The Toyota Way 14 Management Principles 1 Base

The Toyota Way, 14 Management Principles 1) Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals. 2) Create a continuous process flow to bring problems to the surface. 3) Use “Pull” system to avoid overproduction. 4) Level out the workload (heijunka) – work like the tortoise, not the hare. 5) Build a culture of stopping to fix problems, to get quality right the first time. 6) Standardized tasks and processes are the foundation for continuous improvement and employee empowerment. 7) Use visual control so no problem are hidden. 8) Use only reliable, thoroughly tested technology that serves your people and processes. 9) Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. 10) Develop exceptional people and teams who follow your company’s philosophy. 11) Respect your extended network of partners and suppliers by challenging them and helping them improve. 12) Go and see for yourself to thoroughly understand the situation (genchi genbutsu). 13) Make decisions slowly by consensus, thoroughly considering all options; Implement decision rapidly (nemawashi). 14) Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen) ADVIK CORPORATE - HR 1

The Toyota Way, 14 Management Principles Principle – 10 Develop Exceptional People and Teams Who Follow Your Company’s Philosophy ADVIK CORPORATE - HR 2

Core Values Vision for the Future Teamwork Mission for the Present Vision – To be the global leader in providing products and services which optimize the performance, controllability and safety of mobile & automotive equipment. Goals for Success Core Values to Guide You Mission – Make machines smarter. KRAs Core Values Goals Integrity Safety Creativity Core Values Continuous Improvement Action Steps Results ADVIK CORPORATE - HR 3

“ Respect for people and constant challenging to do better – are these contradictory? Respect for people means respect for the mind and capability. You do not expect them to waste their time. You respect the capability of the people. Americans think teamwork is about you liking me and I liking you. Mutual respect and trust means I trust and respect that you will do your job so that we are successful as a company. It does not mean we just love each other “. - By Sam Heltmann, Sr VP Toyoto Motor Manufacturing. n Conceptual understanding – The difference with example General motors employee Employee Time spent n Missing Role clarity, spending 52% fruitful time New United Motor manufacturing Incorporate employee n Clarity on Job responsibility, Spending 90% of time on shop floor 1) Filling absenteeism 1. 5% 21 % 2) Ensure smooth flow on line 3% 10 % 3) Communicating Job related info Absent 7% 4) Observing team working Absent 5% ADVIK CORPORATE - HR 4

Developing Excellent Individual Work While Promoting Effective Team Work n Balance between individual work and group work and between individual excellence and team effectiveness. 1) Excellent individual performers are require to make up teams that excel. Hence Toyota is putting tremendous effort in finding and screening prospective employees. To Toyota capabilities and characteristic of individual matters a lot. 2) To make good balance it is important to groom each individual to develop in-depth technical knowledge, product and process know-how. 3) Challenging and respecting employee at the same time. 4) If you make teamwork the foundation of company, individual performers will give their hearts and souls to make the company successful. n Developing Teams at Toyota : Four steps of team development 1) Orientation : The group needs strong direction from the leader and must understand the basic mission, rules of engagement, and tools the members will use. 2) Dissatisfaction : Work without fun makes work harder even though group knows about great vision of success. Leader need to understand social dynamics and group needs direction from leader and also a lot social support to get through social dynamics. 3) Integration : Team/Group understand clear picture about roles of various team members and begins to exert control over team processes. The challenge for group is to learn about, goals, norms, and team structure. Leader doesn’t have to provide much task direction but team still need lot social support. 4) Production ADVIK CORPORATE - HR : Group puts it all together and is functioning as a high performing team with little task support or social support from leader. 5

Work Groups Are the Focal Point for Solving Problems Key Advantages : Batch production V/s One-piece flow ADVIK CORPORATE - HR n Multi skilling for team members n Flexibility of staffing n De-risk over production n Eliminate waste n Absenteeism can be managed n Problem detection on-line n Less chances of mistake 6

Work Group Are Focal Point For Solving Problems n Associate/Team member : Who perform the value added jobs are the most familiar with the actual work and the actual problems that affect the work. n Team leader : An hourly employee who worked on line but has an opportunity for small promotions. He give support to Team members. n Group leader : Who is responsible for leading and co-coordinating a number of groups. ADVIK CORPORATE - HR 7

Roles and responsibilities of TM, TL & Group Leaders 1). Team Members (TM) : 3). Group Leader : n Perform work to current standard n Maintain 5 S in their work area n Manpower/vacation scheduling n Look for continuous improvement opportunities n Monthly production planning n Support problem-solving small group activities n Administrative : Policy, attendance, corrective actions n Hoshin planning n Team morale n Confirm routine quality and TL checks n Shift to shift co-ordination n Process trails (Change in process) n TM development and cross-training n Report/track daily production results n Co-ordinate major maintenance n Co-ordinate support from outside groups n Group safety performance n Help cover TL absence n Co-ordinate activities around model changes 2). Team Leaders (TL) : n Process start-up and control n Meet production goals n Respond to Andon call by TM n Confirm quality – routine checks n Cover absenteeism n Training and cross-training n Work orders for quick maintenance n Insure standardized work is followed n Facilitate small group activities n On-going continuous improvement projects n Insure parts materials are supplied to process ADVIK CORPORATE - HR 8

At Toyota, Everything You Learned in School About Motivation Theory Is Right Internal Motivation Theories Concept Toyota Approach Maslow’s Need Hierarchy Satisfy lower level needs and move employees up the hierarchy toward self actualization. Job security, good pay, safe working condition, satisfy lower level needs. Culture of continuous improvements supports growth toward self actualization. Herzberg’s Job Enrichment Theory Eliminate “ dis-satisfiers” (hygiene factors) and design work to create positive satisfiers (motivators). 5 S, ergonomics programs, visual management, HR policies address hygiene factors. Continuous improvement, job rotation and built-in feedback support motivators. External Motivation Theories Concept Toyota Approach Taylor’s Scientific Management Scientifically select, design standardized jobs, train, and reward with money performance relative standards. All scientific management principles followed but at group level rather than individual level and based on employee involvement Behavior Modification Reinforce behavior on the spot when the behavior naturally occurs. Continuous flow andon create shortlead times for rapid feedback. Leaders constantly on the floor and providing reinforcement. Goal Setting Set specific, measurable, achievable challenging goals and measure progress. Sets goals that meet these criteria through Hoshin kanri (policy deployment). Continuous measurements relative to targets. ADVIK CORPORATE - HR 9

The Toyota Way, 14 Management Principles Principle – 12 Go and See Yourself to Thoroughly Understand the Situation (Genchi Genbutsu) ADVIK CORPORATE - HR 10

“ Observe the production floor without preconceptions and with a blank mind. Repeat “ why “ five times to every matter ”. - Thaiichi Ohno n You can’t be sure you really understand any part of any business problem unless you go and see for yourself firsthand. n It is un-acceptable to take anything for granted or to rely on the report of others. n Deeply understanding and Reporting What You See… - Genchi = Actual Location - Genbutsu = Actual materials or products “ Genchi Genbutsu “ What Toyota to mean ? Toyota mean “ Going to the place to see the actual situation for understanding “ ADVIK CORPORATE - HR 11

Always keep the final target in mind… n Carefully plan for your final target n Have a clear purpose for meetings Clearly assign tasks to yourself and to others… Think and speak based on verified, proven information and data… n Go and confirm the facts for yourself (Genchi Genbutsu) n You are responsible for the information you are reporting to others Take full advantage of the wisdom and experiences of others to send, gather or discuss information (form of Genchi Genbutsu)… Share your information with others in a timely manner n Always consider who will benefit from receiving the information Always report, inform and consult (Hou/Reng/Sou) in a timely manner… Analyze and understand shortcomings in your capabilities in a measureable way… n Clarify the skills and knowledge that you need to further develop yourself. Relentlessly strive to conduct kaizen activities… Think “outside the box”, or beyond common sense and standard rules… Always be mindful of protecting your safety and health… ADVIK CORPORATE - HR 12