DU RWARD K. SOBEK II AN D ART SM ALLEY Foreword ........................................................................................................ ix Endnotes ............................................................................................... xi Acknowledgments ........................................................................................ xiii Introduction .................................................................................................. xv A Basis for M anagerial Effectiveness ................................................. 1 PDCA: Heart of the Toyota Way ............................................................ 3 What Don't We Get? .............................................................................. 4 A System to Support PDCA M anagement ..............................................7 Endnotes ................................................................................................. 8 2 A3 Thinking .................................................................................... 11 Seven Elements of A3 Thinking ............................................................ 12 Element 1: Logical Thinking Process ................................................ 12 Element 2: Objectivity ..................................................................... 13 Element 3: Results and Process ........................................................ 14 Element 4: Synthesis, Distillation, and V isualization ....................... 15 Element 5: Alignment ...................................................................... 16 Element 6: Coherency Within and Consistency Across .................... 17 Element 7: Systems V iewpoint .......................................................... 18 Practical Problem Solving ..................................................................... 19 Grasping the Current Situation ........................................................ 19 Identifying the Root Cause ..............................................................22 Devising Countermeasures and V isualizing the Future State ........... 23 Creating an Implementation Plan .................................................... 24 Creating a Follow-up Plan ................................................................ 25 Discussing with Affected Parties ...................................................... 25 Obtaining Approval ......................................................................... 26 Executing the Implementation and Follow-up Plans ........................26 Summary .............................................................................................. 27 End no to s ............................................................................................... 27 3 The Problem-Solving A3 Report ..................................................... 29 Storyline of the Problem-Solving A3 ..................................................... 30 Theme .............................................................................................. 32 Background ...................................................................................... 33 Current Condition and Problem Statement ...................................... 35 Goal Statement ................................................................................. 38 Root-Cause Analysis ........................................................................ 39 Countermeasures .............................................................................. 42 Check/Confirmation of Effect .......................................................... 43 Follow-up Actions ............................................................................ 45 Total Effect ......................................................................................46 Reviewing Problem-solving A3s ............................................................ 47 Y our Turn ............................................................................................. 51 Part 1: Write an A3 .......................................................................... 52 Part 2: Critique Y our A3 .................................................................. 56 Summary .............................................................................................. 56 End no to s ............................................................................................... 57 4 The Proposal A3 Report .................................................................. 59 Storyline of the Proposal A3 ................................................................. 61 Theme .............................................................................................. 62 Background ...................................................................................... 63 Current Condition ........................................................................... 64 Analysis and Proposal ....................................................................... 65 Plan Details ...................................................................................... 67 U nresolved Issues (Optional) ............................................................ 68 Implementation Schedule ................................................................. 68 Total Effect ...................................................................................... 70 Proposal A3 Example 1 ......................................................................... 70 Proposal A3 Example 2 ......................................................................... 76 Reviewing Proposal A3s ........................................................................ 80 Discuss with Peer Group or Advisor .................................................80 Discuss with Affected Parties ........................................................... 80 Obtain Approval .............................................................................. 82 Y our Turn ............................................................................................. 83 Part 1: Write a Proposal A3 .............................................................. 84 Part 2: Review Y our A3 .................................................................... 85 Summary .............................................................................................. 85 Endnotes ............................................................................................... 86 5 The Status A3 Report ....................................................................... 87 Storyline of the Status A3 ..................................................................... 89 Theme .............................................................................................. 89 Background ...................................................................................... 90 Current Condition ........................................................................... 91 Results .............................................................................................. 93 U nresolved Issues/Follow-up Actions ............................................... 94 Total Effect ...................................................................................... 95 Status A3 Example ................................................................................ 98 Discuss with a Peer Group or Advisor ................................................. 100 Y our Turn ........................................................................................... 101 Summary ............................................................................................ 102 En dno to s ............................................................................................. 102 6 N otes on Form and Style ............................................................... 103 Form ................................................................................................... 104 Style ....................................................................................................104 Graphics ............................................................................................. 107 U nderstand Y our Data ................................................................... 107 U se the Best Graph for the Data .................................................... 107 Label Properly ................................................................................ 107 U se as Little Ink as Possible ............................................................ 110 Let the Graphic Talk ...................................................................... 110 Tables .................................................................................................. 110 Summary ............................................................................................ 112 Endnotes ............................................................................................. 112 7 Supporting Structures ................................................................... 113 Standard Templates ............................................................................ 114 Where to Start .................................................................................... 116 Handwritten versus Computer-Generated A3s ................................... 117 Coaching ............................................................................................ 120 Approval ............................................................................................. 121 Storage and Retrieval .......................................................................... 123 Summary ............................................................................................ 124 Endnotes ............................................................................................. 125 8 Conclusion .................................................................................... 127 PDCA and M anagerial Effectiveness .................................................. 128 A3 Thinking ....................................................................................... 130 Three M ain Types ............................................................................... 131 Form and Style ................................................................................... 132 Final Advice ........................................................................................ 133 Endnotes ............................................................................................. 134 About the Authors .................................................................................. 135 Appendix A "Reducing Bill Drop Time" Problem-Solving A3 Report ............................................................................................ 137 Appendix B "Practical Problem Solving" Proposal A3 Report ............. 149 Index ...................................................................................................... 159 Toyota may well be the most admired and copied company in the world at this moment. A few bad quarters of profits could completely change the high level of interest, but right now that does not seem to be in the cards. It would be hard to find a company that has more consistently had profitable years and grown so steadily over decades. This may from the outside appear to be due to some very clever J apanese tricks, such as just- in-time (J IT) systems to keep inventory low and an overall production and logistics system that continually delivers exceptional quality-but no one inside the company would agree with that analysis. If you were to talk to executives inside the company, you would hear the same theme repeatedly: that their competitive advantage comes from engaging people throughout the enterprise in continuous improvement. Indeed, these days around Toyota, the Toyota Production System (TPS) house has been replaced by the "Toyota Way" house that was presented in The Toyota Way 2001 by then- president Fujio Cho. TPS is represented by two pillars-J IT and jidoka. J idoka refers to equipment with the intelligence to stop itself. Within Toyota, both pillars have to do with problem solving. J IT is a system with very little inventory; problems will shut down the line and cause a sense of urgency to solve them. J idoka is about equipment and people shutting down the line when there is a problem. Why would you want to shut down the line? The answer is that Toyota leaders do not want to shut down the line as it is costly and can lead to delays in customer shipments. They want to surface problems so that people working in the process will solve those problems at the root cause, thereby making the process stronger. Through this continual strengthening of processes throughout the company all over the world, Toyota becomes a little better every day. Competitors can imitate various tools and methods of J IT and jidoka, but unless they are getting a little better every day for decades, they will not be able to compete with Toyota. The Toyota way has two different pillars-respect for people and continuous improvement. The TPS house highlighted technical systems, such as J IT, while this newer version highlights people solving problems. In reality, from the time Taiichi Ohno began developing it, TPS was always about people solving problems-but it was not as explicit in that model. In addition to having more of an explicit focus on the human side, this new model-the Toyota way-is also generic and can be applied to every part of Toyota, not just manufacturing. The problem-solving method taught to people throughout Toyota, which acts as the toolkit for continuous improvement, is based on what Toyota learned from quality guru W. Edwards Deming decades ago-Plan, Do, Check, Act (PDCA). It has become engrained as an intimate part of the corporate culture. Also engrained in the culture is a way to report on the results of PDCA and that is now becoming well known as the A3 report. The A3 is an 11 x 17-inch piece of paper and the rules of the game are to put the whole report on one side of one sheet. Originally, as it was explained to me, this was the biggest size paper that could fit in a fax machine. I also have witnessed Americans working for Toyota who were struggling to fit their A3 report on A4-sized paper, explaining that Toyota wants even shorter reports written on 81 x 11-inch paper. It sort of makes sense that a company so passionate about streamlining its manufacturing plants and squeezing out every drop of waste would strive for a wastefree report. Actually, one of the reasons for such lean processes in J apan was the lack of space and the lack of money when Toyota M otor Company started up. There was no room for extra inventory or the money for the huge pieces of equipment to build large batches. One side of one piece of paper is not a lot of space and one cannot afford non-value-added verbiage in such a small space. In fact, if a picture is worth a thousand words, it makes sense to use pictures when possible on your A3. I have had the experience more than once of getting a phone call something like the following: "M y boss wants to get lean in office operations. We did lean on the shop floor with great success and to take it to the office we need a different tool. He heard something about these A3 reports as a lean tool and ordered me to check it out. He wants all reports to him in the future to be A3 reports." With this type of orientation, there is certainly the risk of A3 reports becoming the office analogue to the kanban' card in the factory. There used to be a fad of moving to kanban to eliminate inventory. Print enough cards, make them colorful, seal them up, and you have a pull system just like Toyota. M ake kanban electronic and you have passed Toyota. N ow, the theory goes, in the office you can write lots of A3 reports and be lean like Toyota. U nfortunately it is not that simple. This book is aptly entitled U nderstandingA3 Thinking: A Critical Component of Toyota's PDCA M anagement System. There is a lot hidden in this title. First, you have to understand that A3 is more of a way of thinking than a report-writing methodology. When Toyota went from A3-sized paper to A4-sized paper, they were not fundamentally changing the process. In fact, if they were to suddenly decide you can use both sides of the paper, it would not be an important change. What is important is the underlying philosophy of the methodology. Second, the philosophy is rooted in the PDCA way of thinking. PDCA is a practical tool for continuous improvement. It is practical in that it provides a framework for