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When GM Adopted Toyota’s Secret Sauce With Kaizen

American auto manufacturing's experiment with Kaizen

Posted on December 08, 2014

It was a historic moment when Toyota surpassed GM in number of vehicles sold in 2009. It marked the end of GM’s 77 year reign as the world’s number one auto manufacturer.

How did they do it? There are several reasons for Toyota’s rise but one of the most central is the concept of Kaizen, or “continuous improvement.” Stated simply, Toyota built a company culture that valued employee suggestions for improvement.

Perhaps the most interesting case of Kaizen in America happened in 1984, when GM and Toyota entered an unlikely agreement to work together at a car factory in Fremont California. GM needed Toyota’s expertise in building small cars and Toyota needed GM’s help to stay in the American market. The plant was called NUMMI - New United Motor Manufacturing Incorporated.

As part of the agreement, GM union workers were put on the assembly line for two weeks at a Toyota factory in Japan. Many of the grizzled union members had never been outside of Michigan and what they saw astounded them. Put on a Japanese assembly line, they would work hard to keep up. When they would struggle, in the words of one:

“…at some point, somebody would come over and say, do you want me to help? And that was a revelation, because nobody in the GM plant would ever ask to help. They would come yell at you because you got behind.”

He continued:

“[Our American work team] couldn't believe that responsiveness. I can't remember anytime in my working life where anybody asked for my ideas to solve the problem. And they literally want to know, and when I tell them, they listen, and then suddenly, they disappear and somebody comes back with the tool that I just described-- it's built-- and they say, ‘Try this.’”

That Toyota management took employee suggestions seriously was readily apparent within the factory; among them were special mats for workers to stand on, shelves for keeping tools within easy reach and special cushions for kneeling inside car frames. These small improvements, implemented on a continuous basis, paid big dividends.   

The Results

When the Americans returned to America to work at NUMMI in Fremont, California, they delivered equally powerful results. A union workforce that was notorious for being one of the worst in America to manage, in just three months were producing cars at near perfect quality ratings. The cost savings were enormous. One study estimated it would take 50% more workers to produce the same car under the old GM system.

Further, grievances and absenteeism - a chronic problem at the old Fremont auto plant -  plummeted. Several workers reported for the first time, they enjoyed coming to work.

Unfortunately, GM never whole-heartedly embraced the NUMMI experiment. It was shut down and, perhaps unsurprisingly, GM filed for bankruptcy in 2009 while Toyota continued to flourish.

What We Can Learn From GM

It would be wise to learn the practices of the world’s best and it appears Toyota is onto something.

Takeaway #1 - Employee suggestions matter. Employees have great ideas and they want to be heard. This is more than fluffy “love your workers” jargon - employee suggestions drive real business results through better products, better attendance, and higher productivity.

Takeaway #2 - Start small. The suggestions program at GM have huge results, but a humble beginning. The agreement was only to work in the factory with Toyota for two weeks. When the results came in, the agreement stuck. Remember this for your suggestion program. It’s not only easier to sell “up” when you position initiatives as a test, but it’s also less overwhelming for the employees who have to carry out the initiative.

What did you learn from the GM case study? Tweet us @_Vocoli and let us know.

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