Genchi Genbutsu, The Ultimate ERP and Metrics Based Reporting System
Toyota Productions Systems, (TPS) leadership and their employees refer to it as genchi genbutsu. It is one of the most important and powerful analytical tools available to the executive today. What is it., and how can executives use the tool to help them improve their businesses, cultures and lives of the employees and stakeholders they serve?
Genchi genbutsu means going to the place where things are happening, and seeing and experiencing them for yourself. When properly utilized, this helps us improve employee engagement, deliver higher quality products to our customers, and develop more consistency in identifying waste where things are happening.
A TPS Senior Engineer was tasked with overseeing the improvements of the 2004 Toyota Sienna van with features that would make the car more attractive for buyers of the 2005 model. You might say he was given MBO, or Management By Objectives from the executive team. Toyota had mounds of data and analytics in their ERP system on who their customers were, what conditions they drove in, and how many children or guests were typically in the van. Data on the Sienna itself, and on customers had been collected by Toyota over the years they sold the van that replaced the Previa in 1997.
In leadership however, ERP systems often only tell part of the story.
The TPS engineer poured over the information from the ERP system, visited the production plant and dealer showrooms, and spoke with customers. All pretty standard stuff when making important business decisions on product development. Then he did something different, he asked other leaders if he could experience driving the car. Toyota encourages this sort of thinking and employee engagement, and trains its leaders to think what is the value like that my customers are experiencing?
Driving from Florida to California, and from Alaska to Mexico he logged a total of 55,000 miles in pursuit of genchi genbutsu. What he learned led to significant improvements in the 2005 model. In New Mexico for example, he learned the older model didn’t have a tight enough turning radius for narrow streets, in the mid west he experienced high wind loads which caused stability issues and driving in Alaska on gravel roads the car didn’t steer as effectively as the data indicated it would. Because he logged so many miles himself he also recommended the van be upgraded to better suit children on long trips. This led to improvements in areas such as seat quality, and roll down windows in the back seat along with an optional DVD center.
Experiencing, and seeing things for ourselves helps us better understand the analytics that we may be seeing on paper, but may not completely understand. It gives us valuable pieces of additional information that may sometimes not be passed on to our executive teams because of fear and intimidation which may be the left over bi-product from a poor culture in traditional carrot and stick environments.
Modern day Key Performance Indicators give us immediate insight, but they don’t give us important human interaction, nor do they encourage leadership teams to more actively engage employees. TPS has used genchi genbutsu for years, while many American executives are finally warming up to the idea. Toyota has maintained nearly 50 years of consistent profitability, and very high inventory turn rates because of the efficiencies that were developed while using this tool. It remains an active and integral part in TPS training programs for leadership development throughout Toyota worldwide. Few have been able to mirror the TPS system, but everyone can learn how to go, see, and experience things for themselves where the action is actually taking place.