There exists a misunderstanding among many manufacturers trying to emulate Toyota's success that simply deploying lean tools will reap them rewards similar to those enjoyed by the Japanese automotive giant. Not so -- too many firms already have discovered that isn't the case.

Some also have suggested that Toyota's accomplishments in the automotive sector derive primarily from a lack of the legacy costs that dog U.S. competitors General Motors, Ford and Chrysler, and that there's nothing fundamentally better about the way Toyota makes cars -- it's merely the extra health care, environmental and labor expenses that are slowing down the Detroit Three.

In reality, Toyota's success derives largely from its planning and execution system, says lean consultant and author Pascal Dennis, a former manager at Toyota Motor Manufacturing Canada. Called hoshin kanri (or hoshin planning), the management system (which was not invented by Toyota) helps Toyota remain competitive year after year by keeping the entire organization's eyes and actions focused on achieving the same goals. It's not just an automotive solution, either, as other manufacturers also are reaping the benefits of hoshin planning.

So what exactly is hoshin planning? The Japanese phrase "hoshin kanri" has been interpreted in several different ways. Among the more frequent translations are "strategy deployment" or "policy deployment." Broadly speaking, strategy deployment aims to formulate clear corporate objectives and goals, disseminating and aligning those objectives throughout all levels of the organization, and then creating plans of action to achieve those objectives.

"It's all about focus, separating the trivial problems from the really important ones, and how they relate to the organization's strategy," says Mark W. Smith, a consultant with Breakthrough Management Group Inc. "Do the improvement actions that go on every day relate to strategy? And then what do we do about them?"

Hoshin How-To's

Done right, hoshin planning addresses a wealth of deficiencies in corporate planning, says Mark Smith, a lean master at Breakthrough Management Group. Included among those deficiencies are plans that are not suited for the realities of the shop floor, plans that don't take into account a changing environment and plans that aren't ever reviewed. According to Smith, the key elements of hoshin planning include:
  • Hoshin planning is driven by the organization's vision, not today's problems.
  • It is a system to translate the vision into tangible and measurable objectives for achieving the breakthroughs.
  • Alignment is created by cross-functional planning to achieve short-term objectives each year.
  • Hoshin planning fosters learning through the review process. You become better planners every cycle.
  • The Plan-Do-Check Act cycle of continuous improvement is at the heart of the hoshin process.
  • "Catchball" is the driving force of alignment, clarification and employee involvement. The catchball process, according to Smith, "translates strategies into lower-level objectives in a cause-and-effect way."

 

Hoshin kanri is fundamental to Toyota's success today, says Dennis, currently an instructor at the Lean Enterprise Institute. He says Toyota's ability to grasp the situation, identify two or three obstacles, develop meaningful plans to address those obstacles, and deploy them "is outstanding."

Another company using strategy deployment, HNI Corp., has used a policy deployment mechanism for more than a decade. The office furniture manufacturer, an IndustryWeek Best Manufacturing Company for five consecutive years, deploys its strategy companywide using a Plan-Do-Check-Act (PDCA) sequence that moves from a three-year corporate plan to a unit-level development process that creates one-year plans with action steps. Progress reviews and annual reviews evaluate progress and then the cycle starts again, explains Todd Murphy, vice president and general manager of The HON Co.'s Cedartown, Ga., facility, a 2005 IW Best Plants winner. HON is the largest operating company within HNI Corp.

Also central to policy deployment at HON is rapid continuous improvement, or RCI, a company culture focused on making breakthrough improvements. Further aligning policy deployment at HON is its reward system, which is linked to the achievement of policy deployment goals.