By Masaaki Imai

In Japan we like to tell a story about an old man who was Village Master of a small town on the coast of the Pacific. He had a house on the highest part of town, and could see for many miles. One day he looked out across the ocean and saw a tsunami coming for shore, and knew that he had to warn his fellow villagers. As this was many years ago the village had no means to communicate quickly enough, so the old man rushed outside and set fire to a pile of rice that was being kept in his front yard. The other villagers saw the smoke rising, and rushed up the mountain to see what was going on. In that way, the old man saved the people of the village from the tsunami.

As we struggle to confront the current devastation in our country, we remember this story as an important lesson about putting the welfare of others ahead of one’s self interest. The old man may have lost his rice, but the lives of many were spared because of his actions. Similarly, the people of Japan have chosen to focus on rebuilding their communities through a sense of camaraderie and hope for the future, instead of resorting to the looting and rioting that is so common in the wake of catastrophes.In the high schools, gymnasiums, and community centres where people have taken up temporary residence I have noticed that people are using something that looks very much like 5S to keep organized, and respect each other’s space. They know that restoring a sense of order is the first step towards rebuilding.  If you don’t have respect for each other, love for each other, you can never build a strong community, no matter what has happened to you.

While my family and I were left unharmed, I see people around me who have lost their homes, family members, and their communities. Somehow, though, a sense of optimism persists. Nobody seems to be downhearted. They have hope. Some people have nothing but the clothes on their back, but they say, “at least I am all right.”

The Japanese have a word called “Kiki” that has no direct English equivalent. Roughly translated, the first character “Ki” mean catastrophe, and the second character means opportunity. When we say Kiki it means that with disaster comes a wonderful opportunity to overcome it, and become better. This sentiment persists today.

Interview – Garry Moore and Shaneel Prasad of Fisher & Paykel

In a video interview posted in our last issue, Masaaki Imai noted that Lean began at Toyota as a set of shop floor techniques and evolved over several decades to become a total production system and eventually, a system of management for all of the company’s operations. Although Lean tools are common today, very few companies have gone this far.

The KAIZEN Tour to Japan last November gave participants a rare opportunity to learn from companies that have reached this stage.  On the tour was a team from New Zealand-based appliance manufacturer Fisher & Paykel Appliances (“Fisher & Paykel”), who began their journey 30 years ago with a visit by none other than Taiichi Ohno and Masaaki Imai.

In this candid interview, Fisher & Paykel Lean veterans Garry Moore, VP Global Quality and Customer Service, and Shaneel Prasad, Site Operations Manager for New Zealand shared their insights on what how Lean management is being practiced in Japan, and what this means for their company.

How did the KAIZEN journey begin for Fisher & Paykel?
Garry Moore:  We had Masaaki Imai and Taiichi Ono visit our facilities in Auckland, New Zealand about 30 years ago, and they spent a week with our senior executives. That was the start of our understanding of what the Japanese were doing in terms of best practices in manufacturing, and from that point on we have consistently invested in KAIZEN education.

Shaneel Prasad:  Today, our factories are still designed and built based on the Toyota Production System – we recently built a factory in Thailand that is only three years old.  Our factories are based on  the principle of making things according to customer demand.  We can make multiple products on the same lines, which has given us a competitive advantage.

You’ve had some great results with KAIZEN, but you’ve also said your company can do much better.  Could you explain that?
Shaneel Prasad:  Some departments within the factory are really good at KAIZEN, but we have never combined to deliver fully to the whole business. So we have pockets of excellence in some areas, but not so good for the overall output – at least, not the best we can do.

We’re looking for a broader approach; we want to bring a standardized approach into the whole system, throughout the whole organization, which is why we’re visiting Japan right now. We need some data and a collective understanding that we can take back and use to restructure.

What have you learned from the Japanese factories we’ve seen so far?
Garry Moore:  We're surprised at how far Japan has gone with KAIZEN. They seem to have moved on from the global financial crisis, and now they're doing KAIZEN on lead times and logistics, which is very interesting. You can see that they're making an effort to establish a closer relationship with the customer, to get things to them much faster, and they're hoping to do that by reducing the inventory and lead times. It’s amazing how flexible they are.

Shaneel Prasad: About a year ago we managed to cut our factory lead time by 50%, but just by looking at what they've done here, we think we could cut it even further. It’s all about flexibility and responsiveness. You know, you can't have inventory all over the place like you did 30 years ago. You can't build stock and supply from the warehouse.  The companies we've visited here in Japan know this, and they're adapting to it through KAIZEN and the 5S approach.

There's a lot to be learned from the companies we’ve visited in the last two days. You look at Mori Seiki and they aren’t worried, because they are thinking different, they are coming up with new systems and processes all the time. You look at NBK’s thinking, and how they are continuously improving and innovating on the fly.

These guys are thinking differently in order to stay in Japan, to stay in the market and compete. I think it's great what they're doing. You go to their factories and can really see the passion they have. They are thinking differently, and they are relentlessly and passionately going after those ideas and processes.

It sounds like a lot of this is about attitude.
Shaneel Prasad: It’s all a matter of establishing what’s most important, and going for it. You look at the top five priorities of the companies we have visited here, and cutting costs is nowhere to be seen. They're not worried about that.  They're worried about improving their systems and processes, their thinking. It's absolutely amazing. In Japan, there is clarity in terms of what needs to be done in the manufacturing sector. Every company that we have visited – although they make different products – has succeeded by applying, fundamentally, the same four or five key principles. They know that if they do this successfully then costs will become more and more manageable.

How big a factor is Japanese culture in enabling this kind of thinking?
Shaneel Prasad: To be frank I don't think culture's got anything to do with it. Garry and I discussed it a lot. Influences, values, beliefs, that’s culture, and you can create a culture like that in a factory. Absolutely. If you get people engaged in the work, understanding what we're doing, why we're doing it, then it's possible. Often it's an easy way out to say that it's just too hard, to blame it on culture.

Masaaki Imai has said that in comparison with Japanese companies, Western companies are good at designing, good at selling, but when it comes to making products, that's marginalized - people don't want to talk about it. What are your thoughts on that?
Shaneel Prasad:  Well it’s true. I absolutely agree. To be honest, we have fantastic engineering within Fisher & Paykel, we have innovative products in our components and technology business, and we have very sophisticated and diverse sales models. But have we really grasped the manufacturing side of the business, and transformed that in order to gain a competitive advantage? I think we can improve in this area.

The companies we’ve seen have weathered a pretty tough economy.  What are your thoughts on that?
Garry Moore:  I think they have had to accept a situation where they have lost volume, and they have had to get comfortable again with different models. It's coming down to inventory, it's coming down to the logistics, how they can get products to the customers. And I think that's where they will continue to innovate, and if we're not careful Western companies risk falling behind Japan again.  We risk looking back in 10 years and wondering why they've got no inventory, how they're selling direct to customers.  We can’t let that happen.

What’s the next step in your KAIZEN journey?
Garry Moore:  The big challenge in implementing KAIZEN is a principle across the wider organization.  It is key to educate people that KAIZEN will drive improvement as a lead indicator and a lead principle, not a lag principle. Western companies have a culture of looking at lag indicators, mainly results and the cost for years, and we've got to try and move beyond that.

So many Western companies are results focused and cost driven, but here in Japan there's no talk about that.  They know that quality is the most important aspect; they don't even talk about it anymore, and they don't talk about cost because they know if they do the right processes as efficiently as possible then those costs are minimized.  Japanese companies have come on this journey and this is what I have to take back to New Zealand to continue our journey.