In this blog post, we share lessons learned from an incredible story of NUMMI – a joint venture between Toyota and General Motors (GM) founded in 1984, and how GM was able to phenomenally reinvent the culture of its notoriously dysfunctional plant. These lessons are for all types of business as they demonstrate how Lean can dramatically change a culture, processes, and systems for the better.
GM’s Worst Workforce
The concept of Lean Production is based on the Toyota Production System (TPS), which is a manufacturing philosophy adopted by organizations globally that aims to eliminate waste and achieve the best possible efficiency.
Back in the 1980’s, GM had heard a little about Toyota’s production system and was interested in learning how to build high-quality small cars at low prices. At the time, GM’s Californian manufacturing plant was extremely dysfunctional. The factory had an inefficient assembly line with hundreds of misassembled cars and cars with missing parts. Employee morale was low, and strikes were a common occurrence. So, GM struck a deal with Toyota and opened New United Motor Manufacturing, Inc. (NUMMI) using the same GM plant and retaining the same workforce. At NUMMI, Toyota showed GM how they made some of the best built, most reliable cars in the world at a much lower cost, which allowed GM to quickly and dramatically transform its worst workforce into one of its best.
Here are a few important lessons that GM learned from Toyota:
- Teamwork was key: The key to the Toyota Production system was teamwork. NUMMI workers were divided into teams of four or five, switched jobs every few hours to relieve monotony, and a team leader would step in to help whenever something went wrong. Afterwards, the team leader and the worker would brainstorm to think of ideas to prevent the same problem from happening again. Under the Toyota system, when a worker made a cost-savings recommendation, they would get a bonus of a few hundred dollars. This meant everyone was expected to always be looking for ways to improve the production system.
- Toyota created an environment of continuous improvement: Toyota’s goal was to make incremental improvements to streamline processes to the fewest possible steps, each step timed down to the second. At NUMMI, GM saw the commitment to making these improvements. There were mats for workers to stand on, special cushions for kneeling on, hanging shelves to store parts within easy reach – whatever it took to make an efficient process.
- The focus was on quality not quantity: Toyota placed an emphasis on building high-quality cars, rather than maximizing production volume. At NUMMI, Toyota showed GM exactly how they achieved this. Toyota used the Andon Cord – a thin nylon rope that workers could pull to stop the production line at any time and call for a team leader to help resolve an issue. Toyota believed that unaddressed problems, if left unresolved, could lead to huge complications. The Andon Cord epitomized Toyota’s commitment to employee empowerment and enabling their workers to work in a way that “builds in” quality.
Employee Transformation
The team-oriented processes, employee empowerment, and focus on quality were what changed NUMMI’s culture. And the results were astonishing. Workers at NUMMI embraced the Toyota Production System with passion. Employee absenteeism immediately fell from 20% to a steady 2%. The cars coming out of NUMMI had the lowest defect rates in the USA, even comparable to the Toyota cars that were made in Japan. And just as important for GM were the cost savings. One study found that it would take 50% more workers under the old system to build the same car model.
Moral of the NUMMI’s story? The problem was not the people, it was the process. Learning to work together as a team creates an environment of Kaizen, where people give help and take help and produce high-quality products. Embrace the fact that processes truly matter a lot.
How We Help
At Propel, we have extensive knowledge in designing Lean processes, recommending method changes, and instilling a culture of continuous improvement. Through our proven Lean Process Improvement Methodology, hands-on training, and passion to empower, we make continuous improvement and a people-oriented culture part of your company’s DNA. Let our team of Lean Thinkers lend a hand. You can contact us directly at 604-346-5185 or [email protected].
