TOKYO, JAPAN: Since embarking a decade ago on what it described as a "lean journey", the US Air Force Materiel Command (AFMC) has halved the time taken to overhaul the massive C-5 Galaxy transport aircraft from 339 days to just 171 days. More efficient repair and maintenance work also enables the AFMC--charged with keeping the US Air Force equipped--to keep an additional 100 KC-135 Stratotanker refueling aircraft operational.

This astonishing trimming of waste owes its success in no small part to the lean manufacturing practices espoused by the Toyota Production System, which helped Toyota Motor Corp become the No 2 automaker in the world. It is now breathing down the neck of industry leader General Motors Corp.

In fact, the AFMC has received official recognition for adopting the "Toyota way". Since 2005, it has picked up 10 awards from the Shingo Prize for Operational Excellence (Public Sector). The prize is named after the late Japanese industrial engineer Shigeo Shingo, who helped create and write about lean manufacturing practices that epitomise the TPS.

"Successes from process improvements have long-term impacts on the way the air force accomplishes heavy maintenance on its equipment," AFMC spokeswoman JoAnne Rumple said. "We have significant depot maintenance and engine repair improvements in flow days, better due date performance across the fleets and our customers have witnessed better quality maintenance."

One might wonder why the mightiest military in the world has been inspired by the concept of lean manufacturing practices developed decades ago in Aichi Prefecture. But lean thinking has been critical to eliminating logistical waste not only at the AFMC but at all four branches of the US armed forces, according to Prof Jeffrey Liker of the University of Michigan, who has authored several books on Toyota.

"(Lean processes) became a focus of all of the Department of Defence," said Liker, whose consultancy, Optiprise, was involved in the early stages of this endeavor by the US military and pinpointed many areas that could be tweaked and improved.

"They were weak on standardised processes. There was inventory everywhere, the maintenance people were doing as much walking as working. It took a lot of time to turnaround the ships and aircraft," Liker said. "The turnaround time was a major focus--as an asset under repair is not working for the country and the cost of building more is astronomical."

The Toyota Production System was developed as Toyota was making an effort to catch up with US and European automakers despite being hamstrung by limited capital and other resources. The success of Toyota and its Japanese production management model has made the company a role model for manufacturers around the world.

However, Toyota has had no qualms about sharing its know-how and is actively providing this knowledge worldwide as a "social service".

TSSC Inc, which was established in Lexington, Ky, as the Toyota Supplier Support Centre in 1992 and reorganised into its current form in 2002, has so far shared TPS expertise with 134 North American manufacturers and organisations.

Toyota launched the service when a trade dispute--mainly over Japanese automobiles--was raging between Japan and the United States.

"As global competition intensifies, we've come under more scrutiny. That makes it more important for us to return to our mission to contribute to North American industries by sharing TPS know-how," TSSC President Hideshi Yokoi said.

TSSC charges fees only to cover labour costs and travel expenses. One precondition TSSC insists on before offering to share its skills is that the company being assisted must agree not to shed workers who become superfluous due to the implementation of kaizen--continuous improvement practices.

"All companies we have helped respect this, and some have even used the surplus workers for expanding production or starting new projects," Yokoi said. "I believe when team members feel secure in their jobs and are able to contribute to the business conditions of the company, they are more willing to be creative in improving their own processes and working conditions to produce quality products in the most efficient ways."

A global mission

In searching for business models to resuscitate Japan's flagging economy, can other companies learn from Toyota's success?

The state of the economy has aroused global concern. Many Japanese companies have been involved in cover-ups or false labelling scandals in the past year or so, raising question marks over the ability of Japanese firms to keep their houses in order. Pessimism has become the order of the day in Japan, and many wonder if the once-vaunted "Japan Inc" will ever be able to ride the waves of globalisation.

Even government leaders have been unable to suppress their consternation. Hiroko Ota, state minister in charge of economic and fiscal policy, earlier this year went so far as to say, "Regrettably, we can no longer call Japan's economy a world leader."

Ota has many reasons for this lament. According to the latest statistics, Japan ranked 20th among 30 member countries of the Organisation for Economic Cooperation and Development in terms of labour productivity. Among the Group of Seven major countries, it was last.

If the success of Toyota is any guide, it spotlighted a Japanese-style management practice fundamentally different from Western-style business models: Valuing and developing its workers within the framework of lifetime employment system.

"What Toyota is good at is developing people who are excellent problem solvers and passionate about continuous improvement," Liker said. "They are always setting the next big goal for the company and cascade that down through (strategy) planning with very broad and active involvement in improvement from the entire organisation. Other companies want this result, but have a hard time understanding investment in people is required to achieve it."

Fixing what doesn't work

A slew of suggestions have been put forward for a new Japanese management model that can cure the business malaise, but experts agree that success will require a combination of continuity and change--keeping the best parts of the Japanese style and adapting those that no longer work.

In particular, many say the Japanese employment system must be overhauled to sharpen the competitive edge of Japanese companies and raise the productivity of workers while keeping the lifetime employment system intact. In essence, this means reduced salaries for overpaid middle-aged or older employees with low labour productivity and a redistribution of pay to workers based on their performance, regardless of age.

The Japan Business Federation (Nippon Keidanren) said in a report published in December that Japanese companies must revamp their seniority-based pay system, which is no longer viable with the advent of information and communication technologies that have rendered many conventional skills meaningless.

In fact, many companies have been changing their salary systems. According to a survey released by the business federation in October, 53.8 per cent of companies have adopted salary systems based on worker roles and performances.

However, introduction of these so-called merit-based pay systems has been bumpy, with employees suffering from increased stress and other problems.

Takuzo Maeda, representative partner of the Institute of Human Capital Solution (IHCS), warns that unless Japanese companies completely change their long-established yardsticks for evaluating employees, reform efforts are destined to fail.

The yardsticks for personnel evaluation adopted by most Japanese companies centre on what kind of a person the employee is--not what he or she can accomplish--such as the length of one's employment at the company, academic records, gender, nationality, status, connections and other aspects of human relations, according to Maeda, who served as a consultant to Canon Inc, Kao Corp, the Isetan department store chain and other companies that have succeeded in reforming their personnel management.

"Under the current Japanese system, evaluation of your work can change drastically depending on whether your boss likes you," Maeda said. "That's absurd."

Instead, Japanese companies must adopt solid yardsticks that strictly evaluate how much value an employee filling a certain position can create for the company, he said.

"The first step is to change the connection between salaries and the value of work done," Maeda said.

Facing up to change

Kao Corp is a prime example of how a payment system can enhance employee motivation.

Kao changed its personnel evaluation system step-by-step between the late 1990s and the early part of this decade. The household goods maker introduced a performance-oriented salary system that "could be globally understood", in keeping with the increasing globalisation of the company's operations.

What distinguishes Kao from other companies adopting performance-based systems is its linkage of work evaluation to company performance. Part of the semiannual bonuses that employees receive reflects the company's overall performance--a system intended to prevent employees from concentrating solely on improving their own performance.

"We've made our employees aware of the connection between their own performance and the company's performance," said Yasushi Aoki, Kao's executive officer in charge of global human capital development. "They're expected to do good for the company, not just for themselves."

In the course of introducing the new evaluation system, Kao rediscovered the importance of teamwork, which led to the introduction of a new product development method, Aoki added.

Teamwork was key to developing the concept for a new brand of shampoo and conditioners called Asience. The brand proved a hit, raking in 10 billion yen ($95.9 million) in sales in its first year after hitting shelves in 2003 and giving Kao a foothold in the premium shampoo market.

In addition to Asience, Kao has turned out other megahit products in recent years, such as Healthia teas and Econa cooking oils for health-conscious consumers.

IHCS' Maeda said companies such as Toyota, Canon and Kao are taking advantage of the inherent merits of Japanese companies, such as teamwork, genbashugi (closeness to consumers) and the spirit of takumi (craftsmanship).

But capable workers who can contribute to the improvement of the company's performance must be suitably rewarded, he said.

Toyota Chairman Fujio Cho concurs.

"The competitiveness of a company in the global market will be decided by the extent to which the company can employ and manage excellent and motivated people," Cho said at a press conference he gave earlier this year in his capacity as chairman of the Japan Automobile Manufacturers Association.

"Manufacturers treating workers as simply one of the 'three Ms'--men, machines and material--won't develop in terms of international competitiveness," Cho said. "We firmly believe that we need to value our workers so much that every single one of them feels part of the management of the company and an active participant in everyday business.

"It's important for all companies competing in the global marketplace, and for the manufacturing industry as a whole, to encourage people to work (to their potential) in return for suitable remuneration." (By YUMIKO MIYAI and HIROYUKI UEBA/ The Yomiuri Shimbun/ ANN)