Japanese management

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A Presentation

On Japanese Management
Under the Guidance Of: Prof. M. D. Kakade Submitted by: Team Evolution

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Table of contents

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Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


It gives us immense pleasure to take this opportunity to than all those who left no stone unturned & helped us in successfully completion of the presentation.

At the very offset, we would like to thank our Institute IMED for providing us to be a part of this university.

We would like to say thanks to Prof. M. D. Kakade for his able guidance & support; he had extended to us through the presentation period. His timely suggestions & tips helped us a lot in channeling our efforts fruitfully & in successfully completing the project.

We would like to say thanks to all the management Gurus who have posted their subject related content (Japanese Management) on different web sites.

On the other hand, we would like to give thanks note to the library staff of IMED who helped us in letting us read any book of management kept in the reference section.

We are very much grateful to our group members, because without their coordination and team work this work will never be completed.

This project helped us immensely in increasing our analytical, managerial and decision making skills and also helps us in shaping our personality as a successful Corporative Entrepreneur in future.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Scope of the presentation
As a part of our MBA curriculum, we got about 20 Topics of presentation on 16th July 2008, out of which each group (No. of students in each group is 4) has to give a presentation on any one topic. So our topic for presentation is JAPANESE MANAGEMENT…….. Studying the entrepreneur MBA in IMED, Bharati Vidyapeeth University, Pune, will introduce you not just to Japanese management, but to the global potential for new hybrid management styles expressing regional identities, equipping you with a multicultural fluency in tune with current trends under the guidance of our Prof. M. D. Kakade. The aim of this project was to understand the term ‘Japanese Management’, how this Japanese Management has evolved? What is its relationship with societal values? The primary focus was on understanding the core aspects of management practices, its unique features and its comparison with American management. This involved:  Understanding the historic view of Japanese Management, how this concept has evolved?  Understanding the nature or the development Management?  Understanding, why Japanese management techniques so far considered the best?  Overview on the comparison between Japanese Management with American Management? of Japanese

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Introduction Japan... Nippon... The Land of the Rising Sun....

Japan has consistently maintained its position as one of the world's top economies and technological innovators, and in recent decades has built up an extensive network of interconnections with other economic regions and business interests, including Asia, Europe and the Americas. This experience has helped to build a mature democratic society enjoying widespread affluence. Japan's leading companies in fields such as automobiles and electronics originally introduced management methodology and technology from western sources. Here these elements were re-combined, moulded and refined into locally appropriate models that then provided inspirational perspectives for business models around the world.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


What constituted Japanese management?
How this Japanese Management has evolved? What is its relationship with societal values?

Numerous books and articles have been written on the Japanese management systems. Abegglen (1958) was one of the first to bring Japanese management to the attention of a large Western audience, and was followed by Yoshino (1968), Cole (1971) and Dore (1973) who, through in-depth case descriptions, laid the groundwork for the avalanche of writings to follow. These classic studies identified and described those crucial differences in management style and practice that were identified in later studies as critical to Japanese success.

History of Japanese Management
 Japan’s culture developed late in Asian terms and was much influenced by China and later the west.  Early in Japan’s history, society was controlled by ruling elite of powerful clans.  The most powerful emerged as a kingly line and later as the imperial family in Yamato modern Nara Prefecture or possibly in Kyushu in the third century A.D.  In the late 16th century, began a process of reunification followed by the period of great stability & peace.  Japan rebuilt itself based on a new and earnest desire for peaceful development, becoming an economic superpower in 2 nd half of the 20th century.

Story of Japanese Management
 The culture of Japanese Management is very famous in the west.  Flagships of the Japanese economy provide their workers with excellent salaries and working conditions and secure employment.  One of the prominent features of Japanese Management is the practice of permanent employment (Shushin Koyo).
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 Permanent employment covers the minority of the workforce that work for the major companies.  Management Trainees, traditionally nearly all of whom were men, are recruited directly from colleges when they graduate in the late winter.  If they survive a six-month probationary period with the company, are expected to stay with the companies for their working careers.  Employees are not dismissed thereafter on any grounds, except for specific breaches of ethics.  Permanent employees are hired as generalists, not as specialists for specific positions.  A new worker is not hired because of any special skill or experience, rather the individual’s intelligence, educational background, and personal attitudes and attributes are closely examined.  On entering a Japanese corporation, the new employee will train from six to twelve months in each of the firm’s major offices or divisions.  Thus, within a few years a young employee will know every facet of company operations, knowledge which allows companies to be more productive.  Another unique aspect of Japanese Management is the system of promotion and reward.  An important criterion is Seniority.  Seniority is determined by the year an employee’s class enters the company.  Regular pay is often augmented by generous semiannual bonuses.  Members of the same graduating class usually start with similar salaries, and salary increases and promotions each year are generally uniform.  The purpose is to maintain harmony and avoid stress & jealousy within the group.  During the latter part of the worker’s careers, another weeding takes place, as only the best workers are selected for accelerated advancement into upper management.  The ranking officer of a company has the responsibility of maintaining harmony so that employee can work together.  Effective superordinate goals such as significant, durable, achievable.  Most companies tend to fall in one or more of he following categories: 1. The Company as a entity: Here the whole organization is reinforced as an entity one lives within.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


2. The Company’s external markets: Here the emphasis is on value of the company’s product. The value is quality, delivery, service, and customer’s needs. 3. The Companies internal operation: here it is focused on efficiency, cost, productivity, inventiveness, problem solving, and customer attention. 4. The Company’s Employees: Here attention is paid to the needs of groups of people in reference to their productive function, human resource systems, growth and development. 5. The Company’s relation to society and the state: Here the values, expectation, and legal requirement of the surrounding are explicitly honored.  Japanese managerial style and decision making in large companies emphasizes the flow of information and initiative from the bottom up.  Let us now see the two models of Worker-Management Relationships.

Two models of Worker-Management Relations

Corporation governed by Stockholders

Corporation based on community of interests

Control for Short term profit

Absence of control

Adversial Relationship


Management Elusive demarcation Workers

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Japanese Management Concepts
The Japanese economy was totally devastated after the World War II. The country's turnaround strategy to revive its economy was largely influenced by the Management Philosophy that emerged in Japan. The strong pillars of Japanese Management are Concern for Customers to the extent of putting him on the pedestal of God, Control of the Access of Cost, Quality and Time (Wastage elimination, JIT, TQM, TPM, DOE, Poka Yoke, Kamban, SMED etc.), Excellence in all areas (5-S, Kaizen, Poka Yoke) and Total Employee Involvement. Underlying principle embedded in all these is recognition of the need to satisfy all stakeholders. These Management Principles developed in Japan are gaining wide currency all over the world, and practiced by industry, business and governments because of the enormous power of these concepts that can make any organization highly successful.

Techniques/Key terms in Japanese Management

(Continuous Improvement)

Just-In-Time (JIT)
Techniques/ Key terms In Japanese Management

Lean Production

(Single Minute Exchange Of Die)

Total Quality Management (TQM)

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1. Continuous Improvement (Kaizen)
The Japanese refer to continuous improvement as kaizen (pronounced ky'zen). To the Japanese, kaizen means to strive relentlessly to increase quality, efficiency and effectiveness in all areas of life including personal, family, social, and work. The kaizen method of continuous incremental improvements is an originally Japanese management concept for incremental (gradual, continuous) change (improvement). K. is actually a way of life philosophy, assuming that every aspect of our life deserves to be constantly improved. The Kaizen philosophy lies behind many Japanese management concepts such as Total Quality Control, Quality Control Circles, small group activities, labor relations. Key elements of Kaizen are quality, effort, involvement of all employees, willingness to change, and communication. Japanese companies distinguish between innovation (radical) and Kaizen (continuous). K. means literally: change (Kai) to become good (zen). The foundation of the Kaizen method consists of 5 founding elements: 1. teamwork, 2. personal discipline, 3. improved morale, 4. quality circles, and 5. Suggestions for improvement. Out of this foundation three key factors in K. arise: - Elimination of waste (Muda) and inefficiency - the Kaizen 5S framework for good housekeeping 1. Seiri – tidiness 2. Seiton – orderliness 3. Seiso – cleanliness 4. Seikestsu – standardized clean-up 5. Shitsuke – discipline - Standardization. The continuous improvement approach is illustrated by the ShewhartDeming plan-do-check or study-action (PDCA or PDSA) cycle that appears in Figure: 7
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Figure: 7

PDCA Statistical Tool Some of the statistical tools used in the continuous improvement cycle include: 1. Pareto diagrams, 2. Fishbone, or cause and effect diagrams, 3. Histograms, 4. Other graphs and charts, e.g., pie charts, 5. Control charts and 6. Scatter diagrams and related techniques. For e.g. Regression and Correlation Analysis. Companies that implement Kaizen strategy:  Reliance Industries Limited, Patalganga. (Textile, Petroleum)  Tata Power, All Plants (Electricity Generation and Distribution)  Mahindra and Mahindra Ltd, Igatpuri, Nashik, Nagpur. (Farm Equipment)  Cummins India Ltd, Pune. (Heavy Engineering, Diesel Engines, Generators)  Electronica Machine Tools Ltd, Pune. (Electronic Machine Tools)  ABC NISSAN Motor Co. Ltd (Automotive Industry)  MEPZA, Mauritius (Service Industry, Special Economic Zone)
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2. Lean Production/ Manufacturing
Lean is about doing more with less: less time, inventory, space, labor, and money. "Lean manufacturing", shorthand for a commitment to eliminating waste, simplifying procedures and speeding up production. The idea is to pull inventory through based on customer demand. Lean Manufacturing (also known as the Toyota Production System) is, in its most basic form, the systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over-processing, defective units – and the implementation of the concepts of continuous flow and customer pull. Five areas drive lean manufacturing/production:      Cost Quality Delivery Safety, and Morale

Lean Production Overview
    


Non-value added activities or waste are eliminated through continuous improvement efforts Focus on continuous improvement of processes - rather than results - of the entire value chain The lean manufacturing mindset: concept, way of thinking - not techniques; culture - not the latest management tool Continuous product flow is achieved through physical rearrangement and system structure & control mechanisms Single-piece flow / small lot production: achieved through equipment set up time reduction; attention to machine maintenance; and orderly, clean work place Pull reduction / Just-in-time inventory control

Strategy of Lean Production  Lean customer relationships  Lean product development  Lean manufacturing/order fulfillment
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 Lean supply chain Diagram highlighting Components of Lean Production

Companies using Lean Production/ Manufacturing:      Toyota Production System Canon Production System IBM Epson Pentel

3. Total Quality Management (TQM)
TQM, also known as Total Quality Control (TQC), is a management tool for improving total performance. TQC means organized Kaizen activities involving everyone in a company – managers and workers – in a totally systemic and integrated effort toward improving performance at every level. It is to lead to increased customer
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satisfaction through satisfying such corporate cross-functional goals as quality, cost, scheduling, manpower development, and new product development. According to the Japan Industrial Standards, "implementing quality control effectively necessitates the cooperation of all people in the company, including top management, managers, supervisors, and workers in all areas of corporate activities such as market research and development, product planning, design, preparation for production, purchasing, vendor management, manufacturing, inspection, sales and after-sale services, as well as financial control, personnel administration, and training & education. Quality control carried out in this manner is called company-wide quality control or total quality control (TQC)." Quality control in Japan deals with quality of people. It is the fundamental concept of the Kaizen-style TQC. Building quality into its people brings a company a half-way towards producing quality products. Seven Main Features of the TQC Movement in Japan 1. Company-wide TQC, involving all employees, organization, hardware, and software. 2. Education and Training, emphasis for top management, middle management and workers. 3. Quality control (QC) circle activities by small groups of volunteers 4. TQC audits 5. Application of statistical methods 6. Constant revision and upgrading of standards 7. Nation-wide TQC promotion Areas Targeted by TQM in Japan  Product Quality Improvement  Quality assurance  New product development  Improvements in the workplace  Cost reduction  Safety  Productivity improvement
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 Management      Education and training Organizational/ systems development Cross-functional management Policy deployment Quality deployment

 Supply, Production, and Selling Chain      Supply management Meeting production quotas Meeting delivery schedules Marketing Sales

4. SMED (Single Minute Exchange of Die)
literally, changing a die on a forming or stamping machine in a minute or less; broadly, the ability to perform any setup activity in a minute or less of machine or process downtime; the key to doing this is frequently the capability to convert internal setup time to external setup time; variations on SMED include:  Single-digit setup – performing a setup activity in a single-digit number of minutes, i.e. fewer than ten.  One touch exchange of die (OTED) – literally, changing a die with one physical motion such as pushing a button; broadly, an extremely simple procedure for performing a setup activity.

5. 5S framework, 3M
5. a). Japanese 5S Framework 5 S is a very popular concept in Japanese companies. 5S'' is a tool with Japanese roots, focused on fostering and sustaining high quality house keeping. ''5S'' is the beginning of a productive life for everyone, and is fundamental to
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productivity improvement. '5S' is a time tested and proven approach (in fact a stepping stone) to achieving World Class status. The 1st S stands for Seiri (sorting), 2nd S Seiton (arranging), 3rd S Seiso (cleaning), 4th S Seiketsu (maintaining) and the 5th S Shitsuke (self discipline). 1. Seiri: tidiness, organization. Refers to the practice of sorting through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to fewer hazards and less clutter to interfere with productive work. 2. Seiton: orderliness. Focuses on the need for an orderly workplace. Tools, equipment, and materials must be systematically arranged for the easiest and most efficient access. There must be a place for everything, and everything must be in its place. 3. Seiso: cleanliness. Indicate the need to keep the workplace clean as well as neat. Cleaning in Japanese companies is a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its place. 4. Seiketsu: standards. Allows for control and consistency. Basic housekeeping standards apply everywhere in the facility. Everyone knows exactly what his or her responsibilities are. House keeping duties are part of regular work routines. 5. Shitsuke: sustaining discipline. Refers to maintaining standards and keeping the facility in safe and efficient order day after day, year after year.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


5. b). 3M’s of Japanese In Japanese Language 3M is associated with reducing wastage and lowering of load due to inconsistency. The terminology commonly used by the Japanese has the following meaning: Muda (waste) – activities and results to be eliminated; within manufacturing, categories of waste, according to Shigeo Shingo, include: 1) Overproduction – excess production and early production 2) Waiting – waste time spent at the machine; delays 3) Transportation – waste involved in the movement and transportation of units 4) Processing – waste in processing; poor process design 5) Inventory – waste in taking inventory 6) Motion – actions of people or machinery that do not add value to the product 7) Defective units – production of an item that is scrapped or required rework Mura – inconsistency Muri – unreasonablness

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


6. Just-In-Time (JIT)
Just-In-Time is a process broadly aimed at increasing value-added and eliminating waste; a production scheduling and inventory control technique that calls for any item needed at a production operation - whether raw material, finished item, or anything in between, to be produced and available precisely when needed, neither a moment earlier nor a moment later. JIT was designed at Toyota specifically to cut waste in production. JIT can be developed by considering the main elements that are attributed to successful JIT systems. These elements can be separated into two broad categories including attitude and practice. While the elements of attitude can be adopted by any organization, the elements of practice are mainly applicable to companies involved in repetitive manufacturing. From an accounting viewpoint, these are companies that would normally use the process cost accumulation method.

A JIT system requires an attitude that places emphasis on the following: 1. Cooperation with a value chain perspective 2. Respect for people at all levels 3. Quality at the source 4. Simplification or just enough resources 5. Continuous improvement and 6. A long term perspective. A JIT system also incorporates the following practices: 1. Just-in-time purchasing, 2. Focused factories, 3. Cellular manufacturing, 4. Just-in-time production, 5. Just-in-time distribution, 6. Simplified accounting and 7. Process oriented performance measurements.
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Components of JIT
           

Production Leveling Pull System Kamban (label or signboard) system Good Housekeeping Small Lot Production Setup Time Reduction Total Preventive Maintenance (TPM) Total Quality Control (TQC) JIT Purchasing Line Balancing Flexible Manufacturing Small-group Activities (SGA)

These above mentioned techniques of Japanese management are the strong pillars of one or many Japanese companies in Japan and worldwie. There are some other terminologies of Japanese management which is to be taken into account. 1. Jidoka - Jidoka (autonomation) is a framework of quality assurance. It recognizes the disruption and costs caused by defective units flowing on to subsequent processes and thus provides for an autonomous status to defect control. This means that every worker is vigilant about quality and has an autonomous power to stop the whole assembly line if necessary to prevent a defective unit flowing into good production. It supports JIT by never allowing a defective unit to go on to a subsequent process. 2. Shojinka - continually optimizing the number of workers in a work center to meet the type and volume of demand imposed on the work center; shojinka requires workers trained in multiple disciplines; work center layout, such as Ushaped or circular, that supports a variable number of workers performing the tasks in the layout; the capability to vary the manufacturing process as appropriate to fit the demand profile.
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3. Soikufu - Soikufu (creative thinking) is a framework for harnessing the creative abilities of employees and recognition of the fact that no one appreciates a task better than the person who performs it day in day out. Through implementations such as Quality Circles and Suggestion Schemes, employees are encouraged to continuously think about improvement. Soikufu, thus, is an integral part of the overall Kaizen framework. 4. Seiban - The name of a Japanese management practice taken from the Japanese words "sei", which means manufacturing, and "ban", which means number. A Seiban number is assigned to all parts, materials, and purchase orders associated with a particular customer job, or with a project, or anything else. This enables a manufacturer to track everything related with a particular product, project, or customer. It also facilitates setting aside inventory for specific projects or priorities. 5. Poka-Yoke – a defect warning system.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Difference between Japanese Management and American Management

ST RAT EGIES Motto: Am erican Management GOALS "It's not the big that eat the small... it's the fast that eat the slow." Venturing unlimited The Core Advantage Venture strategies Revolution: radical Innovation, changing the name of the game Making Things Better
Technology-focused solutions to enhance product design and manufacturability

Motto: Japanese Management "O snail, climb Mount Fuji with no hurry." Improvement unlimited Continuous improvement Evolution: Kaizen, group technology, good condition and proper placement of equipment, smaller manufacturing units, and quality circles
Statistical control of processes, zero-defects, and vendor quality programs

Quality management: statistical control of processes, zero-defects, and vendor quality programs
Job enlargement programs Value analysis Standardizing products Lean manufacturing, just-in-time manufacturing Continuous reduction of lead and setup times Equipment maintenance Supervisory training Broadening of worker's jobs

Making Things Cheaper

Automation and robotics

Reducing bureaucracy Making Things Faster Institutionalizing innovation
Flexible manufacturing systems (FMS)

Innovation-adept culture Fast company Opportunity-driven business development Being More Agile* Enterprise-wide business process management (EBPM)
Cross-functional communication improvements

Considering agility as an integral part of quality and delivery capability; a by-product of action programs to improve these areas

New Product Development

Moving ideas sequentially (vertically) through functional areas. Establishment of crossfunctional innovation teams by leading companies.

Development by cross-functional product development teams; integration of all ideas in the early design stages, thus reducing time and cost, and optimizing the overall manufacturing process

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Japan is now at a crossroads between holding fast to the benefits of long-established structures without changing and be left behind by the rest of the world, or building a society based on sustainable market principles to achieve growth and development. Since the end of the Second World War, Japan has experienced the reconstruction era, the period of high economic growth, and the bubble economy and its collapse, and it is now facing the issue of structural reform toward a new socioeconomic system. It is the role of corporate executives to identify new value and provide customers with better products and better services through their management techniques, as well as to aim at highly efficient management. From the 1990s, however, Japanese corporate management has bounced back and forth between the Japanese style and the global standard, which might more appropriately be called the American way. Amid the ongoing globalization, response to global environmental problems, the declining birthrate and the aging of society, and diverse other changes in the times and our surroundings, the time has come to pursue a new way of Japanese management as the ideal form for Japanese corporations, which constitute the core of our market-oriented economy and society. The major strength of the Japanese approach is the recognition of human creativity. As Taiichi Ohno, who pioneered the Toyota Production System said: "Manpower is something that is beyond measurement. Capabilities can be extended indefinitely when everybody begins to think". Cost aware and creative employees, just-in-time production, autonomous quality assurance and an in-built flexibility in the process layout and employee skills, are dominant features of the Japanese management approach which creates a cost aware and quality conscious culture across the organization. It has a flexible outlook, encourages improvement and invests in training multi-skilled employees. Japanese management practitioners are arguably better equipped and well suited to face the open-ended challenges of rapidly changing technology and increasing global competition.

Institute of Management and Entrepreneurship Development Bharati Vidyapeeth University Pune


Bibliography/ References

1) 2) 3) 4) 5) 6) 7) 8) 9) Articles from Harvard Business Review The Toyota way(the company that invented lean production)

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