The Future on a Schedule: Toyota’s Profit Management

Presented By:

Tom Jackson

Session Abstract:

In this session, Dr. Tom Jackson explains how to use value stream accounts and strategy deployment to reduce variability in your profit streams through profit management, Toyota’s financial management system. Profit management marries hoshin kanri with target costing and kaizen costing. Target costing is cost management for new products and services; kaizen costing is the continuous improvement of cost for existing products and services. Before and after the launch of a new product or service, profit management controls cost “at the source”.

In the same way that total quality empowers your employees to make real-time decisions about fixing quality problems, profit management empowers employees to make real-time decisions about controlling cost. Profit management is essentially a self-auditing system of financial and quality control. In time it may replace its predecessor, management accounting, which is approaching its 100th birthday. Whether you hail from the automotive, aerospace, food service or healthcare industries, profit management is an essential complement to lean production.

Learning Objectives:

In this session you will learn…

  • how leading companies such as Toyota use TQM principles to think about financial management.
  • about the dual role of “stop the line” in managing cost as well as quality.
  • how cost targets are deployed through hoshin kanri.
  • how cost targets are audited through leader standard work.

About the Facilitator:

Tom Jackson is the former CEO of Productivity, Inc. and Productivity Press, a member of the Ford Lean Advisory Group and author of the Shingo Prize-winning Hoshin Kanri for the Lean Enterprise (Productivity Press, 2006). He holds a PhD in business economics from the Indiana University School of Business and has been a student of lean enterprise since 1988, when he copyedited Hiroyuki Hirano’s JIT Factory Revolution and Yasuhiro Monden’s Japanese Management Accounting. Looking at pictures of Japanese factories and reading about how differently the Japanese count their money, he became so enthusiastic about lean that he left his comfortable position as a professor of business at the University of Vermont to start a lean consulting company¾in Malaysia. Tom’s manufacturing clients have included Siam Cement, Ford Motor Company, Nissan, Xerox, Lockheed Martin, Emerson, Tenneco, Adidas, Whirlpool and the Ohio State University. Tom began his lean healthcare journey in 2003 in Alaska, where he regularly flew in and out of the back of beyond to help improve healthcare services for native American communities. In 2007, Tom founded the Rona Consulting Group with Mike Rona. Tom is currently Clinical Associate Professor of the University of Washington’s School of Public Health. His healthcare clients include Sutter Health, Zuckerburg San Francisco General Hospital and the University of California San Francisco, among many others. His latest books include Productivity Press’s Lean Tools for Healthcare Series, of which Mapping Clinical Value Streams is his favorite.