Nissan Production Way: A better alternative to TPS?

I have visited three former Nissan Diesel factories in Japan this week (today owned by a foreign multinational). The plants operate according to the Nissan Diesel Production System—a bi-product of the famous Nissan Production Way (NPW). I believe that too many lean-lovers focus too heavily on the Toyota Production System (TPS), and know too little about alternative approaches to world-class production. The core idea of an XPS is exactly that the X should be tailored to the company, and not be a TPS-blueprint. In fact, the NPW might provide a better benchmark for many Western manufacturers than the TPS…

The objective of the TPS and the NPW is the same: To achieve world-class operations by reducing waste and reducing lead times. But the approaches have some important differences: Where Toyota focuses on extreme simplicity and Kanban-based supply, Nissan focuses on synchronization and technology-driven supply. Nissan relies far more on the use of IT and detailed planning of just-in-time deliveries. In the factories you see a synchronized dance of parts and products flowing seamlessly on the shop-floor and merging with the moving assembly line. Low-tech AGVs are the blood flow in the factory, bringing perfectly prepared parts directly to where they are needed and when they are needed (the when is the trick). Yes, Toyota achieves the same with Kanban, but the approach is still different.

The two “never-endings”

The purpose of the Nissan Production Way is to achieve “boundless synchronization with customers and boundless exposure of problems and innovation”. Thus there are two key aspects: Synchronization and Kaizen—known as the “two never-endings”. Ideal synchronization means “produce when consume”. In reality this means supply when consume, with a never-ending quest to make just-in-time supply perfect. The overall objective is to reduce lead-times.

The two never-endings of the Nissan Production Way (Source: NPW Kaizen Consulting)

Synchronization is the result of a holistic plan and discipline to the plan. At the factories I visited, it is not just the product on the line that moves; the carts with kitted parts to be assembled and the operator often move together with the line. There is no inventory at the line other than the needed parts and simple two-bin systems of small standard components. Standardization is the heart beat of the system–the routine that makes it all possible. Kaizen is the brain that constantly improve the standard and the workplace. The methods for Kaizen are QC-circles, Nissan’s 4-boxes method and the classical PDCA. Andon makes sure the system is fit; the andon cord is used many times every day to eliminate any hick-ups that might occur. The result is a world-class production system.

The Nissan Production Way: A proven XPS (Source: Nissan)

Go Gemba!

NPW was introduced in 1994. The basis of the NPW is Gemba Kanri: Shop-floor management performed by experienced and trained Foremen. The factory is managed based on the real situation on shop-floor compared to the plan. There are two situations: Normal and abnormal production. For any abnormal activities that deviates from the plan or the standard, the improvement loop is started right on the shop-floor; after analysis of current operations the wanted operation is designed, tested and verified, before becoming the new standard. Employees are trained in the new standard and it becomes the normal situation. Daily meeting structures, the Andon system and Foremen’s daily work keep this ecosystem alive and thriving.

Nissan’s XPS deserves attention from more Western companies. Compared to Toyota, the synchronization philosophy of Nissan is more geared towards lower-volume, higher-variety and more high-tech manufacturing. Exactly the type of characteristics that western economies claim to have. Be warned though; even if the system is simple in concept, it requires a level of discipline that is rare to find outside the Japanese society. However, Western plants like Nissan in Sunderland has proven many times that world-class effectiveness is achievable with an approach like NPW. Is it possible? Yes it is!

36 thoughts on “Nissan Production Way: A better alternative to TPS?

  1. Comment in the LinkedIn Group “Lean Six Sigma”
    Robert G. Elliott II, Ph.D. Business Process Improvement Consultant at Performance Excellence Consulting

    Is it REALLY different, or just as you said – is it TPS tailored towards their environment/situation?

    • You’re absolutely right. At the end of the day, both Toyota and Nissan are applying the same general concepts, but have different styles of doing so. it’s like listening to the same song played by 2 different singers – although it has the same lyrics and rhythm, it sounds noticeably different.

  2. Comment in the LinkedIn Group “Lean Six SIgma Q&A”
    by Krishna Kantheti, Manager Resource Acquisition Atum IT

    insightful, thanks

  3. Comment in the LinkedIn Group “The Toyota Way” on 24-8-2013
    by Ted Bradshaw, Specialist in Training and Development at Toyota Motor Manufacturing Texas

    I read the article. Actually, it sounds closer to TPS than you might think. The thing about the Toyota Production System is that it is constantly changing and evolving and is much more than what is read in books. At the Texas plant we utilize kitting as well as 21 on site suppliers. This leads to the ability to produce 48 different build types in assembly.

  4. Awesome read.. I recently worked with an ex-Nissan manager who did time in Sunderland and at Nissan Japan. He words reflect this article to the letter.

  5. Thank you Lean Work Up! I’m glad you liked it. Let’s hope more people will be able to benchmark lean companies outside Toyota also. Nissan, for example, does incredible things.

  6. Comment in the LinkedIn Group “The Toyota Way”
    by Jeff Liker, Liker Lean Advisors

    The statement that the Nissan system is a better alternative to TPS is a silly statement. By and large Nissan copies Toyota. If you look at the underlying philosophy they are talking about the same thing–continuous improvement through surfacing problems and solving them one by one. Specific surface manifestations like how much automation you use in a particular area and whether or not you use a cart are simply countermeasures being tried at different places and times. Toyota has been all over the board in the use of automation and IT. They have kept a very consistent philosophy over decades of solving problems at the gemba and striving for simplicity. They highly value people development and kaizen and normally will move away from technology, like a lot of automation, when they determine it reduces flexibility and reduces kaizen. Nissan does not seem to have as strong and consistent a philosophy of developing people and their system these days is probably influenced by the fact that Renault, a French company, owns them. Nissan sees to be more tool focused, which I agree makes them an easier fit for American companies, in that it is more similar to what we do. It is not necessarily the best way as we depend far too much on tools to solve our problems and far too little of gray matter and persistence to do what it takes to solve the problem and achieve the target.

  7. Thank you for reading and commenting my post about the Nissan Production Way.
    Indeed, the Nissan Production Way is Nissan’s variant of the TPS. The point I made in the blog post was just that Nissan’s adoption of the TPS might fit Western companies better than the original TPS template. It was not a statement, but raised as a question.
    In the US and EU we usually say that we want to manufacture low-volume, high-value and high-tech products; in that regard, the NPW claims more suitable then the TPS, which is better suited for high volumes and stable demand. Toyota is great, but others are also great. Nissan is definitely one of them.

  8. Comment in the LinkedIn Group “Lean Six Sigma”

    Cannot agree more on the basic thought of tailoring the system. Copy-pasting TPS doesn’t guarantee intended results. Having worked extensively on GM’s version of TPS – Global Manufacturing System(GMS) and Honda’s TPM I can share that the thought of tailoring system is indeed in place at other manufacturers. For example the andon system, designed for high volume manufacturing was modified at GM to suit the lower volume and reduce the capital costs.
    I think its a learning curve which every organization goes through and with learning over a time systems improve. That’s why Standardization and continuous improvement were two of the five pillars of GMS.

  9. I once had a heated discussion with a French colleague on which country had the best education system, UK or France. I proposed the acid test was Gross Domestic Product (GDP) per head of population. When we checked the figures (albeit a few years ago) the result was surprisingly close, suggesting the results were more or less the same. OK, we didn’t do a statistical test.

    My point is, for Nissan cf Toyota how would you measure which system produces better results – EBITDA and/or ROCE ? Or do they also reflect Sales and Marketing activities?
    Perhaps then we can have a definitive statement on who has the best Production System?
    Looking forward to your comments!

    • Thanks for your comment Mark (and compliments on your webpage). Your point is well taken. My reply would be as follows: Could it be that the French education system is better for France, and the UK one better for the UK? Similarly; TPS works best for Toyota, NPW works best for Nissan. The point in the article is that I hypothesise that most Western companies have more in common with Nissan than Toyota. Hence, when they develop their own XPSs they should not look blindly only to Toyota. I’m afraid that measuring finite effects on financial performance (EBITDA, ROI, etc) of lean (and education systems) is practically impossible. There are simply too many confounding factors.

  10. Comment in the LinkedIn Group “Lean Thinking”

    I have had the opportunity to live with this kind of lean operational work, I believe TPM has more marketing, Nissan is working this way from decades conducting staged cultural and thought changes with the same operating personnel. Renault learned and work operationally with a joint venture, Renault is applying these operations.

  11. Comment in the LinkedIn Group “Lean Six Sigma”

    Can’t add much to what has already been said. Lean, for me, after being deeply dipped in the Six Sigma bath, was an eye-opener. I love both, and they have (I hope) moved me on a path towards “Universal Quality Theory”, similar to Unified Field Theory, in that it is an evolution and we may never actually get there. I am delighted to see the “rainbow” of applications of quality and leadership models that emerge as a result of “wise practitioners” knowing that tailoring and customization is key so long as you don’t lose sight of the underlying principles and goals. We must remain open to new ideas and new approaches… “adopt”, “adapt”, “abandon”. Thanks for sharing Torbjørn’s article, Oana!

  12. Comment in the LinkedIn Group “Lean Six Sigma”

    The Toyota leaders I have worked with have always seen Nissan as a thorn in their side because, in many ways, they challenge and beat TPS with the Nissan more consistent use TPS challenging them at their own game. The same plays with Hitachi and Panasonic. The free market chess game is healthy and continues.

  13. Comment in the LinkedIn Group “Lean Six Sigma”

    The most remarkable thing is the fact that lean production system was first envisioned and applied in the auto industry by the founder of Toyota – Eiji Toyoda and his production genius Taiichi Ohno. Although western companies would have probably kept at least some improvements to themselves to get a competitive edge, Toyota did the opposite and became an evangelist of the new system and preached it to the world starting with the Japanese companies – both competitors and suppliers from the auto industry. Now after more than 50 years since the birth of the the lean system, we have different versions of it – TPS, NPS and others. The fact that now Toyota and Nissan are benchmarking themselves to each other in order to be competitive, just goes to prove that although having common roots and beliefs, competition will always motivate companies to become unique and better in what they provide to the customer.

  14. Comment in the LinkedIn Group “The Toyota Way”
    By Michael Bremer, Director at Chicagoland Lean Enterprise Consortium

    Nissan did a major turnaround when Carlos Ghosn became the President & COO in the late 90s. Anyone interested in Policy Deployment should read “Turnaround” by David McGee. It does an excellent job of describing effective actions by a leadership team. Ghosn was one of a handful of CEOs that truly did make a meaningful contribution to turning around a global organization. They did push effective decision making down to much lower levels within the organization in a very short period of time. I have created a one-page summary of their original plan. If anyone wants a copy…find my e-mail info and send me a note….I’ll send it to you.

    Nissan and Toyota have always been strong competitors and anything Toyota does, Nissan as a cultural norm would rather do it in a different way or do something similar but call it something different. Whereas Honda and Hyundai more freely copied TPS practices. Ford and GM used to act the same way in the 1950s and 60s when they were the big dogs in the auto industry.

    As Dr.Liker suggests the underlying philosophies of continuous improvement programs are pretty universal. Most organizations adopt “programs” like Lean (TPS), Six Sigma and years ago TQM and they do get better. But very few organizations actually transform and become highly effective at improving. Toyota and Honda (which is much more secretive) are two companies that have become highly effective at improving for a very long period of time. Nissan had a major burst in improvement effectiveness in the early 2000s perhaps to 2005 or 06. And then their rate of improvement slowed down.

    But they largely use the same tools. Most of these tools predate Toyota. They have been around for 100 years, since the early days of the industrial revolution. Toyota and a handful of other organizations (Autoliv, OC Tanner, Cogent Power to name a few) are amazing because of the depth and breadth of their improvement activities. They use the same tools but I think (my opinion) is the leadership teams manage differently. There is a high degree of humility at the leadership level for every company I know that is highly effective at improving.

    There are a handful of other differences based on our research…but that is off topic for this dialog.

    Two other companies that are pursuing highly automated solutions in the auto industry are BMW and Volvo. They have accomplished some significant improvements following this pathway….if that will be as durable and effective as the pathway carved out by Toyota and emulated by many….only time will tell.

    • Agree. How long and how wide we can consistently sustain application of these principles will determine a business’ competitiveness.

  15. Great article. Where can I learn more? I have read many books about Lean Manufacturing and I reference TPS often but I’m always interested in new ideas that fit our manufacturing practices better. Can you recommend any books about NPW?

  16. No other company is exactly like Toyota, or Nissan, or any other company. The principles underlying TPS apply anywhere, but each company must do its own thinking on how to apply them. Exact copying without thinking is not good because it does not start people thinking through problems on their own, which is a major purpose of any system based on the principles.

    Every company named X should develop its own XPS. They may steal ideas shamelessly, but practices seen elsewhere are but a trigger for the thinking they need to do during their own implementation.

    • This is THE point that should rise to the top of this thread – Toyota, Nissan, and others are using the PRINCIPLES of the TPS and applying their own PRACTICES. Copying practices will not work because cultures are different, outputs are different, environments are different, etc. But taking the principles and figuring out how to apply your own practices based on these principles in your own situation is the key. That’s what Nissan has done.

  17. Hi there. There are hundreds of books about Toyota PS at Amazon, there are none about Nissan Production Way (to the best of my knowlegde). To learn about Nissan’s approach of synchronization I suggest crawling the web or visiting a Nissan facility. To learn more about other XPSs and tailoring of lean in general I suggest you “Follow this blog” in your lower right corner (and recieve not more than 2-4 emails a month).

    • Hello Torbjørn,

      Was this offer of your article made to just Doc, or anyone reading your blog?

      Thanks for your comment Doc. Couldn’t agree more; and that is exactly the point I made in the paper Exploring the phenomenon of company-specific Production Systems: One-best-way or own-best-way? published in the International Journal of Production Research, Vol 51. (2012), Issue 4, pp. 1084-1097 (let me know if you want a copy)

      Thank You!

      Bryon Brandt, P.E.
      Arlington Heights, Illinois USA

  18. Comment in the LinkedIn Group “Lean Thinking”

    As the original article indicates each company will and arguably should differ in it’s production / operational excellence systems. Mazda is another company that essentially uses synchronised push of a supply system (since the late 70s). Unipart is another. What seems to be important is not so much which is the best ( there are many good and best ways out there ), but what is appropriate, and coherent, based on the nature of the company’s work / mission. The judgement and skill that develops the specific system is key. In an implementation context this is a combination of the external experience applied to the company and the internal iteration as it learns to define its system. Without leaving the field wide open I suspect the core TQM and Lwan principles apply as a good starting point. Scheduling systems are probably the key structural difference.

  19. Comment in the LinkedIn Group “Lean Thinking”

    Hello,I agree it is very interesting….but I have a hard time to find the huge difference to the TPS. The core fundamentals are absolutely the same and I think, it is natural, that different companies develop different solutions according to there individual needs and business models.
    Therefore I am always teaching the fundamental principles and not the existing solutions of so called WCM companies. Furthermore I am a strong believer, that the effective combination of TOC, TPS and SixSigma gets you better benefits sooner. The real challenge is to design the right mix.

    Dirk

  20. Comment in the LinkedIn Group “The Toyota Way”
    by Jeff Liker, Liker Lean Advisors

    I would take back my statement suggesting Nissan does not have deep thinking people and their own way. I have studied them in the past and the similarities were much greater then the differences with Toyota. I agree that a lot of the concepts pred-ate Toyota and Toyota borrowed many of them. I also observed that Nissan got away from its roots in the 1990s and was also made some bad business decisions. They were struggling on the verge of bankruptcy for many years before Renault and Ghosn saved them. What Ghosn did was western management–close plants, switch to lower cost suppliers,and develop more visually appealing products—things a traditional Japanese company would have a hard time doing. He also was smart enough to take a small group to Nissan and let Nissan run operations and product development as they are really good at it. He then let Nissan develop and make some Renault badged small cars and Renault learned a lot about operational excellence from Nissan and Nissan learned how to be run more like a western business. When it comes to supplier relationships I prefer the Toyota partnership model but the traditional purchasing model can work. There are a number of aspects of the way Toyota integrates value streams and is relentless about waste elimination through continuous improvement and also believes strongly in respect for people from customers to society to outside partners and inside team members that align with my view of an excellent enterprise. But businesses that do not do these things can make money–seem to usually have a rockier road over 50 years with reorgs, plant closures, sweeping org changes with people losing jobs, etc. And certainly there are excellent companies that seem to be on a strong long term trend like P&G and Amazon–interestingly both have been working for a while to implement TPS hiring people with Toyota backgrounds.

  21. These articles are great for people like myself, an automotive quality engineer with lots of TPS, TQM, SIX SIGMA knowledge, but without a job. I have an interview with Nissan tommorrow!

  22. Toyota overtook Nissan in the 1960s in volume / turnover terms, although Nissan has always been bolder in terms of selling / manufacturing / designing overseas. I believe that whilst Toyota has been more conservative in this respect, it has also held true to TPS ideals whilst Nissan allowed genba-kanri (core of NPW) to drift at times. I suspect that being a family business has something to do with Toyota’s success in this regard.

  23. Pingback: Lean Manufacturing | JBD

  24. If you think Nissan is lean, or world class, you don’t know Nissan. They have not even figured out FIFO at their assy plants, and choose horrible vendors based on Corporate Japan relationships. Internal communication is confused, and new product launches do not seem to involve project managment best practices.

    • Thanks for your comment! Not sure which Nissan plant/division you refer to? My experience comes from the previous Nissan Diesel plants in Japan.

    • Dear Ezio, your question is well taken and a usual one. There are many who have studied this. Perhaps this book can provide you some answers: “Toyota Under Fire: Lessons for Turning Crisis into Opportunity” by Jeffrey K. Liker and Timothy N. Ogden.

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