Profit-Making IE

“Profit-making Industrial Engineering.” That’s how Taiichi Ohno described the Toyota Production System.

“Profit-making”? What’s so special about this? In the end, we are all seeking profit?

The Japanese word Taiichi Ohno used here is “Moukeru,” which has a different meaning. Those meanings are;

Prepared.

Developing future leaders.

Taiichi Ohno called the Toyota Production System “Profit-making Industrial Engineering.”

What is the difference between traditional IE and the Toyota system? In brief, Toyota-style IE is mōkeru or profit-making IE, known as MIE. Unless IE results in cost reductions and profit increases, I think it is meaningless.

Ohno, Taiichi. Toyota Production System: Beyond Large-Scale Production (p. 71).

If this is simply “Profit-making,” there are several other Japanese words he could have used. “Shueki 【収益】” is a definite candidate. “Eiri 【営利】” is another. “Rieki wo ageru 【利益を上げる】” is another candidate. So why did Ohno choose this word?

“Moukeru 【儲ける】” has many nuances.

One popular explanation is as follows. They look at the symbol in two parts: Shin 【信】, which means trust, and Sya 【者】, which means the person. Based on this combination, some claim that it means having believers. By having those who believe in your business, you make a profit. Although this is a wonderful story, it is not correct.

The true meaning of this symbol comes from the front section 【イ】, which means people. The latter part is 【諸】, which means various or many.

1️⃣ To be prepared

Based on the above combinations, this symbol represents people who prepare various things. (One meaning is to store many things, but that is irrelevant in this case.🤣) “Moukeru” means to establish various preparations for changes.

In the Toyota Production System, this means we should be prepared for an economic downturn. Even if sales drop, we should remain profitable. When this idea comes up, some people make cynical comments like “You are saying that we need to be profitable even if the volume is zero.” No, that is not the point. The point is to lower the breakeven point. If your business has a lower breakeven point, competitors will suffer more from the downturn. Instead of investing for maximum demand, design the system around the Heijunka volume and handle volume increases through Kaizen. By keeping fixed costs low, we can better weather the downturn than our competitors.

2️⃣ Develop future leaders.

This preparation includes human resources. This “Moukeru” means finding someone who can succeed you. Therefore, it means having a prince. Today, we will say “Kowo Moukeru,” which means “to have a child.”

The interesting story about the Toyota Production System is that it was called the “Ohno method.” Then, before these methods got famous, they began training future leaders under Ohno at the Genba. If this were a typical company, it would not be clear that they would train future leaders. The “Ohno method” would remain his unique approach. There would be no one under him to train as a future successor. Instead of recognizing the “Ohno method” as the competitive advantage, they would say that the ‘machine shop’ is the advantage and let the method fade away over time.

This is strange, but ‘being prepared’ and ‘developing future leaders’ together meant ‘profit-making.’ It's not about shortcuts and short-term profits, but about the long term.