Growers Apply the ‘Toyota Way’ to Cannabis Farms

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh. 

It’s no surprise Michigan’s marijuana industry is undergoing rapid process improvements.

For one, low prices have all but decimated margins. Cost-cutting measures are paramount in a tough business.

Secondly, this is the home of automakers and automation.

In truth, the roots of the continuous improvement approach — which is not only being embraced by the burgeoning marijuana industry but a staple in health care and many other industries — were born in Japan.

Kaizen is core to lean manufacturing and was first implemented at Toyota (NYSE: TM), which historically manufactures the highest-quality vehicles with the fewest defects with fewer workers in smaller factories than its competitors. Kaizen itself was created by American engineer W. Edwards Deming, who was assigned by the U.S. Army and General Douglas MacArthur to aid in the rebuilding of the Japanese economy following World War II.

Kaizen is the compound of two Japanese words that translate to “good change.” Today, kaizen means continuous improvement through the use of airtight processes and principles. Each member of a workflow is responsible for improvements, and those improvements are studied, tested and implemented to lower costs and eliminate waste.

Kaizen and continuous improvement operate in seven cyclical steps:

1. Involve employees
2. Identify problems
3. Create a solution
4. Test the solution
5. Analyze the results
6. Standardize the solution
7. Repeat the cycle.

It’s as complicated as designing a factory floor to as simple as minimizing a worker’s movement on that floor to improve efficiency. Everyone in a company is accountable to those principles under the “Toyota Way.”

The principles of kaizen came to the U.S. in 1984 — an era when American automobiles were known for poor quality as compared to their Japanese competitors — when General Motors and Toyota opened a joint venture production plant called New United Motor Manufacturing Inc. (NUMMI) in Fremont, Calif.

GM got access to the “Toyota Way” of lean manufacturing to better build small cars and Toyota got its first manufacturing presence in North America, freeing it of import tariffs.

Under Toyota’s management, consensus decision-making was implemented and many of the hierarchical structures of GM were eliminated — all factory employees were given the same uniforms, ate at the same cafeteria and special parking spots were outmoded.

It’s arguable whether the joint venture was ever successful, as both companies abandoned the plant by 2010 — it’s coincidentally now Tesla’s primary production plant.

But the theory of kaizen heavily influenced the creation of Six Sigma, another process improvement strategy invented in 1986 by Motorola engineer Bill Smith.

Today, kaizen and Six Sigma are largely interchanged and used by nearly every corporation across the planet from hospitals to accounting firms — and now marijuana.