Toyota and the Ringi-sho Process

Over on the website the Lean Global Network submits the following question:

“What is Ringi? The Lean Edge has discussed Nemawashi, but could you clarify the practice of Ringi? How is this linked to A3? How widespread is its use within Toyota? Should that practice be adopted by lean thinkers?”

In all honestly I was not very excited to answer this question. I think a huge problem with the Lean movement in general is falling prey to Japanese buzzwords (Ringi, Nemawashi, Houshin Kanri, A3, Hansei, Yokoten, Yamazumi, Kamishiai, Muda, Kanban, Heijunka, etc.), and hyping a concept or practice. Buzzwords fail to create a practical improvement methodology in terms that all organizations can embrace. That shortcoming in my opinion turns off large segments of the population and ultimately fails to get down to first principles for improvement as I have stressed repeatedly in the past. So in that spirit I would always ask first “what problem or set of problems is the organization facing and what are the causes”? Naively starting off with a question like “is this process something Lean Thinkers should embrace” is a non starter for me. The difference may be subtle but I fear that it unfortunately plays a hand in creating a culture of “adhering to fads” rather than “thinking and improving”.

So that I do not entirely rain on the parade however I decided instead to ask four current and retired Toyota management personnel their opinions on the topic. The two Japanese individuals asked to remain anonymous. The two Americans I asked gave their consent to be quoted and recognized. In case readers are really interested in how things like Ringi-sho, Nemawashi, and A3’s, etc. tie together in Toyota the responses below should provide a better sense.

For starters a retired Japanese manager was quick to point out that as I thought that the Ringi-sho process (which we’ll define better below) is not really a Toyota concept in terms of origin. The term is common to many Japanese companies and is especially prevalent in the governmental bureaucracies.  So if you want to be as efficient as the paperwork process in Japanese governmental agencies then the Ringi-sho process may suit your needs! All kidding aside I just want to reinforce that no one should adopt a process because another group practices it…simply copying is not a legitimate form of problem solving or improving. It takes effort to get down to basics, first principles, and concrete goals in order to actually improve in any discipline. This retired manager also warned about treating Toyota elements such as this one as a “fashion show” and something to wrap yourself up it for appearance sake. Without critical thinking skills, etc. a ringi-sho process may not net you much return for your time investment he cautioned.

Recently retired Toyota engineering and tooling manager Mike Johnson can help interested parties with a definition and sense of how it was used inside of Toyota from his experiences. I suspect that Mike has written more of these documents than the rest of the LE site combined.

The term Ringi-sho is basically the Toyota term for a combination appropriation & project approval document.  The purpose of the document is to provide the project purpose, goal, benefit, financial justification ( payback ), cost per unit impact, and schedule for implementation to management for approval before proceeding.  Ringis as we called them were required for all capital items or projects costing more than $5000.  They could also be required for projects that changed policy or major procedure.  Levels of approval depended on the total project cost and could go up to the President.  General managers could approve projects up to $50,000.  Projects had to be in the annual plan or if unplanned substituted with a project already in the annual plan.In terms of the ringi process, it was a very effective tool especially for capital projects and equipment procurement.  The most elaborate ones were written for model change & capacity increase projects.  They gave upper management all the information both technical and financial to make good decisions about projects as well as the means to track actual project spending versus plan. They also required the sign-off of associated departments which prevented a lot of problem issues. For example project ringis affecting emissions had to be signed off by the environmental section, anything affecting safety had to have safety section sign off etc. The annual capital plan was based on ringi submission and approval timing and reported each month all the way up from each shop to the president. In later years the ringi tracking system even prevented over spending by preventing purchase order processing when the ringi limit ( ringi amount + 10% ) was reached.

I also asked retired Toyota Vice President Russ Scaffede on his experiences with the system when he worked with Fujio Cho at Toyota Georgetown in the late 1980’s for some broader perspective. His response was insightful, honest, and humorous in some regards:

At least while I was at Toyota we used the Ringi-sho only as a form of getting a process or proposal reviewed by all the appropriate departments well before it was to be brought up and discussed at our President Mr. Cho’s staff meeting. We would write the A3 and identify all parties who needed to sign off or return with questions. We had no limit back then as far as money for the proposal however if it was going to cost money this did need to be addressed on the Ringi-sho. It was not used as permission or approval only a notification process to all who would be in the permission or approval meeting and identification all questions were answered ahead of the meeting. To me it was a written from of Nemawashi or consensus building in the organizations.  However being typical Westerners we often lost the items sent out to other departments back then so I remember we had to have them sent out repeatedly via our staff assistants and returned each time to resend so we knew where they were. In the early days all too often the ringi’s went out and never came back before the review time ended.

I truly liked the system however I think most Americans did not think it was that valuable. If done correctly it was very beneficial to get the questions answered and amounts discussed before the main meeting and save much time with those departments that had no questions and just signed off. In the past I would have either not considered getting their support until the big meeting or I would need to set up meetings with every department leaders, many of which did not have any questions and were going to give full support anyway.

The final person I asked was still in upper management at Toyota and he also asked to stay anonymous. In his view the system is useful within limits. It is certainly no magic elixir for companies to copy and then hope to emulate Toyota’s success. He emphasized that the Ringi-sho process is simply that – a process for communicating and project or policy type approval especially for matters that crossed organizational boundary lines. When pressed what the real value of the system was other than “communication” he emphasized personnel development. In particular he emphasized improving staff communication skills, problems solving skills, and other some forms of leadership.