Toyota Is Tightening Its Belt – NYTimes.com
The words don't appear directly in the article, but the RSS blurb for this article (repeated in many “Tweets” and RSS feed news sources) reads:
“Toyota Tightens Its Belt – In a soft market for autos, the carmaker's already-lean manufacturing practices are not good enough…”
Of course Toyota is tightening its belt — revenue is down 46%. But, then again, the “kaizen” or continuous improvement mindset means that Toyota should ALWAYS be further tightening its belt (and by “belt” we mean financial, not a “green” or “black” belt).
What does the Times mean by “already-lean” as an adjective? That sounds like a destination, that Toyota is “already Lean.” To a Lean thinker, that doesn't make any sense in the sense that Lean is a methodology and you're not done unless you don't have any waste left and there's no more additional value that can be provided to the customer. Toyota's not perfectly Lean (they aren't perfect) so of course there's more room for belt tightening.
And who would think Lean (the Toyota Production System and the Toyota Way, actually) would be enough to keep Toyota profitable in these economic conditions? Of course Toyota overexpanded and misread the market… who didn't? Toyota's Chairman has said they have been “lacking” and they are “sorry” (more on this Monday, come back to the blog).
People often make a mistake when they think or say they have “implemented Lean,” again implying a finish line that they already crossed. So they stop “doing Lean”? Ridiculous. Lean, done properly, is a mindset and a way of thinking that you can't easily give up. You can stop using a tool (like 5S), but then you weren't really committed to Lean if it was all about the tools, was it?
A VP of Nursing said to me the other day that she needs to make sure everyone in her organization understands that Lean is never “done.” When projects and special teams are done working on Lean initiatives, the managers and nurses need to have ownership of the methods and improvement processes. Lean is never ending. Too often, hospitals and other organizations think of improvement as a project with an end point. This VP gets it and understands the message she needs to communicate.
Back to the Times, they say:
But with the global automobile industry mired in its worst crisis in a quarter-century, even Toyota's latest standards for lean manufacturing are not good enough.
Of course today's standards aren't good enough. Today's standards are NEVER good enough if you believe in kaizen and live it like Toyota does. That doesn't mean Toyota was lacking… they just still have room to get better (which is no surprise to a student of Toyota and Lean).
Instead of just dumping workers as a variable (and expendable) cost, Toyota workers are busy finding ways to save money:
Among the ideas: instead of spending $16,000 to hire a contractor to build a conveyor belt for delivering bins of parts to a section of the assembly line, workers designed and installed their own, for $700. The search for savings is under way at every Toyota plant, large and small, in every part of the world.
Is the search for savings under way in hospitals, large and small, in every part of the world? It should be? Are hospitals tapping into the creativity of their highly skilled and motivated workforces?
Another thing interesting to me in the article is a move toward what sounds like a true customer “pull system.” We often associate Lean and Toyota with “kanban” or pull systems for ordering materials from suppliers and moving parts in the factory. Toyota has built cars to forecasts (dealer orders) that don't reflect true customer demand (people have argued that Toyota was closer to real pull than the Detroit Three). But they aren't there yet.
When I worked at Dell almost ten years ago, GM executives came and visited Dell and people dreamed of true build-to-order cars delivered in under a week. Nobody has gotten close (and they've given up trying, it seems).
Tackling the crisis has forced the company's sales and manufacturing operations to cooperate far more than they have in the past.
Previously, plants operated under the sales force's direction of “you make them, we will sell them,” said Real C. Tanguay, president of Toyota Motor Manufacturing Canada. Now the philosophy is, “if we can sell them, then you will make them,” he said.
That's a great illustration of “push” vs. “pull” production. Push says “build it, then sell it.” Toyota is trying to move toward real pull – building only to real sales and customer demand.
Ironically, Dell has moved away from 100% build-to-order and now builds many computers based on forecasts for retail stores. Go figure.
Another statement I really like:
“We can't fix the market. We can't cry about how bad things are,” said Mr. Tanguay, who is a managing officer of the parent auto company and one of its highest-ranking non-Japanese executives. “We can take control of what we can fix.”
Take control of what you can fix. Perfect. We need more of that thinking in healthcare and to help fix our global economy, in general.
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A most interesting assessment and illustration of push and pull. When you are considering “taking control of what you can fix,” a company can not focus only internally at its operations. It must also consider it’s market and it’s cash flows, for what can be fixed and what, such as the sudden recession, that can not. There may be no irony in Dell’s changing business model. If you look more closely you may find that Dell is gaining a larger profit in selling in batches to the stores vice selling one-offs to individual customers. If you want to take control, I believe you need to follow the money, not just the product.
Interesting points, Tonyj.
I’m further hi-jacking my own Toyota post with Dell talk… back in the day, Dell’s huge orders (for corporate customers and the military) were all build to order and all configurable to a lot size of 1 even if they shipped 500 at a time.
So it wasn’t batch production then. It sounds like it’s more so now, with big batches of identical computers being shipped from abroad.
I think those unfamiliar with lean think that great gains are made in the initial move from a traditional operation to one that is lean, but after that, only small incremental gains are possible. In financial terms, a company may think they can save $2 millon in operational costs Year 1, but once all the “low-hanging” fruit has been picked, Year 2 will only yield $500K in cost savings, Year 3 will be $250K, etc.
I personally don’t believe this but some have this mindset. Lean is almost viewed as one-time program or project that delivers results and then it’s done.
Nice insight Mark…all great points.
I have bought a new Toyota 2009 because I was told by my Toyota salesmen that is was the safest car and it is not safe. I wanted to use it to drive with my family, instead the $22,000.00 Camry is standing in my driveway since the recall and now it’s sales are suspended because the car I bought could kill me and other people. Toyota does not know how to fix the problem. I have called the dealer and wanted to return it but they said they would give me $ 16,000.00 for a new car with only a 1500 miles driven . I feel cheated, I feel lied to and very angry that Toyota has violated my trust as well as participated in false advertising, breach of implied warranty and negligence and although they have sold me a lemon they don’t want to return my money. The car is impossible to stop because the neutral gear position is difficult to find because it requires the driver to move the shifter both laterally and vertically; and when the throttle is in the open position it requires a brake pedal force of 150 pounds to stop the vehicle, five times more than the 30 pounds required when the vehicle is operating normally. In addition, Toyota vehicles are not equipped with a brake-to-idle failsafe, which many other manufacturers already incorporate in their designs. This failsafe brings the engine to idle when both the throttle is in the open position at the same time the brake pedal is being depressed.