Toyota Fails Due to Earthquake…Not Lean

I will warn you this post is going to be a rant.  One that I can’t help and I feel is necessary to do.

A couple of days ago I found an article on Bnet.  The title was “Lean Production: Another Casualty of the Japanese Quake?“.  The title caught my eye so I decided to give it a read.  I would have been better off not reading it.

The first part of the article had some good information and was informative, but then came this paragraph:

When complex systems break down, they really break down

The old model of having a plentiful supply of components on hand was costly and inefficient, but it had one big plus: It made it easier to recover quickly from an economic downturn or a natural disaster that disrupted business. In a nutshell, it was durable, if dumb.

My jaw hit the floor from shock when the author mentions that traditional supply chains are costly and inefficient but defends them again because it is quicker to recover from a natural disaster.  What!?  Can you imagine sitting in executive meeting that goes like this:

Person 1: “Are supply chain is really working well.  The costs are down and we are delivering great value to the consumer.”

Person 2: “But what happens if a once in a lifetime 9.0 earthquake causes a tsunami that knocks the earth slightly off its axis?  Will our supply chain work then?”

Person 1: “Great point.  We should triple our inventory immediately.”

The lean model allows for an automaker like Toyota to produce better cars and adjust more nimbly to fluctuations in demand. But because it’s accordingly more complex and required more brain- and communications power to operate correctly, it’s vulnerable to the type of catastrophic breakdown we’re now witnessing in Japan.

Where is he even hearing about lean?  In all my time studying and learning about lean, I have never heard that lean is complex and requires significant communication power to operate.  If someone understands that lean at the basic level is about eliminating waste then how can you draw the conclusion that it is more complex?  At the fundamental lean is the complete opposite of this statement.  It is about making things simpler, including communication.

There is more but I just can’t stomach it.  Plus, a lot of it has already been said very well by some of my counter parts in the comment section of the article.  I really appreciate Steve Martin from theThinkShack kicking off the comments.  Also, Mark Graban from the LeanBlog, David Kasprzak from MyFlexiblePencil, and Joe Dager from Busines901.

I encourage you to go and read their very thoughtful insights and your own if you would like.  I didn’t have an account and as upset as I was I didn’t want to take the time to sign up for the free account to post something and then never use the account again.  So, I decided to use my blog as my forum for this one and didn’t want to rehash some of the great insights from others.

I appreciate your patience on this rant and now I will return your to your regularly scheduled program.

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Posted on March 18, 2011, in Customer Focus, Development, Manufacturing, Misc, Waste and tagged , , , , , , , . Bookmark the permalink. 7 Comments.

  1. Thanks for the mention. However, I disagree somewhat with your statement. Though I do not believe the Toyota officials had the conversation that you mentioned I do believe as a result of being a Toyota(Lean) Company that they are prepared to handle this crisis. With short supply chains, reduced inventory levels and not heavily invested in capital equipment, they will be better organized to move production to another facility.

    However, Toyota first steps are their commitment and respect for their people and that is why production is halted in other plants. However, I would be surprised if during this time that production lines are being re-configured to handle the production lost at other plants. Only a Lean Company could do this.

  2. Like Joe…thanks for the mention.
    I took the time to register an account because I thought it was necessary to ‘call out’ the writer on his massive insensitivity to the people of Japan.

    As Jamie Flinchbaugh [aka Mark Graban ;-)] pointed out in his recent comment at the BNET article, “This article is either written from astounding ignorance, or just a choice to capture two popular topics (lean, and the quake) in an effort to be sensationalistic.”

    Our opinions and the words we choose to share, matter. They have value. It’s encouraging to read the responses to the article and note how each contained information to support what was being said.

    Bashing someone’s viewpoint is the easy way out and never leads to anything better. When we drop our $.02 into the bucket of public debate and allow for discussion…we enable ourselves to learn something new.

  3. Intestingly enough, even though I’m in healthcare, a nurse told me she thought this was a situation where Just in Time would hurt Toyota. I acknowledged that could possibly be true, but looking at it from a lean perspective, here are other angles, which more or less elaborate on some of what Joe touched on above:

    • They don’t have millions of dollars of inventory lying around that they cannot use because the plant is shut down, therefore they are in a better cash position than if they had a big stockpile of inventory
    • If that inventory had been there it may be contaminated and a lot of work would need to be done to decontaminate it.
    • Their suppliers will now be able to send that inventory to other factories, if they want, to produce those products there. If they had shipped a lot of it to Japan at the factories near the accident site, they’d have to send it to another plant, resulting in shipping the materials twice – very expensive – and they’d also have to decontaminate it. Chance are that Toyota won’t be able to produce at that plant for quite a long time – undeterminable at this point.

  4. Let’s think about how much more inventory would be ruined if they were not JIT. Did you see the photos of the cars waiting for export? They were stacked like dominoes after the waves came through. An inventory glut would have made those expensive losses worse.

    There will always be people who think inventory is a good idea since it covers up problems. I doubt that there could be enough inventory to cover up this current crisis.

  5. I suppose the right answer would have been to sit on all that inventory tying up cash and making the product more expensive for the once in a life time event. The disaster in Japan is not a typical issue to prepare for. I think something like this would even effect large inventories.

    Good post. This is frequent misconception about Lean.

    • Great discussion on this topic and article. There has been a lot of great thoughts and opinions on this. Normally, I can keep a cooler head when I read an article like this one, but I couldn’t this time. I think it goes to the disrespect of the Japanese people that got me upset.

      I really like how each and every comment on my blog and on the page of the article gave good facts and understanding of why Lean probably is going to help Toyota recover from this tragedy.

  6. Reblogged this on Kisah Mayang.

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