Toyota and the Curse of Lean

Has Toyota’s legendary adherence to lean manufacturing principles increased the company’s vulnerability to the kind of devastating quality problems that, unimaginably, have caused the world’s number-one car maker to recall millions of vehicles and tarnished its once pristine brand image?

It’s a natural question to ask, given that, for many years, the vaunted Toyota Production System — a precursor to modern lean principles — was cited as Toyota’s not-so-secret weapon in its largely successful battle with Detroit to dominate the global car market. But could the same guiding principles that helped Toyota win the manufacturing battle also have played a role in bringing about what must be the company’s most significant challenge to date?

Recently I spent some time discussing the issue with Kelly Thomas, senior vice president for manufacturing at supply chain management software provider JDA. Thomas, who spent 10 years at General Motors’ former EDS unit before getting into the supply chain software business, thinks that too much lean in some parts of Toyota’s business and too little in others contributed to the company’s current problems.

To be sure, lean isn’t the cause of Toyota’s current problems. The company has publicly traced the cause of the recall to too rapid growth, which, Toyota says, caused it to lose focus on quality.

But, Thomas says, Toyota’s slavish adherence to lean principles — particularly in the sourcing and supplier management domain — may have made it much harder for the company to recover from its current mess. Toyota, he says, has been a leading proponent of value engineering, a lean-related principle that calls for the reuse of parts across designs, particularly those that don’t necessarily add value in the eyes of customers.

That led Toyota to use essentially the same part designs — including the faulty accelerator assemblies — in many of its vehicles. When the parts proved defective, the impact rippled across Toyota’s product line — and installed base of vehicles — with devastating effects.

Toyota, of course, hasn’t been the only car maker to fall victim to this problem. German manufacturer Audi/Volkswagen had similar problems back in 2003.

At the same time, lean principles have led Toyota to significantly reduce the number of suppliers with which it works and the number of dealers in its network. Again, in the face of a devastating design problem and a massive recall, Toyota’s lean supplier network has been overwhelmed.

And, Thomas says, the company has too few dealers to fix all the problems quickly enough. With about 8 million cars on recall, each of the company’s 1,100 dealers would need to service, on average 7,300 cars each, on top of their regular service workloads. Not something that’s likely to happen without a lot of scheduling headaches and customer dissatisfaction.

At the same time, he says, Toyota failed to apply lean principles in areas where it might have helped the company cope with or even avoid its current difficulties. Take the company’s design and engineering processes, for example. While workers in Toyota’s plants have been trained to be on the lookout for production bottlenecks and to report them immediately for corrective action, that type of behavior hasn’t been encouraged in the design and engineering domain.

“There, bringing problems to your boss is not nearly as prevalent as it is in the plant,” Thomas says. “It’s just not part of the culture.”

As a result, Toyota hasn’t been able or willing to spot and fix design problems, even when, by all accounts, they’ve been evident in the field for a long time.

Ironically, U.S. car makers — specifically General Motors — seem to be doing a better job these days of sniffing out engineering and design issues before they become big problems.

Unfortunately, Thomas says, it’s not at all clear that other car makers will learn enough from Toyota’s mistakes. Most are following in Toyota’s lean-inspired footsteps, pursuing value engineering and attempting to slash dealer networks.