This week I read a news story describing a trio of new offerings from IT product and service juggernaut CA. The products help govern the methods that IT departments use to deliver services to their constituents (anything from fixing a frozen screen to installing new software), and how those constituents order those services.
So I was a little confused when I read the quote attributed to CA’s vice president of marketing, Kathy Shoop: “We’re taking a page out of the book of lean manufacturing. This process has been used for years in manufacturing and Toyota is its best-known practitioner.”
What? Maybe the writer reported the quote out of context. Either way, it’s a long leap from creating more efficiency on the factory floor to delivering IT provisioning software. And it underscores the point: It pays to be wary of lean look-alikes. Lean is in vogue right now, and people will gladly hang their hat on that hook. Popularity always attracts attention, and some hangers-on.
Stick to the core principles, and stay focused on value chain in your manufacturing process.
How are your lean efforts bearing up under the pressure of the recession?
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Why Didn’t Lean Save Toyota?
The grandfather of lean has fallen, and it can’t get up under its own weight.
This week, the venerable carmaker announced that it would incur an $8.6 billion loss in its recently closed fiscal year. It has slashed production and is struggling to clear bloated inventories.
How did Toyota — progenitor of the Just-in-Time concept — get so far off its own tracks? I think the answer is simple: It abandoned one of the core tenets of JIT. It does not produce automobiles based on customer sales. It produces them based on dealer orders. That simple twist adds a layer of unpredictability into the value chain. Dealers place orders based on what they think they will sell, after all, but the people with the final say are those like you and me who drive the cars off the lot. Or, in recent times, leave them sitting on said lots.
Just in Time, in its purest form, is a thing of beauty. Read Toyota’s description of it on their website — it sounds like poetry in motion. But the marketplace doesn’t care for poetry. We don’t want to place our order and watch the gears — perfectly meshed though they may be — smoothly churn out our product. We want our hamburgers pre-cooked and waiting for us under a heat lamp. In that world, Just-in-Time has no place. It’s a museum piece, a relic of a more patient era.
In this world of pre-heated hamburgers and mass customization, Toyota and its counterparts are forced to produce not to actual demand, but to expected demand. And that, my friends, not only belies JIT; it creates a huge amount of risk.
This, in part, explains why Toyota lost more money than GM did in the first three months of 2009. (Yes, you read that right.) Toyota was on cruise control, enjoying market popularity and sales increases. It produced to that scenario. When that scenario disappeared almost overnight, Toyota was left holding the grenade. GM, meanwhile, had trouble on its hands even before the recessionary sales plunge, so it had a head start on adjusting production and costs downward (although some would say it still failed to do either adequately).
A New York Times article illustrates just how far from its roots Toyota strayed:
Oh, how the mighty have fallen. Who would have predicted that a Toyota executive would ever sum up the company’s philosophy as, “You make them, we will sell them”?
His description of the revised mantra – “if we can sell them, then you will make them” – is a return to the company’s core belief in Just in Time. But even that won’t work as neatly as it does on paper, or on a corporate website. Someone needs to tell Toyota that you can’t go home again. JIT is dead.