If Lean Is So Great, Why Is Toyota Struggling?

long time reader, first time to comment but this article has really resonated with me as I too am frustrated. but like you said, now is the time to step up and make things happen. thanks for reminding me. I needed it.

Toyota lost its way when it decided that it wanted to be the biggest car company and overtake GM. At that point it made the anti-Lean management decision to abandon the demand flow principles that make Lean work.

Also, how many salary/professional employees in a normal business contribute more than 7x to 10x of their compensation like direct labor employees. Why businesses choose to shed direct employees and Lean practitioners in tough times when they are actually the most productive at generating cash flow astounds me. I realize that they feel that it may be easier to replace them but why would you want to get rid of someone who made you $10 dollars for every dollar you spent. Why not consider the folks who only give you break even return or worse, are a negative asset.

I know not alot about the happenings in Toyota, but totally agree with your higher level response Ron. No amount of Lean or other process engineering can replace the fact you have a dimished orderbook. I thought the whole idea was ‘pull’ – if customers aren’t creating pull, you’ve just got a lot of overhead haven’t you? Rise up Black Belts, get excited, go after the overhead reduction projects.

I like your comment Tim. You have to remember that Lean and Six Sigma tools help us to manage and organize production. For sales of products takes responsibility different methods and departments. And of course costomers have to need our product. In current situation we may be compared to well trained athlete who is ready for long-distance races but he can’t make his best because competition were canceled.

The Lean overture helps the companies to improve the entire process and causes people to reduce waste, to make things happen, to change ancestral thinking and, especially, to think positive and to be creative.
Ink rivers had explained the reason of the actual worldwide crisis. Toyota or others companies would be overwhelmed anyway because of the expense (adapt indirect labour and, especially, fixed costs to the current turnover is not simply). Probabily, the lean companies where processes are lean, fixed costs under control and wastes reduced, the crisis will fly away sooner.
The last but not the least: I think is useful to rediscuss the paste choices who caused the race to produce in low cost country just for to increase the contribution margin (containing the cost). In this way many companies stopped to organizes process, to plan improvement, to study methods and times, and any others.

Well put Ron. I fully agree with you. When there is no transaction in the market no amount of Lean / Sig Sigma can help. I believe Toyota and other practitioners of Lean or Six Sigma will bounce back learning from the mistakes. And that is what Lean is all about learning and growing. Those that can withstand the present downturn will survive and go to the next level if they learn lessons from it.

Thank you for this interesting article Ron. I’ve been reading about lean and applying its principles over the last couple of years, and I am impressed with the manufacturing philosophy. Thinking practically, the areas where I have seen the most benefit in applying lean manufacturing principles to different industries are those processes that are high-volume, resource intensive and repetitive. Lean focuses on eliminating manufacturing waste, with the objective of making manufacturers more responsive to customer demand and market changes, if there is a demand and a market. Therefore, what is happening for Toyota now dose not surprise me, as the demand had significantly decreased. However, we need to keep in mind that lean companies are ‘ideally’ highly efficient and they can offer lower prices which can help grow sales even in the current global recession. Lean is more about thriving as it is about surviving. Lean can significantly improve sales and help in this recession.
With sales sagging, companies have turned to the cost side of their budgets to find savings and keep profits up. Ford, for example, recently reported a head-scratching $2.3 billion net profit. But this has been attributed mainly to the lower interest payments and $1.8 billion in cost-cutting that included less spending on manufacturing, engineering and advertising. The question that should receive great deal of attention now is: (Is this what all companies should do? Does this help to get out of the recession? I think the answer is NO.
I fully agree with you Ron, in this time companies should focus on continuous improvement attacking waste, improving manufacturing methods and reducing lead times. Tough times end. Be honest about now and hopeful about then.

Hi Ron you are most likely right with the W recovery or the double dip as some call it, we are seeing in industrial manufacture some slight growth in the 4th qtr 2009 but we are also anticipating only around 7 or 8% for 2010.
Of course the impact of a double dip could certainly have additional impact so its even more prudent now to focus on waste and variation reduction projects. Improve productivity without adding additional labour or variable cost is key.
Still now even in this current economic climate I see businesses with past due shipments, the supply pipeline has been emptied and capacity has been removed or mothballed.
Customers are leaving it to the last moment to commit to orders then are expediting them with suppliers as fast as possible, much of the time inside the product lead-time.
This in itself is putting huge strain on the supply base & internal processes, which were developed for only a small majority of the volume, are now being swamped by the increase.
Ideal time to map, improve and reduce those process lead-times otherwise we will drown in the workload even in a recession…..