Don’t Forget about Marketing!

Guest Post by Jason Stokes

As practitioners of lean, we’re all in favor of using this powerful methodology to ensure we efficiently manufacture to customer demand while increasing throughput at the lowest possible cost.

However, often times it seems we only focus on half the equation – filling the demand that customers have for our products.

Toyota Stagnant

Toyota is often heralded as the champion of lean, through books like The Toyota Way, through Taiichi Ohno’s teachings, and through countless blog posts that reference the stellar way they do business. Why, then, if Toyota is a manufacturer we all need to emulate, are they not gaining business over their competition, especially Honda?

Toyota’s sales were down 8.3% by volume YTD in August. Honda’s sales were up 1.2%. These numbers would probably look worse in dollar amounts, given the product mix.

Honda Delivers

What gives? Simple.  Toyota is a great manufacturer. Honda makes vehicles people want to buy.

Honda manufactures 9 models for sale in the United States:

5 Trucks / SUVs / Vans:

1. Odyssey – Minivan
2. Pilot – Large SUV
3. CR-V – Small SUV
4. Element – Medium SUV
5. Ridgeline – Pickup Truck

4 Cars:

1. Fit – Ultracompact Car
2. Civic – Compact Car
3. Accord – Mid Size Car
4. S2000 – Sport Convertible

Toyota needs to Rationalize?

Toyota, by comparison, manufactures 18 models:

9 Trucks / SUVs / Vans:

1. Sienna – Minivan
2. RAV4 – Small SUV
3. FJ Cruiser – Small SUV
4. 4Runner – Medium SUV
5. Highlander – Medium SUV
6. Land Cruiser – Large SUV
7. Sequioa – Large SUV
8. Tacoma – Pickup Truck
9. Tundra – Pickup Truck

9 Cars:

1. Yaris – Compact Car
2. Corolla – Compact Car
3. Camry – Mid Size Car
4. Avalon – Full Size Car
5. Prius – Hybrid
6. Scion xA – no idea
7. Scion xB – no idea
8. Scion tC – Compact Car
9. Scion xD – no idea

Toyota’s car sales were down 8.3%, while their truck sales were down 16.8%.

Toyota, by virtue of its product mix, has set itself behind its primary competitor. It has added considerable complexity to the mix, by adding the Scion line of cars and a bevy of virtually indistinguishable models, along with a large stable of trucks and SUVs, which, as we are all well aware, have been hammered by high gas prices.

The Prius

Toyota’s one bright spot, the Prius, actually sold less through August 2008 than through August 2007. With customers clamoring for this vehicle, what happened? Toyota wasn’t able to predict demand well enough and was caught without the ability to sell its cars.

Keeping it Simple

Honda, on the other hand, has kept its product offerings simple, and has been able to capitalize on the small car push by selling 10% more Accords and Civics this year than last.

By marketing cars that people want to purchase instead of a stable of SUVS with no demand, Honda has kept sales flowing in the face of a tough market.

Customer is King

We must always remember that while we can be the leanest manufacturer in the world, it matters little if no one wants to buy our product.

Takt time = Net Available Time / Customer Demand

What happens to takt time if customer demand is zero?

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