| Can the lean supply chain get too lean? That's a hot | | | | these techniques in a lean environment. You have to |
| topic now that Toyota is suffering safety and quality | | | | be able to collect and interpret data correctly to do |
| woes possibly related to its supply chain. While the | | | | things right, e.g., know what your inventory level |
| lean manufacturing pioneer grapples with the fallout | | | | needs to be to provide a desired service level or |
| and recovery from "unintended acceleration" and | | | | know when a result is outside a control limit. When |
| other issues, high-tech manufacturers would do well | | | | you don't pay attention to the details - or you don't |
| to view the troubles at Toyota as a cautionary tale | | | | know what you're doing with the details - things can |
| in lean supply chain practices. Regardless of the final | | | | (and will) go wrong. |
| verdict on Toyota, the supply chain can, indeed, get | | | | Reinterpret inventory. Lean manufacturers view |
| too lean. As a veteran of several lean | | | | inventory as a necessary evil. Why? Because as a |
| implementations in the high-tech industry, I've got a | | | | manufacturing discipline, lean encourages the |
| few suggestions for staying on the right side of the | | | | elimination of waste, which includes inventory. |
| lean line. | | | | Meanwhile, Wall Street takes a negative view of |
| Don't dismiss Toyota. People who say that Toyota | | | | inventory when it comes to corporate valuation. To |
| has messed up because of lean are not clear about | | | | Wall Street, inventory is a non-performing or |
| Toyota's history or the real root cause of their | | | | under-performing asset. |
| problems. Toyota has a great supply chain as well as | | | | But manufacturers can't just take inventory out of |
| the original and best, long-term implementation of | | | | the supply chain altogether without exposing |
| lean manufacturing. In fact, the Toyota Production | | | | themselves to many risks. Look at Texas |
| System that the company started to develop in the | | | | Instruments, for example. It cut back so much in the |
| 1950s is the original blueprint for lean manufacturing. | | | | downturn that a lot of their parts are factory |
| The real root cause of their problems: the change of | | | | allocated, and Texas Instruments can't make enough, |
| strategy in the 1990s to become the largest | | | | fast enough to meet overall demand. The company |
| automotive manufacturer in the world. Bottom line, | | | | cut everything back, from manufacturing facilities to |
| they tried to grow too fast! | | | | staff, and it took all of its inventory out of the |
| More humbling for U.S. automakers, Toyota drew | | | | supply chain. |
| heavily on the works of W. Edwards Deming, an | | | | Another way manufacturers reduce inventory levels |
| American. After Toyota successfully implemented | | | | is to implement vendor-managed inventory programs. |
| lean, the U.S. automakers adopted lean manufacturing. | | | | Dell is a good historic example, having earned raves |
| Bottom line, whatever lessons Toyota may learn | | | | about its supply chain as best in class with a negative |
| from any supply chain errors will certainly be worth | | | | cash-to-cash cycle and a configure-to-order model |
| studying. | | | | that had a two hour lead time from order to build |
| Pay attention to the details. Many lean | | | | complete. Basically, Dell pushed its entire inventory |
| implementations are done sub-optimally. They may | | | | into warehouses that sat next to its factories. Until |
| look good because of the emphasis on the visible. | | | | it's actually delivered to the Dell factory, the |
| People pay attention to establishing visual controls, | | | | inventory is owned by the vendors. Dell has |
| fool-proofing assembly lines, laying out factory floors | | | | immediate access to inventory, but the vendors |
| and "walking the Gemba" - all of which are great. You | | | | carry the burden when Dell was probably best suited |
| have to do those things. But that's only half the job. | | | | from a cost of capital perspective to actually own |
| The other half of the job involves the unseen. | | | | the inventory. |
| Utilizing analytics and statistics to understand, control | | | | Unless you have a perfect supply chain, you're going |
| and then improve processes. Whether it's measuring | | | | to need inventory to help manage supply and |
| variability of output from a CNC machine or | | | | demand. And for most high-tech manufacturers, that |
| understanding demand patterns, you have to be | | | | means walking a fine line to get a lean supply chain. |
| reasonably sophisticated in the way that you apply | | | | |