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Supply Chain News: Japanese Reputation for Manufacturing Quality Being Shaken – Along with Aspects of the Its Famous Lean Practices


The Legendary Genba at the Center of the Serious Questions Japanese Manufacturers Face

Feb. 13, 2018
SCDigest Editorial Staff

For decades, after embracing such approaches at the Toyota Production System (TPS) and the teachings of US quality guru W. Edwards Deming years before US manufacturers took notice, quality was the hallmark of Japanese manufactured goods.

But the Japanese reputation for quality is being shaken to its core. For example, Japan's Kobe Steel, caught in a major scandal, now says it created fake quality-certification documents for hundreds of thousands of products it shipped to more than 500 customers.

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Can its manufacturers again find a way to improve quality while lowering costs? If not, the erosion of the Japanese manufacturing will likely accelerate.

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And Kobe Steel is hardly the only Japanese manufacturer to be caught up in quality or fraud issues. Mitsubishi Materials Corp. and Subaru have also admitted in recent months to manipulating quality inspection data. Nissan Motors disclosed in September that its Japanese factories let unqualified employees perform final quality inspections on some cars - and had been doing so for years.

"The scandals threaten to accelerate an erosion of Japan's global market share for manufactured goods, handing main rival China further momentum in its march toward becoming the world's largest economy," the Wall Street Journal reported last week. "They also call into question one of the world's most influential theories of management and manufacturing."

That refers to TPS, often now simply called Lean, and the practice of kaizen, with its relentless focus on continuous improvement.

Perhaps surprisingly, the point of contention may actually be the factory floor workers known as the genba – in two somewhat contradictory ways.

First, the genba are key to the practice of TPS, with the famous example of individual workers at Toyota given the authority to stop the assembly line whenever they spot a serious quality issue.

Such line level workers have historically been well paid and enjoy guaranteed jobs for life in return for dedication to their employers.

"The problem today is that many Japanese companies can no longer afford the luxury of guaranteed lifetime employment for craftsmen on factory floors," the Wall Street Journal says.

Especially since the financial crisis in 2008-09, Japanese manufacturers have been replacing permanent genba workers with temporary staff. Panasonic, for example, says that less than one-third of genba workers at its appliance division are now permanent employees.

"We're now paying the price for reducing new [permanent] hires," adds Takuya Shimamura, CEO of Asahi Glass Co.

On the other side of the equation, however is this: delegating so much authority to line workers has left Japanese manufactures exposed to fraud and corner-cutting, while giving executives room to shirk responsibility.

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"The genba has been broken," Hideaki Kubori, a Tokyo lawyer experienced in handling corporate scandals, told the Wall Street Journal, adding that the inability of companies to fully control the genba has resulted in a "kind of crisis" for Japan's manufacturing sector.

An internal Kobe Steel report completed in October found that line workers were overworked as the company tried to maintain profitability, and executives were out of touch with the factory floor.

"There are occasions when we are forced to prioritize a quick shipment over quality," a Kobe Steel factory worker said.

In fact, Kobe Steel itself said in a written statement that pressure from management to achieve profits and meet production deadlines was one of the root causes of misconduct.

Some company managers were aware of the quality report falsification as far back as 2009.

Of course, the entire Japanese economy is highly dependent on exports, though over the last 20 years China has taken a significant amount of its share, and more recently South Korea as well.

All this puts the Japanese manufacturing sector in quite a quandary. The country's manufacturing output basically been flat since the mid-1990s, while output in the US has risen steadily and it has soared in China.

Can its manufacturers again find a way to improve quality while lowering costs? If not, the erosion of the Japanese manufacturing will likely accelerate.

"Corporate Japan is wondering if its prestige has suffered an irreparable blow," the Nikkei Asian Review wrote in late 2017.

What do you you think of these Japanese quality issues? Is too much Lean the issue - or the salvation? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback

Lynne Baxter

Dr, University of York
Posted on: Feb, 13 2018
The trouble stems from moving away from Deming ideals and incorporating US / UK approaches to labour conditions. Also the original works on TPS and JIT were good PR documents rather than empirical studies.  

Clifford Ransom

President, Ransom Research, Inc.
Posted on: Feb, 14 2018
Please let me offer several topics for discussion:

1.  Why does this article, like the Wall Street Journal piece last week, assume that all Japanese compannies are lean?  The reality is that the percentage of world-class lean practitioners in Japan is minsicule, the same condition that pertains in Europe and North America.  There are very few Toyotas, Nippon Densos, Hondas, or Hitachi Electrics.  Aftr 28 years at my investment practice, centered as it is on "finding the next Danaher," I can identify perhaps five enterprises which I call, "Super-Achievers," one of which, Fortive, is a Danaher spin-out.

2.  Didn't the provision of life-time employment in Japan began to disappear decades ago?

3.  What evidence substantiates the conclusion that "...delegating so much authority to line workers has left Japanese manufacture(r)s [correction is mine] exposed to fraud and corner-cutting...?"

4.  What lean company executive does not LIVE in the gemba?  If executives were distant, by definition, they were not lean.

5.  None of the companies cited in the press so far have been Lean exemplars (without getting into the reality that Toyota does not think of itself as "Lean," since that description was created inside the original MIT Study Group that predated the late-1980s publication of "The Machine that Changed The World").

6.  What's the risk that the press has created another hullabaloo without substance?  Certainly, I hear a lot of jealousy in these complaints, particularly from companies which have been left behind in our real Lean Revolution.  At the least, let's understand that less than one dozen Japanese malefactors have been named, an insignificant slice of Japanese industry.  Is the current sample large enough to have sufficient statisical relevance to conclude that all Japanese exports will cease?

"The data will speak to you."




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