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-March 3, 2010-

Supply Chain News: Is “Lean” to Blame for Toyota’s Recall Issues?

Most Say Core Lean Principles Played No Role in Quality Problems, but Toyota may Have Lost Lean Way and Talent as it Focused on Growth; Will Lean Strategies Take a Hit in Corporate Boardrooms?




SCDigest Editorial Staff

SCDigest Says:

This appears to be almost a problem almost completely related to quality, and has nothing to do with core Lean principles such as continuous improvement and the removal of waste.

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Toyota is facing enormous challenges over its problems with rapid vehicle acceleration and the related billion dollar recall and public relations disaster stemming from the deaths of perhaps 40 people. That in turn is causing some people to point the finger at Lean – the popular name for the legendary Toyota Production System – as an important factor in the quality problems.


Is this Lean criticism justified? Both sides raise some interesting points.


In explaining the quality issues, Toyota CEO Akio Toyoda is saying before the US Congress and elsewhere that Toyota may have grown more rapidly than its quality systems could keep up with.


"Toyota has, for the past few years, been expanding its business rapidly. Quite frankly, I fear the pace at which we have grown may have been too quick," Toyoda, the grandson of the company's founder, told a congressional committee last week.


However, almost unmentioned during this latest crisis is that Toyota said very similar things during another recall crisis in 2004 that was somewhat less publicized because the quality issues did not result in the deaths associated with the current sudden acceleration problems.


Amidst a series of recalls and lower quality ratings from organizations such as JD Powers, “there has been a watering down in both knowledge and belief in the famed Toyota Production System,” at the company, as SCDigest noted almost six years ago. (See Growth and Global Expansion Put Strains on "the Toyota Way.")


As we wrote then: “Growth has sometimes put more focus on getting cars out the door than adherence to TPS principles. There has been a lack of TPS experts from Japan to train North American supervisors. Language barriers have played a role. There has been a much higher level of turnover in North America, both at the floor level, leading to training issues, as well as at the executive level as TPS experts went to Toyota rivals.”


Toyota vowed at the time to address these issues, which were thought to be mostly a problem in its North American operations.


Now, of course, its faces even bigger issues, which could do long term damage to Toyota’s brand and global sales.


But did Lean contribute to the problems?


“This is not about the failure of Lean, this is about the corruption of a Lean success story through the temptation of cutting costs without understanding the risks and growing the business too fast in order to please short term goals set by senior executives,” says Mike Loughrin, president of Transformance Advisors and a recognized Lean expert and trainer.

He also told SCDigest that “Toyota took a big chance and grew too fast. Lean did not fail them; they failed to keep Lean expertise at the appropriate levels to support the additional capacity they brought on. In addition, they have seen many of their Lean experts leave for other opportunities. The turnover of talent is probably not a big factor for the facilities in Japan, but it could be significant and not fully understood when it applies to US facilities.”


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He does say, however, that Lean thinking may have played some role in the poor way many believe Toyota has handled the problem as it emerged.


“Where we might be seeing the weakness of a Lean culture is how Toyota’s response has been slow and measured,” Loughrin says. “They have not been able to get out in front with spinning the story. They have not blamed a supplier, ala Ford and Firestone, and they have not claimed to have all the answers.”


Robert Martichenko, CEO of consulting company LeanCor, who had his start in Lean a number of years ago supporting the start-up of Toyota’s then new factory in Evansville, IN, mostly agrees that it was not Lean itself but Toyota losing its way in Lean that is at the root of the problem.


“Toyota grew too quickly and took its eye off the ball of the guiding principles of Lean,” Martichenko told SCDigest.


No one questions, really, the efficiency Toyota has brought with its TPS approach, and Martichenko says that that of necessity usually puts an emphasis on quality.


“If you move to the point of just-in-time, almost radically low inventory levels, it means the quality of parts has to be nearly perfect, because there is no buffer inventory to protect against a quality issue,” Martichenko says. “You shut down the line.”


A key tenet of Lean is that “you can’t inspect quality in,” Martichenko adds, noting that in Toyota’s case, it appears the acceleration problem is actually caused by only one of the two suppliers for the accelerator assembly.


“This appears to be almost a problem almost completely related to quality, and has nothing to do with core Lean principles such as continuous improvement and the removal of waste,” Martichenko added.


Regardless, SCDigest believes that rightly or wrongly, Lean as a strategy will inevitably take something of a hit in corporate boardrooms for awhile – or at least drive companies to better remember that Lean isn’t just about lowering costs and reducing waste – its about ensuring quality is built in too.


Did Lean have anything to do with Toyota’s accelerator and apparently other quality issues – or was it a partial abandonment of Lean disciplines in the quest for growth? Will companies at all rethink Lean over this whole thing – and if so, will it be temporary or long lasting? Let us know your thoughts at the Feedback button below.

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