Upstream Waste Reduction Hurts a Food Bank?

Learning about Lean

Interesting story here on Joe Ely's lean blog... traditional supply/demand mismatch and waste in baking has typically led to "day old" product being donated to food banks. Reductions in overproduction mean less to donate.

Maybe bakeries/restaurants/food producers who get more efficient might be able to make an outright cash donation, a portion of their waste reduction savings, in lieu of excess food? What would you do?

Pelion Systems Targets Automotive Industry With Launch of Pelion Automotive MPO

Press Release:

It's pretty tough to cut through the buzzwords to figure out what this "lean software" does.

"It creates a consistent view of demand for Lean calculation, kanban sizing and control, daily resource planning for labor and machine resources and 'what if' scenario planning and analysis. It also serves as a catalyst for Lean implementation and training efforts resulting in consistent methods, data collection and standardization, and analytic tools."

If the problem statement is "lean is hard to implement", is the problem caused a lack of software tools or a lack of leadership and discipline? What do you think? Have you ever considered using "lean software"? Have you built it yourself in Excel or Access? Click comments to let us know.

TDO Working on Lean Initiative for Health-Care Sector

Press Release:

Here is a nice summary of some lean healthcare/hospital efforts under way in New York:

"The hospitals applied lean principles in numerous areas, he says. In one case, the number of steps it takes to admit someone dropped from 200 to 14."

Surgeons Remove Wrong Kidney

7Online.com: Investigation on After Surgical Error

A scary example of the type of medical mistake that happens far too often. I hope that "augmenting their procedures" includes standard work and poka-yoke (error proofing) steps. Sad, sad case.

Toyota Asks "What is Six Sigma?"

Six Sigma Stigma

This article requires subscription to read online (or purchase it on news stands). The author visited Toyota in Japan and asked a somewhat uninformed question:

Eager to show we knew a thing or two about quality ourselves, we soft-balled our hosts with the obvious question: "When did Toyota start using Six Sigma, anyway?"

Long silence. After some awkward consultation in Japanese, the engineers asked us, "What is Six Sigma?"

Oops, a priceless moment there. TPS <> Six Sigma, of course. There are some conceptual similarities, but Toyota does not subscribe to Six Sigma. The article goes on to discuss how some companies that outwardly promote Six Sigma usage actually lag their non Six Sigma competitors in quality (including Xerox, Sprint PCS, and Ford).

Six Sigma, along with lean, has the potential to be nothing more than executive hot air and window dressing. The real challenge is in the details of actually making it happen.

Strong Supervision: The Key to Long-term Kaizen

Kaizen and Lean Manufacturing thoughts | Gemba Panta Rei

This is a great article by Jon Miller from the Panta Rei lean blog.

Here is a link to the Financial Times article he referenced (you have to do a free trial to the website to read it).

I can't agree more about the role of strong and capable supervision. At my last manufacturing company, they had long ago pulled out the first line supervisors as "non-value added", yet another "cost savings" that ends up costing more money I believe. Each manager had at least two departments with at least 30 employees each. As Jon writes, the managers were simply overwhelmed and could not spend enough time on the gemba. They certainly didn't know their processes well enough to train or coach operators on the process.

As with other factories I've seen, if you let a factory run without supervision, you'll ge the results you deserve. From our lean group, we argued a long time that they needed to add "working team leads" to each department, ala Toyota. They would be the "best" of the operators from each team (someone with the right coaching and problem solving abilities). Management agreed, in general, to the concept and even talked to HR. But, I think cost got in the way.

Strangely though, they added another production manager, so you now had three instead of two (scope of employees went down to about 20). But, for the cost of a manager, they could have added a number of team lead roles (taking existing employees, giving them a pay boost, and then reducing enough NVA work so the team leader didn't have to run production 100% of the time). But, I think management's bias is that "management" fixes things, not operators (even under the name of "team lead"). Sad.

Boeing Workers Blame Lean for Shopfloor Cuts

Press-Telegram - News:

It sounds like a compelling argument from the union.

"Jacki Harris, president of United Aerospace Workers Local 148, said she agrees with the Boeing concept of lean manufacturing, but job cuts shouldn't just come from the hourly side of the ledger.

'I understand their practice and theory, but they are creating jobs over here in salaried positions all the time. That's why I'm not happy,' Harris said. 'If you're gonna cut, you have to cut some salaried people, too. They need to practice lean in management, too.'"

I've seen the Boeing "5S" Video, but I've never seen the Boeing "motivate people and your lean efforts by doing hourly layoffs every time your customer asks for a lower price" video. ;-)

Seriously, I think everyone knows by now that true lean, continuous improvement, engaged workforce kind of improvements will NOT continue if management cuts heads, whether it's the result of kaizen efforts or just because management wants to "cut costs".

The article doesn't say program volumes are going down, that's about the only good reason to have to cut heads. It just says the government demands a lower cost. Thank you government.

Lean Guru Henderson Transforming Imation

St. Paul Pioneer Press | 08/26/2005 | Imation pins hopes on growth:

It's no surprise that lean author Bruce Henderson (Lean Transformation) would be using lean as a turnaround strategy at Imation.

"Much of Imation's optimism stems from a more stable market for optical disks.Henderson also has begun to deploy Toyota's famed 'lean production' methods that he learned working for TRW on a joint venture making seat belts with Tokai Rika Co. Ltd. of Japan."

New LEI Case Study - Canada Post

Success Stories

Good case study (with pictures) on applying lean thinking to non-manufacturing environments. The Canada Post team focused on flow, even going so far as to eliminate a giant automated sorting machine with a manual cell that was much smaller. I've seen many cases where getting rid of automation actually helps, that's very counterintuitive in the traditional manufacturing mindset (especially when the automation was originally put in with the justification of improving "efficiency"!).

“I used to think that we weren’t a manufacturing company; we didn’t produce anything,” said Don McLellan, director, mail operations, at the Calgary facility, “but you can lean out mail operations. What we’re looking for is flow; in one door and out another.”

They also applied value stream mapping, standard work, takt time, work balancing, visual controls and other lean tools.

Chasing Cheap Labor in IT

siliconindia.com: "Quoting a new report from market research firm Gartner, Inc. CNN says that a labor crunch and rising wages could erode as much as 45 percent of India's market share by 2007. "

Yes, an article about IT, but it reminds me of the position Mexico was in. For a while, of course, Mexico was the "cheap" place to do manufacturing... problem is, someone cheaper always comes along. There have been earlier articles on this blog discussing how China is potentially no longer the "cheap" place and countries like Vietnam and Bangledesh come along. I think the lesson is to focus on more than just your labor cost and you can avoid having to jump from country to country.

Book Review - The paradox of Henry Ford

FT.com / Home UK - The paradox of Henry Ford

From yesterday's paper -- has anyone read this one yet?

Another review inadvertantly mentions of the Seven Types of Waste:

'The People's Tycoon' exposes Ford's defects

Lean Knife Making

HeraldNet: Leaning on a role model:

Another lean transformation snapshot story:

"Three years ago, Buck Knives was manufacturing the old way, using long, specialized assembly lines that resulted in the need to store large amounts of partially completed knives that were not yet ready to be shipped or sold. This unusable inventory - work in progress - had a considerable amount of labor invested, took up floor space and needed to be tracked.

Buck Knives was introduced to lean manufacturing by its executive vice president of operations, Phil Duckett, and began to transform its lumbering, inventory-laden, inefficient assembly lines into a quicker system."

I like how the CEO is quoted calling it a "philosophy" (hopefully, he is coming to believe in it), not just some cost-cutting tools.

I hope the CEO also truly embraces this:

Many of these solutions are about enabling those who do the work. "One of the goals of a lean organization is to push down the ability to say, 'Yes'," Buck said. "The closer the decision can come to the person doing the work, the more efficient the process."

Toyota Production System Steers JAL Group Cargo Operations at Narita

news - Toyota Production System Steers JAL Group Cargo Operations at Narita:

Here is a nice adaptation of lean and TPS to a non-manufacturing environment:

"JAL named their plan the M3 Project after the three main elements in the Toyota Production System's (TPS) philosophy of eliminating muda (waste), mura (eliminating the lack of standardization) and muri (taking the strain out of the job).

The ultimate aims of the TPS are to cut out the three M's—muda, mura, and muri - and put into practice the four S's—seiri [sorting], seiton [simplifying], soji [systematic cleaning] and seiketsu [cleanliness]. "

The article also discusses their use of kaizen events and employee training, focusing on TPS as not a one time event, but a continuous improvement activity. Interesting reading.

Is Cessna Being Lean?

Wichita Eagle | 08/21/2005 | Cessna works to streamline supply chain, reduce costs

Now, this is just a single article, and reporters often misunderstand things or don't tell the whole story, but let's play a game of "are they being lean?" with Cessna.

The article starts off with a nice example of visual controls, a key lean concept:

"On the shop floor on the Citation jet line at Cessna Aircraft Co., a green flag sits on top of a kit of parts. The flag signals that the parts needed to assemble the lower tail cone of a CJ3 business jet are there and ready for the operator.

In the midst of several kits sporting green flags, however, is a kit with a red one: Two parts are missing."

But, listening to the Cessna people, all I hear them talk about is schedule, delivery, and cost -- nothing about quality.

"We are certainly committed to and are going to make our (delivery) schedules," said Don Beverlin, vice president for supply management at Cessna.

Of the 160,000 different parts that go on Cessna's fleet of aircraft, the company buys 60,000 of them from 850 suppliers -- everything from engines to rivets."

That sounds like a lot of suppliers, I wonder if they are working to drive that down? Of course, it's easier to squeeze small suppliers on cost, which it also sounds like Cessna is doing. That's not a preferred practice, just demanding cost reductions, without also working to reduce or eliminate waste.

If Cessna is solely focused on delivery and cost, what is happening to quality and safety? I hope they are sending a message that corners can't be cut to make delivery.

"It has put in lean manufacturing practices to raise productivity and become more efficient. It adopted a "just-in-time" method of inventory so it doesn't keep an abundance of costly parts on the shelf.

And it worked with suppliers to lower their costs as well.

"We went in and we squeezed on that excessive margin," Beverlin said."

Oops, I don't know if that really sounds lean. I wonder if they are just adopting the lean tools that suit them or benefit them, like "JIT" inventory. Are they managing different or teaching the shopfloor personnel to solve problems and make improvements? Or is it just blustery VP's making the changes?

From reading the article, am I being too hard on them? Or do they sound like many companies that are struggling to figure out what lean really means?

Article about Delphi and Lean

Kokomo Tribune Online:

"Guggina said Delphi implemented lean manufacturing in the early 1990s. The company's standardized approach is now known as the Delphi Manufacturing System.

'It means build only what you need when you need it -- nothing more, nothing less,' Guggina said. 'We hold a very specific amount on the line. It's kind of like the supermarket mentality: We only use what we need.'"

It's always interesting to me to think about the concept of "build only what you need " (a build-to-order or Dell type model that certainly eliminates the waste of inventory) vs the concept of heijunka or leveling. In some cases, especially when capacity is expensive, it can actually make more sense to build at a steady rate and build some inventory before you really need it.

But, as with many things, there are no easy cookbook rules -- the sweet spot in that balance depends on your company and your industry, factors including capacity cost, inventory cost, risk of obsolescence, quality risk, etc.

Make way for megaships -- Bigger Batches!

Dallas Morning News | News for Dallas, Texas | Business

When reading this article, I kept thinking about the trend toward bigger batches with shipping - bigger mega ships that take 4-5 days to unload at port instead of 2-3 days to unload, along with planes like the Airbus A380 megaplane. Can you imagine being the last one off of that plane after landing? That's time to read another book!

I'm not an expert on ships, I wonder if the "efficiencies of scale" from these larger ships are really efficiencies, given the extra fuel costs required to move them across the ocean, etc. I guess they reduce labor costs with the larger ships... but is it really reducing total cost for them?

A related article discusses other bottlenecks in the logistics network, ranging from a shortage of truckers to rail bottlenecks. Union Pacific Railroad "is borrowing lean management techniques from Toyota Motor Corp. to weed out inefficiencies" (but the article doesn't outline what those are, other than to say they aren't letting trains sit in yards as long as before).

One "lean" innovation from the ports, as described in a photo caption is to "allow trucks to pick up cargo on weekends to cut down on bottlenecks". I'm sure union rules probably got in the way, but allow pick ups 7 days a week instead of 5 is an obvious capacity increase. When demand is increasing, you can keep your takt time in line by increasing your working hours. Seems pretty obvious right?

No Experience Required?

Evolving Excellence -- Inbreeding is killing 'em

Here is a good post from the Superfactory Evolving Excellence Blog. Is the auto industry worse than other industries about saying that you must have specific industry experience before they'll consider hiring you? Check out their blog and see or to contribute your thoughts.

Energy prices pose dangers to manufacturing sector

Reuters Business Channel | Reuters.com:

Another example on the theme of costs and prices

"International competition may limit manufacturing companies' ability to pass on higher raw material costs to their customers, said David Huether, chief economist of the National Association of Manufacturers.

'While they have better pricing power than a couple years ago, they're still being significantly hurt by rising commodity costs,' he said."

The article DOES point out, at least, that lean is a strategy for reducing costs to get profits back in line:

"Cost cuts and better productivity have helped manufacturers to offset the burden, but these have been squeezed as far as they will go.... and a focus on "lean manufacturing" may help them weather a downturn."

Now don't confuse "lean" with "cost cuts" meaning layoffs. Lean companies won't take the short-cut approach to slashing costs short-term with layoffs. Identify and fight waste instead!

Local firms are squeezed by gas prices

SignOnSanDiego.com > News > Metro -- San Diego:

This story is from California, but I've also seen it in the local news. I've complained in the past about big companies complaining that they can't pass along the higher cost of oil (as a raw material to, say, nylon production), but you're hearing it from smaller companies regarding gasoline.

"The increased costs are coming largely out of Welk's pocket, pushing the company closer to posting losses even though some price increases have been passed along to customers.

'Fuel is huge right now,' Welk said. 'I will have to raise rates again because it won't cut it where it is right now.'"

We're all feeling the pain at the pump, but this is yet another example where the price should be set by the market, not by your raw material costs. I'm probably preaching to the choir here, but the Toyota model says:

Profit = Price (as set by the market) - Cost

This dictates that, if you want to maintain the same profit, that you have to find other ways to cut your internal costs, you can't just pass along higher costs to customers, necessarily, through higher prices.

If your customers readily accepted the higher price, maybe you weren't charging enough before?

But so many of us, as customers, are conditioned to the old notion of Price = Cost + Profit, that we accept "my costs are higher" as a reason to pay a higher price. We may accept that in the short-term or have no other choice. But, if we don't value the service, we might walk away in the long-term.

What do you think? Facing this challenge in your business, large or small? Facing it as a customer? Click "comments" to chime in.

Toyota on Supplier Relations, An Illustration of Many Toyota Way Principles

EV World: The World of Electric, Plug-in Hybrid, Fuel Cell and Alternative Fuel Vehicles:

This article features Jim Press, Toyota Motor Sales, U.S.A., Inc. President and COO talking mostly about the need and desire to collaborate with automakers on fuel and environmental issues. That seems to embrace a number of The Toyota Way principles, including:

Principle 1: Base Your Management Decisions on a Long-Term Philosophy, Even at the Expense of Short-Term Financial Goals.

Toyota could easily have been criticized early in Hybrid vehicle development for working on a vehicle that was "too expensive" or hurt short-term financial targets. While publicly traded, Toyota isn't a slave to short-term Wall St. pressures as other companies are.

Principle 11: Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve.

That network also seems include competitors, in this and other cases where Toyota has shared hybrid technology (with Ford).

In italics are the comments from Press. My comments are in bold.

The one challenge I would make when reading this... think about your "lean" efforts. No matter where you are on the journey, are you patting yourself on the back and satisfied that you're doing all that you can? If you are just implementing a few lean tools, look at the number of Toyota Way philosophies and principles that can be seen in just one speech. Strive to adopt the Toyota Way, all of it, and you'll go much further than you would with lean tools.

------------------------

"Our business has always thrived on good relationships…and they are even more vital as we face the challenges of tomorrow. Unfortunately… we've let them slip a bit over the past decade or so…and it's time to put our house back into order.

(Principle 14: Become a Learning Organization Through Relentless Reflection and Continuous Improvement)

Take supplier/factory relationships, for instance. There was a time when suppliers and automakers were fiercely loyal to one another and trusted each other.

Today, we see almost continuous headlines about automakers leaning on suppliers to cut costs…at all costs.

In the end, that doesn't make good sense. We're in this boat together and we need each other over the long haul. When we rob Peter to pay Paul, we both get poorer.

You know…people often ask me why Toyota is highly rated by suppliers. And I tell them the secret lies in our Toyota Way philosophy of respect for people. (Principles 9 & 10)

We respect our supplier partners by listening to them, sharing our plans for the future and fostering long-term relationships. In other words, we focus on their success as much as our own. (Principle 11)

We know that…if they have stable production (Principle 4: Level Out the Workload) and are making money…they will be able to grow and develop better products that…in turn…will help us be more successful.

We watch costs as much as anyone, but we also work hand-in-hand with our suppliers to help them reduce their costs, often teaching them key lessons we've learned in more than 50 years of perfecting the Toyota Production System. (Principle 10: Develop Exceptional People and Teams Who Follow Your Company's Philosophy)

For instance, we recently sent a team of our people to a chrome emblem supplier to work with their in-house kaizen team on efficiency and cost reductions. Our hands-on approach (Principle 12: Go and See for Yourself to Thoroughly Understand the Situation) helped them to identify key changes in production that led to less waste and higher productivity.

There's no rocket science to our methods…just the strong desire to respect and help suppliers help themselves so everyone is successful. Anyone can do it…and those who do it well…will advance tremendously in the Golden Era."

Chinese Oil workers trade in marriages for a job

My Way News

When you're outsourcing jobs to China, are you intending to support a culture/economy that allows this type of thing? I'm just asking.

Former employees of a state-run oilfield in north China are jumping through a strange hoop to get their jobs back -- they are filing for divorce.

China's state-run giants, once the heart of the planned economy, have cast off millions of employees since the launch of market reforms two decades ago.

But the Huabei Oilfield Co., based in Renqiu, Hebei province, Friday issued a new policy saying divorced laid-off employees could return to work, the Chinese news Web site www.sina.com.cn said Wednesday, citing an article by the local Yanzhao Metropolitan News.

...

The report did not explain the oilfield's motives for the pro-divorce policy and company management was not immediately available for comment.

"This policy is just in trial stages," an oilfield manager told the newspaper. "I can't say anything about it.

The State of Lean Healthcare: Critical Mass is Building

Kaizen and Lean Manufacturing thoughts | Gemba Panta Rei

The blog at gemba.com is always very thoughtfully done. This links to a writeup they did summarizing the status of "lean healthcare".

Jon Miller cites:

"The main reason why hospitals are not going Lean is still the excuse that "we are different" or that the trainers or consultants in question do not have a healthcare background."

That doesn't sound too much different than what I've heard in factories.... "our factory is more complicated than Toyota"..... "our industry is different"...... "you don't understand how to make these widgets."

Hogwash to all of that. I think the best lean perspectives come from a combination of those who do know the current process working alongside those who do NOT know the process. Outside eyes bring fresh perspectives, NOT knowing that product/factory/industry/company can actually be a huge advantage. As the outsider, remember to stay humble and work with your insider partners. Otherwise, you'll both be frustrated and lose out.

Skilled workers essential for Lean Plants

Skilled workers essential - The Clarion-Ledger

I never bought the argument, laid out last month by the president of the Canadian Auto Parts Manufacturers' Association that, "The level of work force in general is so high [in Ontario] that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the Southeastern United States."

As many people did, I thought this was a misguided and terribly biased statement to make.

The article linked above points out that Toyota chose the second Ontario site because suppliers were already nearby for the existing Toyota plant. It makes sense to leverage existing manufacturing and transportation resources.

They also have a map that illustrates the large number of auto plants there are in the southern U.S, from Tennessee on down. No intelligent, trainable workers down there huh?

There is a related point, regarding the intelligence required to work in a lean factory. When I worked at GM, I worked with many 30+ year UAW workers. Many of them were very intelligent and didn't have the same kind of educational opportunities that I did. But, many of them refused to participate in lean improvement activities or the suggestion program because management had long ago told them to "check their brains at the door."

I think it's a positive sign that we've moved from viewing factory workers as "just a back, two arms, and two legs" and that we're actually arguing over who has the SMARTEST factory workers. That's particularly true in newer industries, like semiconductors, and it's nice to see it's also happening in automotive.

Lean workers don't just do the same thing all day. They learn multiple jobs, rotate often, and make improvements to their own work. As mentioned in the Wipro article, that can bring much joy to people who would otherwise be doing thankless, mundane work.

Taking A Page From Toyota's Playbook: Indian IT

Business Week

This is a good article talking about how a leading Indian IT outsourcing company, Wipro, is adopting the principles of Toyota and the book, The Toyota Way.

On the theme of discipline (see the Tom LaSorda article below), an interesting story from Wipro taking a Toyota tour:

"There were plenty of lessons to learn, but for Sambuddha Deb, Wipro's chief quality officer, one stands out. Deb began to take a shortcut when the safety path painted on the factory floor made a sharp turn. The Japanese manager walking behind him reached out, took his shoulders, and gently guided him back onto the path. The message -- all the little rules count. "They had that sort of discipline. It's second nature to them," marvels Deb."

I like how Wipro apparently thought about how to apply lean principles to their own business, rather than just copying Toyota tools, as in this example:

"Almost immediately, Kurien spotted a surprising problem -- cubicles. They're normal for programmers but interrupted the flow for business-process employees. So he came up with the idea of positioning people side by side at long tables and running processes up the line step by step. Wipro also adopted Toyota's kaizen system of soliciting employee suggestions for incremental improvements, and made The Toyota Way required reading. The company even did time-and-motion studies. One discovery: It took an average of nine minutes for employees to regain optimal performance after water and bathroom breaks. The water coolers were quickly moved closer to people's desks."

Many other good examples are in the article, check it out.

Great Lean Discipline Story with New Chrysler head LaSorda

New Chrysler head LaSorda sees improved earnings in 2006, plans 'smart' output - Forbes.com

You can tell LaSorda is a real lean guy from the longer WSJ version of this article, I love it:

During the mid-1990s, Mr. LaSorda was plant manager at GM Eisenach factory, a showcase for lean production in the former East Germany. "I was a fanatic on discipline," Mr. LaSorda recalls. Assured by workers in one part of the plant that they cleaned up under parts racks twice a week, he wrote his name and the date on a piece of paper and dropped it under a rack. A week later, after the workers had assured him again that they cleaned up twice a week, he picked up the paper to prove them wrong. "I got mad," he says. The workers began using a sign-up system to verify that the cleaning got done.

I think the simple idea of "discipline" is often forgotten in lean implementations. That applies to managers as well as production workers. Managers need to have the discipline to walk the shop floor and make sure that discipline is being maintained, that systems are being used, and that processes are being followed. While many think a "lean manager" is a nurturing coach, there's also a time for getting angry. The key is finding the balance between those two aspects of leading. Workers will respond to things that managers pay attention to and ask questions about. If you pay attention to safety and quality, and ask questions (or get angry even), people will respond and know that you're serious. Note in the story above, that LaSorda was teaching, even though he got mad. He wasn't just yelling for the sake of yelling, I would think.

An iPod's quick journey from China marks arrival of the just-in-time global economy

An iPod's quick journey from China marks arrival of the just-in-time global economy

This is thought-provoking, at least in the way that the terms "lean" and "JIT" are thrown around. You might question if it's "lean" to build products half way around the world from your customers, but with products that are cheap to ship via air and with the reliability of FedEx, maybe we have to re-think that.

It's interesting to me to think about the difference between automotive, with long product lifecycles, and electronics, with much faster cycles. Is Dell, mentioned in this article as an example of "lean", "lean" because they are incrediby responsive and flexible or are they merely pushing inventory back on suppliers and not being lean throughout the supply chain? Is Apple being "lean" through these practices? What do you think?

Updated: NUMMI Plant Workers, Cos. Talk as Contract Deadline Passes

Bloomberg.com: U.S.:

Updated 8/11: Looks like the plant has a tentative agreement.

Last post before vacation... still sounds like there could be a labor stoppage at NUMMI. I found this interesting:

"While GM and Toyota own the plant equally, most of its capacity is used by Toyota. In this year's first half, 84 percent of the 205,563 vehicles the California plant produced were Toyota models."

I remember, at one point, at the Toyota Corolla, while being practically identical to the GM Geo/Chevy Metro, sold at a nice ($500?) price premium over the GM product. People said this was due to Toyota's quality reputation and reliability. GM was being punished by the market for poor quality.

That's a great illustration of the Profit = Market Price - Cost principle. Although the "Cost" for the GM and Toyota NUMMI products were the same, I'd guess, Toyota's profit was higher because the market placed a higher value on the Corolla over the Metro.

Toyota Focusing on the Long Term, Short Term Profit Falls

Toyota's 1st-quarter profit declines 7%

The WSJ article commented:
"The news underscores the company's willingness to sacrifice short-term profit to maintain its torrid pace of growth. Still, it will disappoint Wall Street critics, who have called on Toyota to invest at a more measured pace and return more profit to shareholders."

That's certainly in keeping with Principle #1 from the book The Toyota Way. I would imagine that Toyota has enough of a track record at this point to "do the right thing" for their business and not worry about investors and shareholders jumping off their bandwagon. I bet this is a challenge for companies starting the lean journey -- not yet having enough credibility with "The Street" to hold to lean principles and focus on the long term.

Part of that long-term Toyota investment is aimed at growth, particularly in hybrids:

Toyota Motor Corp. is aiming to sell 600,000 hybrid vehicles a year in the U.S. by early in the next decade, a goal that implies a bigger surge in hybrid sales than some other car makers have been expecting.

Keep It Lean and Safe

Occupational Hazards - Keep It Lean and Safe

The author says, in part:

"In the worst-case scenario, an overzealous company may implement extreme Lean Manufacturing strategies where safety is not merely overlooked, but compromised."

I don't this should be called "extreme Lean"... it's either "bad lean" or "not lean."

I agree, of course, that safety should be a major focus of any lean initiative. I don't think the main focus should be "reducing the waste" that is associated with safety and ergonomic problems, although that is part of the equation.

I have found that focusing on safety and ergonomics sends a powerful message to oft-neglected production associates -- that management values you and that it's important that people go home in the same condition they arrived in. By focusing maintenance resources, attention, and dollars on fixing safety issues, it can build trust between workers and managment.

Focusing on safety and ergonomics is clearly the "right" thing to do, if that fits your value structure. But, once you can build that trust, your production people will probably be more forthcoming with improvement ideas and will have the confidence that they are doing so in a safe environment. What do you think? Click comments.

Flexibility vs. Simplicity

WSJ.com - Amid Price War, Chrysler To Revamp Manufacturing (subscription required):

Today's WSJ has an article about Chrysler's attempts to produce three different models, instead of just one or two, at their assembly plants. Such flexibility will lead to increased utilization and higher profits. Toyota and Honda often produce up to six models at plants in Japan.

"In North America, Toyota executives say, relatively high turnover among assembly workers means workers are not as steeped in the company's manufacturing systems. Implementing flexible systems is 'daunting,' said a Toyota manufacturing executive, Art Niimi, even though the company's initial aim in North America is to produce just three different models on an assembly line.

On a line at its plant in Georgetown, Ky., which builds roughly one Camry or Avalon a minute, an operator used to have to make multiple decisions to choose among 24 kinds of visors and nine different seatbelts, depending on which vehicle was coming down the line. Now, in an effort to stabilize quality, the company is implementing a new in-plant method to simplify production systems and eliminate as many errors as possible.

Under the new system, known internally at Toyota as 'kitting,' workers synchronize packages of parts with the order of vehicles heading down the assembly, and place part kits inside vehicles under construction. The aim is to limit the number of decisions an hourly worker makes per vehicle to two or less -- and thus reduce complexity and improve quality."

It's interesting to see this tradeoff between producing MORE models (which would reduce cost, but hurt quality given the circumstances) and producing FEWER models (which reduces complexity).

Lean or Six Sigma?

In his article “Putting Six Sigma in Perspective”[1], Michael Hammer uses the mantra: “Use the right tool for the right problem”. An excerpt that summarizes what he means (he uses the term “process redesign”, which in this context is synonymous with Lean):

“Process redesign leads to a new mode of operation rather than correct execution of the existing mode; it has stretch rather than incremental goals; it centers on creative invention rather than structured problem-solving; it entails a small number of large projects rather than a large number of small ones; and perhaps most significantly it leads to major rather than minor organizational change.

“Six Sigma offers “small bore solutions to small bore problems. This is not said pejoratively. Most problems that enterprises encounter are small bore, and having a tool that will consistently find the right solution for them is a significant achievement.

“But not all business problems are small bore. Some cannot be traced to a narrow and well-defined defect. These problems result from fundamental flaws in the overall design of a process, not from minor flaws in its execution. Six Sigma can isolate and solve problems within an existing framework, but it is powerless to create an alternative framework.”

We sometimes use the chart below as a discussion guide while helping clients choose the right tool.

	Six Sigma	Lean
Goal	Specific, localized solution	Pervasive cultural transformation
Scope	Narrowly defined problem (“final test pass variation”)	Enterprise-wide (“call-to-cash”, “time-to-market”)
Situation	Hard to diagnose, easy to fix	Easy to define, hard to achieve and sustain
Assumption