Toyota: Better or Different?

Seth’s Blog: In search of better

Seth Godin asks if we should try to make processes better or “different.”

It makes me think back to this morning’s WSJ article comparing the upcoming Toyota San Antonio plant with the existing (and old) GM Arlington plant. Sure it’s unfair, in a way, to compare old and new plants, but look at the innovation in the Toyota plant. This sounds more “different” than “better.” (A free version of the full WSJ article is here).

On the other hand, even though Arlington is the country’s most efficient large-SUV plant, GM can’t maximize its success by adopting its newest, best methods there. “Arlington is doing a great job for GM, but they can’t have an optimal layout, and their footprint is landlocked because a world with subdivisions and expressways has grown up around it, whereas Toyota was able to take out a clean sheet of paper,” Mr. Robinet says.

Right, not a fair comparison. But still, here is what Toyota is doing:

Being new means Toyota can use its most-efficient manufacturing technology, which the company has developed as part of a recent push to slash its production costs.

The San Antonio plant is installing smaller, lighter machinery with a simpler design that takes up less space than previous generations of equipment, an effort Toyota calls “simple and slim.” Smaller machines mean Toyota can spend less on the building that houses them, while simpler design means those machines are cheaper to install, easier to maintain, much less likely to break down and simpler to fix if they do. The plant covers about 2.2 million square feet, including some metal-stamping operations, which are not done in Arlington. Still, the Toyota plant is roughly a third smaller than the 3.75 million-square-foot GM plant.

If Toyota had built the plant with the conventional technology, the plant would have been “30% to 40%” larger, says the plant’s manager, Hidehiko “T.J.” Tajima.

As his engineers haul in and test new stamping presses and other heavy equipment in San Antonio, what’s equally important to Mr. Tajima is what’s missing. Toyota’s newest U.S. factory doesn’t have shoulder-high shelves lining the assembly line to hold parts for workers. Instead, the parts for each vehicle are delivered in a small container inside each car, freeing workers from having to pick out the right parts from the shelves. The missing shelves coupled with the smaller machines turn what would ordinarily be a dark and noisy place into one that is airy and well lighted.

[toyota]
Robots on the assembly line at GM’s Arlington facility.

“We try to come up with break-through innovation in every major equipment and process,” Mr. Tajima says, pointing to an example where engineers replaced heavy parts conveyer systems with lighter and more flexible robots.

Further, Toyota has arranged for 21 key Tundra suppliers to set up factories right on the same site, sandwiching the plant on the north and south sides. Engines still come from a Toyota plant in Alabama and axles from a supplier in Arkansas, but most other major parts, from instrument panels to seats to exhaust systems, are assembled at those on-site suppliers. That cuts the cost of transporting parts and storing large inventories on site as insurance against missed shipments. It also eliminates risks of having too many components en route to San Antonio — a potential logistical nightmare that could cost Toyota dearly if a defect suddenly appears.

There are risks for the on-site suppliers, though. They cannot spread their costs over different products from multiple auto makers, which makes them vulnerable to a downshift in demand for Toyota’s big trucks.

So to those who say Toyota’s kaizen system can’t innovate, look at the comment above:

“We try to come up with break-through innovation in every major equipment and process.”

If I was a Toyota supplier, I wouldn’t worry about the “risk” of marrying my production to Toyota. They have an amazing track record of consistent growth. It would be a “risk” to do the same thing as a supplier to GM. GM could try to copy Toyota’s supplier strategy, but does GM have the trust and relationships built up to get suppliers to go along with it? Would GM “strongarm” suppliers into cooperating? What a silly notion that is.

The notion of “spreading your costs” across multiple programs…. isn’t that more of a mass production mindset coming out in the writing of the WSJ reporter?

Here is a nice follow up posting at the Curious Cat blog.

The supply chain digest also summarized this article.


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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5 Comments on "Toyota: Better or Different?"

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  1. This was a worthwhile article. Having been involved in a few dozen factory redesigns (see http://search.blogger.com/?as_q=Lean+Factory+Design&ie=UTF-8&ui=blg&bl_url=kanban.blogspot.com&x=44&y=5 ). I can understand the perspective of wanting a new factory. Many factories, in fact most factories, are not helpful to those using them. Of course there are two factors: the box, and how you use the space inside the box. Much can be done with any size and shape box that people are missing the opportunity on. The shape and size of the box is of course a significant contributing factor to what you can, and can not, do. There are a couple factors worth addressing in this article that don’t have a lot to do with a new factory.

    1. Here’s one that does: it mentioned blueprints showing a plant expansion. When Toyota builds a new plant, they at least ask themselves the question “what do we want from this over the next 30 years?” They won’t build it to handle a 30 year plan, but they make sure that they don’t limit what can be done.

    2. They make comparisons of plants based on the Harbour Report. I think this is a mistake. The Harbour Report for those who use it properly can be helpful. However, most just take the surface-level numbers like hours/vehicle and turn it into a competition on labor hours. This is a huge mistakes and distracts from the real question. I was in one factory that managed to the Harbour numbers DAILY. Safety, quality, delivery, cost and HARBOUR. Now that’s focusing on the numbers.

    3. I have to bring up the state incentives. The GM plant manager seems to be disappointed in not getting state incentives. Consider the negotiation concept of BATNA – Best Alternative To No Agreement. If GM negotiates with the state, what’s the State’s BATNA? No agreement is the best alternative because GM is NOT going to close and move the plant just because they didn’t get a few bucks in incentives. The author also tries to allocate Toyota’s incentives over 1 year, which is horribly misleading, because they will neither be paid nor accounted for in one year. Back to the point, GM can build a new plant. They can even threated to move the plant or build a new one there. Look at what Boeing did with their new 787 plant. They didn’t have to build it in Washington, but didn’t make the commitment until the negotiations were done. The problem is that the situation isn’t nearly as bad as they make it sound, and only when the plant gets really old does it make sense to build new. Consider Jeep’s Parkway plant that was closed – it was built in 1904 and cars traveled up and down through multiple floors for so many miles that the vehicle was out of warrenty before it left the factory. That’s bad – time to build a new factory, which was done (in Toledo, and with State help, keeping over 3,000 jobs in Ohio).

    4. Let’s not make the GM – Toyota competitiveness debate all about cost. On the income statement, yes GM’s costs are way too high and they are losing money. But they are NOT losing market share because of this. For the same content, Toyota’s cars are at least 10% more expensive to the consumer than GM and GM is still losing share. GM does have a cost problem, but cost is not why they are losing in the market. They have yet to delight, thrill or even satisfy their customers.

  2. Mark Graban says:

    For Point #2 Jamie, for clarification, you’re suggesting they should NOT manage solely to Harbour numbers and especially not manage to them daily? Labor cost is only one aspect of plant/company performance and to obsess over one metric isn’t helpful. Hours per Vehicle is easy to measure, it doesn’t mean it’s a meaningful number.

    When I was at GM, we obsessed over “Hours Per Engine” and us vs. our benchmark Ford plant. The least rewarding work I did in the Industrial Engineering group was doing charts for the plant manager “explaining away” the gap between us and Ford. That chart (and the excuses) were complete NVA.

    What was rewarding was doing the lean work to help impact that number (and general plant performance).

    Amen to the point on cost and GM’s struggles. The “market premium” that Toyota gets is the same or more than the cost difference. If GM could people to value their cars higher, they would be better off.

    I’m sure people at GM have their charts and excuses for why they don’t get a premium price, like Toyota. Let’s blame the media, consumer reports, etc. etc. etc. instead of fixing the problem.

  3. Jamie Flinchbaugh says:

    That’s correct, and for two reasons. First, it’s just one aspect. But second, and perhaps more importantly, managing your business to win some third-party ranking that has nothing to do with the customer is a sure-fire way to go in the wrong direction.

  4. Bill Waddell says:

    Like, winning Shingo Prizes, for instance?

  5. Jamie Flinchbaugh says:

    I was thinking Harbour and J.D. Power, but Shingo applies as well.

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