Bloomberg.com: U.S.:

Here is a great lesson in the lean/TPS concept of building near your customers, from an article about the upcoming Toyota San Antonio plant:

Hidehiko “T.J.” Tajima, president of the Toyota plant, said the relationships fostered during the visits helped make San Antonio a contender for the factory. Another key, he said, is that Texas is big market for pickup trucks. Toyota has a strategy of manufacturing close to where the products are sold.

The biggest strike against San Antonio was an absence of automotive suppliers. Texas has only one other auto plant, a General Motors Corp. factory in Arlington. On-site suppliers will provide 70 percent of the parts for the 200,000 Toyota Tundra pickups made each year, easing that concern, Tajima said.

Think about that for a second. There were NO supplier plants in Texas. Yet, Toyota still located there, because it’s a huge market. I know. I live near Fort Worth and parking spots marked “compact” must mean “compact pickup.”

Toyota isn’t a dumb company. Don’t you think they would be sourcing all of their parts from China that if it was better for business overall? Don’t you think Toyota is looking at more than just labor cost? I’m sure they are considering the total costs, supply chain risks, supply chain time and costs, etc. Their choice is to have 70% of parts made right near the final assembly plant. Other parts are coming from plants up I-35 in Austin and Georgetown.

Why can’t more companies follow this model? Why do so many companies go for the lure of cheap labor instead of being truly lean?

About LeanBlog.org: Mark Graban is a consultant, author, and speaker in the “lean healthcare” methodology, focused on improving quality and patient safety, improving access, reducing costs, and fully engaging healthcare professionals. He is also the Chief Improvement Officer for KaiNexus.