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WSJ Wrongly Blames Apple Inventory Problems on “Lean Manufacturing”

OK, so I’ll admit I had a case of “rabbit ears” when I took the WSJ to task for calling the doomed BP Deepwater Horizon rig a “lean” operation. They were using the colloquial everyday use of “lean,” a term that can get in the way of understanding the real “lean manufacturing” principles and approaches based on the Toyota Production System.

The WSJ, though, has a track record of being horribly wrong about lean manufacturing, you almost wonder if it’s intentional or if it’s bad reporting (it’s multiple reporters who are guilty of this). Thursday’s article about Apple is another case of this –> (“Gadget Appetite Strains Suppliers“).

The WSJ has a habit of blaming lean, often referring to “just in time,” for inventory shortages. Can’t meet customer demand? Must be JIT’s fault. Don’t have enough inventory and lead times are too long? Blame “lean.”

In cases like this, Apple’s not even criticizing “fake Lean” or “L.A.M.E.” practices — they are criticizing something that’s not even really Lean — it’s bad reporting.

I don’t know about you, but I’ve never heard anyone accuse Apple of being a “lean manufacturer,” have you? Apple outsources its manufacturing, primary to China, which brings long supply chains that create long lead times or air freight (at least Apple products are small and light). Not to mention the accusations of labor conditions at Foxconn that seem to be the opposite of any Lean “respect for people” principles.

From the WSJ article, in response to data that Apple, and other companies, are having trouble meeting demand:

Companies like Apple and Nissan are seeing the drawbacks of lean manufacturing methods, which call for carrying little inventory but make supply snags tougher to offset.

Again, who says (other than the WSJ) that Apple is “lean”? It’s an outdated 1980s view that Lean = Zero Inventories. Blindly cutting inventory has gotten a lot of companies in trouble in the name of “lean” – to use the old analogy, lowering the water too quickly exposes rocks that your ship is going to crash into.

Also from the article:

They are also victims of an overstretched global supply chain trying to meet recovering demand after the recession forced suppliers to slash production capacity and postpone plans to upgrade their facilities.

“An overstretched global supply chain” is Apple’s choice (actually the electronics industry’s choice). Yes, all of the component suppliers are in Asia and there might not be practical alternatives to Apple producing big batches of mass produced products in China. I doubt Apple will be creating jobs by opening an iPad plant in Texas (regardless of any tax incentives that you could throw at them).

“Overstretched global supply chain” is NOT a characteristic of Lean Manufacturing. Here’s what I wrote on the WSJ comment page for the article:

Who says Apple practices “lean manufacturing” except the WSJ? Apple’s methods of outsourcing production to a huge plant in China (far away from their customers) is the antithesis of “lean manufacturing” supply chain practices. Toyota generally builds factories where their customers are (hence adding more production in the United States) because total cost (including shipping and inventory costs) are lower to do so. If Apple wants to do things their way, that’s fine – I love their products. But to blame any inventory shortages on “lean” is just ignorant and does a disservice to your readers who only know “lean” as a buzzword.
Ah, and another guy (Eric Landes, a Lean Blog reader???) also posted a similar comment!

Who said Apple uses Lean Manufacturing methods? In all the literature about Lean, I have never seen Apple cited as someone who uses these methods? I would ask to WSJ to become a little more conversant in the area of Lean. They seem to have the mistaken impression of what it entails, as only being JIT inventory. Please look at Womack’s Lean Enterprise Institute, MIT’s Lean Advancement Initiative to get a start.

Lean is about adding value, so I do not know if you could classify Apple manufacturing as lean. Please do your homework on this, and let us know why you think this.

The final comment on Lean from the WSJ:
The pitfalls of lean manufacturing methods, a hallmark of cash-rich and efficient companies, arise when parts either prove faulty or in short supply. Production delays or stoppages are common in the electronics and automotive industry.

Apple’s suppliers could also be taking “just in time” to extremes that mean they can’t meet Apple’s demand. When you have new products that are tough to forecast sales for, you have to balance the cost of too much inventory versus the risk of missing sales. It’s an old classic manufacturing problem. Apple’s opportunity is to work with suppliers to make sure they are using true Lean practices, communicating forecasts and collaborating to avoid the “Beer Game” effect in the supply chain.

You can criticize Apple’s decisions and supply chain management practices, but to blame “Lean” is bad reporting and sloppy thinking.

It’s analogous to nurses blaming Lean because they can no longer get supplies in their hospital (if someone took “zero inventories” to heart). A real Lean system (as written about in the NY Times) ensures that nurses DO have their needed supplies, Lean shouldn’t make that problem worse.


About LeanBlog.org: Mark Graban is a consultant, author, and speaker in the “lean healthcare” methodology. Mark is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as the new Executive Guide to Healthcare Kaizen. Mark is also the VP of Customer Success for the technology company KaiNexus.

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12 Comments on "WSJ Wrongly Blames Apple Inventory Problems on “Lean Manufacturing”"

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  1. Matt Wrye says:

    Oddly enough, I blogged on the exact same topic/article this morning. I saw the article you reference yesterday. I reference an article from a couple of days earlier about Nissan. The journalism is plain lazy because some of the lines are copied and pasted from the earlier article about Nissan. They just added Apple’s name to the article. It is a shame how bad the reporting is on lean in these articles.

  2. Mark Graban
    Twitter:
    says:

    Thanks for sharing the link, Matt, and for commenting on the Nissan angle. If the WSJ is copying and pasting from other articles, that’s somewhat scandalous, eh? Do you have the earlier link?

  3. Mark Graban
    Twitter:
    says:

    In some related Apple news, it sounds like an engineer tried to warn Steve Jobs about antenna problems, but wasn’t listened to:

    http://www.bloomberg.com/news/2010-07-15/apple-engineer-said-to-have-told-jobs-last-year-about-iphone-antenna-flaw.html

  4. Matt Wrye says:

    My link is not working properly on my blog. If I google “nissan hitch has swiss roots” the first link is to the full story in the U.S. I copy and paste that link but when you click on it it takes you to the short “subscribe now” version. Not sure why. Here is the full version link that I have been trying:

    Maybe it will work from here.

  5. Mark Welch says:

    From reading this post I think it’s time to resurrect Doofus & Leanie, Mark. http://doofusandleanie.blogspot.com/

    Especially this one:
    LINK

  6. Anon says:

    Apparently, reception drops when you hold the phone a certain way in your left hand. Apple responded to these complaints yesterday with a variation on an old Henny Youngman joke about a patient complaining of pain whenever he moved his arm: “Just stop doing that.”

  7. derik cordill says:

    you lean guys are all brain washed… anytime bad press comes out about your outdated program you all rush to it’s defense with emotion,not fact!!!! fact is toyota is a failing company that uses a huge p.r. machine to keep it’s rep. and head above water.

  8. derik cordill says:

    Lean is “outdated” in what way?……REALLY???, where should I start? It was invented about 60 years ago, packaged and sold to U.S. corps. 30 years ago, all by a company who no longer uses it themselves. I’ve been the victim of “lean” gurus, or blackbelts ,or whatever childish name they are using now, several times during my career, and I’ve never seen it benefit anyone except the guy getting a paycheck to implement it!!!….in my not-so-humble opinion “lean” is a cult. It may be helpful to a company completely void of common sense ,but to all others it is nothing more than a well orchestrated scam!!

  9. To Derik: Lean has always been and will always be a set of sound business practices. “Outdating” occurs with flavor-of-the-month programs when the next shiny object comes along. Lean does not create perfect companies as people are behind application. I don’t define Toyota as “failing” but since we all believe in data and fact-based communication, we’ll just have to see on that one.

    As for the WSJ inventory quote, Doofus does indeed apply here. This is a sentence from a reporter who doesn’t have clue what the Lean approach is to inventory management. True that it’s “minimum necessary” but the rest of the sentence is “for maximum outcomes.” Running out of inventory due to supplier issues isn’t a “maximum outcome.” I have a client with only 3 turns per year who absolutely has to have it due to the erratic nature of their business, some regulatory requirements, and the true inability to find product closer to home. It’d be disastrous for this company to have low inventory.

    Again, Lean is about sound business practices, not some silly sound bites that people take to heart and then wonder why Lean “doesn’t work.”
    Karen Martin recently posted..The Allure (and Myth) of MultitaskingMy Profile

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