Toyota, Quality, and Flexibility
News Flash...
According to an article in the Wall Street Journal, Toyota Motor Corp. President Katsuaki Watanabe said on July 23, 2007, that the temporary production shut down of all 12 of Toyota's domestic plants (after Riken Corp., a supplier of $1.50 piston rings, had been damaged by the 6.8-magnitude earthquake that hit Japan on July 16) would result in delivery delays of 55,000 vehicles, but the car maker would not change its just-in-time system of production.
Mr. Watanabe said the company would examine its risk management and risk control, and look for ways to become less dependent on single suppliers. But he stressed that the car maker will not change its kanban, or just-in-time, strategy of keeping as little inventory on hand as possible, which reduces warehouse costs and ensures quality. "Quality is the most vital aspect of our organization," Mr. Watanabe stated.
Toyota said it planned to make up for loss of vehicles, at least 60% of which would have been exported, during holidays and weekends.
This little story speaks volumes about Toyota and its singular focus.
- Toyota understands fully their quality-delivering value stream, who their current and prospective customers are and who drives that value stream within the company.
- Toyota understands and can measure which processes in the value stream are the highest priority for holding steady or for improvement.
- Toyota understands how the high priority processes are performed and which are the value-adding steps.
- Toyota understands the process performance measures and how accurate and precise is their measuring system.
- Toyota understands and can measure the customer-driven specifications for each of them, whether they are in control, how capable their producing processes are and what the improvement goals are for each one.
- Toyota understands and can measure the kinds of waste in the process and the financial as well as customer impacts of those wastes.
- Toyota understands and can measure the sources of variability in the value stream and which of them are controlled and how.
- Toyota understands whether any sources of waste or variability are supplier dependent and how they are working with those suppliers to eliminate waste and variability (even in the face of prototypical acts of God).
- Toyota understands and measures the key input variables that affect the average and variability of the measures of performance.
- Toyota understands and can measure the relationships between the measures for performance and the key input variables and how they interact.
- Toyota understands what settings for the key input variables will optimize the measures of performance.
- Toyota understands what variability still exists in the performance measures for the optimal settings of the key input variables.
- Toyota understands and has implemented a process flow and control system to sustain gains and continuously improve the process.
- Toyota understands and has measured how much improvement has been shown in the value stream in the past and what it will see in the future.
In other words, Toyota has adopted, refined, and assimilated all the key tools of six sigma and lean. Only in this way is the company president able to speak confidently about mundane production issues and forecast accurately that even an earthquake will only have a ripple effect for less than 5 months. If you can answer these questions, your president will be able to do the same.
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