Tuesday, May 11, 2004

The Results of Lean


Today's WSJ had the following headline in the International Section


Toyota's Profit Jumps 55%On 12% Increase in Sales


How can this happen?


Last Thursday, I had a chance to speak with my friend Jim Clark of Toyota Industrial Equipment, the folks who make Toyota's fork trucks in Columbus, Indiana.  I asked Jim how he was doing and his eyes got big and he described a recent project.  It seems that an internal machining process in their plant was having a hard time delivering to the main line the right part, on time.  Looking sad, Jim said "We had four days of inventory and still had stockouts," as if it were a moral failing to have that much in-plant inventory.  Then his face brightened: "So our associates themselves took a different path!!  Instead of using kanban to pull these parts they worked with the line to find out the day's production run and queued up the exact parts they needed, in order, as they needed it!!  And we cut the inventory to about a half day!" 


How can this happen?


In the May issue of Harvard Business Review (not yet available online for non subscribers), Steve Spear wrote "Learning to Lead at Toyota" where he followed the training of a Toyota leader.  Spear wrote the seminal 1999 article, also in HBR, Decoding the DNA of the Toyota Production System  ($6 download).  In this new article, Spear gets to the heart of how an individual leader, like my friend Jim Clark, learns how to get rapid change, rapid improvement and a relentless lowering of costs and elimination of waste. 


Read these two articles to learn more.  They are seminal to understanding Lean.  And it explains how thousands of Jim Clarks, around the world, allow headlines like this to appear.


I hope this is helpful.