Archive for January, 2010

Principled Lean: Give Toyota Credit

Posted January 27, 2010 By Fletcher Groves

The remarkable decisions coming out of Toyota this week – to stop selling most of its car models, to stop even producing most of its car models, until they solve the gas pedal problem – are thought-provoking. Even for someone like me, who interprets Lean Production within a particular industry vertical, and judges Lean as less of a religion and more a part of the toolset homebuilding companies need.

Toyota could have – and should have – responded more quickly to this problem. Clearly. But, give them credit for walking the walk when they did respond. They stopped the line to fix the problem. They matched the rate of production to the self-imposed limitation on demand; if you are not going to sell cars, then you might as well not make them. They took a longer view than the next couple of quarters’ earnings reports.

As I have said previously in this column, homebuilding is not automobile manufacturing.

Homebuilding production is project portfolio management, not continuous flow. Kaizen and PDCA pose limitations to solving anything but the simplest of problems. At best, Lean is only part of the solution for homebuilding companies. There are lots of areas where Toyota – and Lean Production – just get it wrong. In particular, Toyota produces to forecast, not direct demand, more the result of a flawed value stream than a flawed production system.

But, they understand how to solve problems with standards, they understand that inventory is an asset only on some balance sheet (and is a liability in every other sense), and they have the courage to make tough decisions and live their principles.

I wonder how many homebuilding companies would have done the same.