“Build to Order” Yet Heijunka

March 3, 2009 - Tags:

Cho’s quote at the opening of this chapter suggested customers may have to wait a little longer if they want to order a vehicle specially built for them. He is not willing to sacrifice the quality and efficiency benefits of heijunka for the sake of “build-to-order.” Yet, other car manufacturers have developed build-to-order systems, potentially giving them a competitive advantage. One of the conventional build-to-order solutions is to keep a lot of finished vehicle inventory in huge dealer lots around the country and swap vehicles among dealers that match custom orders.

So is Toyota satisfied with asking customers to wait while they may be able to get the specific car they want from a competitor? In response to this challenge, Toyota has developed a solution that will allow it to level the schedule and at the same time build to order. They are never satisfied with either/or. Alan Cabito, Group Vice President of Toyota Motor Sales, explained:

The Toyota system’s not a build-to-order system. It is a “change to order” system. And the big difference is that we have cars moving down a line that we change specs on. We’ve always done that. But we’re just taking it another big notch up. We pick a car on the line, any car, and change it. And obviously there are guidelines on how many changes you can do in a day, so we consistently have the parts available to do it.

This is all done within the leveled schedule created several months in advance. Cabito explained further the realities of the mixed model production line:

You might have a van unibody and a truck and then you might have another truck, so that the van was every third vehicle. That isn’t going to change. You can change the color, which is not simply paint, it’s interior and everything else. You can have matching mirrors, etc. There’s a lot of complexity to changing color— you have to change virtually all the accessories. And the way that gets managed is on the allowance of how much change can take place. There will be a limit to the number of green, leather-interior Siennas we can make in the same day.

As usual, Toyota experimented with building to order with an actual pilot—the Solara, a sporty coupe version of a Camry—in the Canadian plant. It is relatively low volume. For Solara they achieved 100% “change to order.” For the Tacoma truck there are a huge number of engine combinations, and they were able to achieve about 80% “change to order” from dealers who called in with customer requests. Cabito gave me a sales perspective on how this works:

We place a single month’s order three times. We’ll order it four months out, three months out, two months out. During that time, they set up all the components and suppliers. For July production, the final order will be placed in May. So your order’s out there 60 days in advance. Then every week we can change the order in the U.S. plants. Every week we can modify anything that’s unbuilt, except for the basic body type.

The important point here is that the Toyota culture does not allow managers and engineers to conclude, “That cannot be done here.” The rigid principle of heijunka does not stay rigid for long. On the other hand, it is not simply thrown away because of a new trend such as build-to-order. The question is: How can we accommodate the customer’s desire to make choices and get the car quickly without compromising the integrity of the production system? In true Toyota Way problem-solving style, the engineers carefully studied the situation, experimented on the shop floor, and implemented a new system.