Managing Visibility by Leveling the Workload
Heijunka—the leveling of the workload—serves many purposes. First, it is a prerequisite to having continuous flow and pull production. Second, at the supply chain level, it reduces artificial demand fluctuations, or the bullwhip effect. Third, it provides visibility into systematic changes such as shift in product mix or slowing of demand, and allows the planner to use rate-based planning techniques. It allows the match of production and sales rates (using the concept of takt time). Thus, heijunka along with mix planning are keys to maintaining a stable supply chain. As Toyota Examples of Mix Planning revealed, a mix strategy does not mean that the same product mix needs to be produced and supplied to every dealer in the world. The supply chain allows each dealer and each region to focus on the 80 percent that sells the best. At the national and even the regional level, the variations accumulate and are accommodated through careful planning to fit the overall sales goals. Thus, what is produced is a much larger set than what is sold at the dealer. That is another wonderful example of allowing local (or random) variations and adapting to them at the central level, where the control is better and planning more precise. Moreover, heijunka when applied to sales trends provides a quicker signal of bigger and more difficult issues to manage, such as the recent drop in sales of Tundras and the upswing in demand of the Prius. Every supply chain manager, if asked which is more difficult to manage, mix or volume fluctuations, can use Toyota’s principles to articulate the trade-off precisely.
In an interview, Katsuaki Watanabe gives yet another use of heijunka, namely, in managing risk. It is difficult to respond to global shifts in demand. How does one supply more cars to the hot market in China or trucks in the United States and at the same time practice heijunka? The Toyota solution is to use production capacity in Japan to smooth out production. How does that work? Suppose we make the following assumptions: There will always be ups and downs in individual global markets, but collectively, these fluctuations will tend to cancel each other out. However, in order to meet an upswing in China, it might not be possible to supply from the relatively slow U.S. market (for trucks) due to logistical problems as well as the tremendous effort required to retool the plant. Instead, a very flexible factory in Japan can be utilized to supply the upswings. Watanabe calls this concept “global-link production.” The advantage is that all plants are used fully, demand is met, and flexibility is tested.