People Do the Work, Computers Move the Information

March 24, 2009 - Tags:

When I teach about Toyota’s system, I start with the basics including kanban, which is mainly a manual visual process. If there is an information technology specialist in the house, he or she inevitably asks the question, “Isn’t there any place for information technology in the Toyota Production System?” I reassure them that they are not out of a job even if their company goes completely lean. But their role may be different. IT will not drive the way Toyota does business and certainly is not allowed to disrupt the values of the Toyota Way.

Toyota is a modern company and, like any modern company, you could paralyze it in no time by shutting down its computer systems. Computers are used to run finances, pay bills, keep track of millions of customer orders and tens of millions of service parts transactions, capture the data for developing new products, and schedule many things. IT is critical to Toyota, but Toyota looks at technology as a tool that, like any other tool, exists to support the people and the process.

For example, at Toyota’s service parts operations they continue to use an old software system developed in house years ago under much simpler circumstances. It has continuously evolved over the years and does exactly what is needed today. Jane Beseda, General Manager and VP North American Parts Operations, does not see any burning need to modernize it, but she does plan a gradual transition to newer technology.

In contrast, I had an interesting consulting experience with an America auto parts supplier that had worked with Toyota for years learning the Toyota Production System (TPS). My client’s CEO got hooked on the idea of increasing inventory turns as a major corporate “lean” goal. He gave all of the business units aggressive targets for inventory turns, which on the surface would seem to support TPS principles of eliminating waste. It became a corporate mania.

A large group of “supply chain engineers” within the company was tasked with addressing this problem. The background of the leader of the supply chain group was in information technology. His main priority was to bring in new Internet technology to provide “visibility into the supply chain.” There are many supply chain software “solutions” promising to radically cut inventory and provide control over the process. They supposedly do this by showing anyone who logs into the Web site how much inventory there is in real time at every stage of the supply chain.

His subordinates were very proud of their boss, who was extremely intelligent and a fast thinker, and they often repeated a story he would tell. He described supply chain visibility software as analogous to a bulldozer. You can dig ditches manually and it will work. But a bulldozer will do the same thing in a fraction of the time. IT was like this—speeding up dramatically work that could be done by hand.

I was floored by this belief. How does keeping track of inventory on the computer give you any control over making it go away? From my TPS training, I knew that inventory is generally a symptom of poorly controlled processes. Ultimately, manufacturing is about making things. I talked to the boss and gave him my perspective. I explained that software may be very fast, but it is not a person or a machine performing work. In fact, true “supply chain visibility” is more analogous to setting up a video camera at the work site and hooking up a remote monitor in another state so you can sit back and watch the ditchdiggers work. To get more productivity out of the work process, you have to change the way the work is done by eliminating waste. Supply chain software by itself does not eliminate waste.

My perspective was confirmed when we did a project in one of their plants. Without any information technology, we were able to cut inventory by 80% on the assembly line. We did this by moving from the system of pushing inventory according to schedules to a manual pull system, using kanban. Lead time was reduced by one-third—with no new technology. To eliminate most of the parts inventory required working with a supplier in Mexico—also owned by the same company—that was pushing as much inventory as it could onto this plant so its inventory turns would look good. Improving the process is the only way you can control inventory.