Tuesday, February 09, 2010

Toyota has lessons for the world ..

Toyota, the no. 1 car maker of the world, who gave us the lean manufacturing techniques and is one of the major companies oft quoted in academic and research circles world over, has now some gyan to transfer to the world on the same techniques.

Standardisation is an important aspect of lean manufacturing as it reduces the cost of operations and reduces wastage of inventory, reducing inventory holding costs and obsolescence related costs into the future.

Unlike a non-moving component like a music system, for a moving component like car, there is the possibility of accidents happening, advertently or otherwise. Accidents result in recalls of cars due to faulty parts for substitution ( raising questions of the Toyota Quality System ).  If this standardisation is limited to just one model it would result in recalling less number of cars. The final cost impact on the company and thus on the customer in the long run, in terms of a long life model and its support network, would therefore be limited. GYAAAN ....

For Toyota and the world, it is the greatest lesson to learn from this recall exercise ..

Moral of the story : Limited Standardisation is better in the long run than extensive standardisation .. 

The geographical spread of the distribution network, cost of individual standardised components factored into the future and the range of liability on litigation would finally decide the extent to which standardisation could be implemented !


1 comment:

  1. I am not convinced you can draw such a drastic conclusion from a faulty quality assurance program.

    There are huge benefits and savings to be gained from standardised components across multiple models, not to mention huge quality gains to be achieved as well. I am quite certain that quite a few heads at Toyota have rolled as a result of this.

    If the problem was a design flaw, you have isolated the design flaw to one component (albeit that which is used across multiple models). Imagine if you had different designs across multiple models, you now have opened up the potential for flaws across multiple models, which will not necessarily all be made evident at the same time, but might, if Toyota was unlucky enough, reveal themselves one after the other over the span of a few years and which could potentially lead to multiple litigations, all of which could be expensive.

    So, I personally feel, it is too early and there isn't enough evidence to suggest that limiting standarisation in the manner you suggest is going to be any better.



Ambani and cautious days ahead for Indian economy

Reliance is planning slowly to be a zero debt company by 2020.  As an overtly safe move from India's richest man, is it reflective of...

My popular posts over the last month ..