Thursday, August 29, 2013

Genchi genbutsu - what is this ?

Go to the workplace and see for yourself, so there is no selective filtration of communication and missing out on pertinent information which could help to identify the problem and prevent its recurrence.
The Toyota Way !!

The beauty of Genchi Genbutsu is the stress on the non-recurrence of the problem. If the problem cannot be resolved straightaway, the problem is escalated to the top management, top management also comes to the shop floor and investigates the occurence.

Problem Solving simplified ..
Let us not forget the main stress during the whole exercise, to identify the problem and  prevent its recurrence by identifying the root cause and eliminating it..  When Toyota had a problem of falling market share in India, the Toyota top management in the country, resorted to  Genchi Genbutsu exercise. The whole top management were on the roads in different cities and industrial towns of the country to find out why Toyota vehicles were not selling.

About 70% of Toyota components in India are imported. Except for the engine, gear box and transmission, (which constitutes 70% of value of an automobile), the rest 30% is manufactured in India with the help of local manufacturers. This explains the reason for the high costs of Toyota automobiles on Indian  roads. (part of a Genchi Genbutsu exercise)

Indians are the smartest customers in the world, in the sense that they look for the most affordable quality, need not essentially be the best, but at a very affordable cost. More than end products they are constantly on the look out for solutions. The "Jugaad" culture, where any make shift arrangement that can serve a function and meet a need, thus is very popular. Brands and Brand names rarely matter to a majority of Indians looking for value, sheer VALUE, nothing else.

The cost vs performance / value comparison is always topmost in Indian customer's minds, be it the customer in the busy village market looking for items for his house during the day or the big industrial customer looking for raw materials / products.

If the function of moving from point A to point B can be achieved by an automobile that serves the purpose with moderate safety and speed at lower costs, Indians would embrace such a solution. All other major players in the Indian market have indigenous production capacity. High initial cost of ownership was the reason why Toyota was pushed out of the Indian market, even though it has global reputation for quality and low total cost of ownership during the whole life of the vehicle.

I believe Toyota is working on solutions to start the production of critical engine and gear box in-house within India at the earliest, so that it can bring out cars of high quality, moderately priced and be able to capture the market.


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