Leaving Japan Behind

    

Rahul Garga wrote a piece concerning the Japanese economy in Seeking Alpha the other day called “Why Japan Might Find it Hard To Ease Out of This One”.

Among his points were:

“Japan once held a major competitive advantage in the field of manufacturing, which it successfully used to dethrone major Western industrialized countries in many different areas. For example, in 1980, Japan held over 50% of the shipbuilding market share and this fell to less than 10% in 2013. The single biggest reason for their advantage was the "lean" manufacturing process that made them super efficient.

This "trade secret" however is no longer a secret in so much as it has become a standard operating procedure in manufacturing plants around the world. Factories from Shenzhen to Bangladesh use Kaizen principles just as any plant in Osaka would.

In terms of product differentiation, "Made in Japan" was synonymous with quality, however because of the increasing standardization of production and global nature of business, quality has now become a requirement rather than a distinguishing feature.”

While he might be over-estimating the universality of the adoption of lean, his points were well made. I think the broader, but more pertinent implication is that lean has improved, broadened and expanded from Toyota. While Japan is no longer the pinnacle of lean manufacturing excellence, Toyota is not necessarily the golden example for all to imitate.

Don’t get me wrong – Toyota does many great things, but the body of knowledge and the underlying principles that drive manufacturing excellence have expanded beyond them. Some of this is by necessity, and much of it is the result of some pretty smart people with the advantage of standing on Toyota’s shoulders taking things to a higher level.

Value Streams are a good case in point.

Toyota doesn’t organize their plants into value streams formally or informally. The reason is quite simple – the scope of automobile assembly is such that a plant is a value stream – a few products, similar to each other, going down one line and being sold by and large to the same group of customers. Many manufacturers have quite a different environment, however. There truly are multiple value streams in most factories – substantially different products flowing through multiple process flows serving multiple customers through multiple channels.

I have no idea who thought of value streams and formally structuring plants and entire businesses around them, but it was a necessary adaptation of the approach Toyota takes to running its business, and has proven to be a very effective extension of Toyota’s original thinking.

In a similar vein, lean accounting is a purely American creation that has expanded and improved the core lean thinking. I don’t know why Toyota was able to make decisions that flew in the face of traditional accounting. Perhaps they are simply the product of a Japanese culture or war hangover that caused them to be more focused on common sense than numbers.

A pretty good case can be made that their stumbles 5-10 years ago were the result of losing some of that sense and paying too much attention to numbers. It doesn’t really matter though.

The fact is that American managers are driven by accounting numbers they believe to be true. Lean could not succeed in the United States without providing managers with numbers that supported it. Lean accounting was another necessary and powerful extension of Toyota’s thinking that improved the body of knowledge.

The information technology and equipment manufacturers are largely stumbling around, by and large, but some of them are developing tools that similarly expand and facilitate lean. Those tools are not Toyota – or even Japanese – products. They come from all over.

My friends at iDatix – the host of the blog – are working on such additions to how manufacturing can go around and beyond ERP to facilitate lean management … a big part of the reason I wanted to get closer to them.

The point is that emulating Japan never was a particularly good idea, and emulating Toyota is only a good idea to a point, or to the degree their business is similar to yours. There are many other examples of lean thinking and lean management that are better models for the simple reason that other companies have developed lean tools and lean processes that effectively support a business model closer to yours.

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