Why Toyota Dominates (part 2)

Shigeo Shingo, Chief of Industrial Engineering (who trained the company’s industrial engineers in the time that they built the Toyota Production System), explained that the key to the success of the production system was SMED – the Single Minute Exchange of Dies – which allowed them to run many different products on the same production line, and eliminated many kinds of waste.

Company executives ascribe their success to following the 14 principles of the Toyota Way (see http://en.wikipedia.org/wiki/The_Toyota_Way).

Why do you suppose that these might not be compelling answers for US Auto Industry Executives?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Why Toyota Dominates.

Toyota continues to dominate the automotive industry, reporting for FY 2006 “… earnings of US$180.29 billion, an increase of 13.4% over 2005.  This was the fifth consecutive year of sales increases at Toyota Motor (and since 2001, sales have increased a total of 57%).” 

They claim that the single most important reason for their success is that they follow ‘the 14 principles of the Toyota Way.’

US auto makers have heard Toyota talking loudly about the Toyota Production System and the Toyota Way since the 1970s.

 Our question is this: Why is it that the major US auto makers say they practice ‘lean principles,’ and yet are unable to produce even a shadow of the kind of robust performance in difficult times that Toyota has demonstrated for decades?

Do you find the standard list of excuses satisfying?

  • Labor contracts that contribute $1,000 per car to the cost of GM automobiles.
  • Bad marketing intelligence, so that the company(ies) aren’t offering what the customers want.
  • Excess capacity.
  • Inefficient plants and unproductive workers.
  • Workforces that don’t want to work.
  • Incompetent management.
  • Greedy management.
  • Slow innovation.  
  • etc.

I think the problem runs deeper than this. What do you think?

Chauncey Bell (with Greg Neil)

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.