Dr. Frazelle explains how to incorporate unique economic, geographic and demographic conditions in to consideration when developing supply chain strategies.
Optimization is a facet of our RightChain™ program that most clearly differentiates it from other quality, operational, and/or philosophical approaches to supply chain logistics including Lean, Six-Sigma, Pull, Just-in-Time, Kanban, and the Toyota Production System (TPS). Those approaches all have their roots in the Toyota Production System – and implicitly assume that all inventory is bad (or illegal), that 100% perfect quality is always the goal, and that moving things between places more often is always better than carrying inventory.
In the late 1980s I had the unique privilege to lead a major study for the U.S. government comparing U.S. and Japanese logistics systems. As a part of that study I interviewed business and supply chain executives in many large Japanese organizations. Not surprisingly, one of those was Toyota. I spent significant time with the developers of the Toyota Production System and their professor. One of the stories they shared explains more about the Toyota Production System than all the books I have ever read on the topic.
The Toyoda (the company name was created from the family name) family was a rice farming family. They became wealthy when they invented mechanical harvesting equipment for rice. At some point they decided that if they could make rice harvesting equipment so well, they could also make cars. Unfortunately, the concepts did not translate very well and the auto making venture almost bankrupted the family. The head of the family decided to hire a new engineer from outside the family and to give him one year to develop a new way to make cars. To make a long story short, that young man came up with a way to profitably make cars in an island nation (self-contained), with few natural resources (no waste), limited inhabitable land (no space), and locust-like industrial congestion (perfectly orderly). The Toyota Production System was born out of those unique geographic, business, and cultural conditions. Those are not the same conditions that exist in the United States, western Europe, eastern Europe, China, Brazil, etc. There are many good ideas and concepts in the Toyota Production System and its paradigm children, but they are not all applicable and they are not all best practices. They are for Toyota, but not for everyone. “Don’t philosophize, optimize!”