Lean manufacturing - Toyota and over production

Throughout this blog I have talked about lean manufacturing and its concept and application and even success stories and failures. All the time I have taken Toyota as the example and as the benchmark. In fact being the initiators of lean, Toyota knows their system well than anyone else.

But recently I was reading a post on lean blog (http://www.leanblog.org). It compares Toyota to the GM on sales and the stock levels they maintain. The obvious conclusion is Toyota having lesser inventory since both of them have almost similar sales according to this post. But the reality is not that. Actually Toyota had more inventory than the GM. Interesting isn’t it. Does it mean that Toyota is not following their own system? At a glance it looks like.

Although back in our minds have a picture of no work in progress and inventory attached to lean manufacturing, the reality is lean never talks about minimizing inventory. It always talks about inventory as a waste and a reflector of the wastes. But if we think about it very carefully, lean always worried about the bigger picture. Although it is true to say inventory is a waste, reduction of inventory needs to be weighed. If the cost of reduction of inventory is higher than loss of opportunity or costs in production variations due to technical or other reason the balance must be found. Lean is about finding the balance between all of these. So in that sense Toyota is actually just living their culture, not violating concepts of lean.

This is a very good lesson to all of us. Lean is not about eliminating the entire inventory completely at any cost. It is about looking at the bigger picture and taking the action required to get the optimal out come. If you thought lean is about removing inventory from your system, think again.