Wednesday, September 29, 2021

A counter-intuitive solution

Superficially, Japan and China are much alike. For instance, they both put a huge premium on saving "face".

This is not solely an oriental trait. Mrs ERJ will occasionally remind me of some event where I was not at my best and I will have no recollection of it.

In industry, log-books SHOULD be hard-bound with numbered pages. Without permanent tracks in the snow, problem-solvers inevitably circle back around and try "fixes" that didn't work the first time (nor the second, third or fourth time).

Every success has a thousand fathers and every failure is a bastard.

Just In Time Inventory

W. Edward Demming was famous for demanding that organizations "Drive out fear."

Fear poisons the flow of information.

Toyota recognized that you cannot change human nature and it is very hard to change culture so they developed a system that makes problems (waste) obvious.

They start reducing inventory levels a bit at a time.

Inventory is the universal bandage.

Don't have enough people to run the shop? Add inventory between stations so workers can build from the piles of inventory between stations.

Have processes that go off-line frequently? Add inventory between stations so downline stations can continue to build.

Process has a high scrap rate? Add inventory.

Incoming material varies wildly in key characteristics? Add inventory.

People call in sick every Friday and Monday? Add inventory.

Throughput sucks? Add inventory.

Toyota realized that no engineer was going to admit that the process that he installed was a piece of crap. Nor was a maintenance supervisor going to admit that he could not manage his people. Yada, yada, yada.

By lowering the inventory levels incrementally, the biggest problems announced themselves.

If the biggest problem was a wing-of-bat-eye-of-newt process then stock piled up on the in-basket side of the process and was empty on the out-basket side. At that point, the only way for the engineer to save-face was to clean up the process or to propose a process up-grade.

Toyota relentlessly kept lowering inventory levels. Poor suppliers were weeded out. Unreliable trucking companies were fired (and went out of business). Supervisors who were drunks committed suicide.

The west looked at J-I-T and saw reduced carrying costs but that was the smallest part of it. The biggest part was that Toyota (and others) had created a self-correcting system. J-I-T settled the mud out of the water and everybody could see the rocks. If you had a brain, you fixed your problem BEFORE it was the rock that broke the surface of the water.

A myriad of unexpected benefits resulted. One of the biggest sources of quality problems is when a "quarantine" is breached. Picture a worker inspecting output of a machine. He puts the good ones into one bin and bad ones into another bin. When the bin of bad material is full, it is moved to another site*. Days later, a stockhandler sees the bin of (bad) parts and moves it back to the line to feed the next station. 

Shrinking the inventory addressed that because you no longer needed to have huge numbers of bins of in-process material scattered wherever the material handlers could find room to put them. Shrinking inventory forced engineers to fix their processes so they produced 99.999% good parts and scrap baskets disappeared.


After a burst of enthusiasm for the Toyota Production System, corporations reverted back to business-as-usual. Too much middle-management was invested in doing things the old way. Too many of them had their egos gored.

Failures are hidden or subsidized or enabled or "celebrated". The liars collude. The thieves, embezzlers and officials-on-the-take get fat.

The current energy crisis sweeping the globe is a harbinger of things to come. Get used to it.

*Scrap parts are often "reworked" to make them not-scrap. Holes or rips in the metal are welded shut or discolorations are painted over or rough edges hit with a grinder to smooth them. Cards identifying the condition of the material are easily knocked off or not read resulting in scrap parts being put back on-line.


  1. Too many people involved in a process are not invested in the process. This motivates cutting corners, turning a blind eye and sometimes blatant cheating or fraud. It's human nature.

  2. That is why Toyota (and all the Japanese manufacturers succeeded) where the US manufacturers failed in the quality circus.

  3. It sounds like your experience in manufacturing has made you a fan of 'Just in Time' inventory controls, Joe. Accountants love minimizing inventories as well. It costs money to keep inventory viable, especially if it's perishable, and it costs money to control storage and manage warehousing. The 'Just-in-time' concept is great - for assembly line manufacturing. What about systems that are subject to disproportionately-powerful outside influences?

    The problem is that modern corporate management has become inured to reporting on a quarterly basis, and on keeping the books as their guiding light to performance management. Are they leading with a well-supported vision - or just managing their profits by controlling their costs?

    Where does 'Value' enter the conversation? Price is what you pay - value is what you seek. An accountant never captures the value of intelligent decision-making. An accountant never captures the bottom line on the invoice that wasn't written because someone made a wiser choice.

    If you truly believe in 'Just-in-time' - then why do you stock a pantry?

    I beleive in a 'Just-in-case' philosophy, instead.

    1. I think Joe was not expressing a belief in JIT per re. Rather, I believe he was pointing out that Western industry completely misunderstood WHY Toyota implemented JIT.

  4. I've long said that importing a different cultures management concepts don't always work. I remember when the saying was fix the problem not the blame. That worked in Japan because if you screwed up badly enough in Japan that you lost face,you committed seppuku. In America it was just a way of dodging responsibility. When you fixed the problem the screw up was removed from the equation and didn't make more major mistakes. In this country the same screw up was still in place to do it again. This is a bit like the lefts belief that executing murderers doesn't act as a deterrent. Only in horror movies do dead murderers kill again.


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