This extremely popular 20 minute video (7mm+ views) hits on the various reasons for global shortages but one fairly obvious message is the misapplication of the 50 year old Toyota Just-In-Time principles that exist in the American economy.
From the video, “Just-in-time is such a simple principle, but the pursuit of elimination of waste is now the central mission of any manufacturer. However, most did it wrong. Manufacturers globally saw the headline-elimination of inventory leads to massive efficiency gains and jumped on that without actually determining what made it work for Toyota.
- They ignored that Japan’s small physical size made for short domestic supply chains, less vulnerable to things going wrong.
- They ignored the company’s production leveling technique-finding the average daily demand and producing that, regardless of short-term changes in demand.
- They ignored the fact that eliminating excess inventory is different from eliminating all inventory.
- They ignored the principle of growing strong teams of cross-functional workers, predicated on respecting people.
- They ignored the culture of stopping and fixing problems, to get things right the first time.
- They ignored huge swaths of the Toyota Way and created a system that’s less effective and les resilient, but can impress shareholders through short-term savings.
Watch the video (with your family, perhaps) for the full report…It is eye opening on so many levels.