Toyota’s lean practices help company recover rapidly

Toyota's lean practices help company recover rapidly

When Japan was rocked by a massive earthquake and ensuing tsunami in March 2011, the World Bank pegged the damage to be upwards of $235 billion – making it the most destructive and costly natural disaster in history.

The Japanese economy has been recovering since the disaster, and likely has years more to go before it can return to the levels it had reached before the wave hit. One of the most-affected industries was Japan's automotive sector, where Toyota was hit so hard it teetered on the edge of collapse, reporting startling low financial results in the second quarter of 2011, and huge losses in production and exports.

The damage was so bad it sent the number of consolidated vehicles sales down 599,000 to 1.2 million, while net revenues fell 29.4 percent compared with the same period a year earlier.

However, for all the perils the company has been through in the last year and a half, its advanced system of manufacturing is proving to be its saving grace, and inspired businesses around the world to look into one thing – adding lean operations.

According to Wall St. Cheat Sheet, Toyota's lean manufacturing system has kept costs low, production high and made the return to profit a faster journey than any thought possible. Toyota's specific method of lean, the Toyota Production System, was the first system that spawned several similar strategies all over the world. Lean is now making its way into hospitals, logistics operations and other industries far from the auto manufacturing sector.

The system – or even philosophy, as it is described by some – could have an entire college course dedicated to it to understand all its intricacies, however at its most basic level, it can be broken down into two principles. The first entails quickly and clearly identifying and labeling problems that arise, and the other includes aggressively eliminating waste, inconsistency and unreasonable requirements. At its very core, the system aims to find the root cause of a problem, and do away with wasteful operations.

Perhaps the most impressive example of lean implementation is Toyota's move to use lean on its assembly line. One of the company's Mississippi assembly plants can build 600 cars in one day, and if operating at full capacity for one year, 2,000 employers could assemble as many as 200,000 vehicles every year.

Perhaps Lou Spagnoletta, an employee at Toyota, summed it up best – and in true lean fashion – in only a few words.

"You have a car in a smaller space," he said, "and it takes less time to do the work."

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