Wednesday, July 9, 2008

True North

Eric Farrell recently observed, "It's weird to 86 a product because we prepped too many of one size and not enough of another."

It's a very plain, direct statement. It goes to the heart of lean philosophy. And it's worth a little thought. While the problem seems simple, the solutions are complex.

Before I get into why it happens and how to solve it the first thing to note: it's a common problem. When you shop for a small T shirt and all they have are mediums it's the same problem. When you want the mint green iPod but they only have black and white it's the same problem.

What's the root cause of the problem? In each cases a product is made ahead of its need. Whether it's in our kitchen, at the t-shirt factory, or in China, the need was forecasted and products were made accordingly. When we forecast need it's always inaccurate.

What's the root level solution to the problem? That's the hard part! It's so difficult Toyota puts it at the heart of its work, calling it True North: Make each product as needed, on demand. A customer asks for something then it's made. In other words--and here's where it always plays tricks in my head to write it:

the only way not to run out of something is to not have it,
to make it when it's needed.

If that sounds hard it's because it is. More like impossible. That's why Toyota defines it as a direction (true north), not a location. Toyota isn't there and will never be (though they're closer than other car companies). The pursuit of True North causes many problems and loads of interesting intermediate solutions, too. I'll go into more detail about them on a future post.

1 comment:

Susan Ederer said...

Not only does this ensure we won't run out of a product, it minimizes the wastes associated with overproduction and handling (such as inventory counting).