Just in Time?

Just in Time?

Just when you thought there were no new supply chain innovations to be had, Toyota unveils yet another pioneering industrial strategy: just-in-time reverse logistics.

That may not be what the world’s largest, and suddenly most troubled, automaker may call the process it has undertaken in the United States to cope with the mushrooming safety concerns over Toyota cars. But it’s a fair description of Toyota’s woeful response to the problems it faces, a response being watched closely across the shipping world not only because of Toyota’s enormous scale but because the automaker is an icon of supply chain management and a model for industrial processes.

Now it appears Toyota’s famously disciplined supply chain management has gone awry, and that inevitably raises the question of whether the manufacturing and supply processes had a role in Toyota’s failures. It’s a critical question across the logistics and transportation world: If the just-in-time discipline that helped build Toyota into the world’s largest auto brand is a model for shippers and for efficiency-minded transportation providers, are there fundamental weaknesses in the system or did the company fail to pay attention to its own extensive preaching on its production system?

The Toyota production system is built on two pillars: just-in-time, or lean manufacturing, with its focus on low inventory, detailed planning and highly efficient production that supplies “what is needed, when it is needed and in the amount needed;” and the “kanban system” for communicating the need for particular parts through the supply chain, allowing goods to be “pulled” based on need.

Simple in design, it’s a highly complicated system to execute, and comes with some wrinkles. Keeping inventory low is certainly one measure of efficiency, but it means you are depending on your supplier to have inventory on hand to keep your expensive production system moving.

But the revelations of recent weeks also raise the question of whether Toyota in its move to the top of the automobile world became more concerned with the process than the product. JIT may tell us about the production system, after all, but it doesn’t tell us about the car.

Joel Sutherland, managing director of the center for value research at Lehigh University and a former vice president of operations at Toyota’s largest parts supplier, Denso, says the lean discipline isn’t supposed to come at the expense of quality. “It is a process, but it is one where quality is built in at every step, where there is responsibility and, more importantly, accountability for anyone to step in and stop things if they see any flaw,” he said.

Sutherland says an “air of complacency” may have spread as the company grew larger. “Somebody took their eyes off the ball,” he said. “This process is supposed to work.”

In some ways, the process did work. It produced more cars, more efficiently than any other automaker in the world. Now the company has to make it work better, in reverse.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage