Monday, September 23, 2013

Can lean manufacturing systems backfire?

This blog post is based on the weekly readings and based on few articles that I came across this week.

Lean Manufacturing, coined and developed by Toyota is a technique that has been adopted by almost all manufacturers around the world. Lean manufacturing involves eliminating waste in the production process, thereby improving the efficiency and continuously cut-down production costs. Toyota achieves this by constricting the number of suppliers to procure parts at a large scale. Toyota would then standardize their key components for different models thus eliminating waste and increase revenue.  In the year 2008, Toyota had to recall several million cars for failures in the rapid vehicle acceleration systems where, some of its best-selling vehicles have been prone to accelerate while drivers step on the brakes. Due to this, their reputation as a quality car manufacturer has taken a massive hit. Toyota is facing enormous challenges over its problems, resulting in a billion dollar recall of their cars and public relations disaster emanating from the deaths of around 34 people.

That in turn is causing some people to point the finger at Lean – the popular name for the legendary Toyota Production System – as an important factor in the quality problems. Analysts feel that companies attempt to save a lot of money by standardizing their key parts to reduce production costs and their obsession with making more profits rather than emphasizing on quality is the reason behind this fiasco.

Other companies also faced similar problems by adopting lean manufacturing techniques. Ford announced a recall of 4.5 million cars to address a fire hazard involving a faulty cruise-control deactivation switch used across different models. That brought the total number of Ford cars and trucks recalled due to the switch to 16 million vehicles since 1999. Panasonic has been standardizing key components for years to reduce their costs and resulted in one of the biggest product recalls ever in 2007. Panasonic recalled over 365,574 refrigerators in China alone made between March 2007 and March 2009 due to a defective valve. Under extreme conditions, the faulty valve can leak cooling agent which can cause the refrigerators to catch fire.  Matsushita Electric Industrial Co., which would later become a part of Panasonic, recalled three million microwave ovens, clothes dryers and refrigerators, which shared common electric parts that could overheat and catch fire.

Even though standardizing spare parts have caused bad results; companies still prefer to adopt them in their manufacturing practice. For instance, Sony created a division for procurement across the company and decided to cut the number of suppliers by half. Sony estimates that this move could save them up to 500 billion yen. Standardizing spare parts could have certain deleterious effects on the products as mentioned in the examples above. Commodities without prior testing and trials could lead to poor quality products. Companies should adopt extensive testing procedures and trials to ensure product quality and safety. Although companies could save tons of money on their production costs through lean manufacturing, quality should always come before profits or companies could suffer a huge hit on their reputation that took them years to build.

With all these arguments comes a question. Do you feel that some companies are more into making profits by standardizing their key components and emphasize less on their product quality? What could companies do to improve their lean manufacturing techniques to prevent product recalls? 







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