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Welcome to the Lean times

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article image The Australian automotive industry finds itself challenged by circumstance.
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Thirteen years ago I was in the UK, working in passenger vehicle manufacturing for a very large and reputable manufacturer. We were only two years into production of what was a brand new model (for UK production) and in a brand new purpose built plant.

Since the start of production, times had become difficult; the strong pound at the time (around 0.36c) was a contributor to the problem and the situation was growing worse.

It wasn’t long before many manufacturing plants began shutting shop and moving elsewhere:

Ford at Dagenham -2002
Vauxhall (GM) at Luton-2003
Jaguar at Coventry-2004
MG Rover at Longbridge-2005
Peugeot at Ryton-2007

As you can imagine thousands of people lost their livelihoods.

Today, in Australia, the automotive industry, much like the UK back then, finds itself challenged by circumstance. So what will it do? Well there are numerous courses of action.

Some manufacturers will give in and fold; as we are witness to already; and others may keep their heads down and attempt to ride it out. Others may stand and cry out for more handouts from the government while their businesses crumble and collapse around them. However there is another way. It is the way I experienced working in the UK and it’s a way that Australian manufacturing must adopt with a sense of urgency.

It requires that organisations forget about rousting for external help and begin to focus internally on the things that they themselves can control.

It requires mutual trust and respect between the organisation, it’s employees and the community, and it requires the engagement and empowerment of the workers to be able to make a difference. In short it requires a completely different style of management.

This style of management is a way of life where I worked in the UK and still is today.

This place is Toyota.

At Toyota we never closed our doors and we did not lay anybody off. Of course times were hard and there were tough calls made on such things as overtime and running only a single shift, but we survived. People were redeployed into other areas of the business where possible, and some even found themselves in the role of groundskeeper or in some cases painter and decorator but the point is everybody had work, and the plant is still producing well to this day.

So why is Toyota’s management style (A.K.A. Lean management) so different from the others?

Firstly Toyota’s system is built on 2 pillars that everyone must promote and follow,

1. Continuous Improvement

Challenge-This means that everyone within the company has contempt for the current state.

This contempt then builds a culture that embraces change and actively seeks it out. There is a “no Problems is a Problem” mindset.

Go, Look, See-Toyota managers do not sit in their offices thinking they know it all. If there is an issue the ONLY place to understand it is where it is occurring, which means getting off their backsides and venturing into the place where the important work happens.

2. Respect for People

Respect-Toyota builds a culture of mutual trust and respect. They believe that problems are the result of poor processes not bad people. What this means is that your people will feel empowered rather than frightened to raise problems, thereby presenting many opportunities for improvement.

Teamwork-There is power in numbers and when the right people are gathered together great things happen.

Secondly they are not focussed on cost cutting; they are focussed on the removal of wasteful actions and processes. Thereby reducing lead times, doing more with less and developing their people to work smarter rather than harder. This then increases productivity and capacity to enable growth.

Taiichi Ohno, the architect of Toyota’s Production System (TPS) is famously quoted as saying “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” No mention of costs.

This management system is responsible for Toyota being the number two car manufacturer in the world today (based on sales, profits, assets and market value) second only to Volkswagen (which is of course a sum of VW, Audi, Daimler and Lamborghini) according to Forbes.  

Forbes’ top car makers for 2012

  • Volkswagen – 17
  • Toyota – 25
  • Daimler – 37
  • Ford – 44
  • Honda – 59
  • BMW – 61
  • General Motors – 63
  • Nissan – 85
  • Hyundai – 96
  • Volvo – 183
Source: Forbes 2000 companies  

So if Australia’s manufacturing truly does not want to go the way of Ford then they must

1. Acknowledge that only they have the power to change the predicament they find themselves in.

2. Recognise and accept that the way they have managed in the past just will not cut it into the future and that this admission will mean change on a personal level.

3. Better engage their people in making change happen.

I have been working in this area of management thinking for over 15 years now, both within industry and coaching organisational leaders how to change, and for those that can the future can be very bright indeed, but for those that can’t, It seems the end is nigh.

Troy Taylor is the director of BusinessLearners.com

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