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What’s After Lean?

by APICS CEO Abe Eshkenazi CSCP, CPA, CAE |   2013 | 0 | 0

Abe Eshkenazi Photo

Abe Eshkenazi


What’s After Lean?

The Toyota Motor Corporation is making some big changes, especially across its North and South American affiliate companies. Among these changes, the company announced a new head of North American operations, a new board chair, and a new board member. A Los Angeles Times headline underscores the importance of these moves: “Toyota Overhauls Management, Gives More Autonomy to North America.”

“Of course, as president, management responsibility ultimately lies with me,” says Akio Toyoda, grandson of the company’s founder, in the Los Angeles Times article. “However, as for daily operations, we plan to implement a more agile and autonomous business unit type of structure that will enable the executive vice presidents in charge to accelerate decision making.”

James Lentz, who was head of US sales and marketing, will take the reins of North American operations. Steve St. Angelo is the new chief executive officer of Toyota’s Latin America and Caribbean Region. Takeshi Uchiyamada will become the board’s chair. Uchiyamada was the lead executive for the Prius hybrid team. Lastly, Mark Hogan was named an outside board member at Toyota__the first American to hold the post. Previously, Hogan worked for 31 years at General Motors.

“We have drawn from a strong and seasoned cadre of global business leaders with these appointments,” Lentz said, commenting on the widespread changes announced last week. “This new leadership team leverages a unique combination of strategic vision, breakthrough innovation, executional discipline, and an unwavering focus on the customer.”

These changes come at a time when Toyota still is recovering from a series of recalls that began in 2009 and were related to an acceleration problem. According to the Los Angeles Times, the company paid $1.1 billion in class-action settlements and $29 million to 29 US states because of the incidents.

“I have learned many lessons,” Toyoda said. “Sustainable growth is what is most important. We also learned that increased sales do not equal real growth.”

Inserting some S&OP into TPS

Not once in the article or in the Toyota press release did writers mention what we in supply chain and operations management recognize Toyota most for: the Toyota Production System or lean management. According to the APICS Operations Management Body of Knowledge (OMBOK) Framework, “lean management is closely related to the concepts of the Toyota Production System (TPS) … it involves the systematic identification and elimination of waste throughout the entire value stream. In the TPS, waste is identified by the Japanese word ‘muda.’”

Now consider the following APICS OMBOK Framework definition: “The S&OP [sales and operations planning] process develops tactical plans that assist management in strategically directing the business to achieve continuous competitive advantage. It integrates customer-focused marketing plans for new and existing products with the management of the supply chain. The process integrates all business plans into a single set that meets all the needs of the functions of the business.”

As Toyota moves into a new era, with a focus on customers, should the company de-emphasize lean? Can S&OP be key to companies’ “sustainable growth?” APICS helps professionals answer important questions like these. For example, together with the Institute of Business Forecasting & Planning, APICS sponsors the Best of the Best S&OP conferences, where attendees learn about S&OP from leading practitioners. This year, the conference comes to London, England, May 16–17, and to Chicago, Illinois, June 13–14. Click here for more information.

Questions for discussion

What are some of the potential advantages of Toyota’s strategy of making its North American business unit more autonomous? Are there any potential downsides?
Are many companies de-emphasizing lean management and the Toyota Production System? Is this a good strategy?

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