Why Some Companies are More Successful at Implementing Lean Than Others

Posted by on Jun 8, 2011 in Lean | 0 comments

Managers often struggle implementing lean in their organizations for various reasons.  Many cite that the Japanese culture is different and this is why Toyota has been so successful at implementing lean.
As I’ve mentioned in previous posts, early Ford Motor Co. and Toyota used a cash flow based financial system.  This allowed them to concentrate on cycle time as the primary metric.  It also created an atmosphere where employees were constantly looking for ways to improve flow and make work easier.
Most large companies have a financial system based on optimizing Return On Investment (ROI).  There are two inherent flaws using an ROI model.  The first is considering inventory as an asset.  This creates a set of problems because it drives a behavior that over-producing is alright and doesn’t detract from the bottom line.  The other inherent flaw is considering direct labor a variable cost, meaning that employee job security is purely a function of sales volume.
These two inherent flaws and others drive behaviors that are contrary to being a lean organization.  This system creates an atmosphere where everything is a numbers game and those that succeed are more adept at playing the game.

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