Verical Communications

The Economist carried an insightful article today, describing how Toyota, in its quest to become the number one car manufacturer worldwide, stretched its lean manufacturing philosophy to the breaking point. As Toyota sought to grow market share, they rapidly expanded their supply base to include suppliers they hadn’t worked with before. Along with their sole-source strategy, this resulted in a decrease in quality, an increase in recalls, and the situation Toyota finds itself in today.

If we look back on the origins of lean manufacturing, we can trace the principles to improving design, service, quality, testing and sales through various methods, including the application of statistical methods. In inventory management, statistical methods are applied to accurately size the amount of inventory needed in the supply chain based on time, variability and service levels. If applied correctly, the use of statistics in lean manufacturing will optimize the end-to-end supply chain. If applied incorrectly, with a “lean focus” (meaning reducing inventory as much as possible), it’s going to mean missed opportunities as upturns in the economy occur.

At Verical, we recognize the need for highly agile supply chain processes to compete in today’s market and the problems associated with the chronic excesses and shortages that result in large costs and risks to the supply networks. We work directly with the OEMs and contract manufacturers to reduce the risk by allowing them to source time critical components fast and easily, and with component manufacturers and distributors to allow them to monetize slow moving and end of life inventory. Our innovative online electronic components outlet provides an easy, reliable and fast way to buy and sell electronic components—which ultimately results in more agile, responsive supply chains with the associated lower costs and risks.

We can all learn a lesson from Toyota. As The Economist article states, take time to “stop, think and make improvements” in your supply chain and lean manufacturing strategy.