Can the lean supply chain get too lean? That’s a hot topic now that Toyota is suffering safety and quality woes possibly related to its supply chain. While the lean manufacturing pioneer grapples with the fallout and recovery from “unintended acceleration” and other issues, high-tech manufacturers would do well to view the troubles at Toyota as a cautionary tale in lean supply chain practices. Regardless of the final verdict on Toyota, the supply chain can, indeed, get too lean. As a veteran of several lean implementations in the high-tech industry, I’ve got a few suggestions for staying on the right side of the lean line.

Don’t dismiss Toyota. People who say that Toyota has messed up because of lean are not clear about Toyota’s history or the real root cause of their problems. Toyota has a great supply chain as well as the original and best, long-term implementation of lean manufacturing. In fact, the Toyota Production System that the company started to develop in the 1950s is the original blueprint for lean manufacturing. The real root cause of their problems: the change of strategy in the 1990s to become the largest automotive manufacturer in the world. Bottom line, they tried to grow too fast!

More humbling for U.S. automakers, Toyota drew heavily on the works of W. Edwards Deming, an American. After Toyota successfully implemented lean, the U.S. automakers adopted lean manufacturing. Bottom line, whatever lessons Toyota may learn from any supply chain errors will certainly be worth studying.

Pay attention to the details. Many lean implementations are done sub-optimally. They may look good because of the emphasis on the visible. People pay attention to establishing visual controls, fool-proofing assembly lines, laying out factory floors and “walking the Gemba” — all of which are great. You have to do those things. But that’s only half the job.

The other half of the job involves the unseen. Utilizing analytics and statistics to understand, control and then improve processes. Whether it’s measuring variability of output from a CNC machine or understanding demand patterns, you have to be reasonably sophisticated in the way that you apply these techniques in a lean environment. You have to be able to collect and interpret data correctly to do things right, e.g., know what your inventory level needs to be to provide a desired service level or know when a result is outside a control limit. When you don’t pay attention to the details — or you don’t know what you’re doing with the details — things can (and will) go wrong.

Reinterpret inventory. Lean manufacturers view inventory as a necessary evil. Why? Because as a manufacturing discipline, lean encourages the elimination of waste, which includes inventory. Meanwhile, Wall Street takes a negative view of inventory when it comes to corporate valuation. To Wall Street, inventory is a non-performing or under-performing asset.

But manufacturers can’t just take inventory out of the supply chain altogether without exposing themselves to many risks. Look at Texas Instruments, for example. It cut back so much in the downturn that a lot of their parts are factory allocated, and Texas Instruments can’t make enough, fast enough to meet overall demand. The company cut everything back, from manufacturing facilities to staff, and it took all of its inventory out of the supply chain.

Another way manufacturers reduce inventory levels is to implement vendor-managed inventory programs. Dell is a good historic example, having earned raves about its supply chain as best in class with a negative cash-to-cash cycle and a configure-to-order model that had a two hour lead time from order to build complete. Basically, Dell pushed its entire inventory into warehouses that sat next to its factories. Until it’s actually delivered to the Dell factory, the inventory is owned by the vendors. Dell has immediate access to inventory, but the vendors carry the burden when Dell was probably best suited from a cost of capital perspective to actually own the inventory.

Unless you have a perfect supply chain, you’re going to need inventory to help manage supply and demand. And for most high-tech manufacturers, that means walking a fine line to get a lean supply chain.

Buyers See Part Numbers, Prices and Quantities for Inventory In-Stock at Verical’s Factory Outlet—without Navigating to Verical.com

• Firefox extension gives buyers immediate, always-on access to Verical inventory information
• Auto-complete feature displays drop-down lists of matches as shoppers key in part number searches
• Download the Verical Toolbar at https://www.verical.com/extensions

SAN FRANCISCO — February 22, 2010 — Verical, Inc., the online factory outlet for electronic components, today announced the Verical Toolbar, a Firefox web browser extension that lets users quickly and easily search the company’s extensive catalog of electronic components through a search box located in the browser bar. With the Verical toolbar, buyers can browse Verical’s in-stock inventory and bargain prices—without navigating to Verical’s website located at https://www.verical.com. Available now, the Verical Toolbar can be downloaded at https://www.verical.com/extensions/.

“Our new plug-in toolbar gives buyers, engineers and others an instant search tool to spot check prices and availability at Verical without needing to open a new window and navigate to our site,” said Josef Ruef, co-founder and CEO at Verical. “This toolbar is just one of many features that Verical offers to improve the efficiency of its user’s search experience, by rendering data in a way that makes it extremely consumable—information rich, yet easy to understand and act on. Our mission is to provide shoppers with all the data and tools they need to make informed buying decisions as immediately as their circumstances dictate.”

Other customer-driven features recently announced for the Verical Marketplace include the Bid Button, a one-click icon that delivers eye-popping bargains on selected clearance inventory available at https://www.verical.com, and Demand Match™, the industry’s only bulk search tool that matches open requirements with available supply automatically.

After adding the Verical Toolbar to the Firefox browser, users simply type in the part number they are looking for, and the toolbar will display a drop-down list of the parts available at Verical that match the search. To expedite searches, the toolbar’s auto-complete feature guides users as part numbers are keyed-in, by progressively refining the match list with each keystroke entered. Selecting one of the parts from the list will take users to the Verical site, where they can research and purchase the part. Going forward, the company will introduce a Verical Toolbar for Internet Explorer and Chrome.

For buyers who need parts delivered “yesterday,” Verical’s new toolbar provides ready access to factory direct inventory, at discount prices. Keying in the first few digits of a part number will instantly reveal parts orderable on demand, replete with pricing and quantity available.

For more information on Verical, Inc., please visit https://www.verical.com. For additional perspectives, visit and subscribe to the Verical blog at http://blog.verical.com/, and follow Verical on Twitter at @Verical and Facebook at http://www.facebook.com/Verical.

Additional Resources

Verical Website: https://www.verical.com

Company Overview: https://www.verical.com/about/

Newsroom: https://www.verical.com/about/resources/newsroom.html

Blog: “The Electronic Components Source” http://blog.verical.com/

Verical on Twitter: http://www.twitter.com/Verical

Verical on Facebook: http://www.facebook.com/Verical

Industry Insights: presentations, articles, websites; https://www.verical.com/about/resources/industry.html

Counterfeit White Paper: “The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design”; http://bit.ly/counterfeitwhitepaper

About Verical

Verical is the creator of the Verical marketplace, an online factory outlet for electronic components that provides buyers traceable, branded goods at discount prices. Top manufacturers and franchised distributors publish slow-moving inventory to Verical to optimize prices and yields anonymously. Founded in 2007, Verical is a San Francisco-based start-up backed by Valhalla Partners. The company is experiencing rapid growth with over 27,000 parts available today in the Verical outlet at www.verical.com.

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DemandMatch is a trademark of Verical, Inc. All other brand names and product names are trademarks or registered trademarks of their respective companies.

Tags: Verical Marketplace Toolbar, Firefox, browser bar, electronic components, distribution, electronic component catalog, electronic components factory outlet, excess inventory, online catalog, shortage purchasing, shortages, supply chain, supply chain integrity, supply chain security, inventory, manufacturing, Bid Button, DemandMatch, Internet Explorer, Chrome

Media Contact:

Susan D’Elia, media relations for Verical

TECHMarket Communications

650.344.1260

Susan@TECHMarket.com