By Greg | March 16, 2009
Lean Philosophy: inventory, water, ship and rocks
Shigeo Shingo, leading expert on the Toyota Production System, used an awesome analogy which shows what the Toyota Production System is all about. It’s simple. There are only three elements in the analogy:
• a ship – representing a business, let’s say – a production plant,
• expensive (for the purpose of our analogy) water – representing inventory, and
• rocks – represening all sorts of waste (like overproduction, the time workers have to wait for the materials they need, transportation, defects, machines breaking down and etc., etc.)
In a conventional factory this is how rocks are dealt with: More water is pumped in to cover them. “The ship must sail” – a conventional manager thinks – “I must prevent the factory from stopping at all costs”. Why? “Because it’s expensive! Pumping in more water will cost less than hitting the rocks and stopping the ship!” And it’s true. Just as it is true that getting gasoline a few miles sooner than normal will cost you less than paying for your car’s tune-up or installing traffic lights is more expensive than carefully crossing a busy street without a light. In other words – adding more water may be a cheaper solution, but it is only a short term solution, and will not actually solve the problem. As the water evaporates, the rocks will surface again and more water will have to be purchased to cover them.
In a company operating in harmony with the Lean Philosophy, every time the ship hits a rock is a happy moment as it presents a new opportunity to remove another problem. Once the rock is removed it will never be hit again. Plus – some water can be pumped out (keep in mind – it’s precious. It can be resold or at least there will be no need to purchase more for a while ).
So, if the Toyota Production System is a new concept for you – do not fear, because it’s simple. All we do is keep removing rocks and laugh at our competitors who are now paying for more water while we sit and wonder: “Since we don’t have to pay for all that inventory anymore, should we lower our prices or treat ourselves to a bonus?”. The Toyota System just makes sense: removing real problems makes much more sense than covering them up, which, in the long run, can become very expensive.