Porsche Gets Its Speed from Toyota

I just read this great article over at the Bloomberg Businessweek site titled Porsche ‘Shock Therapy’ Spurs VW, Lufthansa Efficiency Drive. Other than pointing out that Porsche currently has the highest profit margins in the industry, the article discusses how Porsche, under the auspices of CEO Wendelin Wiedeking, began benchmarking Toyota's Lean production techniques back in the 1990s. This current success could indeed be attributed to the lessons learned from Toyota.

One section of the article -- "Taught By Toyota" -- points out how Porsche fully embraced a JIT (just in time) delivery system in cooperation with its suppliers: "Porsche took steps to fine-tune cooperation with suppliers to ensure factories received parts just when they were needed on the assembly line."

For years, Toyota has been operating its "Toyota Production System Support Center" at its North American manufacturing and engineering headquarters in Kentucky "where it holds ongoing seminars for outside companies, as well as schools, hospitals and charities." It appears Porsche has followed this lead as well as it has established its own consulting division and has worked with such clients as "Deutsche Lufthansa AG, Volkswagen AG, and Meyer Werft GmbH" who have "all turned to Porsche to make their manufacturing processes more efficient."

In 1993, Porsche "had a net loss of 122 million euros ($162 million) and sales of no more than 14,000 cars" and now in 2010 posted an "operating margin in the automotive unit in the fiscal first quarter of 19 percent" and earned honors in J.D. Power & Associates’s annual quality study.

What do the readers of this blog think of Porsche's success? Does it come as a surprise? Is Porsche building a new culture within its organization?


Lean Labor Management

I recently read a very informative article by Stephen Jannise on the Software Advice site that covers a concept often left out of Lean manufacturing discussions: lean labor management. This article pinpoints three key effects that Lean principles can have on labor management, particularly within the manufacturing industry. These effects are:

  • The metrics of effort and success will differ from a non-Lean environment because the goals for productivity have changed.
  • Employees will be expected to work with greater flexibility and adapt to unique problems that arise each day.
  • Relationships between co-workers, superiors, and subordinates will be reshaped to emphasize managed cooperation over individualized labor.

Jannise continues with a more detailed analysis of each of these areas and makes some crucial points, such as: "If managers in a Lean workplace are going to convince workers to handle more complex tasks, then they must devise ways to reward flexibility," but the overarching theme reinforces an overall transformed mindset. All those involved in the Lean initiative must be ready to exit their respective comfort zones and realize that the majority of the traditional metrics and behaviors not only don't apply, but will ultimately prove detrimental.