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Fujio Cho Can Make You More Profitable |
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Who is Fujio Cho and why would some guy in Japan have anything to do with residential homebuilding? Fujio Cho is chairman of Toyota Motor Corporation, one of the most profitable automobile companies in the world. He is an advocate for environmentally friendly car building and the methodology called "lean". Lean is really what makes Toyota (and Fujio Cho) unique. Fujio Cho was instrumental for promoting Lean at Toyota. No other company in the world does Lean better. Toyota does lean so well that other companies study and publish books on their methods.
When a company adopts Lean, here is what happens:
- Material handling costs are reduced by 70-90%
- Scheduling is simplified
- Quality improves
- Callbacks decrease by 50-90%
- Workers are more involved and take greater responsibility for their work
- Customers receive their orders more quickly and are more satisfied with the end product
- Reduced scrap and waste
- Reduced inventory costs
- Cross-trained employees
- Reduced cycle time
- Improved customer communication
- Lower inventories
- Improved vendor support and quality
- Improved flexibility in reacting to changes
At the core of lean thinking is ELIMINATING WASTE with a focus on what the customer defines as value. Here are the principles of lean as defined by James P. Womack and Daniel T. Jones in their 1996 book Lean Thinking:
- Define value precisely from the perspective of the end customer, in terms of a specific product, with specific capabilities, offered at a specific price and time. In other words, the customer defines what is valuable in the end product, not the supplier.
- Identify the entire value stream for each service, product or product family and eliminate waste. The value stream is the actions required to bring services or products through these elements: - Design - concept to final drawing - Delivery - raw material to product Information - management and communication. These elements usually identify huge amounts of waste.
- Make the remaining value-creating steps flow. This is the most transformational principle as it focuses on eliminating organizational constraints and creating value for the customer
- Design and provide what the customer wants only when the customer wants it. This principle helps eliminate the waste of inventory, tracking, and storage.
- Pursue perfection. Ruthless pursuit of continuous improvement
Many companies are seeing the immediate, long term benefits of lean on the people, products and processes within their companies. As the market begins to improve, the truly inspired will embrace and profit from adopting lean. Fujio Cho made it part of Toyota's culture. Now Toyota makes higher quality cars for less money and more profit than anyone.
For an excellent and thorough investigation of the application of lean in a homebuilding environment, please see this article, "Getting Lean: Assessing the Benefits of Lean Production in Factory Built Housing" at the huduser.org website
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