The Business Book

290

COSTS DO NOT EXIST

TO BE CALCULATED.

COSTS EXIST TO BE

REDUCED

LEAN PRODUCTION

I

n business, ideas for new

products and production

techniques tend to emerge

during times of crisis when the

old products and methods have

become unprofitable. This is the

case with “lean production,” a

method of planning for demand by

reducing waste, developed in Japan

by the Toyota Motor Corporation

in the 1950s. At that time, Toyota

was a relatively inefficient producer

of cars. Like many other Japanese

companies, Toyota was struggling

to overcome the shortages created

by an economy that had been

devastated by war. Looking for

ideas, Toyota sent a young

engineer, Eiji Toyoda, to the US to

IN CONTEXT

FOCUS

Waste reduction

KEY DATES

1908 The Model T Ford

automobile is mass produced

on an assembly line by the

Ford Motor Company in

Detroit, MI.

1950 W. Edwards Deming

trains engineers and managers

(including Akio Morita, the

co-founder of Sony) in process

and quality control in Japan.

1961 Robots are first used on

an assembly line at a General

Motors plant in Ewing

Township, NJ.

2006 US management

consultants McKinsey

& Company publish an

influential report urging

governments to apply lean

production techniques to the

delivery of public services so

taxpayers get more for less.