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the root cause of the problem, but merely pushed the problem backward onto
other companies. This will show up in a non-lean value stream and ultimately
in higher costs and lower profits for someone—in this case the suppliers.
One might ask: “If Toyota is in fact lean wouldn’t they build exactly what
the customer orders in the sequence in which they order, like Dell?” The answer
is decidedly no! Customers do not order in a stable, predictable way. Yet the
foundation of TPS is a stable, leveled schedule. Another Toyota paradox is that
in order to have a lean value stream, you sometimes want to hold the most expen-
sive inventory—finished goods inventory. This allows you to ship to order but
build to a leveled schedule. In this chapter we will discuss the whys and hows
of leveling the schedule.
Heijunka Provides a Standardized Core for Resource Planning
The term “heijunka,”as we noted earlier, means to level, or to make smooth. As
with many translated words, there is some conceptual meaning lost in the trans-
lation. In most lean references, the meaning is to level the product mix over a
specific time period, with the objective of producing every part every day (or
even every few hours). Customers do not typically order products in specific
batch sizes, but they’re often produced in batches. The concept is to produce in
smaller quantities more aligned with actual customer consumption.
But this is only part of the concept. Pushing a process toward an ideal smooth-
ness in production also pushes the process to the highest degree of flexibility
and responsiveness to changing customer demand.
We have never seen a situation where customers conveniently order the same
mix and quantity of parts every day. If life were only that simple! Constantly
changing demand creates many issues within the value stream; namely, the
alignment of resources to the constantly changing need. If the demand swings are
large, there will be a need to have higher levels of inventory to adjust to the
swings. Equipment capacity is limited when demand swings to the high side,
and is in excess when demand is on the decline. The amount of resources needed
will be higher overall—generally, set at levels necessary to meet the higher
demand, and excessive when the demand falls.
The swings in customer demand create a “bull whip” effect. Aslight flick of
the wrist by someone skilled with a bullwhip creates a tremendous destructive
force at the other end of the whip. Similarly, even small variations in customer
demand at the final process ripple through the entire value stream, increasing
in amplitude with each successive operation. This whip effect is particularly
large for suppliers or subprocesses, at the end of the whip. This magnifying effect