Denso is Toyota’s largest supplier and grew up with TPS along with Toyota.
Yet its Battle Creek, Michigan, plant was considerably less advanced in TPS
than Toyota. In the past they had implemented isolated tools, but did not put
lean together as a system. As we’ll discuss in the case example below, they
developed their version of the Company X production system, which they call
“Efficient Factory,” in order to involve everyone in continuous improvement. To
implement this they used real projects and the “value stream model line
approach.” Pilot product families were selected for each major product line and
began to implement lean value streams from the customer back through to raw
materials. Only when the model lines were implemented and the methodology
tested did they move to other product families. Even a plant thought to be a
lean model needs to periodically take stock of where it is and bring lean to
another level, and the value stream model line is the recommended implemen-
tation approach.
Case Example: Denso’s Efficient Factory Value Stream
Approach
Denso is Toyota’s biggest parts supplier, with almost $24.2 billion in
sales in 2004 and 95,000 associates. Originally, the electronics division
of Toyota, Denso was a spin-off, but Toyota retained a significant portion
of the company (currently owning 23 percent). As TPS grew up within
Toyota, Denso grew up with it, and as Toyota began to build cars in
the United States, Denso built a plant (DMMI) in Battle Creek, Michigan,
in 1984, to make automotive heat exchangers (radiators/condensers)
and air-conditioning units. DMMI has experienced remarkable growth
in a highly competitive auto parts industry year after year from its largest
customer, Toyota, as well as DaimlerChrysler and General Motors. Annual
sales between 2002 and 2004 went from $1 billion to $1.25 billion, and
Denso’s reputation for exceptional technology, high quality, and near
perfect delivery placed it at the top of the list for high-performing
companies. The automotive parts supply market is a difficult one in
which to make a profit, but DMMI has been profitable year in and out.
It would seem that Denso is an excellent example of lean manufacturing
and has little more to learn. Those who don’t understand the power of
continuous improvement might say, “We have arrived,” but DMMI
knows differently.
In 2003, DMMI, Battle Creek, introduced a new activity: “Efficient
Factory.” DMMI is a company steeped in TPS tradition, thus, moving
to a concept like “EF Activity,” one might envision next generation
automation, information technology, and new lean concepts. Yet,
“EF” is simply DMMI’s modified version of TPS. The EF symbol (Figure
19-12) has the appearance of Egyptian origin, possibly discovered on