Toyota senior executives in the period of 2002-04 intentionally created
instability because they believed that intensified competition from low wage
countries like China and Korea could threaten Toyota’s global leadership. They
requested major cost reductions of 30 to 40 percent over two to three years in
their own plants and the plants of suppliers. Small, incremental changes could
not possibly achieve these targets. Managers who had grown accustomed to
fine-tuning stable operations had to take a fresh look at all processes and make
big changes that created instability when moving up the spiral. We saw this while
visiting the first American Toyota plant in Georgetown, Kentucky, in 2004.
They had been so focused on growth in the 1990s that some of the TPS disci-
pline had slipped. In 2002 they received severe marching orders from Japan to
improve. The engine plant, for one, was asked to reduce total costs by 40 per-
cent—an astounding number. But by 2004, they were well on the way to
achieving these aggressive goals. And in the process, TPS was tightening upChapter 3. Starting the Journey of Waste Reduction 51Figure 3-4. Continuous improvement spiralStabilizeCreate
FlowStandardizeLevel
IncrementallyStabilizeCreate
Standardize FlowLevelIncrementally
Create
FlowStabilizeStandardizeLevel
IncrementallyStabilizeCreate
FlowLevel Standardize
IncrementallyStabilizeCreate
FlowStandardize