Thursday, December 20, 2012

The Three 'Loops' - Design, Make, Sell

By Pascal Dennis

Three decades ago the Toyota Production System landed in Fremont California at what was to become the NUMMI plant.

This splendid factory, a joint Toyota-GM venture, revolutionized the automotive industry. I spent many weeks there and made great friends.

NUMMI triggered Toyota's expansion into North America and the helped disseminate the Toyota Production System.

But Toyota's business system comprises three 'loops':
  • Design
  • Make
  • Sell


Since the NUMMI launch we have tended to focus on the Make loop, even though the Design & Sell loops are as important.

(My sensei, Shin, was a Toyota sales & marketing executive, and one the finest Lean thinkers & managers I've ever met.)

Optimizing Operations is necessary, but is it sufficient? If your sales & scheduling teams create lumpy, chaotic production schedules -- how can you flow?

You'll have to buffer the chaos with some combination of inventory, lead time and capacity.

Your most expensive asset, Operations, will operate far out of its sweet spot.

Similarly, if your Design teams design products & services that cannot flow & pull, all your Operations kaizen may be for naught.

(The Remedy is my humble attempt to shine a light on the three loops.)

In my view, to harvest Lean's bountiful benefits, we need to go upstream & downstream of Operations.

Lean thinkers have to learn the language of Sales, Marketing, Design, Engineering Finance, Human Resources and so on.

We have to help these good people through the journey we've taken the past few decades.

It won't be easy. We'll uncover unhelpful mental models and practices. (Remember how we used to manage?)

But it should be fun & rewarding.

Best,

Pascal

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