Will Dell, GE and Wal-Mart Replace Toyota as the Standard of Efficiency and Excellence?

I was going through my stack of junk mail and came across a flyer advertising a seminar by a well-known lean manufacturing consultant.  In the flyer he claims that Dell and Wal-Mart have become the new "Lean gold standard via aggressive innovation and external collaborative methods."  Then he suggests focusing more "outward" as opposed to the "inward-looking, and limited to the 30-year-old Toyota system."

In my opinion Toyota has a pretty good (ie excellent) "outward" methodology as well.  Wal-Mart may have incredible supply chain efficiency... but they often do it by bashing their suppliers into submission.  Or is that "helping" their suppliers be as efficient as they are?  And even though their founder wanted everything built in the USA, they now source substantial amounts (if not most) from overseas.  Dell has incredible manufacturing execution, but the products or the brand don't exude the same sense of quality that Toyota does.

Has Toyota become an "old" benchmark for modern-day excellence?  Lean purists still refer to the "Toyota Production System" instead of "Lean."  And the company continues to be pretty amazing from a financial and quality standpoint... especially when compared to others in its industry.  But is there anyone else of the stature of Toyota on the horizon, with organically-developed (or stolen but modified with pride...) process and execution innovations?  We know of some companies that are very, very good... Danaher, Wiremold, etc.  But who has the stature to have an impact in the future the way Toyota has up until now?  Is the new era of company process innovation along the lines of GE's new "Ecomagination" program?  Who will we be talking about in 15-20 years?

We have a propensity in North America to classify things by age and dismiss them when we become familiar with the names.  We become tired of them long before we appreciate either their value or their implementation.  In Toyota's case they may be old but what they practice we are only marginally now beginning to understand.  And at their core they are a learning organization, therefore we have much more to see and learn from them.

Toyota, Dell, GE and Wal-Mart.  Each in their own right is a standard, each embodies excellence, and in many ways each should be studied, emulated, and copied.  But in the end each is a very different player.

Comments

[Bill Waddell]

Dell, GE, Walmart - setting a higher standard than Toyota? I don't think so. Walmart is a retailer - a fine one with a great supply chain - that manages information and leverages size better than anyone, but retailing and supply chain management are not manufacturing. It's apples and oranges.

Dell? an assembler of modular components. Again, very good at what they do but a long way from the manufacturing big leagues that the automakers play in. there are more manufacturing technology, parts count and defect opportunities on the dashboard of a Toyota product than in the entire Dell product. Think Dell can turn around precision engine machining with the same speed they assemble computers? Nah.

GE? They seem to be getting out of manufacturing as fast as they can. What they are world class at is buying and selling companies and managing outsource partners. Do they actually make anything in their own plants in this country anymore? Their locomotive plant brags that they are assemblers, rather than manufacturers. Most of their vast facilities in Evendale and Louisville are empty. Again, very good at making money but they have quit the manufacturing game.

No, Toyota is still far and away the Gold Standard among serious manufacturers.

[Mark]

This is a point I have argued endlessly with former colleagues from Dell and a noteworthy lean speaker/writer/consultant. I have worked in the auto industry (not Toyota) and at Dell. Dell deserves much praise for instituting the direct model into the computer industry and for creating an efficient "Dell Production System" (they don't call it that). Much as Toyota created a system that worked for Toyota (based on their markets, products, and business), Dell created a system that works for Dell.

Dell may have low inventory and impressive financial results (plus their factories are an outstanding example of "flow"), but they are not "lean" and they are most certainly not a "TPS" driven company.

I think you can admire Dell and find things to emulate. But, there is also room to STILL admire Toyota, Toyota is not old hat. But, don't go blindly copy Dell anymore than you would blindly copy Toyota.

For example, Dell's build to order model precludes any "leveling" type benefits you would see through a Toyota model. But, in that industry, inventory is much more expensive than capacity... so not leveling probably makes sense for Dell (although it creates supply chain costs via the suppliers). If a company like Toyota were to consider blindly copying Dell, they would have to take things like this into account. For Toyota, because of the auto industry dynamics, capacity might be more expensive than inventory, so some greater attempt to level the BTO orders might be made.