Streamlining Non-Profits with Toyota Techniques

Any company can give away money. Most don’t do it very well.

It’s harder, smarter and ultimately more valuable for companies to share their talent and expertise.

That’s what Toyota is doing with a program, announced yesterday at the Clinton Global Initiative in Chicago, aimed at helping schools, hospitals and other non-profits stretch their dollars further.

Toyota is famous for its lean, worker-friendly approach to manufacturing. Its Toyota Production System isn’t so much about efficiency–although that’s the end result–as it is about respecting workers, letting ideas bubble up from the shop floor and driving continuous improvement, or Kaizen . The Toyota system is “at its core a problem-solving method,” says Jim Wiseman, a group vice president and company spokesman who’s been with Toyota for 22 years.

Toyota will now share its expertise more widely. In a news release , the company says:

At the Community Kitchen & Food Pantry in Harlem, a Toyota team helped reduce wait times for clients and food waste.

At Allegheny General Hospital in Pittsburgh, nurses figured out with Toyota’s help how to save time when sorting and delivering pharmacy supplies so they could devote more time to patients. Here’s a short video about that.

The new initiative is being led by the Kentucky-based Toyota Production System Support Center . It  was formed in 1992, initially to help Toyota’s U.S. suppliers learn how to increase productivity, safety and quality. Since then, the center has worked with more than 160 companies and a handful of non-profits.

This approach to corporate giving makes sense to me because the company is leveraging its unique talents. Traditional corporate philanthropy strikes me as much less useful. After all, when companies make donations to non-profits, they are giving away their shareholders’ money. Inevitably, they are expressing preferences for charities, causes and groups. (In the worst cases, they are supporting pet projects of a CEO or a senior exec or an exec’s spouse.) Unless there’s clear payback in terms of brand, reputation or an enhanced community that will benefit the workforce, companies would do better to (1) simply match employee benefits, i.e., turn charitable giving into a workplace perk or (2) let the shareholders guide them on how to give the money away.  But that’s a blogpost for another day.

Lean Enterprise Institute CEO John Shook Calls for Ending the ...

06.21.2011– Lean Enterprise Institute CEO John Shook Calls for Ending the “Madness” in Supply Chain Strategies

Shook made his recommendations on lean supply chains to authorities on Japan, leading investors, economists, policymakers, and business executives at Bloomberg’s Rebuilding Japan Conference.

Cambridge, Mass., June 21, 2011 – The massive supply chain disruptions caused by the Japan earthquake and tsunami show that companies must reconfigure supply chains to respond faster to natural or man-made crises, according to John Shook, chairman and CEO of the nonprofit Lean Enterprise Institute (LEI).

Shook made his observations during a supply chain panel discussion at the Rebuilding Japan Conference organized by Bloomberg Link, a unit of business information giant Bloomberg, LP, on June 7, 2011, at the Japan Society in New York City.

“Maybe the one good that can come out of the disaster in northeast Japan, will be rethinking global supply chains,” Shook said.

Lean Supply Chains Needed He noted that supply chains became increasingly complex as companies outsourced production and then logistics. As a result, companies generally don’t know who supplies their suppliers, making risk assessment much more difficult.

“There really is this ignorance of who are the suppliers of my suppliers,” said panelist Michael Smitka, professor of economics, Williams School of Commerce, Washington and Lee University.

In addition, outsourcing focused on getting the lowest price rather than assessing the total cost of fulfillment that includes assessing the combined impact of lead times, inventories, service levels, political and monetary stability, and other factors, Shook noted.

He said reconfiguring fulfillment streams so suppliers and customer companies could respond quickly and flexibly to natural or man-made disasters was a superior strategy than stuffing supply chains with inventory just in case problems occurred.

“You don’t try to buffer against a 100-year catastrophe with inventory,” said Shook, who as the senior American manager at the Toyota Supplier Support Center in Lexington, KY, helped the carmaker develop suppliers using its lean manufacturing and management system.

Panelist George Stratts, president and CEO, Chartis Global Marine and Energy, recommended that companies work to integrate logistics and risk management to better understand their exposure to threats.

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