Japanese competitiveness in a number of industries is the result of a combination of factors. Among the most important are a series of innovations and practices in manufacturing and product development that have been referred to as “lean”: aimed at high productivity as well as high quality in engineering and manufacturing, resulting in high price-performance in the value of products delivered to the customer. This article outlines some of those innovations and practices, particularly those in the Japanese automobile industry. It then addresses two other issues: how transferable these practices are outside Japan, and what limits the Japanese themselves have encountered as they have pursued “continuous improvement” in manufacturing and product development management.
Principles of “Lean” Management
Table 1 lists the principles of “lean” manufacturing and product development. In manufacturing, these practices made it possible for Toyota and other firms that followed its approach to achieve extremely high levels of quality (few defects) and productivity in manufacturing (output per worker that was as much as two or three times higher than U.S. or European plants in the late 1980s). Japanese firms also achieved relatively high levels of flexibility by producing relatively small lots of different models with little or no loss of productivity or quality.1 Toyota developed this small-lot, just-in-time (JIT) manufacturing approach in response to the needs of the post-World War II Japanese auto market, which was very small, with few exports, but with rapidly growing demand for different types of car and truck models.
During the late 1970s and 1980s, the nine major Japanese automakers gradually took advantage of their manufacturing capabilities to shift the primary competitive domain to product development. Led by Honda and Toyota, this shift resulted in fast development times (estimated at forty-two months compared to sixty-five months or so for the U.S. and European producers2), a very aggressive expansion of product lines by all the Japanese automakers, as well as adoption of full model changes every four years (a practice started in the 1950s). This rapid change and expansion of products allowed Japanese automakers to introduce new features and technologies into their vehicles more quickly than U.S. or European automakers, which generally had product replacement cycles of six to eight years or more. As indicated in