Demand for Hybrids Tests the Limits of Lean

Even the best, most flexible lean production systems may not be able to cope with sudden, dramatic shifts in consumer demand.

Case in point: hybrid vehicles. USA Today reports that sales of hybrids were down in May – not because people didn’t want them, but because dealers were running out of them.

"Not only are they out of cars and out of inventory, but the capacity they have for the hybrid components was locked in a year ago," before $4-a-gallon gas, says George Peterson, president of consultants AutoPacific.

The newspaper says the problem is hitting all manufacturers – even Toyota.

Prius. Sales of America's most popular hybrid fell 37%, while the compact Corolla, Toyota's most comparable conventional model, was up 17% in May vs. the month last year. Prius stock on dealer lots "is best measured now in hours, not days," Toyota Group Vice President Bob Carter says…

Toyota, meanwhile, has reached the production limit at the Japanese Prius factory. It just announced it will build a new battery plant and expand another in conjunction with partner Panasonic.

"We knew we didn't have more capacity. We simply cannot turn on more production," Toyota's John Hanson says.

Is there a limit to a lean system’s flexibility? Is it possible the current shortage could have been avoided? What do you think?


Anonymous said...

Though I can't speak to PEVE's production process, the bottleneck for battery production probably has more to do with the electrochemistry than processes that are easily improved by Lean methods. You might compare it to the production of wine, where the main bottleneck is WIP caused by the fermentation process.

So yes, I'd have to say that there are limits to Lean.

David Rawheiser said...

Even the best surfer will find waves that they just can't handle. I don't think this is an issue with lean, just an overwhelming demand of the market. If there is an issue it's with the consumer's addiction to cheap oil.