Lean is Zero Defects? – I don’t think so!

If you work in manufacturing, sooner or later you will find someone who claims that lean manufacturing is all about Zero Defects. Or Zero Inventory. Or Zero Lead Time. Or Zero Whatever. This is bollocks! Zero Defects was a management fad from the 1960s that pops up regularly every now and then again. In this post we will look at what Zeros there really are in lean manufacturing – if any.

In my view, most of the Zero Whatever claims stem from the uncertainty and insecurity of the people issuing them. If they are unsure about what they are doing, then it gives them false security to claim things that cannot be achieved. Hence, they are setting themselves up to fail. For some reason, some people work more relaxed if they know that that it will fail anyway. Rather than working on improvement, they can already plan an exit strategy if things won’t work out. They can look for reasons why it failed – which, of course, never has anything to do with them but only with others. In these cases, lean manufacturing is more of a religion than the common-sense manufacturing approach it should be.

Zero Defects

Zero Defects is probably the most common claim associated with the Toyota production system. The goal – supposedly – is to have no failures or defects of any kind, ever. Skeptics sometimes ask me, “If Toyota is Zero Defects, then why did all the problems with the brakes happen in 2011?”

Well, first of all, in most cases the problem was not with the car, but between the steering wheel and the driver’s seat. In most if not all cases, the driver simply mixed up the pedals, resulting in what the National Highway Traffic Safety Administration called “pedal misapplication.” Additionally, the US government probably wanted to boost its own US car industry by putting a damper on foreign imports – regardless of how Toyota cars sold in the US actually have a higher domestic content than many traditional US car makers. Hence, they leaned on Toyota much more harshly than they did, for example, during the Firestone and Ford tire controversy.

But let’s get back to Zero Defects. This is actually a misquote. The full quote is in reality Zero Defects Accepted! The idea is that no defect that is found should be passed on to the next  station in the progress. This means not only to pass no defect knowingly to the consumer, but to pass no defect knowingly to anybody downstream. In a Toyota assembly line, the entire line is stopped rather than a detected problem being passed on to the next person in line. Contrast this with most Western car manufacturers, where a special group often exists at the end of the line to fix all the problems and the detected defects are simply handed down since they are somebody else’s responsibility.

Overall, this Zero Defects Accepted approach at Toyota has improved their quality much more than any Zero Defect approach anywhere else. W. Edwards Deming – the guy that actually taught Toyota how to improve quality –made a very clear statement about this. Point 10 of his 14 key principles states to Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity.

Deming even takes it one step further. For him there are acceptable defects. Depending on the product you make, the type of defect, and the impact of the defect, it may be more cost effective to accept the defect. While major problems must be corrected, there may be minor defects that the customer is willing to accept rather than pay more for a non-defective product.

In sum, Zero Defects is bollocks. At best, you may have Zero Defects Accepted. Or, after careful consideration of the defects, you may even accept some defects.

Zero Inventory

The next big misunderstanding is Zero Inventory. Sometimes Toyota is even called the Zero Inventory Company. Clearly, Zero Inventory is impossible. Inventory also serves as an often-necessary buffer against fluctuations in demand or supply. Taiichi Ohno, the brain behind the Toyota Production System, clearly stated that Reducing inventories to zero is nonsense and In no way is the Toyota production system a zero-inventory system (Ohno, Taiichi, and Setsuo Mito. Just-In-Time for Today and Tomorrow. Productivity Press, 1988).

While it is true that Toyota aims to reduce inventory, they do understand its need and its function in manufacturing. In many Western companies, there is the drive to reduce inventory, regardless of what the manufacturing system allows or needs, resulting in even more waste through chaos on the shop floor. Toyota did indeed drastically reduce its inventory, but in some cases it may intentionally raise inventory to cover for demand and supply fluctuations and to allow a smoother production. It is also a well-known secret among lean experts that sometimes you need to raise inventory to stabilize the production system before you can address the issues that allow you to reduce inventory again.

Zero Set-Up Time

Yet another of those wannabe Zeros is Zero Set-up Time. The idea is that you should reduce all your set-up times to zero. Yet again, it is a question of the cost of the reduction compared to the benefit. In general, Toyota accepts about 5% to 10% of the time as set-up time, with the goal to reduce lot sizes. This brings us next to Zero Lot Size.

Zero Lot Size

Even the creators of Zero Lot Size have figured out that a lot size of zero makes no sense whatsoever, and they usually talk about a Zero Excess Lot Size. The idea of reducing lot size is basically sound, but as with everything, it has to be seen in perspective with other aspects of the production system. Just setting Zero Lot Size as a target on its own is highly risky.

Other Zeros

There are a whole bunch of other Zeros floating around in literature.

• Zero Price
• Zero Cost
• Zero Lead Time
• Zero Downtime or Zero Breakdowns
• Zero Handling Time
• Zero Surging (Changes in Quantity or Mix)

All of them are pretty much impossible to achieve (except maybe Zero Price, but that would be difficult to sustain). While it would be nice to have any of them, you can’t focus on all of them at the same time. Often these Zero goals are conflicting. In most cases, it may be more economical to set a goal other than zero, which would lead to a better overall and long-term profitability for your industry. Where this goal is depends heavily on your business. This ideal point is also changing over time. Finding these sweet spots and setting correct targets are difficult management tasks, but please, do not set targets to zero. The ultimate consequence of zero inventory is zero output. Since you surely don’t want zero output, you should not want zero inventory. Now go out and improve your industry!