Toyota's answer to exposing inefficiencies: ask why

A time-tested problem solving technique + modern technology = a new way to tackle supply chain challenges.

No matter the industry, there are countless things that can go wrong along a supply chain, from manufacturing faults to packaging mishaps… and that's before the product has even left the warehouse.

A single problem can have enormous consequences for businesses. A 2018 report found that one particular supply chain challenge – asset loss – costs US retailers 1.33 percent of their sales each year, at the expense of $46.8 billion.

Knowing that the issue exists is one thing. Knowing how to solve it is another, far more difficult task. Because when a supply chain has hundreds or thousands of touchpoints and contributors, a problem can manifest as a complex web that affects numerous parts of the process, and to address each of these symptoms, companies need to uncover the underlying cause.

Five Whys framework

Planning and managing an entire supply chain is as complex as building an engine from scratch.

Examining a troubled supply chain is much like diagnosing a dysfunctional engine, with its myriad moving parts, so it's fitting that an auto manufacturer came up with a way to uncover the root cause. In the 1950s, Toyota developed a method for interrogating and understanding problems with a series of questions, all of which are identical: “why?"

Now known as the Five Whys, the technique requires teams to identify an issue, ask “why" it's happening, and then keep asking that same question in order to incrementally determine the source of the mess. So if a supply chain leader wants to understand the underlying reason why their inventory is going missing, their investigation might look like this:

  1. Why didn't my asset arrive at its destination? Because it was never loaded onto the truck.
  2. Why wasn't the asset loaded onto the truck? Because the wrong asset was loaded in its place.
  3. Why was the wrong asset loaded onto the truck? Because the wrong stock was retrieved from the warehouse.
  4. Why was the wrong stock retrieved from the warehouse? Because the retrieval process is prone to errors.
  5. Why is the retrieval process prone to errors? Because the workers have unreliable equipment.

It's through this type of thinking that Toyota has become the manufacturing powerhouse that it is, known for its philosophies for eliminating workplace inefficiencies. But of course, asking “why" is easy, but finding the response each time, and following it to the next problem is impossible without visibility over the supply chain.

Using location data to answer your questions

Thankfully, modern technologies like indoor tracking make answering each “why" much easier. Using real-time location data, companies can see how their assets move along their supply chains to ascertain when and where disruptions occur.

This goes beyond just monitoring inventory, with the location data being useful for tackling other supply chain challenges. For example, detecting an asset's exact whereabouts to plan a worker's most efficient walking route through a large plant, or recognizing where bottlenecks are appearing so that engineers know where to adjust their processes.

If the Five Whys is the magnifying glass, then indoor tracking supplies all the clues in the form of data, and tracing these clues across the supply chain is the road to the solution. The technique may be decades old, but thanks to ever-evolving technology, it's more capable than ever.

Topics: Indoor Positioning

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