The current economic crisis has brought a downturn in almost every industry the world over. First the USA and its banking companies came across the subprime lending crisis leading to the fall of some leading financial institutions that had gone deep into the lending space without taking all the necessary precautions and becoming too liberal to lure the customers from the competitors. Then came the fall of an insurance giant. This had repercussions throughout the banking industry across Europe and Asia too. This was also felt by the banking industry in India.
A simultaneous sms and online campaign by some rogue stock brokers in India spread rumors bout the fall of the largest private sector Indian bank. It was advertised by the brokers that ICICI was on the verge of becoming bankrupt due to exposure to the bad loans in the US although the situation was not so grim in reality as ICICI had limited exposure to the subprime lending that lead the US banking industry to the downfall. Even as the exposure to ICICI was bigger than SBI, it was not on the verge of becoming bankrupt. ICICI experienced huge customer unrest due to this and had to take some special PR measures to prevent any casualty. The biggest private bank of the country was threatened for its existence due to such a small issue of SMS campaign by some rogues.
What should all the companies do when they are faced with the prospect of dyeing a slow death due to the economic crisis that has been thrust upon the world by the incompetence and lack of foresightedness of the planners in the government and financial powerhouses of the USA. All the economies and even the most competitive companies are feeling threatened by this crisis that was unwarranted and all because of some people who miscalculated some facts and didn’t give heed to some common things that are necessary for the finance industry to operate. This has not only created a liquidity crisis for the industry but also the consumers. The lack of demand has also boomeranged on the industry because they can’t keep producing and increase the inventory levels.
Here comes the role and need of lean. Those companies that had a well researched inventory management system and were operating on minimum inventory levels will suffer the minimum losses and can control the situation faster. But for those who thing huge inventory levels are for the brave and the industry titans are destined to be doomed. The situation is most apparent in the automobile industry of the United States wherein both Ford and GM had become nearly bankrupt if not for the sudden and timely infusion of funds by the government. Same was the case with the biggest of the financial institutions. But if we look at the pioneers of the concept of lean, Toyota motors is facing the first loss in its history after the first few months of its foundation. But they are sure of reviving their fortunes. They have not had to take such stern measures like firing thousands of their employees. They only had to shut their factories for one shift for some days.
Lean management principles say ‘Workers are the real assets of any enterprise’. So, how can an enterprise become successful by firing their valuable employees. Toyota doesn’t believe in firing employees. They didn’t do that during the world wars and I don’t think they will resort to such measures during the current economic crisis either. Although I firmly believe Toyota would not resort to such extreme steps but it remains to be seen what Toyota is going to do in these times to sustain their levels of success during such gloomy times.
What ever may happen in Toyota’s case, one thing is sure that minimum inventory is the way to go and that is one of the basic things Lean Management comprises of. Hence IT is time to be LEAN during the MEAN Economic crisis.
Your comments are welcome.