Can the Toyota Production System be Implemented Abroad? - A Case Study of the Brazilian Automobile Industry

Our survey of the Brazilian automobile industry began in 2013 and included visits to approximately 60 manufacturers and parts suppliers. The surveyed companies were all transferring their Lean production from their headquarters to subsidiaries in Brazil. Lean production seems to remain vital for production of integral product like automobile, even in the face of the recent changes in the automobile industry. Despite this importance, however, some studies reveal that about 80% of the Lean production transfers ended with failure (Liker et al, 2002, M.H.A. Soliman, 2017). Study to improve this success rate must be executed.

Prior to this survey, no empirical studies comparing Lean production transfer between Japanese and Western companies were found. Consequently, in September 2017, we investigated nine Japanese parts suppliers, seven Western parts suppliers, and four manufacturers in Brazil, using both quantitative and qualitative methods. The mechanism of Lean production transfer was analyzed based on the promotion factors detailed in communication theory (Gupta et al, 2000). These factors include: motivation, abortive capability, channels (formal and informal), and the character of the knowledge itself. As a result of the survey, clear differences between Japanese and Western companies were found.

Among these differences, the first and most important difference was in the underlying objective of the Lean production transfer. The majority of Japanese companies focused on JIT and Jidoka (flow production) , while Western companies emphasized cost reduction. The second point was that Japanese companies rely more on human to human transfer based on motivation (for example OJT coaching on the shop floor). The third point was Western companies used more formal structures in their overall system and policies; we found one sophisticated case like “World Class Manufacturing” (WCM), which is highly structured with five maturity levels and ten pillars.

To achieve JIT and Jidoka, Womack el al. (1995) stated that trust and team-work among stakeholders based on high job security and long-term job-rotation are necessary. If this is true, then Japanese companies, since they contain those conditions traditionally, are therefore suitable for Lean transfer. For Western companies that do not have those conditions, it may be suitable to modify labor contract like legal collective agreement for better team work and evade strikes. Also, beneficial to modify traded contract with supplier to improve Quality, Cost and Delivery.