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The underlying principles associated with managing variety, velocity, and variability across the supply chain—the focus of Toyota’s supply chain leadership and management process—are found in many different industrial contexts. We provide several examples from service industries such as health care, insurance, banking, credit processing, and retailing. Products and services covered include apparel, wine, brake linings, emerging market product development, concrete delivery, and more. In each of these cases, a supply chain leadership strategy delivered superior performance. If you are fired up and eager to develop your individual industry application using the Toyota supply chain principles, this chapter offers several different application prototypes.

Banking Example

Goland, Hall, and Clifford1 provide a description of how the application of Toyota principles to banking can yield significant results. They describe the back-office check processing operations for a bank that faced capacity shortfalls and demands for added capacity to process checks. A couple of managers decided to follow the “Journey of Chuck the Check” by mapping the steps involved in processing checks at the bank. What they discovered was astounding. More than 45 percent of the time, the check processing machines sat idle. Though checks could be sent for processing two times a day, most banks accumulated checks and sent them in at the end of the day. Even when processing, the machines were subject to breakdowns, and checks had to be processed more than once.

Clearly, the process was not streamlined, and the capacity issues observed reflected deeper underlying problems. The managers then went back to the banks and worked to streamline the procedure of separating checks in batches before they were sent for processing. Checks that needed additional time at the bank before they were sent were kept until the evening, while others were shipped out earlier in the day. This smoothing of flows permitted the arrival of checks to the sorting facility to be better synchronized with capacity demands. Next, the bottleneck: check sorting equipment and its operation were examined and provided with additional resources to ensure its availability during peak demand periods.

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