Elon Musk Is Trying to Reinvent the Factory as Well as the Car. It's a Problem.

People in every industry have been learning from Toyota and going Lean. Can Musk do better?

Tesla just announced that it is shutting down production of the Model 3 for six days. According to Autoblog:

Tesla has been struggling to find solutions to manufacturing bottlenecks on the new assembly line that produces the Model 3, a sedan intended for volume production. An over-reliance on robots has complicated that task, Chief Executive Officer Elon Musk has acknowledged.

In a long memo published in Electrek, Musk explains that he has had trouble feeding the machine, blaming the complexity of the supply chain.

The reason that the burst-build target rate is 6000 and not 5000 per week in June is that we cannot have a number with no margin for error across thousands of internally and externally produced parts and processes, amplified by a complex global logistics chain. Actual production will move as fast as the least lucky and least well-executed part of the entire Tesla production/supply chain system.

He blames the suppliers for not meeting his standards.

There is a very wide range of contractor performance, from excellent to worse than a drunken sloth. All contracting companies should consider the coming week to be a final opportunity to demonstrate excellence. Any that fail to meet the Tesla standard of excellence will have their contracts ended on Monday.

I read all this shortly after having had the honor of speaking at the Lean Construction Conference in Vancouver, on the theme "reducing waste and working smarter." Lean is based on the Toyota Production system which aimed for Kaizen (continuous improvement), respect for people, and Jidoka, (build a culture of stopping to fix problems to get quality right from the start).

© Lean Construction Institute Canada

Before I went to the conference, and while I was there, I tried to learn about Lean and the principles behind it, going right back to the Toyota Production System. Even their way of organizing supplies, Kanban, can be used to organize your life. When you then read about Musk cranking the production line at all costs, and beating up on suppliers instead of trying to fix the problems, you have to wonder. Lean expert Jeffrey Liker wrote in the Lean Post:

In my view Elon Musk has adopted an untenable mechanistic philosophy that will need to change if Tesla is to be successful as a mass producer of vehicles, no matter how well designed. He will need to discover basic values that underlie operational excellence like developing people, building culture, continuous improvement, visual management, and work teams owning their processes. In short, he will need to learn about, perhaps the hard way, lean management. Sitting back and counting your money while marveling at digital systems humming along sounds like a dream vision, but it is not reality. Mass production is hard work.

The Battle of Giants via Seeking Alpha/Screen capture

Over on Seeking Alpha, a Tesla stock analysis site, they do a side-by-side Tesla vs Toyota analysis and it is not pretty. They conclude that " Tesla will continue to face production challenges and high costs for the rest of 2018".

It becomes clear that Toyota’s human-centered system is best suited to produce different products that change over time. It makes full use of humans’ ability to improve. To spot problems, identify their root cause, and creatively imagine better solutions.

Entire industries are now learning Toyota with lean management, design, and manufacturing, whereas Musk is determined to reinvent manufacturing, with the factory as the product. A lot of people out there think this is a mistake.

© Tesla Model 3/ Tesla

On the other hand, Tesla makes a product that a lot of people want. He has astonished the world with his rockets and his cars and may well succeed where others have failed at reinventing the factory. I really do hope that he does succeed and that we see his Model 3s everywhere soon.