Taiichi Ohno
Inventory is there to hide problems
Lower the water and the rocks appear
Taiichi Ohno, Toyota Production System, 1978
Everything obvious has been cut and the cost will not move. Why he treated stock as a cover rather than a cushion.
What actually happened?
He had a picture for it. Inventory is water and problems are rocks on the riverbed. With the water high the boat runs smoothly, because every rock is submerged: an unreliable machine, a supplier who misses dates, a handover nobody has sorted out, all of it carried by the stock. Lower the water and the rocks come up one at a time; hit one, repair it, and the channel is genuinely open. Toyota cut stock not to save warehouse rent but to leave problems nowhere to hide.
Wherever there is slack, something is being covered
An extra week in the schedule, extra material, an extra pair of hands: every piece of slack is underwriting some problem. A problem that is underwritten never gets repaired, so the slack turns into a permanent cost. Hunt the slack first. There is a rock beneath it.
Whichever stage always keeps a margin has, underneath that margin, a problem nobody has fixed.
You lower the water to hit rocks, not to save water
His purpose in cutting stock was never the storage bill. It was forcing problems into the open. Lower the water and leave the exposed rocks unrepaired and the boat is holed, which is why the imitators failed: they copied the cutting and skipped the repairing.
After you cut a margin, something will go wrong. That is the rock surfacing. Repair it instead of putting the margin back.
A little at a time, one rock per pass
He did not drain the river. Lower the level slightly, one rock appears, repair it, lower it again. Take it all out at once and ten rocks arrive together and none of them get fixed. Cost comes down in layers, never in a single cut.
Cut a margin a little, wait until this layer of problems has been repaired, and only then cut the next slice.
How do I use it today?
Where you are: every obvious cost has been cut, and cutting further would damage the people or the goods, so you cannot see where to go next.
Ask first: which stages always keep a margin? If I removed the margin at one of them, what problem would surface? Am I prepared to repair that one?
Where it goes wrong: reading it as all margin is waste. What he cut was stock being used to hide problems, not genuine safety margin. And never cut it all at once — that is holing the boat, not clearing the channel.
Lines to keep
Inventory is water, problems are rocks, and high water runs smooth.
Every margin is underwriting a problem, and underwritten problems go unrepaired.
Cut the margin and something breaks. That is the rock you wanted.
Same situation, other people are asking
I'm told this is just what it costs. Is it?Costs won't come down and I can't see where to cut first.Every stage in this takes a cut and each one says it is necessary.Every team keeps a buffer and I've stopped asking why.Everyone says it can't be done cheaper · all 5 questions →If this one named what you are going through,
send it to someone who needs it, or keep it somewhere you will find it again.