Downstream blindness

In the 1960s and the 1970s, car manufacturing plants in the US would be filled with bins of fasteners.

Workers on the assembly line would then dip into this bin to find a bolt for their assembly. If the bolt didn’t fit, they would throw it to a discard pile and reach into the bin for another bolt. Even if they spotted a defective bolt, they were encouraged to find a replacement and keep the line moving.

It was important to keep the assembly line moving. Any break in flow would cost the company thousands of dollars. Therefore, it was cheaper to use tolerate imperfect fasteners in the supply chain and keep the line moving. As a result, American cars were less reliable. They broke down more often. The problem of stopping the line was visible to the plant managers, but not the quality issues that this decision caused downstream.

Japanese car manufacturers adopted a different approach. Whenever workers spotted even a minor defect, they would stop the entire assembly line, analyze it and remedy it. That way, this defect would not move downstream and affect hundreds of vehicles. Because the interruption came at a great cost, they took every measure to ensure that it didn’t happen again.

When Toyota cars hit the market in the 1960’s, their parts fit more perfectly and with fewer defecty than any other car before it. The Toyota Corolla, launched in the 1960s’, remains the world’s best selling car today.

It is expensive to break the flow of an assembly line. However, it is more expensive to let defects flow through. The second kind of cost is harder to see, but can be deadly. It ultimately drove American car manufacturers to bankruptcy.

In today’s complex world, our decisions and actions always have consequences downstream that we are likely to be blind to. When we make a compromise, what are the ways it backfire downstream?