Porsche Case Study Summary

In the beginning of the early 1990’s Porsche faced a severe problem. After orders decreased to 30% from 1986 to 1993 the company was on the verge of bankruptcy. The loss of almost 240 Mio. DM was so far the biggest in the company’s history. Porsche’s day as an independent luxury car company seemed to be over. Yet, five years later Porsche recovered and became one of the most successful automobile company’s in the world with an annual profit of 1.939 billion €. This dramatic change is owed to the implementation of lean management and the Toyota production system. This paper will illustrate the causes for the crisis and how lean management was introduced to Porsche.1992 marked the year of the crash.

Main Body

Production processes were slow, redundant and inefficient, products lacked quality, organizational structures were complex and employees capabilities have not been used effectively. All of these led to the dramatic drop of sales in 1992. Chairman Wendelin Wiedeking was aware that a dramatic changes were necessary and introduced lean management to Porsche with the guidance of Japanese consultants (Jones, Womack, 2010).

The implementation required a restructuring of the management and work force, operating with the Just-In-Time production and Kanban system and reducing the inventory.

The first step of the implementation was decreasing manager layers from six to four layers, creating four cost centers and three support functions. The executive stuff was reduced by 38%