Lean Production
From GTwM
Lean manufacturing or lean production, which is often known simply as "Lean", is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Lean thinkers have consciously drawn on the experiences and learning of many most influential industrial strategists of the past whilst adding they have also added many new ideas and approaches.
The term Lean Production was coined by John Krafcik in 1988 but only became established in the 1990’s best seller called "The Machine That Changed the World : The Story of Lean Production". The book chronicles the transitions of automobile manufacturing (in particular Toyota's post war development) from craft production to mass production to lean production.(Note: Krafcik worked at the time for the authors of this book)
Lean Production requires radical change in virtually all areas of organisational activity including Lean Accounting & Lean HR and needs to be seen as part of a far broader underlying business philosophy.
Contents |
Philosophy
- Respect for people
- Reduce Waste
Respect for people
People is a very broad term. They do however break this down further as below.
- Company Survival
- Employees Welfare
- Society
- Customers
Interestingly customers come last in this list. It is only at a process level that customers come first (i.e what does this process add from the customers perspective?)
Seven Wastes
The Toyota Production System (TPS) is a management philosophy that focuses on reduction of the seven wastes
- Overproduction (making more than what is needed, or making it earlier than needed)
- Transportation (moving products further than is minimally required)
- Waiting (products waiting on the next production step, or people waiting for work to do)
- Inventory (having more inventory than is minimally required)
- Motion (people moving or walking more than minimally required)
- Processing itself
- Defects (the effort involved in inspecting for and fixing defects)
By eliminating waste, quality is improved, production time and cost is reduced.
Tools
To solve the problem of waste, Lean Production has several "tools" at its disposal. For example
- Continuous Improvement (kaizen)
- Gemba
- "pull" production by means of (kanban)
- mistake-proofing (poka-yoke)
- production levelling (Heijunka)
- visual management
- JIT
Lean however is not just a toolset. Rather it is a comprehensive, enterprise-wide program designed to be integrated into the organization's core strategy. At Toyota for instance this Systems Thinking finds it's expression in TPS (the Toyota Production System).
Understanding Lean Thinking as a business philosophy is a pre-requisite for the effective launch and maintenance of lean activities. John Seddon argues that a failure to grasp this helps explain the The misapplication of Lean in the Service Sector, characterising individuals who fail to grasp this as "Toolheads".
History
Literature documenting some of the basic principles of lean production date back to at least Benjamin Franklin. In "Poor Richard's Almanack" he argues that avoiding unnecessary costs could be more profitable than increasing sales: "A penny saved is two pence clear".
- Of wasted time, "He that idly loses 5s. [shillings] worth of time, loses 5s., and might as prudently throw 5s. into the river."
- About carrying unnecessary inventory (stock). "You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, 'Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.'
The concept of waste being built into work processes and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who observed that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to get a 5 pound (2.3 kg) brick but this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.
Fredrick Winslow Taylor, the father of Scientific Management, introduced what are now called work standardization and best practice deployment: "And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment" (Principles of Scientific Management, 1911).
Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: "…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer's side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it".
Shigeo Shingo, the best-known exponent of single-minute exchange of die SMED and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration (Andrew Dillon, translator, 1987. The Sayings of Shigeo Shingo: Key Strategies for Plant Improvement).
Henry Ford continued this focus on waste whilst developing his mass assembly manufacturing system. Ford (1922, My Life and Work) provided a single-paragraph description that encompasses the entire concept of waste. "I believe that the average farmer puts to a really useful purpose only about 5%. of the energy he expends. … Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. … It is waste motion— waste effort— that makes farm prices high and profits low." Poor arrangement of the workplace-- a major focus of the modern kaizen-- and doing a job inefficiently out of habit-- are major forms of waste even in modern workplaces.
Ford also pointed out how easy it was to overlook material waste. As described by Harry Bennett (1951, Ford: We Never Called Him Henry), "One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. 'You know,' Mr. Ford said to me, 'there's iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.'" In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.
Design for Manufacture (DFM) also is a Ford concept. Per My Life and Work, "Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything— a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. ...But also it is to be remembered that all the parts are designed so that they can be most easily made." The same reference describes Just in time manufacturing very explicitly.
Henry Ford's mass production system failed however to incorporate the notion of Pull and thus often suffered from the waste of over production and high inventories.
In 1937 Kiichiro Toyoda of Toyota Automatic Loomworks developed a plan to introduce a revolutionary flow based system for the production of cars calling it JIT. In the run up to the second World War Toyoda built a plant in the parent company site using this theory. Unfortunately during the War this system was dismantled and was not reconstructed until ???? when Taiichi Ohno revived this technique and added his own kanban refinement.
A delegation from Toyota visited the United States to study its commercial enterprises. Naturally, they first visited Ford automotive plants in Michigan, but, despite Ford being the auto industry leader at that time, they found their methods to be unappealing. They were mainly appalled by the large amounts of inventory that were laying around and how the amount of work being done by the various departments within the factory were uneven on most days. Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale held less appeal for them than for Ford.
Having visited and seen supermarkets in the US Taiichi Ohno recognised the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period over production was not an option and thus the notion of Pull (rather than sales target driven Push) came to underpin production scheduling. Norman Bodek wrote the following in his foreword to a reprint of Ford's (1926) Today and Tomorrow: "I was first introduced to the concepts of just-in-time JIT and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system's creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford's book."
Taiichi Ohno also incorporated many of the techniques & philosophical points put forward by W Edwards Deming
Criticism
- Many early commentators in the 1980's argued that Lean's success was actually due to Japans low wages and compliant workforce. However the later expansion of Lean into North America and in particular the NUMMI joint venture with GM dispelled to some degree both of these criticisms.
- America's recovery in the 90's (and Japan's stagnation) saw a decline in interest in Lean and a resurgence of interest in more creative leadership - however the spate of corporate accounting scandals in the early 00's have lessened this to an extent (see Cult of Success).
- Research suggests less than 20% of Lean Implementations in the West are considered a success by the host organisation
Lean implementation program
An example of a lean implementation program would be:-
- Senior management to agree and discuss their lean vision
- Management brainstorm to identify project leader and set objectives
- Communicate plan and vision to the workforce
- Ask for volunteers to form the Lean Implementation team (5-7 works best, all from different departments)
- Appoint members of the Lean Manufacturing Implementation Team
- Train the Implementation Team in the various lean tools - make a point of trying to visit other non competing businesses which have implemented lean
- Select a Pilot Project – 5S is a good place to start
- Run the pilot for 2-3 months - evaluate, review and learn from your mistakes
- Roll out pilot to other factory areas
- Evaluate results, encourage feedback
- Once you are satisfied that you have a habitual program, consider introducing the next lean tool. Select the one which will give you the biggest return for your business.
