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Lean manufacturing, lean enterprise, or lean production, often simply, "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. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for.
Essentially, lean is centered on preserving value with less work. Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS) (hence the term Toyotism is also prevalent) and identified as "lean" only in the 1990s. TPS is renowned for its focus on reduction of the original Toyota seven wastes to improve overall customer value, but there are varying perspectives on how this is best achieved. The steady growth of Toyota, from a small company to the world's largest automaker, has focused attention on how it has achieved this success.
Lean principles are derived from the Japanese manufacturing industry. The term was first coined by John Krafcik in his 1988 article, "Triumph of the Lean Production System," based on his master's thesis at the MIT Sloan School of Management. Krafcik had been a quality engineer in the Toyota-GM NUMMI joint venture in California before coming to MIT for MBA studies. Krafcik's research was continued by the International Motor Vehicle Program (IMVP) at MIT, which produced the international best-seller book co-authored by Jim Womack, Daniel Jones, and Daniel Roos called The Machine That Changed the World. A complete historical account of the IMVP and how the term "lean" was coined is given by Holweg (2007).
For many, lean is the set of "tools" that assist in the identification and steady elimination of waste (muda). As waste is eliminated quality improves while production time and cost are reduced. A non exhaustive list of such tools would include: SMED, Value Stream Mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), Total Productive Maintenance, elimination of time batching, mixed model processing, Rank Order Clustering, single point scheduling, redesigning working cells, multi-process handling and control charts (for checking mura).
There is a second approach to lean Manufacturing, which is promoted by Toyota, called The Toyota Way, in which the focus is upon improving the "flow" or smoothness of work, thereby steadily eliminating mura ("unevenness") through the system and not upon 'waste reduction' per se. Techniques to improve flow include production leveling, "pull" production (by means of kanban) and the Heijunka box. This is a fundamentally different approach from most improvement methodologies, which may partially account for its lack of popularity.
The difference between these two approaches is not the goal itself, but rather the prime approach to achieving it. The implementation of smooth flow exposes quality problems that already existed, and thus waste reduction naturally happens as a consequence. The advantage claimed for this approach is that it naturally takes a system-wide perspective, whereas a waste focus sometimes wrongly assumes this perspective.
Both lean and TPS can be seen as a loosely connected set of potentially competing principles whose goal is cost reduction by the elimination of waste. These principles include: Pull processing, Perfect first-time quality, Waste minimization, Continuous improvement, Flexibility, Building and maintaining a long term relationship with suppliers, Autonomation, Load leveling and Production flow and Visual control. The disconnected nature of some of these principles perhaps springs from the fact that the TPS has grown pragmatically since 1948 as it responded to the problems it saw within its own production facilities. Thus what one sees today is the result of a 'need' driven learning to improve where each step has built on previous ideas and not something based upon a theoretical framework.
Toyota's view is that the main method of lean is not the tools, but the reduction of three types of waste: muda ("non-value-adding work"), muri ("overburden"), and mura ("unevenness"), to expose problems systematically and to use the tools where the ideal cannot be achieved. From this perspective, the tools are workarounds adapted to different situations, which explains any apparent incoherence of the principles above.
Also known as the flexible mass production, the TPS has two pillar concepts: Just-in-time (JIT) or "flow", and "autonomation" (smart automation). Adherents of the Toyota approach would say that the smooth flowing delivery of value achieves all the other improvements as side-effects. If production flows perfectly (meaning it is both "pull" and with no interruptions) then there is no inventory; if customer valued features are the only ones produced, then product design is simplified and effort is only expended on features the customer values. The other of the two TPS pillars is the very human aspect of autonomation, whereby automation is achieved with a human touch. In this instance, the "human touch" means to automate so that the machines/systems are designed to aid humans in focusing on what the humans do best.
Lean implementation is therefore focused on getting the right things to the right place at the right time in the right quantity to achieve perfect work flow, while minimizing waste and being flexible and able to change. These concepts of flexibility and change are principally required to allow production leveling (Heijunka), using tools like SMED, but have their analogues in other processes such as research and development (R&D). The flexibility and ability to change are within bounds and not open-ended, and therefore often not expensive capability requirements. More importantly, all of these concepts have to be understood, appreciated, and embraced by the actual employees who build the products and therefore own the processes that deliver the value. The cultural and managerial aspects of lean are possibly more important than the actual tools or methodologies of production itself. There are many examples of lean tool implementation without sustained benefit, and these are often blamed on weak understanding of lean throughout the whole organization.
Lean aims to make the work simple enough to understand, do and manage. To achieve these three goals at once there is a belief held by some that Toyota's mentoring process,(loosely called Senpai and Kohai, which is Japanese for senior and junior), is one of the best ways to foster lean thinking up and down the organizational structure. This is the process undertaken by Toyota as it helps its suppliers improve their own production. The closest equivalent to Toyota's mentoring process is the concept of "Lean Sensei," which encourages companies, organizations, and teams to seek outside, third-party experts, who can provide unbiased advice and coaching, (see Womack et al., Lean Thinking, 1998).
In 1999, Spear and Bowen identified four rules which characterize the "Toyota DNA":
Rule 1: All work shall be highly specified as to content, sequence, timing, and outcome.
Rule 2: Every customer-supplier connection must be direct, and there must be an unambiguous yes or no way to send requests and receive responses.
Rule 3: The pathway for every product and service must be simple and direct.
Rule 4: Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization.
There have been recent attempts to link lean to service management, perhaps one of the most recent and spectacular of which was London Heathrow Airport's Terminal 5. This particular case provides a graphic example of how care should be taken in translating successful practices from one context (production) to another (services), expecting the same results. In this case the public perception is more of a spectacular failure, than a spectacular success, resulting in potentially an unfair tainting of the lean manufacturing philosophies.
The avoidance of waste has a long history. In fact many of the concepts now seen as key to lean have been discovered and rediscovered over the years by others in their search to reduce waste. Lean manufacturing builds on their experiences, including learning from their mistakes.
Most of the basic goals of lean manufacturing are common sense, and documented examples can be seen as early as Benjamin Franklin. Poor Richard's Almanack says of wasted time, "He that idly loses 5s. worth of time, loses 5s., and might as prudently throw 5s. into the river." He added that avoiding unnecessary costs could be more profitable than increasing sales: "A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have."
Again Franklin's The Way to Wealth says the following about carrying unnecessary inventory. "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.' In another place he says, 'Many have been ruined by buying good penny worths'." Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.
The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to pick up a 2.3 kg (5 lb.) brick, and 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.
Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment. In his Principles of Scientific Management, (1911), Taylor said: "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."
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."
American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and explicitly stated the goal of what is now called lean manufacturing as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor's Shop Management (1911), "We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."
Henry Ford continued this focus on waste while developing his mass assembly manufacturing system. Charles Buxton Going wrote in 1915:
Ford, in My Life and Work (1922), provided a single-paragraph description that encompasses the entire concept of waste:
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. A former employee, Harry Bennett, wrote:
In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.
Ford's early success, however, was not sustainable. As James P. Womack and Daniel Jones pointed out in "Lean Thinking", what Ford accomplished represented the "special case" rather than a robust lean solution. The major challenge that Ford faced was that his methods were built for a steady-state environment, rather than for the dynamic conditions firms increasingly face today. Although his rigid, top-down controls made it possible to hold variation in work activities down to very low levels, his approach did not respond well to uncertain, dynamic business conditions; they responded particularly badly to the need for new product innovation. This was made clear by Ford's precipitous decline when the company was forced to finally introduce a follow-on to the Model T (see Lean Dynamics).
Design for Manufacture (DFM) also is a Ford concept. Ford said in My Life and Work (the same reference describes just in time manufacturing very explicitly):
This standardization of parts was central to Ford's concept of mass production, and the manufacturing "tolerances", or upper and lower dimensional limits that ensured interchangeability of parts became widely applied across manufacturing. Decades later, the renowned Japanese quality guru, Genichi Taguchi, demonstrated that this "goal post" method of measuring was inadequate. He showed that "loss" in capabilities did not begin only after exceeding these tolerances, but increased as described by the Taguchi Loss Function at any condition exceeding the nominal condition. This became an important part of W. Edwards Deming's quality movement of the 1980s, later helping to develop improved understanding of key areas of focus such as cycle time variation in improving manufacturing quality and efficiencies in aerospace and other industries.
While Ford is renowned for his production line it is often not recognized how much effort he put into removing the fitters' work to make the production line possible. Until Ford, a car's components always had to be fitted or reshaped by a skilled engineer at the point of use, so that they would connect properly. By enforcing very strict specification and quality criteria on component manufacture, he eliminated this work almost entirely, reducing manufacturing effort by between 60-90%. However, Ford's mass production system failed to incorporate the notion of "pull production" and thus often suffered from over-production.
Toyota's development of ideas that later became lean may have started at the turn of the 20th century with Sakichi Toyoda, in a textile factory with looms that stopped themselves when a thread broke. This became the seed of autonomation and Jidoka. Toyota's journey with JIT may have started back in 1934 when it moved from textiles to produce its first car. Kiichiro Toyoda, founder of Toyota Motor Corporation, directed the engine casting work and discovered many problems in their manufacture. He decided he must stop the repairing of poor quality by intense study of each stage of the process. In 1936, when Toyota won its first truck contract with the Japanese government, his processes hit new problems and he developed the "Kaizen" improvement teams.
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 therefore had little application. Having visited and seen supermarkets in the USA, 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 had to be avoided and thus the notion of Pull (build to order rather than target driven Push) came to underpin production scheduling.
It was with Taiichi Ohno at Toyota that these themes came together. He built on the already existing internal schools of thought and spread their breadth and use into what has now become the Toyota Production System (TPS). It is principally from the TPS, but now including many other sources, that lean production is developing. Norman Bodek wrote the following in his foreword to a reprint of Ford's Today and Tomorrow:
Although the elimination of waste may seem like a simple and clear subject it is noticeable that waste is often very conservatively identified. This then hugely reduces the potential of such an aim. The elimination of waste is the goal of lean, and Toyota defined three broad types of waste: muda, muri and mura; it should be noted that for many lean implementations this list shrinks to the first waste type only with reduced corresponding benefits. To illustrate the state of this thinking Shigeo Shingo observed that only the last turn of a bolt tightens it—the rest is just movement. This ever finer clarification of waste is key to establishing distinctions between value-adding activity, waste and non-value-adding work. Non-value adding work is waste that must be done under the present work conditions. One key is to measure, or estimate, the size of these wastes, to demonstrate the effect of the changes achieved and therefore the movement toward the goal.
The "flow" (or smoothness) based approach aims to achieve JIT, by removing the variation caused by work scheduling and thereby provide a driver, rationale or target and priorities for implementation, using a variety of techniques. The effort to achieve JIT exposes many quality problems that are hidden by buffer stocks; by forcing smooth flow of only value-adding steps, these problems become visible and must be dealt with explicitly.
Muri is all the unreasonable work that management imposes on workers and machines because of poor organization, such as carrying heavy weights, moving things around, dangerous tasks, even working significantly faster than usual. It is pushing a person or a machine beyond its natural limits. This may simply be asking a greater level of performance from a process than it can handle without taking shortcuts and informally modifying decision criteria. Unreasonable work is almost always a cause of multiple variations.
To link these three concepts is simple in TPS and thus lean. Firstly, muri focuses on the preparation and planning of the process, or what work can be avoided proactively by design. Next, mura then focuses on how the work design is implemented and the elimination of fluctuation at the scheduling or operations level, such as quality and volume. Muda is then discovered after the process is in place and is dealt with reactively. It is seen through variation in output. It is the role of management to examine the muda, in the processes and eliminate the deeper causes by considering the connections to the muri and mura of the system. The muda and mura inconsistencies must be fed back to the muri, or planning, stage for the next project.
A typical example of the interplay of these wastes is the corporate behaviour of "making the numbers" as the end of a reporting period approaches. Demand is raised to 'make plan,' increasing (mura), when the "numbers" are low, which causes production to try to squeeze extra capacity from the process, which causes routines and standards to be modified or stretched. This stretch and improvisation leads to muri-style waste, which leads to downtime, mistakes and back flows, and waiting, thus the muda of waiting, correction and movement.
The original seven muda are:
Later an eighth waste was defined by Womack et al. (2003); it was described as manufacturing goods or services that do not meet customer demand or specifications. Many others have added the "waste of unused human talent" to the original seven wastes. For example, six sigma includes the waste of Skills, referred to as "under-utilizing capabilities and delegating tasks with inadequate training". Other additional wastes added were for example "space". These wastes were not originally a part of the seven deadly wastes defined by Taiichi Ohno in TPS, but were found to be useful additions in practice. In 1999 Geoffrey Mika in his book, "Kaizen Event Implementation Manual" added three more forms of waste that are now universally accepted; The waste associated with working to the wrong metrics or no metrics, the waste associated with not utilizing a complete worker by not allowing them to contribute ideas and suggestions and be part of Participative Management, and lastly the waste attributable to improper use of computers; not having the proper software, training on use and time spent surfing, playing games or just wasting time.For a complete listing of the "old" and "new" wastes see Bicheno and Holweg (2009)
Some of these definitions may seem rather idealistic, but this tough definition is seen as important and they drove the success of TPS. The clear identification of non-value-adding work, as distinct from wasted work, is critical to identifying the assumptions behind the current work process and to challenging them in due course. Breakthroughs in SMED and other process changing techniques rely upon clear identification of where untapped opportunities may lie if the processing assumptions are challenged.
The discipline required to implement lean and the disciplines it seems to require are so often counter-cultural that they have made successful implementation of lean a major challenge. Some would say that it was a major challenge in its manufacturing 'heartland' as well.
In summary, an example of a lean implementation program could be:
|With a tools-based approach ||With a muri or flow based approach (as used in the TPS with suppliers). |
The role of the leaders within the organization is the fundamental element of sustaining the progress of lean thinking. Experienced kaizen members at Toyota, for example, often bring up the concepts of Senpai, Kohai, and Sensei, because they strongly feel that transferring of Toyota culture down and across Toyota can only happen when more experienced Toyota Sensei continuously coach and guide the less experienced lean champions.
One of the dislocative effects of lean is in the area of key performance indicators (KPI). The KPIs by which a plant/facility are judged will often be driving behaviour, because the KPIs themselves assume a particular approach to the work being done. This can be an issue where, for example a truly lean, Fixed Repeating Schedule (FRS) and JIT approach is adopted, because these KPIs will no longer reflect performance, as the assumptions on which they are based become invalid. It is a key leadership challenge to manage the impact of this KPI chaos within the organization.
Similarly, commonly used accounting systems developed to support mass production are no longer appropriate for companies pursuing lean. Lean accounting provides truly lean approaches to business management and financial reporting.
After formulating the guiding principles of its lean manufacturing approach in the Toyota Production System (TPS), Toyota formalized in 2001 the basis of its lean management: the key managerial values and attitudes needed to sustain continuous improvement in the long run. These core management principles are articulated around the twin pillars of Continuous Improvement (relentless elimination of waste) and Respect for People (engagement in long term relationships based on continuous improvement and mutual trust).
This formalization stems from problem solving. As Toyota expanded beyond its home base for the past 20 years, it hit the same problems in getting TPS properly applied that other western companies have had in copying TPS. Like any other problem, it has been working on trying a series of countermeasures to solve this particular concern. These countermeasures have focused on culture: how people behave, which is the most difficult challenge of all. Without the proper behavioral principles and values, TPS can be totally misapplied and fail to deliver results. As with TPS, the values had originally been passed down in a master-disciple manner, from boss to subordinate, without any written statement on the way. Just as with TPS, it was internally argued that formalizing the values would stifle them and lead to further misunderstanding. However, as Toyota veterans eventually wrote down the basic principles of TPS, Toyota set to put the Toyota Way into writing to educate new joiners.
Continuous Improvement breaks down into three basic principles:
Respect For People is less known outside of Toyota, and essentially involves two defining principles:
While lean is seen by many as a generalization of the Toyota Production System into other industries and contexts there are some acknowledged differences that seem to have developed in implementation.
Lean, as a concept or brand, has captured the imagination of many in different spheres of activity. Examples of these from many sectors are listed below.
Lean principles have been successfully applied to call center services to improve live agent call handling. By combining Agent-assisted Automation and lean's waste reduction practices, a company reduced handle time, reduced between agent variability, reduced accent barriers, and attained near perfect process adherence.
Lean principles have also found application in software application development and maintenance and other areas of information technology (IT). More generally, the use of lean in information technology has become known as Lean IT.
A study conducted on behalf of the Scottish Executive, by Warwick University, in 2005/06 found that lean methods were applicable to the public sector, but that most results had been achieved using a much more restricted range of techniques than lean provides.
The challenge in moving lean to services is the lack of widely available reference implementations to allow people to see how directly applying lean manufacturing tools and practices can work and the impact it does have. This makes it more difficult to build the level of belief seen as necessary for strong implementation. However, some research does relate widely recognized examples of success in retail and even airlines to the underlying principles of lean. Despite this, it remains the case that the direct manufacturing examples of 'techniques' or 'tools' need to be better 'translated' into a service context to support the more prominent approaches of implementation, which has not yet received the level of work or publicity that would give starting points for implementors. The upshot of this is that each implementation often 'feels its way' along as must the early industrial engineering practices of Toyota. This places huge importance upon sponsorship to encourage and protect these experimental developments.
The espoused goals of lean manufacturing systems differ between various authors. While some maintain an internal focus, e.g. to increase profit for the organization, others claim that improvements should be done for the sake of the customer
Some commonly mentioned goals are:
Taking the first letter of each waste, the acronym "TIM WOOD" is formed. This is a common way to remember the wastes.
The strategic elements of lean can be quite complex, and comprise multiple elements. Four different notions of lean have been identified:
The following steps should be implemented to create the ideal lean manufacturing system:
A fundamental principle of lean manufacturing is demand-based flow manufacturing. In this type of production setting, inventory is only pulled through each production center when it is needed to meet a customer's order. The benefits of this goal include:
The core of lean is founded on the concept of continuous product and process improvement and the elimination of non-value added activities. "The Value adding activities are simply only those things the customer is willing to pay for, everything else is waste, and should be eliminated, simplified, reduced, or integrated" (Rizzardo, 2003). Improving the flow of material through new ideal system layouts at the customer's required rate would reduce waste in material movement and inventory.
A continuous improvement mindset is essential to reach the company's goals. The term "continuous improvement" means incremental improvement of products, processes, or services over time, with the goal of reducing waste to improve workplace functionality, customer service, or product performance (Suzaki, 1987).
Stephen Shortell (Professor of Health Services Management and Organisational Behaviour – Berkeley University, California) states:-
"For improvement to flourish it must be carefully cultivated in a rich soil bed (a receptive organisation), given constant attention (sustained leadership), assured the right amounts of light (training and support) and water (measurement and data) and protected from damaging."
Overall equipment effectiveness (OEE) is a set of performance metrics that fit well in a lean environment.
One criticism of lean perennially heard among rank-and-file workers is that lean practitioners may easily focus too much on the tools and methodologies of lean, and fail to focus on the philosophy and culture of lean. The implication of this for lean implementers is that adequate command of the subject is needed in order to avoid failed implementations. Another pitfall is that management decides what solution to use without understanding the true problem and without consulting shop floor personnel. As a result lean implementations often look good to the manager but fail to improve the situation. In addition, many of the popular lean initiatives, coming from the TPS, are solutions to specific problems that Toyota was facing. Toyota, having an undesired current condition, determined what the end state would look like. Through much study, the gap was closed, which resulted in many of the tools in place today. Often, when a tool is implemented outside of TPS, a company believes that the solution lay specifically within one of the popular lean initiatives. The tools which were the solution to a specific problem for a specific company may not be able to be applied in exactly the same manner as designed. Thus, the solution does not fit the problem and a temporary solution is created vs. the actual root cause.
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