Idea 28 - Lean manufacturing (50 Management ideas you really need to know)

Idea 28 -  Lean Manufacturing

It may trade under a rather prosaic title, but 'lean manufacturing' inspires a zeal that is positively revivalist in its fervor. It is Japanese by birth, and utterly Japanese in nature, managing to be complex, relentlessly demanding and, at the same time, elegantly simple. Doing it is not at all easy, but it does boil down to one imperious principle - 'eliminate waste'.
Lean, as its adherents call it, is about speed and efficiency, though they would say it was far more complicated than that. While it was formulated in the Japanese automobile industry in the 1930s and 1940s, its acknowledged influences go back at least as far as Henry Ford. It was Ford who first integrated the production process, using interchangeable parts, standardized working and a moving production line. Some say he was the first practitioner of lean.
One thing Ford wouldn't do was variety, as it would have slowed down his process. Quite apart from 'any colour you want as long as it's black', there was only one specification throughout, and all Model T chassis were the same until the day the plant closed. Later car makers offered many models, but the price they paid was having to abandon the continuous production line, so increasing throughput times and inventories.
Over at Japan's Toyota Motor Company, Taichii Ohno and his engineering colleague, Shigeo Shingo, thought they could enjoy the twin virtues of product variety and continuous process flow by using Ford's techniques while introducing certain innovations. The result was what eventually became known as the Toyota Production System, which incorporated several new ideas.
Instead of the huge machines being used in Detroit, Ohno and Shingo sized their machines to suit the actual volumes needed. They introduced very quick setups - now called single-minute exchange of dies (SMED) - so that each machine could make very small batches of lots of different parts, to accommodate the model range. And they saw to it that each step in the process kept the previous step informed of its need for materials (using Kanban cards), reducing inventories to the bare minimum. This was just-in-time (JIT) production. At its heart were the principles of low cost, high quality, plenty of variety and fast throughput times to keep up with the fickleness of consumer taste.
Something different Other Japanese companies adopted some of Toyota's techniques, but it wasn't until the 1970s that the rest of the world, and the US in particular, began to realize that Japanese manufacturers were doing something very different. That was when the Japanese began to make big inroads into the small end of the US automobile market, before expanding into others, such as electronics.

US manufacturers began to visit Japan, to see what was going on, and they returned with the odd catchy idea, like Kanban cards. But they never quite got the full picture until in 1981 Norman Bodek, an American entrepreneur, came across books on the Toyota system by Shingo. He had the books translated, brought Shingo to lecture in the US and started the first lean consultancy. 'Lean' itself didn't enter the vocabulary until 1990, with the publication of The Machine that Changed the World, a comparison of the US, European and Japanese auto industries by James Womack,
Daniel Jones and Daniel Roos. Womack, an MIT research scientist at the time, subsequently founded the non-profit Lean Enterprise Institute to spread the word. And the word has spread, to companies like Boeing Porsche and Tesco. Lean is not touted as a quick fix - the converted
describe it as a journey to a destination you never quite reach. And you can't get there on your own because, if you want to be lean, your suppliers must be lean too, because it doesn't work without quality and guaranteed JIT from the supply chain.
Lean starts with a walk around the factory, looking and seeing with a lean eye, to see how the different parts affect each other, on the lookout for waste (muda). Waste comes in many forms. Producing more than demanded or before it is needed is waste. So is inventory and anything that doesn't add value to the product. Waiting for machines to process and unnecessary transportation are waste and should be eliminated. Making defective products is sheer waste - don't detect and repair defects, prevent them. If you don't train and empower employees you are wasting their time and skills. If you give customers poor quality with features that don't add value, you are wasting their time and money.

Lean draws on many disciplines, which include J IT, SMED, Kanban, total productivity maintenance, 5S (order and cleanliness) and Kaizen (incremental change). Lean professionals warn against cherry-picking. You can't Kaizen your way to lean, they say. What you have to do is follow the five principles of lean:

Ø  Specify value - focus relentlessly on the customer when specifying and creating value (not on the shareholder, senior management, political expedience or anything else).
Ø  Identify the value stream - map how value is added to the product, through all the actions required to produce it.
Ø  Flow - only after the first two steps can you design processes that flow, uninterrupted.
Ø  Customer pull - let customers pull the product from you as needed, rather than pushing unwanted products onto them.
Ø  Pursue perfection - now it will dawn on you, say Womack and Jones, 'that there is no end to the process of reducing effort, time, space, cost and mistakes, while offering a product which is ever more nearly what the customer actually wants. Suddenly perfection, the fifth and final principle, doesn't seem like a crazy idea.

Reference: 50 Management Ideas You Really Need to Know

Book by Edward Russell-Walling

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