The Routledge Companion to Lean Management

Torbjorn H. Netland, Daryl J. Powell, Torbjorn H. Netland, Daryl J. Powell

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781317416500
• Topic: Business
• Subtopic: Business General
• Index: Business

Interest in the phenomenon known as "lean" has grown significantly in recent years. This is the first volume to provide an academically rigorous overview of the field of lean management, introducing the reader to the application of lean in diverse application areas, from the production floor to sales and marketing, from the automobile industry to academic institutions.

The volume collects contributions from well-known lean experts and up-and-coming scholars from around the world. The chapters provide a detailed description of lean management across the manufacturing enterprise (supply chain, accounting, production, sales, IT etc.), and offer important perspectives for applying lean across different industries (construction, healthcare, logistics). The contributors address challenges and opportunities for future development in each of the lean application areas, concluding most chapters with a short case study to illustrate current best practice. The book is divided into three parts:

• The Lean Enterprise
• Lean across Industries
• A Lean World.

This handbook is an excellent resource for business and management students as well as any academics, scholars, practitioners, and consultants interested in the "lean world."

PART I

The Lean Enterprise

3
LEAN PRODUCTION

Pauline Found and John Bicheno

Introduction

At the time of writing, it is more than one quarter-century since the term “lean production” was first introduced to the management lexicon by John Krafcik, a researcher from the Massachusetts Institute of Technology (MIT), who was working on the International Motor Vehicle Program (IMVP) (Krafcik, 1988). Womack, Jones, and Roos later popularized lean in the bestselling book The Machine that Changed the World. However, it was Richard Schonberger and Robert Hall who wrote the two books, in 1982 and 1983 respectively, that effectively launched (or relaunched) the concept that became known as lean production in the West. Schonberger (2007) noted that while The Machine that Changed the World is commonly perceived to mark the beginning of the lean movement, in reality lean manufacturing was actually already well established in the US in the early 1980s, albeit under different names.

In The Machine, the authors contend that the findings of the IMVP large-scale study revealed that there was a dramatic performance gap between Japanese and Western car producers and asserted that lean production should be universally adopted: “Our conclusion is simple: Lean production is a superior way for humans to make things … It follows that the whole world should adopt lean production, and as quickly as possible” (Womack et al., 1990, p. 225). The impact of The Machine has been far-reaching and the book led to the commissioning of two follow-up studies that provided further support for the existence of a substantial performance gap (Anderson, 1992; Oliver et al., 1994). These studies were publicized extensively to the manufacturing community at the time.

In the period since the introduction of lean, huge changes have taken place, yet it is also true that, for the majority of operations organizations, the lean potential has hardly been tapped. This chapter looks at the evolution and spread of lean and opens the discussion on lean as the dominant operations paradigm of the 21st century.

Evolution of Lean Production

Lean emerged in the West as a result of great interest in Japanese production and management methods stimulated by the second oil crisis when automotive production in the US fell by almost 22 percent as consumers turned to the more fuel-efficient small Japanese cars. The golden days of mass manufacturing in the US were over in 1976 as Chrysler declared bankruptcy and both GM and Ford were losing money. The interest in Japanese manufacturing techniques and, in particular, Toyota’s production system, led to the publication of two English language articles in 1977, one by Sugimori et al. in the Journal of Production Research and the other by Ashburn in the American Machinist (cited in Schonberger, 2007) which raised concerns in US and European automotive companies, but it was an NBC-TV broadcast by producer Claire Crawford-Mason in 1980 entitled “If Japan Can, Why Can’t We?” that prompted a quality revolution, which led to the five-year, five million dollar IMVP research program.

The ideas behind what is now termed “lean” originate from several sources, including great industrialists like Henry Ford in the US, Frank Woollard in the UK who developed the concepts behind flow manufacturing and moving assembly lines and management thinkers such as W. Edwards Deming and Peter Drucker who criticized mass manufacturing and won support in Japan to think differently. In Japan, one of the main sources is considered to be Sakichi Toyoda in the Toyoda loom factory, who originally developed the philosophy and methods associated with lean production at the turn of the 20th century; these influenced his son Kiichiro Toyoda to develop what is known as the just-in-time (JIT) method at the Toyota Motor Company in the late 1930s which became one of the pillars of the company.

The Second World War reconstruction of Japanese manufacturing and the lack of available capital resources and severe economic slump saw these ideas extended and combined with a discipline of daily improvements (kaizen) at Toyota that was supported by Eiji Toyoda, the new chairman, and enforced by chief engineer Taiichi Ohno, who had transferred from Toyoda Loom Works to Toyota Motor Company in 1943. The new approach, created by Taiichi Ohno, became known as the Toyota Production System (TPS). The philosophy and methods of TPS evolved over time, extending to Toyota’s supply base in the 1970s, its distribution and sales operations in the 1980s, and became a competitive weapon as Toyota competed openly with US and European automakers. Toyota’s business success and world-leading product quality is an established fact. Rother (2010) recently summarized Toyota’s success into four key statistics: Toyota has shown sales growth for over 40 years (at the same time other car makers’ sales have reached a plateau or declined); Toyota’s profit exceeds that of other car makers; Toyota’s market capitalization has for many years exceeded that of other car makers; and in sales rank Toyota has become the world leading car maker. This success is often attributed to the production system Toyota developed during 1950s and 1960s as a result of intense post-war competition.

TPS is characterized by a systematic approach to the organization of production that emphasizes the elimination of all forms of waste (Ohno, 1988). However, over time TPS has been discovered to be a complex, multifaceted element of Toyota’s broader management system and culture, something that has been reflected in the prolific lean literature. In his book The Evolution of a Manufacturing System at Toyota, Takahiro Fujimoto (1999) describes how Toyota developed three layers of manufacturing capabilities: a routinized manufacturing layer, a routinized learning layer, and a non-routine and dynamic evolutionary learning capability which gives Toyota the capacity and strength to adapt and change over time. Spear and Bowen (1999, p. 99) attempted to codify TPS and describe four key rules that describe the tacit knowledge and guide the design, operation, and improvement of every activity, connection, and pathway of products and services and it is these rules that are the essence, or DNA, of TPS. These rules are as follows:

1 All work shall be specified as to content, sequence, timing and outcome.

2 Every customer–supplier connection must be direct.

3 The pathway for every product or service must be simple and direct.

4 Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest level in the organization.

In spite of a plethora of academic and practitioner books and articles on lean, however, there is still not a precise and agreed-upon definition (Shah and Ward, 2007). Referring to the old fable of the blind men touching an elephant and imagining very different animals, Shah and Ward suggest that over time commentators on lean have focused on single, visible aspects of the process while missing the invisible highly inter-dependent links of lean systems as a whole. As well as being a poorly defined construct, interpretations of lean have continued to evolve over time. Originally presented by Womack et al. (1990) as a counter intuitive alternative to traditional manufacturing, it is now presented, by some at least, as a new paradigm for operations management (Bartezzaghi, 1999; Holweg, 2007). In addition, lean has expanded beyond its original applications on the shop floor of vehicle manufacturers to other functional areas within organizations, to other manufacturers and to non-manufacturing organizations. Consequently, lean means different things to different people (see Table 3.1).

Lean is described as a philosophy (Bhasin and Burcher, 2006), a management system (Hines et al., 2004), and an operating system of production planning and control (Standard and Davis, 1999).

Lean Production as a Philosophy, Management and Operating system

Lean as an Operating System for Production Planning and Control

A shop floor-based view of lean still emerges as the prominent means of implementation. The essence of this view is smoothing and improving operational processes through the application of lean tools. Often, these are not even a set of tools but completely independently introduced by companies trying to emulate the TPS. For example, managers employ a variety of mapping tools to identify the value-added and non-value-added activities of each process. From this they can reduce the operating costs by eliminating non-value-added activities, waste, and reorganizing value-added activities. In these cases, the primary goal of the shop floor tool-based method is to efficiently improve the organization’s performance at an operational level, by enhancing quality and reducing waste, inventories, and lead times (Manos and Vincent, 2012).

Table 3.1 Lean viewed as a philosophy, a management system, and an operating system for lean production planning and control

Lean philosophy

Systems thinking

Value for the customer

Waste elimination

Lead time reduction

Humility and respect for humans

Continuous improvement

Lean management

Hoshin kanri (policy deployment)

Value stream (cross functional and “gemba” management)

Visual management and visual controls

Kata

Leader standard work

TWI (Training Within Industry)

Lean operations

Value stream management

5S

Standard work

TPM (total productive management)/SMED (single-minute exchange of dies)

Pull systems/Kanban

Demand and capacity management

Source: Adapted from Slack et al. (2004).

Womack and Jones began their book Lean Thinking with the words “Muda. It’s the one Japanese word you really must know” (Womack and Jones, 2003, p. 15). Today there is widespread awareness of waste. Fujio Cho, former President of Toyota, defined waste as “anything other than the minimum amount of equipment, materials, parts, space and worker’s time, which are absolutely essential to add value to the product” (Suzaki, 1987, p. 8). The concept of muda primarily originated from Taiichi Ohno’s production philosophy in the early 1950s (Dahlgaard-Park, 2000) although Toyota also talks about three Ms—muda (waste), muri (overburden), and mura (unevenness). Knowing about all three gives a more complete understanding of lean; the three are interlinked and lean is about mobilizing people to reduce all three. While total quality management (TQM) was not mentioned in The Machine that Changed the World, possibly because TQM was not a well-known management philosophy in the West at that time (Dahlgaard and Dahlgaard-Park, 2006), the mention of muda in lean thinking is very significant as it links the two management philosophies and confirms that the aim of lean production is to eliminate waste.

Lean is often described as a pull system, compared with a materials requirements planning (MRP), or push, system. Toyota implemented a JIT pull system in post-World War II Japan as the capital resources to support the high levels of inventory that were often the consequence of push and MRP systems were not available. The concept behind JIT is described by Monden (1983, p. 2). JIT means “to produce the necessary units at the necessary quantities at the necessary time” and core to implementing a JIT and pull system is managing demand and capacity to reduce the lead time between customer order and cash received. Therefore, pull systems are based on responding to actual customer demand, not in response to orders pushed on to the shop floor from schedules based on forecasts. Pull is based on a sell-one (or use-one), make-one concept of small batches. To run a successful pull system, demand needs to be leveled as much as possible to eliminate spikes and to allow the products to flow without disruption and diversion, thus reducing the need for excess inventory. This is managed by understanding the “load” and the “capacity” of the system. Load is the amount of work imposed on the system and capacity is the resources available to do the work. Ohno used a simple formula to show that present effective capacity is the sum of work and waste:

Present capacity = work + waste.

While this is a simple way to demonstrate that you can get more work out of the current system by reducing the waste, this can be misunderstood and may suggest that you can increase capacity if you increase waste. There are actually three factors that influence queues or lead time. These are arrival variation, process variation, and utilization, as in the equations: Utilization = load/capacity and load = real demand + mistake demand (mistake demand could be rework, work done due to errors, failure demand). Therefore, present capacity = base capacity – waste. Hence, there are four things that should be tackled: arrival variation, process variation, mistake demand, and waste.

The key to realizing JIT is not relying on a central planning approach to production control which “pushes” a product through production by simultaneously scheduling the individual processes but, rather, t...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of contributors
• Preface
• Introduction
• Part I The Lean Enterprise
• Part II Lean across Industries
• Part III A Lean World
• Index