Lean On!

Evolution of Operations Excellence with Digital Transformation in Manufacturing and Beyond

Mohit Gupta

• Publisher: New Degree Press
• Year: 2021
• eBook ISBN: 9781637302910
• Edition: 1
• Topic: Commerce
• Subtopic: Opérations

If someone told you Domino's Pizza and Tesla might not be all that different through their manufacturing process, would you believe them?

In Lean On! Mohit Gupta reinvigorates the power of Lean manufacturing and the importance of adopting optimization in a world of limited resources by sharing stories from well-known companies such as Tesla, Tata, Domino's, Boeing, Amazon and many successful operations experts and consultants. With interviews from people who work for a wide range of companies, from the automobile to the telecom industry, Lean On! provides an intersection of Lean and Agile for industries beyond manufacturing and factories.

• Are you new to operations excellence?
• Are you unsure of how to engage your IT folks in your next operations project?
• Are you looking for a quick intro to the world of manufacturing?
• Are you having trouble differentiating between Lean and Agile?

Lean on! will help you answer all of these questions and more while helping you gain a clearer understanding of operations excellence and why Lean can help us all.

PART 1

CHAPTER 1

LEAN | HIGHLIGHTS FROM THE PAST

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Did you know that the idea for Lean came from slaughterhouses?[9] When Henry Ford was creating Model T, he discovered Lean after studying animal disassembly at a meatpacking plant in Chicago. Many developments took place before we got to a point of adopting this gem as a standard practice. Before diving into Mr. Ford’s story, let’s take a step back and understand the Industrial Revolution through just one factor: geographical reach.

The Origin

Without transportation, communities couldn’t ship and sell goods. India couldn’t share its spices, and China couldn’t sell its silk. Prior to the expansion of railroads, most trade relied on ships, which is why major cities grew up beside large bodies of water.[10]

The landscape of our civilization changed with the expansion of better modes of transportation. Gradually, international trade prospered. This increased the demand for goods everywhere, which pressured manufacturers to produce more goods in less time. The creation of machines spurred the first Industrial Revolution. By the mid-nineteenth century, manufacturing in major parts of the United States and the United Kingdom had started using the concepts of division of labor, machine-assisted manufacturing, and assembly of standardized parts.[11] The growth of manufacturing was accelerated by the rapid expansion of rail, ship, and road transportation. Let’s see a few ingredients of the process and break them into different components to see how each of them evolved with time.

The first thing we need to define is “what” of an operations process. A process requires three main components. First, there are the actors: the people who do a task. Second, the machines: the tools and equipment which the actors use to complete their tasks. And third, the management: the managers who work to achieve bigger goals of producing and selling a product and eventually earning a profit. An easy way to divide processes is to treat them as actions that are sandwiched between an input and an output.

The second ingredient of operations is “why?” Everything that a company does revolves around two goals. First, to reduce the costs of its input and processes, and second, to increase the quality of its output. Cost and quality have been used to evaluate a company’s performance for a very long time. Manufacturers ventured to create the power loom and steam engine technologies to add a third component: time to make a product. But it did not stop there. The beast of industrial revolution had to be controlled, especially the quality of the products, which could go out of hand with faster production. While the equipment had mechanized, the performance of workers was yet to be upgraded. There was still a huge gap of using those machines efficiently.[12]

Two major developments in the 1870s and 1880s attempted to bridge this gap. The first used scientific studies on processes. In the United States, three pioneers paved the way to study processes closely and create a foundation for manufacturing industry to follow. They were Frederick Taylor and Frank and Lillian Gilbreth. They started studying manufacturing processes in separate parts of the United States.[13]

Frank and Lillian Gilbreth pioneered the study of movements used by workers to complete their processes. The Gilbreths observed the process and then broke down the motions into micro-motions and measured them in seconds. This simple process, which could be compared and improved repeatedly, came to be known as time and motion studies. In the Gilbreth’s biographical novel, Cheaper by The Dozen, the couple tries to apply their efficiency methods in their household of twelve children. Frank Gilbreth tried to instill excellence in everything that he taught his kids. His intelligence and devotion to excellence engender a great deal of respect in all the people who know him. One day when one of his kids, Anne, disobeyed him and complained that she was not respected by her classmates because they considered her a freak, he told her, “No person with inner dignity is ever embarrassed.”[14] He regarded all kinds of work to be the same and tried to champion them by finding the best way to do each one of them.

On the other hand, in his pursuit to excellence, Frederick Taylor studied the way workers moved while doing tasks like moving material or shoveling. He then designed methods that would reduce the effort of the workers. In his book, The Principles of Scientific Management, Taylor discusses four principles of scientifically distributing work among workers and managers. He proposed selecting, training, and providing detailed instructions to each worker to assess performance and develop repetitive actions that would eliminate defects. His idea in his own words is that “the remedy for this inefficiency lies in systematic management, rather than in searching for some unusual or extraordinary man.”[15]

Both pioneers created the organizational structure of many manufacturing operations. While century-old theories may not seem to be applicable in today’s fast-paced, technology-driven world, process designs still use a similar structure to define and standardize both manual and robotic motions today. In an interview that I conducted with a Lean consultant who has seen these developments for over thirty years, he says, “the base of Lean is managing culture and discipline. Everything else that you see are the tools and will change in every generation.”

The second development occurred in the 1910s in Detroit, Michigan. Henry Ford set a goal for his company: “A motor car for the great magnitude.” Automobiles were expensive, custom-made machines at that time, so Ford’s goal was ambitious. He set out to produce a simple, less expensive mass-produced car for a wider consumer base.[16] He and his team used four principles to further their goal: use interchangeable parts, develop a continuous flow, divide the labor, and reduce wasted effort.

Ford started his crusade for the people’s car in 1907 by developing processes to increase the productivity of his workers. His production of the Ford Model T started in 1908, but it still took over twelve hours to produce. He spent five years fine tuning the manufacturing and standardizing parts for the car. In 1913, he discovered methods used by grain-mill conveyors and meat-packing plants in Chicago. The slaughterhouses used monorail trolleys to move suspended carcasses past a line of stationary workers, each of whom did one specific task. He started applying this conveyor method for aggregate parts like fender and panels. Then came the pièce de résistance: a conveyor for assembling the complete vehicle. The Ford team developed the first moving assembly line in large-scale manufacturing. Now making cars at a record-breaking rate, he could lower the price and still make a good profit by selling more cars. The assembly line transformed the organization of work, and by the end of World War I, the principle of continuous movement was sweeping mass-production industries of the world, soon to become an integral part of modern industry.[17]

The basic elements of traditional assembly line methods are nearly all the same. First, the sequence in which a product’s component parts are put together must be planned and designed into the process. Then the first manufactured component passes from station to station, often by conveyor belt, with work done in each station. By the last station, the fully assembled product is identical to each one before and after it. This system produces large quantities of uniform-quality goods at a relatively low cost.

Ford had another innovative idea: his workers were also potential consumers. In 1914, Ford workers’ wages were raised to five dollars a day—a wage high enough to allow employees to buy their own Model Ts! Ford was called “a traitor to his class” by other industrialists and professionals, but he held firm in believing that well-paid workers tolerate dull work and are loyal—and buy his cars. “That,” he said, “is the best kind of cost reduction I can do.”[18]

Ford brought together consistently interchangeable parts with standard work and conveyors to create what he called flow production. From the standpoint of a manufacturing engineer, however, the breakthroughs went much further.

Continuing Ford’s Methods

Henry Ford produced the Model T until 1927. By that time, he had produced fifteen million vehicles in fourteen years. However, many things needed improvement, namely variety.[19] Consumers wanted additional features in their beloved cars. At the time, a famous saying would go for Model T: “You can have any color you want—as long as it’s black!” The reason was simple—all the cars had to be identical, and black was the only color available. This uniformity kept production output high and avoided complications from product complexities. Ford agreed to this challenge but said that it would take a village to add a different model on the same conveyor belt and still run equally efficiently.

On the other side of globe in Japan, Kiichiro Toyoda and Taiichi Ohno had found the solution to the shortcomings in Ford’s production in Japan. By 1923, they devised advanced methods to take care of irregularities caused by multi-model lines and created what we today know as Toyota Production System (TPS). The system shifted the focus from an individual machine’s utilization to the flow of product through the total process. TPS was created to bring discipline to the processes and stability at its foundation.[20]

I respect TPS because of its simplicity and customer-centric nature. The first of its two pillars is just-in-time (JIT) processing, which tells the manufacturer to produce products only when requested by the customer. The second pillar called autonomation, or Jidoka, which means adding intelligent automation to keep things faster and safer. In other words, TPS streamlined the flow of any kind of “value-add,” whether tangible or intangible.

A little-known fact is that Toyota got its inspiration for its production system from the United States. A few years after the second world war, a delegation from Toyota visited the United States to study its commercial enterprises. They visited an American supermarket, Piggly Wiggly, and observed that staff reordered and restocked the items only when those items were purchased. This gave them the idea of Kanban, a system that relies on JIT processing, which is central to TPS.[21] I’ll explain this term in detail in the next chapter.

An example of TPS in action is Apple’s launch of the iPhone 11, 11 Pro, and 11 Pro-Max in 2019. Each model is also available with various storage capacities, colors, and other options. To quench the thirst of Apple-nerds, the company would need something like TPS to optimize its costs while producing all the models in large volumes. Specifically, the two pillars of TPS suggested the following:

1. A unit is produced only when the customer orders one. This creates a “pull” in the system to produce only what is required as opposed to a “push” system where Apple creates a large supply of iPhones in every color and feature and then expects to sell them.[22]
2. As a part of Jidoka, the flow of material and assembly of the phone is the quickest and most efficient way to deliver the phone to the customer. The system should ensure that each phone is defect-free and made from lowest costs.

Where We Are Now

One of the operations leaders that I interviewed remarked, “TPS had brought companies a long way, but its implementation has introduced more challenges and more solutions.” Once the manufacturing plants over the world started implementing TPS, productivity increased, and costs decreased. However, the nature of work in a factory changed radically. Skilled workers were replaced by semi-skilled or even unskilled workers because tasks had been minutely compartmentalized, so each worker assembled or added one particular part. Manufacturers soon realized that not only were a great number of managers and supervisors required to oversee these laborers, but a high degree of pre-planning on their part was also essential. Overall, operations became more complex and required correct sequencing.[23]

The product and the assembly line had to be designed before assembly line production could begin. The simpler tasks focused on customer delight and this became more critical to its success. The simple, straightforward assembly line became a highly complex process designed in smaller chunks. There are some big examples in this area that underlined this change: wholesale stores like IKEA started using simple visual aids like floor tapes for safer and easier access to customers, and supply chains divided up their work into minute details and got high efficiencies in areas like inventory management.[24] Walmart is one such example of a company putting in huge resources in process mapping and inventory management across stores by using big data.

In the 1980s and 1990s, the robotics revolution created another transition in manufacturing. While the Toyota Production System gained popularity in the West, electronics became the second major industry to adopt the concept. In the United States, Motorola took the baton from Toyota in manufacturing. New innovations in Lean enterprises moved away from machines to electronic technology. Motorola also started another concept, Six Sigma. While TPS was built around the manufacturing processes in a factory, the electronic industry emphasized management as well. Six Sigma is a management technique built off of mass production principles with more focus on minimizing variability. Six Sigma principles reduced cycle time, pollution, and costs while increasing customer satisfaction and profits. This evolved into a process called “Lean Six Sigma.”[25]

An interesting change happened in th...

Table of contents

• Contents
• Chapter (i) How to Use This Book
• Chapter (ii) Introduction
• Chapter (iii) My Inspiration Story
• Part 1
• Part 2
• Part 3
• Part 4
• Acknowledgements
• Appendix
• Notes