![]()
PART I
Introduction to Lean and Supply
Chain Management
![]()
Chapter 1 LEAN
Learning Objectives
Define and explain lean principles
Define and explain Just-In-Time (JIT) principles
Explain the relationship of lean and JIT
Describe the JIT/lean productivity cycling process
Describe lean methodologies
Use process and value stream mapping
Describe and explain the value of group technology
Describe tools of Six Sigma
Introduction
In this textbook we use the term lean as a noun. We will be defining what lean is throughout this chapter, but for purposes of a beginning, a brief definition of lean is a means of waste identification (e.g., wasted labor, materials or some resource) in operations (e.g., manufacturing, service, administration, etc.) so that it can be removed (i.e., made lean) for greater efficiency. Lean is a dynamic process of continual change and is not a standardized, one-size-fits-all approach. It is an adaptive means of efficiency improvement.
The origin of the concept of lean or lean thinking cannot be easily assigned to any one person, company, or nation. Lean is the sum of millions of business organizations and their people who over many years have made contributions to the concept. Most practitioners and researchers would support the claim that Toyota Corporation of Japan has been and continues today to be the standard bearer of lean. Because of Toyota's heightened lean status, much of our discussion in this textbook will be focused either directly or indirectly on what Toyota does to nurture lean in their operations.
What Is Lean?
Lean has been referred to in the literature as a process, project, program, principle, approach, methodology, and philosophy. Don't be confused! Depending on the lean application, it is all of these. Lean can be applied to individual processes, individual departments or entire organizations as a project for short-term efficiency improvements. Lean can be extended into longer-term programs where projects are undertaken to permanently install lean for continuous process improvement. Lean is also a set of principles, approaches, and methodologies that can be applied individually or collectively. When lean principles are used as an approach to management they are continuously applied and can become a long-term philosophy for guiding organizations toward world-class performance.
Origins of Lean Principles
The underlining principles that are the foundation of lean began in Japan during the 1950s with manufacturing firms that wanted to make maximum use of limited resources available at that time. A set of waste removal guidelines emerged, which were collectively referred to as Just-In-Time principles. The name Just-In-Time (JIT) refers to resource utilization, that is, units of material, subassemblies, and components arrive in a manufacturing setting “just in time” for their use. Suppliers deliver their supplies just in time for their use in production, and customers receive finished products just in time for their convenient use. Hence, there is no wasted movement of materials, use of labor or equipment, or idle inventory in a JIT system. All resources arrive just in time for their consumption.
The body of JIT principles initially evolved from manufacturers’ shop floors dealing with common shop floor production issues. These typical manufacturing issues dealt with inventory (see Table 1), production (see Table 2), human resources (see Table 3), and quality (see Table 4). Eventually, as those JIT principles took hold in manufacturing plants, JIT principles expanded to include longer-term considerations like facility design (see Table 5). For example, it is difficult to adopt JIT quality principles without considering the use of facility principles like the use of automation in facilities to improve quality. Continuing to expand outside the organization, JIT principles were added to include suppliers (see Table 6). Again, it is difficult to adopt unitary production and scheduling JIT principles without considering the external suppliers that must deliver materials in a way to support unitary production.
JIT authors (Schonberger, 1982; Wantuck, 1989) generally agree that JIT principles did not just appear all at once, but evolved on a continuous basis over many years. To understand lean principles, you also must understand JIT principles as lean is viewed as a synonym for JIT (Hanna and Newman, 2007, p. 632).
Some authors believe that JIT principles are limited to manufacturing or production systems (Hanna and Newman, 2007, pp. 630–635). In this view, JIT is
Table 1. Select JIT inventory principles
| JIT Inventory Principle | Explanation |
| Seek reliable suppliers. | Having reliable suppliers allows for a reduction in the number of suppliers and the associated costs. It allows for less contingency inventory and frees up capital avoiding wasted interest cost. |
| Seek reduced lot sizes and increased frequency of orders. | Smaller more frequent deliveries (if they are reliable) reduces average inventory and those costs (e.g., insurance). It allows firms to need less physical facility space, reducing the waste of those costs. |
| Seek zero inventories and reduce buffer and work-in-process inventory. | Ideal goal in JIT is no inventory to completely eliminate all inventory costs. Other than work-in-process (WIP) inventory, the less inventory there is, the less cost of inventory |
| Seek improved inventory handling. | Avoiding damage to inventory avoids spoiled goods and helps to maximize product flow. |
| Seek to continuously identify and correct all inventory problems. | Continuous improvement is a requirement of JIT. |
Table 2. Select JIT production principles
| JIT Production Principle | Explanation |
| Seek a synchronized pull system. | The ideal goal is synchronizing demand and production to no units of product until an order is given, which eliminates unneeded production, unwanted inventory, and all the waste associated with them. |
| Seek improved flexibility in providing product changeovers and in scheduling production. | The faster changeovers and scheduling changes can be implemented, the less likely it is to waste production effort on unwanted goods, and the more likely it is to capture market share by offering customers what they want, when they want it. Utilizing mixed model scheduling (i.e., where multiple products can be produced without major changeovers in a production cell) is one of many JIT strategies. |
| Seek uniform daily production scheduling. | The smoother the production rate is, the less likely the need for overtime and other wasteful resource reallocations in making production changes from one day to the next. |
| Seek improved communication. | The faster that managers can communicate solutions to problems, production changeovers, and new production processes, the faster unwanted and wasteful action will be removed from the system. |
| Seek reduced production lot sizes and reduce production setup costs. | Reducing lot sizes motivates employees to find better and more efficient changeover and setup processes. Also, the smaller lot sizes allow the manufacturer to ship smaller amounts of finished goods to customers. Ideally, under JIT one would seek a unitary production level, which would allow the greatest possible flexibility in responding to changing customer demands. |
| Allow employees to determine. production flow and schedule work at less than full capacity | Permitting employees to determine the production flow and giving them some extra time at less than full capacity permits them to spend time finding better ways to do their jobs and perform expected quality control tasks expected under JIT. |
| Increase standardization of product processing. Seek improved visualization. | Where possible, standardization of product processing can greatly increase productivity. Making production efforts (i.e., employee performance on productivity and quality) available to the employees allows them to understand their individual contributions. This helps to identify methods for improving production and wasteful actions that reduce productivity. It is also used to motivate employees by allowing them to see how well their performance is based upon comparative statistics with other employees. |
| Seek to continuously identify and correct all production management problems. | Continuous improvement is a requirement of JIT. |
internally applied within the manufacturing organization on immediate, first tier suppliers that directly impact internal operations (e.g., frequent delivery of small orders) and with distribution or warehouse operations that receive finished goods inventory for later distribution to final customers. This limited relationship is depicted in Figure 1. Other authors (Schniederjans and Olson, 1999, pp. 69–103) claim that JIT has been and continues to be applied in a broader context throughout
Table 3. Select JIT human resource principles
| JIT Human Resource Principle | Explanation |
| Seek to establish a family atmosphere to build trust, empowerment, and pride in workmanship. | An environment of mutual respect of all employees will result is more willingness to contribute to team problem solving and product and process improvements that will lead to higher production quality. As management continues to empower employees to make suggestions, they will understand their suggestions are recognized and contribute to the final product. |
| Seek long-term commitment to employ all employees. | In an environment where employees are comfortable and believe their jobs will be around tomorrow, they will be more willing to suggest innovations to save time and avoid waste, even if such suggestions might reduce labor needs. |
| Maintain a substantial part-time workforce. | During shifts in demand, the number of part-time employees can be quickly adjusted to reduce wasted human resources in downtimes (i.e., It stops layoff costs of full-time employees.) or can be increased rapidly during demand surges with little cost (e.g., reduces expensive overtime). |
| Establish compensation plans that reward individual and team efforts. Encourage employee team approach to problem solving. | The more closely compensation is tied to efforts, the more likely the employees will see the benefits of the efforts they contribute. Team problem solving is particularly valuable for complex issues. Compensation must be focused on motivating c... |
