Lean

The term ‘Lean Manufacturing’ was coined by John Krafcik, a researcher on the MIT project studying the future of the automobile in the late 1980s. This project was looking into the contrast between Japanese and Western manufacturing in the light of the growth of Japanese production within this important market. The findings of the 5-year study were later published in “The Machine That Changed The World” by James P. Womack, Daniel Roos and Daniel T. Jones.

This book is still widely available (ISBN 0-02-94631-5) and remains a good read many years later, providing an introduction to the history of the Japanese approach. Although there are many other excellent books on the overall methodologies and concepts and on the details of individual techniques, this remains valuable in providing the background.

At the time of the study the approach was generally termed in the West as Just in Time, based on all components and materials arriving at the point of use only when required and only in the quantities required. A key element of this was the kanban, the physical trigger to initiate supply of components when stock at the point of use had been consumed. When explained in Western manufacturing units everybody wondered how on earth this worked. After all, it was effectively the same as Reorder Point – when stock falls to a particular level, order some more. ROP had been largely replaced in the West by Material Requirements Planning (MRP), a sophisticated approach to forward planning by computer and MRP had grown into Manufacturing Resource Planning (MRPII) as the management disciplines needed by the planning system were recognised.

Western managers wondered if they could apply the lesson of JIT in their factories. Could the kanban replace MRP and solve all the problems of shortages, high inventory and arrears? At first they thought not . . . . and then upon reflection they knew not. They realised that in a similar environment to Toyota’s car plant – that is, an assembly line fed by component manufacturing departments – there were many reasons why this approach would not work in the West:

When the kanban arrived in the component area there would be a queue at the first machine.

Components would be made in large batches because of the drive to minimise the proportion of time setting machines up. As well as increasing the time to make the batch of the item relating to this kanban, large batches would extend the queuing time at each stage.

The queues would be difficult to manage because each piece of plant would make components for other finished product areas, or various types of component for this particular product.

The total time spent would have to include an allowance for the item moving from one area of the shop to another, and perhaps from one shop to another, because the factory was laid out functionally.

The number of components and component types would be difficult to manage because of the massive variety of products supplied.

Quality problems meant that even if production staff could guarantee completing items quickly, significant buffer stocks would still have to be held. After all, if only one component were faulty and unavailable then the assembly line would be unable to build product. (Alternatively, product would be built and then moved to a ‘snagging’ area; when the component became available the product would be stripped down and re-built to the obvious detriment of bottom-line profit and customer service.)

One of the reasons for quality problems would be inappropriate plant. Another might be that the component could not be made as specified within the unit, largely because the designers did not know about the manufacturing capabilities of their colleagues – and did not care; it was nothing to do with them

Poor vendor performance was another Western concern. This required that stock be held in significant quantity and opened up many questions about the Western approach to buying – everything being driven by finding the cheapest source and negotiating the cost down and down until the vendor was struggling to make profit. This was compounded by having multiple sources for each item and playing one against another so that nobody invested in quality and productivity.

So what became apparent was that the kanban was the last step in a much bigger picture. All the issues above had to be addressed before the ‘physical pull’ mechanism could be relied upon. The Toyota Production System, which was the forerunner of the Japanese approach that was leaving the West behind, was much broader in nature. Just in Time inventory was just the most visible element of the approach.

The key elements making up what is now generally regarded as Lean Manufacturing are described in specific pages on this web site, but in summary form they are:

Reducing set-up times which could reduce batch sizes but would also reduce costs. The Western approach of large batches was clearly seen to be painting over the cracks. Surely the answer was to eliminate the cracks altogether?

If we could lay out production for an item in such a way that all the machines needed for it were next to one another, effectively modelled on the production line approach, we would certainly reduce floor-to-floor time and make the item easier to manage.

Rationalising the product and product variety would also make life easier. Toyota supplied a sunroof on all models – partly because of the market advantage but also because this meant that only one roof pressing was needed and the vendor supplying the inner trim made these all the same.

Numerous techniques to address quality issues were employed, not the least being designing for manufacture. Rather than designers producing specifications and throwing them over a high fence for production engineers to scratch their heads and ask ‘how on earth do we make these?’ the Japanese approach involved the amalgamation of these functions. Interestingly, the Japanese approach originated in the USA under gurus such as W. E. Deming. We include Total Quality Management within the set of tools making up Lean because the American ‘Total Quality Control’ evolved into TQM as Western companies recognised the distinction between quality control and quality assurance (or management).

The Japanese approach to vendor management was almost the opposite to buying in the Western world. Rather than squeeze every last penny out of the deal the buyers worked to maintain ‘partnership’ and made commitments to vendors. Customers also provided resources to establish the best manufacturing methods and helped vendors in their own sourcing of materials and components (hence the term ‘Supply Chain’). Another of the many elements was involving the vendor in product design – after all, specialists in manufacturing, say, interior door trim will know how such an item can be specified in order to make it easier and cheaper to make.

So, of course, John Krafcik recognised that JIT was an inappropriate term. Taking out all the inefficiencies or waste (‘fat’) caused by the elements of mass production was the basis of the Japanese approach. Taiichi Ohno, the father of the Toyota Production System, coined the term 7 wastes as his definition of the improvement opportunities within his business. Athletes, and people without body fat, are known as lean and, as such, this term was far more appropriate. It has therefore become the norm.

There are far more tools within Lean than we could hope to describe within our web site. After all people are now doing degree courses in the subject. Within this site we describe the cultural aspects of Continuous Improvement (‘kaizen’), the 5S approach to housekeeping and error-proofing using poka-yoke devices.

Finally, companies outside the manufacturing sector recognised that they could eliminate waste in their own operations. ‘Lean’ is therefore now a universal term and one which has something to offer for everyone. One interesting point here is that when people in the office environment attacked waste using Japanese approaches in the 1980s it was often called ‘JIT in the office’ and later ‘Lean in the office’ and later ‘Lean’ – though the parallels with Business Process Reengineering are visible to all.