6. What is Lean Manufacturing?

Most all business managers agree that achieving low cost and high quality no longer guarantees a business its success. In the face of fierce global competition, companies are concentrating more than ever on reducing lead-times as a way of achieving operational flexibility. This is because as lead-times decrease, production times fall, quality improves and costs shrink.

The methodology that an increasing number of companies are using to accomplish such a business strategy is the implementation of the Toyota Production System (TPS), also called lean manufacturing.

Lean Manufacturing is best defined as a management philosophy that focuses on reducing waste in all business processes. Although it originates from a time when the Toyota of today was a manufacturer of power looms, in its modern form, lean was pioneered by Toyota Motor Co. in the 1950's, when it dared compete with U.S. automakers who at the time dominated a seemingly impenetrable U.S. automobile market.

Looking back:
Like many Japanese manufacturers of the time, Toyota realized that to compete in America, it would need to produce high quality product in very short lead-times. This was a requirement to both profitably react to customer demand, as well as float the cash needed to finance the asset poor company.

Around this time, Mr. Eiji Toyoda, the nephew of the company's founder, tasked Taichi Ohno, a twenty year veteran of the company, to become a part of the solution. Inspired by a diverse range of inputs ranging from Fords mass production environment to American grocery stores, over the next decade the Toyota Production System was born. Although certainly not the sole force behind the new manufacturing philosophy, so instrumental was Mr. Ohno in its creation that he is widely considered the father of TPS.

Fast forwarding to the 1980's, as the U.S. market share of Japanese vehicles began to rise at an astonishing rate, American companies took notice and attempted to emulate Toyota's blueprint for success. Over the next 20 years, American and some European executives made regular trips to Japan to observe first hand why Toyota was so effective.

Despite hundreds of such visits, western bosses were at a loss exactly how to implement the mysterious Japanese efficiencies in their own factories. This failure was all the more surprising due to the fact that Toyota welcomed competitors inside their plants, showing visitors every detail of the production process. Nothing was off-limits and no questions went unanswered.

Western Solutions:
Initially, the explanation from the west was that the Japanese worker tolled tirelessly; certainly many more hours than any American worker could be pushed. The western response: spend hundreds of millions of dollars on high-tech robots to automate factories. Unfortunately, this approach did not work. While robots can certainly produce around the clock, they offer no new ideas how to do work differently, a key, but missed element of Toyota's success.

After robots were out, another explanation was that Toyota enjoyed so much success because they implemented just-in-time (JIT) systems. The new mandate from executive offices was to implement JIT, preferably with suppliers. Unfortunately, this approach did not work either because nobody took the time to understand what JIT really meant for an operation.

The approach American companies took to accomplish JIT was to mandate more frequent deliveries from suppliers. But this only resulted in inventory carrying costs being transferred from the manufacturer's warehouse to the supplier's shipping dock. While it made for temporary improvements in cash flow for the manufacturer, suppliers eventually passed the costs onto their customers. Furthermore, since pull replenishment signals were not fully understood, the new systems soon failed as production rates changed and demand requirements became a guessing game.

Lessons Learned:
While this is certainly a summarized history of how lean has evolved in the U.S., since then the West has come very far in its ability to understand exactly what Toyota was doing right. In the United States alone, countless books have been written, papers published and more and more companies have been successful with their implementation of TPS. Looking back, we now understand why so many American and European companies were unsuccessful on their benchmarking trips. The problem was that the visitors focused solely on the results of TPS without understanding how these results were achieved.

Lean manufacturing is not just a bunch of tools that can be applied haphazardly to any business process in the hope of making it better. No company can make broad brush statements like ";we have to implement cellular manufacturing" or "the key to our success is to implement 5S"; or even "cycle times must be lowered". While these may certainly be valid lean objectives, it is necessary to first understand what areas need the most attention. What do we hope to accomplish with work cells? How are 5S events going to improve flow? Which cycle times, if any, have been measured above take time?

At Gembutsu, we teach clients not only how to become lean, but also why they are completing particular tasks. By accomplishing this, we ensure our client's long-term success.

To learn how quickly you will see tangible results of this transformation taking place, read about our kaizen approach.

Good luck! And as always, do not hesitate to contact us if you have any questions or would like to provide feedback on this article.

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