Lean – A Philosophy that Changed the Business World – Part 1
Guest Post by: Dr. Subhash Dev Hiwase, Ph.D. (Mechanical Engineering), IIT Kharagpur, India
Lean is the latest buzzword in business circles. It is not especially new. Lean derives from the Toyota Production System or Just-In-Time Production, Henry Ford and other predecessors. The lineage of Lean and Just-In-Time goes back to Eli Whitney and the concept of interchangeable parts.
While Eli Whitney is most famous as the inventor of the cotton gin, the gin is a minor accomplishment compared to his perfection of the concept of interchangeable parts. Whitney developed this about 1799, when he took a contract from U.S. Army for the manufacture of 10,000 muskets at unbelievably low price of $13.40 each.
For the next 100 years manufacturers primarily concerned themselves with individual technologies. During this time our system of engineering drawings developed, modern machine tools were perfected and large scale processes such as the Bessemer process for making steel held the centre of attention.
The trend once again got changed in late 1890′s, with the contribution of new works from early Industrial Engineers in the field of manufacturing process design. As product moves from one discrete process to the next through the logistics system and within factories, the engineers started analyzing, how the chain of processes functioned as a system. Frederick W. Taylor began to look at individual workers and work methods, which resulted in Time Study and Standardized Work. Frank Gilbreth (Cheaper by the Dozen) added Motion Study and invented Process Charting along with the definition of non-value added elements in the work flow. Lillian Gilbreth brought psychology into the process by studying the motivations of workers and how attitude affects the outcome of a process. There were, of course, many other contributors as well, who quietly contributed a lot in the manufacturing field related to machine advancement, process improvement, quality enhancement, tools, techniques & methodologies enrichment and employee development. These were the people who originated the idea of ‘eliminating waste’, a key tenet of ‘Just-In-Time’ and ‘Lean Manufacturing’.
In 1910, Henry Ford achieved a very remarkable breakthrough in automobile manufacturing sector. Ford and his right-hand-man, Charles E. Sorensen, designed the first comprehensive Manufacturing Strategy. He took all the elements of a manufacturing system – people, machines, tooling, and products – and arranged them in a continuous system for manufacturing the Model T automobile. He lined up all fabrication steps in a process order wherever possible. He integrated consistently interchangeable parts with standard work and moving conveyance to create what he called flow production. Ford was the first to truly integrate an entire production process. This was a revolutionary break from shop practices of the American system that usually consisted of general-purpose machines grouped by process. Ford was so incredibly successful, he quickly became one of the world’s richest men and put the world on wheels. Ford is considered by many to be the first practitioner of Just-In-Time and Lean Manufacturing. Ford’s problem was that he could not provide the variety needed.
At General Motors, Alfred P. Sloan took a more pragmatic approach to production and developed business strategies for managing very large enterprises and dealing with variety. By the mid 1930′s General Motors had passed Ford in domination of the automotive market.
Yet, many basic elements of Ford production were sound, even in a new age. Hence, Ford methods and their derivatives were a deciding factor in the Allied victory of World War II.
The Allied victory and the massive quantities of material behind it caught the attention of Japanese industrialists. They studied American production methods with particular attention to Ford practices and the Statistical Quality Control practices of Ishikawa, Edwards Deming, and Joseph Juran.
During the same time after World War II, at Toyota Motor Company, Taichii Ohno and his right hand, Shigeo Shingo, began to incorporate Ford Production, Statistical Process Control and other techniques. They clearly recognized the central role of inventory in manufacturing and also felt that a series of simple solutions might make it possible to provide consistency in process flow in a variety of products. As a result they invented the Toyota Production System or Just-In-Time Manufacturing. This system shifted the focus to the flow of the product through the entire process. Toyota adjusted their production capabilities to the actual volume needed, introduced self-monitoring machines to ensure quality, lined up the machines in process sequence, and pioneered quick changeovers, so that each machine could make small volumes of many parts, and having each step sequence notify the previous step of its current needs for materials (‘pull system’). This allowed Toyota to obtain low cost, high variety, high quality, and rapid throughput times to meet customer needs.
Toyota engineers also recognized that the Ford system had contradictions and shortcomings, particularly with respect to employees. Ford’s harsh attitudes and demeaning job structures were unworkable in post-war Japan as well as in America too, but that would not be evident for some years because, America’s generation carried over their attitudes from the ‘Great Depression’ and made the system work in spite of its defects.
Toyota soon discovered that factory workers had far more to contribute than just muscle power. This discovery probably originated in the Quality Circle movement. Ishikawa, Deming, and Juran all made major contributions to the quality movement. It culminated in team development and cellular manufacturing.
Another key discovery involved product variety. The Ford system was built around a single, never changing product. It did not cope well with multiple or new products. Toyota’s engineers Ohno and Shingo, once again went to work on the setup and changeover problem. They observed that reducing setups to minutes and then to seconds allowed them to produce small batches and with an almost continuous flow like the original Ford concept. It introduced a flexibility that Henry Ford thought he did not need.
All of these works took place in between 1948 to 1975. To some extent it spread to other Japanese companies. When the productivity and quality gains started to become evident to the outside world, Americans started realizing the importance of it, but by that time it was too late from their part. Even, most early attempts to emulate Toyota Production System in America failed because they were not integrated into a complete system and because only few understood the underlying principles.
Norman Bodek first published the works of Ohno and Shingo in English. He did much to transfer this knowledge and build awareness in the western world. Even he invited Ohno and Shingo to America and arranged their study tours, lectures, seminars, and more. Subsequently, Robert Hall and Richard Schonberger also wrote several popular books on the subject.
By 1980′s, some American and Japanese manufacturers, such as Omark Industries, General Electric and Kawasaki, were successful with these methods. Gradually, the knowledge and experience base developed and success stories became more frequent.
Even the independent consultants and educationists took up the campaign of Toyota Production System and acronyms sprouted like weeds: World Class Manufacturing (WCM), Stock-less Production, Continuous Flow Manufacturing (CFM), and many other names all referred to systems that were, essentially, Just-In-Time.
The term ‘lean’ was first coined to describe Toyota’s business during the late 1980s by a research team headed by Jim Womack, Ph.D. at MIT’s International Motor Vehicle Program. The term ‘lean’ was used because Japanese business methods used less human effort, less capital investment, less floor space, less materials, and less time in all aspects of operations.
In 1990 James Womack wrote a book called ‘The Machine That Changed the World’. The Womack’s book was a straightforward account of the history of automobile manufacturing combined with a study of Japanese, American, and European automotive assembly plants. What was new was a phrase – ‘Lean Manufacturing’.
The resulting competition among American and Japanese automakers over the last 25 years has lead to the adoption of these principles within all American manufacturing businesses.
What is Lean?
Lean can be best defined as the establishment and enhancement of system flow, principally through the identification and elimination of waste and the continual reduction of required resources to ultimately increase the customer value.
That simply means, lean is nothing but a method of creating more value for customers with fewer resources with the core idea of minimizing waste.
For many, lean is a set of methodologies/principles implemented in the organization to set the goals of lean as increasing customer value, improving quality and increasing efficiency by eliminating waste and decreasing costs.
A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.
To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.
Eliminating waste along entire value streams, instead of at isolated points, creates processes that needs less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.
The elimination of waste is the goal of Lean. There are broadly three types of waste: muri (overburden), mura (inconsistency), and muda (waste). Firstly, muri focuses on the preparation and planning of the process, or what work can be avoided proactively by design. Next, mura focuses on how the work design is implemented and the elimination of fluctuation at the scheduling or operations level, such as quality and volume. Muda is then discovered after the process is in place and is dealt with reactively.
The original seven muda are:
- Transport (Moving people, products & information that are not actually required to perform the processing)
- Inventory (Storing parts, pieces, work in process, finished product not being processed, documentation, ahead of requirements)
- Motion (Equipment moving, bending, turning, reaching, lifting or people moving, walking more than is required to perform the processing)
- Waiting (Waiting for parts, information, instructions, equipment, next production step)
- Overproduction (Making more than is immediately required, production ahead of demand)
- Over Processing (Performing any activity that is not necessary to produce a functioning product or service)
- Defects (Products or services that are out of specification that involves effort in inspection and fixing defects)
Later an eighth waste was defined as:
8. Non or Under-Utilized Talent (Employees that are not effectively engaged in the process)
Lean is a variation on the theme of efficiency based on optimizing flow; it is a present-day instance of the recurring theme in human history toward increasing efficiency, decreasing waste, and using empirical methods to decide what matters, rather than uncritically accepting pre-existing ideas. Lean is often seen as a more refined version of earlier efficiency efforts, building upon the work of earlier leaders and learning from their mistakes.
In fact, there are several terms are commonly in use for lean in today’s business world, such as, lean transformation, organizational transformation, transformation, lean technique, lean principle, lean thinking or often simply lean. All these terms are nothing but only one term, and, in a gist, lean is a practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.
About Guest Author:
Dr. Subhash Dev Hiwase, Ph.D. (Mechanical Engineering), IIT Kharagpur, India
Dr. Subhash Dev Hiwase, is a Global Professional Leader, doctorate from IIT Kharagpur, India, in Mechanical Engineering, and having 25 years of Extensive Experience on Global Product Development, Strategy & Operations – broadly in the area of New Product Development, Continuous Product Improvement, Technology Innovation, Lean Transformation & Performance Optimization.
He enjoys Designing, Developing & Introducing New Products in the Market, which are having very High Customer Values and has a successful record of creating large/small Product Development Programs, Developing Strategies, Cultivating High Performance Teams and Fortune 500 Client Relationships. Additionally, Subhash has an extensive Financial background and significant International Business Experience.
If any organization/individual is willing to design & develop New Product, which should be Cost Effective, High Quality & within Specific Timeline in India or Abroad, please feel free to reach him at firstname.lastname@example.org.
He has got very strong product design & development credentials and has already developed/worked-on several New Product Development for Automotive, Aerospace, Industrial Product, Heavy Engineering, Consumer Goods, Medical Product, Energy & Power, Oil & Gas, Special & General Purpose Machines Industries for Indian & International OEM’s, such as, In Automotive: He has designed & developed Car, SUV, Bus, Truck, Tractor, 2,3-Wheeler, engines, power transmission, Steering, Clutch, Brakes, Suspensions, Chassis, etc; In Aerospace: He has designed & developed Primary, Secondary & Tertiary Structure, Critical Load-Bearing Structures, Wing Spar, Fuselage Keel Beam, Empennage, Control surfaces, Crew & Passenger Seats, Pressurized Cabin Doors, Fairings, Cowlings, Baffles, Non-Load-Bearing Structures, Un-pressurized Cabin Doors, Access Panels, Armrests, Instrument Panels, Pneumatic-Hydraulic-Electrical Lines, Brackets, Clips, Hooks, etc; In Heavy Engineering: He has designed & developed Cranes, Track Type Tractor, Wheel Loaders, Excavators, Compactors, Motor Graders, Mining & Off-road Heavy Machines, etc; In Industrial Product: He has designed & developed pumps, compressors, fans, blowers, engines, power transmission, gear drives, bearings, couplings, industrial chain, torque limiters, clutches, locking & clamping devices, brakes, backstops, freewheels, and solid-state motor switches, switch-gears, conveyor components, etc; In Consumer Goods – He has designed & developed Mixer, Grinder, Washing machine, Vacuum cleaner, Electronic Toothbrush, Epilator, Trimmer, Massager, Refrigerator, Suitcase, Television, Table Fans, Table Phones, etc. In Medical Product – He has designed & developed X-ray system, Leproscopic surgery products in plastics, Surgical Imaging, Surgical Equipment, Angiography Equipment, Electrocardiogram, etc; In Energy & Power – He has designed & developed ESP, Design Safety, Na Combustion, Cement & Minerals, Building Material, Filter Bags, Reverse Bag Filter, Boilers, etc; In Oil & Gas – He has designed & developed oil rig design, development & quality inspections, etc; In Special & General Purpose Machines – He has designed & developed special purpose, general purpose, lathe machines, and several other machines widely used in the industries etc.