Lean manufacturing


Lean manufacturing is an American invented method of manufacturing goods aimed primarily at improving efficiency within the production system as well as response times from suppliers and customers. Its earliest applications can be traced back to German manufacturing principles, first implemented during the Industrial Revolution in agricultural production and small factories. However, the term "Lean" was not used to describe these and other manufacturing efficiency methods and philosophies until the 1980s.
Before WWII, Dr. William Edwards Deming began to formalize the first true "Lean" philosophy for modern manufacturing while working for the US Bureau of Statistics. Later, Deming invented the first "Lean" manufacturing method and management philosophy, known as Total Quality Management, which continues to be used as the foundational teachings of Lean today. From there, the Just-in-time manufacturing process grew, first in Japan and then around the world. Just-in-time manufacturing tries to match production to demand by only supplying goods that have been ordered and focuses on efficiency, productivity, and reduction of "wastes" for the producer and supplier of goods. Lean manufacturing adopts the just-in-time approach and additionally focuses on reducing cycle, flow, and throughput times by further eliminating activities that do not add any value for the customer. Lean manufacturing also involves people who work outside of the manufacturing process, such as in marketing and customer service.
Lean manufacturing is particularly related to the operational model implemented in the post-war 1950s and 1960s by the Japanese automobile company Toyota called the Toyota Production System, known in the United States as "The Toyota Way". Toyota's system was erected on the two pillars of just-in-time inventory management and automated quality control.
The seven "wastes", first formulated by Toyota engineer Shigeo Shingo, are:
  1. the waste of superfluous inventory of raw material and finished goods
  2. the waste of overproduction
  3. the waste of over-processing,
  4. the waste of transportation
  5. the waste of excess motion
  6. the waste of waiting
  7. and the waste of making defective products.
The term Lean was coined in 1988 by American businessman John Krafcik in his article "Triumph of the Lean Production System," and defined in 1996 by American researchers Jim Womack and Dan Jones to consist of five key principles: "Precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let customer pull value from the producer, and pursue perfection."
Companies employ the strategy to increase efficiency. By receiving goods only as they need them for the production process, it reduces inventory costs and wastage, and increases productivity and profit. The downside is that it requires producers to forecast demand accurately as the benefits can be nullified by minor delays in the supply chain. It may also impact negatively on workers due to added stress and inflexible conditions. A successful operation depends on a company having regular outputs, high-quality processes, and reliable suppliers.

History

documented many observations relating to manufacturing efficiencies and Henry Ford applied Taylor's and early German manufacturing principles at the Ford manufacturing plant in the early 1900s. However, these methods were limited to physical organizational efficiencies and not the management philosophies and statistical methods Lean also requires. Toyota's Shigeo Shingo and Taiichi Ohno were first introduced to Lean's formalized manufacturing efficiency methods and philosophies after WWII by the father of "Lean Manufacturing", Dr. William Edwards Deming. Deming's Total Quality Management lectures in Japan were widely celebrated and rapidly incorporated into Japanese manufacturing during the Reconstruction period.
In 1988 manufacturing efficiencies and philosophies were dubbed Lean by John Krafcik, and then were defined in The Machine that Changed the World and further detailed by James Womack and Daniel Jones in Lean Thinking.

Japan: the origins of Lean

The adoption of just-in-time manufacturing in Japan and many other early forms of Lean can be traced back directly to the US-backed Reconstruction and Occupation of Japan following WWII. In the years preceding this, an American economist, W. Edwards Deming, and an American statistician, Walter A. Shewhart, promoted the earliest formalized modern manufacturing methods and management philosophies that they developed in the late '30s and early '40s. The two experts were the first to apply these newly developed statistical models to improve efficiencies in many of America's largest military manufacturers during WWII. However, Deming and Shewhart failed to convince other US manufacturers to apply these "radical" methods during this period and over the following three decades.
After the war, Deming was assigned to participate in the Reconstruction of Japan by General Douglas MacArthur. Deming participated as a manufacturing consultant for Japan's struggling heavy industries, which included Toyota and Mitsubishi. Unlike what they experienced in the US, Deming found the Japanese very receptive to learning and applying these new efficiency methods. Many of the manufacturing methods first introduced by Deming in Japan, and later innovated by Japanese companies, are what we now call Lean Manufacturing. Japanese manufacturers still recognize Deming for his contributions to modern Japanese efficiency practices by awarding the best manufacturers in the world the Deming Prize. In addition to Deming's critical influence in Japan, most local companies were in a position where they needed an immediate solution to the extreme situation they were living in after World War II. American supply chain specialist Gerhard Planet has offered four quite vague reasons, paraphrased here. During Japan's post–World War II rebuilding :
  1. Japan's lack of cash made it difficult for industry to finance the big-batch, large inventory production methods common elsewhere.
  2. Japan lacked space to build big factories loaded with inventory.
  3. The Japanese islands lack natural resources with which to build products.
  4. Japan had high unemployment, which meant that labor efficiency methods were not an obvious pathway to industrial success.
Thus, the Japanese "leaned out" their processes. "They built smaller factories... in which the only materials housed in the factory were those on which work was currently being done. In this way, inventory levels were kept low, investment in in-process inventories was at a minimum, and the investment in purchased natural resources was quickly turned around so that additional materials were purchased." Plenert goes on to explain Toyota's key role in developing this lean or just-in-time production methodology.
American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s and explicitly stated the goal of what is now called lean manufacturing as a countermeasure. Henry Towne, past president of the American Society of Mechanical Engineers, wrote in the foreword to Frederick Winslow Taylor's Shop Management, "We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."
Continuous production improvement and incentives for such were documented in Taylor's Principles of Scientific Management :
  • "... whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment."
  • "...after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer's side of the case and become imbued with a grim determination to have no more cuts if soldiering can prevent it."
Shigeo Shingo cites reading Principles of Scientific Management in 1931 and being "greatly impressed to make the study and practice of scientific management his life's work".,
Basing their methods on Deming's teachings, Shingo and Taiichi Ohno led the redesign of Toyota's manufacturing process after WWII. Previously a textile company, Toyota had moved into building automobiles in 1934. Kiichiro Toyoda, the founder of Toyota Motor Corporation, directed the engine casting work and discovered many problems in their manufacturing, with wasted resources on the repair of poor-quality castings. Toyota engaged in intense study of each stage of the process. In 1936, when Toyota won its first truck contract with the Japanese government, the processes encountered new problems, to which Toyota responded by developing Kaizen improvement teams, which later became the Toyota Production System, and subsequently The Toyota Way.
Levels of demand in the postwar economy of Japan were low; as a result, the focus of mass production on lowest cost per item via economies of scale had little application. Having visited and seen supermarkets in the United States, Ohno recognized that the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period, over-production had to be avoided, and thus the notion of "pull" came to underpin production scheduling.