Lean manufacturing

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 (1911), "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."[1]

Continuous production improvement and incentives for such were documented in Taylor's Principles of Scientific Management (1911):

• "... 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 [marking time, just doing what he is told] can prevent it."

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".[2]^, [3]

Shingo and Ohno were key to the design of Toyota's manufacturing process. Previously a textile company, Toyota moved into building automobiles in 1934. Kiichiro Toyoda, founder of Toyota Motor Corporation, directed the engine casting work and discovered many problems in their manufacturing, with wasted resources on 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 (see The Toyota Way).

Ohno at Toyota brought the concepts together, building on the existing internal schools of thought, and spreading their breadth and use into what has become the Toyota Production System (TPS). It is principally from the TPS (referred to in the 1980s as just-in-time manufacturing or JIT), but now including many other sources, that lean production is developing.

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 recognised that 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" (or "build-to-order" rather than target-driven "push") came to underpin production scheduling.

John Krafcik coined the term "Lean" in his 1988 article, "Triumph of the Lean Production System".[4] The article states: (a) Lean manufacturing plants have higher levels of productivity/quality than non-Lean and (b) "The level of plant technology seems to have little effect on operating performance" (page 51). According to the article, risks with implementing Lean can be reduced by: "developing a well-trained, flexible workforce, product designs that are easy to build with high quality, and a supportive, high-performance supplier network" (page 51).

Womack and Jones define Lean as "...a way to do more and more with less and less - less human effort, less equipment, less time, and less space - while coming closer and closer to providing customers exactly what they want" and then translate this into five key principles:[5]

1. Value - Specify the value desired by the customer. "Form a team for each product to stick with that product during its entire production cycle", "Enter into a dialogue with the customer" (e.g. Voice of the customer)
2. The Value Stream - Identify the value stream for each product providing that value and challenge all of the wasted steps (generally nine out of ten) currently necessary to provide it
3. Flow - Make the product flow continuously through the remaining value-added steps
4. Pull - Introduce pull between all steps where continuous flow is possible
5. Perfection - Manage toward perfection so that the number of steps and the amount of time and information needed to serve the customer continually falls

Lean is founded on the concept of continuous and incremental improvements on product and process while eliminating redundant activities. "The value of adding activities are simply only those things the customer is willing to pay for, everything else is waste, and should be eliminated, simplified, reduced, or integrated".[6]

On principle 2, waste, see seven basic waste types under The Toyota Way. Additional waste types are:

• Faulty goods (manufacturing of goods or services that do not meet customer demand or specifications, Womack et al., 2003. See Lean services)
• Waste of skills (Six Sigma)
• Under-utilizing capabilities (Six Sigma)
• Delegating tasks with inadequate training (Six Sigma)
• Metrics (working to the wrong metrics or no metrics) (Mika Geoffrey, 1999)
• Participation (not utilizing workers by not allowing them to contribute ideas and suggestions and be part of Participative Management) (Mika Geoffrey, 1999)
• Computers (improper use of computers: not having the proper software, training on use and time spent surfing, playing games or just wasting time) (Mika Geoffrey, 1999)[7]

Senpai and Kohai 'coaching' claimed to have been used to implement The Toyota Way and rumoured as useful to also implement Lean.

• According to Dombrowski, an organization implementing Lean needs its own Lean plan as developed by the "Lean Leadership". This should enable Lean teams to provide suggestions for their managers who then makes the actual decisions about what to implement. Coaching is recommended when an organization starts off with Lean to impart knowledge and skills to shop-floor staff. Improvement metrics are required for informed decision-making.[8]
• Spearman states: Lean philosophy and culture is as important as tools and methodologies. Management should not decide on solutions without understanding the true problem by consulting shop floor personnel.[9]
• Pederson: The solution to a specific problem for a specific company may not have generalised application. The solution must fit the problem.[10]
• Douglas: Value stream mapping (VSM) and 5S are the most common approaches companies take on their first steps to Lean. Lean can be focused on specific processes, or cover the entire supply chain. Front-line workers should be involved in VSM activities. Implementing a series of small improvements incrementally along the supply chain can bring forth enhanced productivity.[11]

For application of Lean to services rather than manufacturing, see Lean Services.