Brief history of Lean
Henry Ford started to use the Lean Manufacturing idea in his automobile factory designed to produce a Model T automobile. His reference to the Lean System was a system where the processing does not wait for components from other stages. He thought of it as a continuous flow of value addition.
Stages that were related were linked together (Lean Manufacturing: Working more efficiently, par. 8). The Lean theory was “first mentioned in the James Womack’s 1990 book, The Machine that changed the World” (Lean Manufacturing: Working more efficiently, par. 6).
Ford’s process was inflexible. It produced the same product repeatedly, and the end product could not be modified (Duque and Cadavid 71). There was a lot of inventory which resulted in wasteful use of space. Production did not depend on consumer demand (Lean Manufacturing: Working more efficiently, par. 9).
Taiichi Ohno of Toyota came up with the Just-In-Time (JIT) production system that eliminated the large inventories that Ford design had failed to address (Lean Manufacturing: Working more efficiently, par. 10).
Stages in Lean Manufacturing
The first stage in Lean Manufacturing is the identification of waste. In this stage, it is recognized wastes cannot be eliminated but they can be reduced. There will always be a more efficient method of production and running business. As a result of this, continuous improvement (Kaizen) is essential (Lean Manufacturing: Working more efficiently, par. 18). A value stream map (VSM) is used to identify processes that do not add value to the end product.
The second stage is analyzing the waste and finding out its source. It involves finding where the waste originated.
The third stage is developing a solution to reducing waste. Some of practices used to reduce waste are JIT, Kanban system, zero defects, Single Minute Exchange of Die (SMED), and 5S principles (Duque and Cadavid 78). After eliminating the perceived waste, the process goes back to the first stage of seeking to identify waste.
The Toyota Production System (TPS)
The TPS has been used by many organizations across the globe as the reference point when it comes to Lean Manufacturing. The TPS evolves within Toyota. It is learnt through participating in the development process (Liker and Morgan 6).
Just-in-Time (JIT) in the TPS involves using Kanban to control the level of production. The Kanban displays the quantity needed in writing. Materials are moved from one task to another without interruption. The process ensures “the right parts to the right place and at the right time” (Liker and Morgan 7). The Kanban system relies on what is needed in the stores.
The TPS also uses a Jidoka system where machines are programmed to stop producing if they detect deviation from the standard size. It is also applied by employees who are required to pull a cord that lights a signal requesting for help. Assistance from a team leader is also expected to with less waiting in between, probably within seconds (Liker and Morgan 7). The Jidoka system is used to eliminate defects.
The Heijunka (leveling) makes the production process smooth and continuous. Heijunka is also applied in new product development (Nepal, Yadav and Solanki 62).
The TPS uses the Kaizen as a term for continuous improvement. It integrates maintenance into the normal process (Liker and Morgan 8). Kaizen is continuous improvement without causing delays. Kaizen also ensures that workers are involved in the improvement of their workstation.
Mehri (23) elaborates that workers in the TPS are nurtured like in a family. Duque and Cadavid (74) explain that there are no “lean” layoffs.
Criticism on the TPS
The TPS system has been criticized for overlooking workers’ welfare. Mehri (24) claims that TPS has less concern about improving the lives of employees. It is more concerned about producing vehicles in the fastest way and at the lowest cost. Mehri (24) claims that utilization of minimal space is implemented at the expense of worker safety.
There are very many workers in a small space (Mehri 38). The system is also criticized for its operations being too quick for workers. Mehri claims that workers have to “work every second of every minute without break” (24). The Japanese TPS uses a system which disallows employee disagreement and confrontation known as Taternae.
Mehri (24) criticizes TPS for relying on purchasing designs from outside the organization. The TPS designers are known to compare designs to emerge with a superior one instead of modifying an existing design to reach desired level of performance. It leads to higher costs because multiple designs are purchased.
The TPS engineers have accumulated deep knowledge on TPS but narrowed their view on what happens outside their system. The TPS practices a form of secretiveness about its technical knowledge (Mehri 28).
Some of the Companies that have applied the Lean System
General Electric (GE)
In 2008, GE abandoned the concept of outsourcing to reduce costs. It is now focused on the Lean System. The company started by investment in human capital. Immelt claims that GE hired “more than 300 industrial designers, engineers, and salaried team members with new skills and expertise” (45).
Recruiting and training workers are part of the Lean System. Continuous improvement requires companies to retain a certain level of technical skills. Successful application of the Lean System requires inspiration from the CEO (Sim and Chiang 97).
The GE factory in Louisville has been applauded for reducing the time needed to manufacture a refrigerator by 68% and the working space by about 80% (Immelt 45). The refrigerator takes 9 hours to build in some factories. The main aim of the Lean System is to reduce costs while maintaining product quality. Overall labor efficiency has improved by 30%, and inventory has been reduced by more than 60%.
GE has emerged as the largest producer of jet engines through managing efficiency. It services over 50,000 jet engines (Immelt 46). GE also managed to design a GeoSpring Hybrid water heater with lower energy consumption. It is retailing at a lower cost. It is expected to create more than 1,300 new jobs through the GeoSpring Hybrid water heater project (Roulo 54).
In Louisville, GE has also applied cooperation between trade unions and the company. Cooperation is part of the Lean System. Immelt (45) reports that the workers’ union accepted a lower wage rate for new employees. Following the new agreement, GE was seeking 450 employees but received 6,000 applications within an hour. It shows attractiveness of the Lean System which promises continuous improvement and job security to workers.
Wiremold
In the 1990s, Wiremold CEO used the Lean System to reduce machine setup time from 14 hours to 6 minutes (Katz 38). Machine setup time is the time needed to alter a machine to start producing a different product or part. At first, employees thought that Art Byrne (former CEO) idea of reducing the setup time from 14 hours to less than 10 minutes was unachievable.
They used the Kaizen concept (continuous improvement) and machine alteration to achieve the change (Katz 38). Byrne had knowledge about the Lean System and engineering which he used to assist the workers.
Ariens Co.
Ariens Company has adopted a pull production system. Katz explains that the “company’s plants now produce kits of components based on the next production line process” (40). Lean System emphasizes producing what the next stage actually needs. The company has reduced its inventory.
It has reduced cycle times from a month to an hour. Sim and Chiang (106) acknowledge the adoption of Lean System into organizational culture for results. The CEO, Dan Ariens, started by incorporating Lean System into the organization’s culture.
Financial Benefits
In 2005, Toyota challenged the leading global automotive makers by promising to be the next largest car producer worldwide. It had profit that exceeded $10 billion. It reported a 15% annual growth rate. Its market capitalization exceeded the combination of GM, Ford, and DCX (Liker and Morgan 5).
In the supply chain industry, Alcoa is reported to have saved $1.1 billion between 1998 and 2000 by applying the Lean System (Lee et al. 974). Nabisco/Wegman Foods implementation of Lean System yielded an improvement in sales from 36% to 50% (Lee et al. 977). Supply chains have applied the customer-pull replenishment system among other Lean System principles.
Jefferson Pilot that offers life insurance policy to its customers was able to reduce the time taken to be issued with an insurance cover by 50%. Labor costs declined by 26%, and redoing tasks reduced by 40%. Premium receipts indicated an increment of 60% (Lee et al. 979).
The direction taken by Lean System
The Lean System is headed towards a stage where organizations seek measurable attributes that indicate that the Lean System is actually productive.
Productivity is enhanced by through the JIT system. It involves reducing order flow time, order lead time, and using pulling process to manage levels of production. The annual value that is channeled through customer-pull mechanism is analyzed (Duque and Cadavid 76).
Communication is concentrated across the team than upwards towards the management. Frequencies of information updates are used to measure the use of information systems (Duque and Cadavid 76).
The Lean System has been applied in the service sector such hospitals, and supply chains. Maslaton (16) identifies single piece flow, Kanban, Value Stream Mapping, JIT, overall equipment effectiveness (OEE) and 5S as some of Lean System tools that are applicable in the pharmaceutical industry.
Conclusion
Customer feedback is emerging as the most useful information in the Lean System. The TPS relies on consumer views to carry out its continuous improvement programs. GE developed a low cost and power efficient Geospring water heater.
Roulo (54) reports that GE collected views from about 2,000 users between 2010 and 2011. Blank (68) discusses that there is no perfect plan, and continuous improvement relies on consumer expectations.
Gregory (21) explains that Six Sigma is very effective in eliminating variations in production. On the other hand, the Lean System is very effective in enhancing productivity. Organizations around the world are trying to combine both models to get their desired result.
Works Cited
Blank, Steve. “Why the Lean Start-up Changes Everything.” Harvard Business Review May. 2013: 63-72. Print.
Duque, Diego, and Leonardo Cadavid. “Lean Manufacturing Measurement: The Relationship between Lean Activities and Lean Metrics.” Estudios Gerenciales 23.105 (2007): 69-83. Print.
Gregory, Annie. “A Lean Marriage.” Works Management Magazine Jun. 2008: 18-21. Print.
Immelt, Jeffrey. “The CEO of General Electric on Sparkling an American manufacturing Renewal.” Harvard Business Review Mar. 2012: 43-46. Print.
Katz, Jonathan. “The Lean CEO Effect: There’s a Difference between CEOs Who Engage in Lean and Those Who Simply Encourage It.” Industry Week Oct. 2012: 38-43. Print.
Lean Manufacturing: working more efficiently 2013. Web. <https://www.mindtools.com/pages/article/newSTR_44.htm>.
Lee, Sang, David Olson, Sang-Heui Lee, Taewon Hwang, and Matt Shin. “Entrepreneurial Applications of the Lean System Approach to Service Industries.” The Service Industries Journal 28.7 (2008): 973-987. Print.
Liker, Jeffrey, and James Morgan. “The Toyota Way in Services: The Case of Lean Product Development,” Academy of Management Perspectives 2006: 5-20. Print.
Maslaton, Rafi. “Lean Manufacturing: Which Lean Approaches and Tools are Best Suited for the Pharmaceutical Industry.” Pharmaceutical Processing 2012: 16- 19. Print.
Mehri, Darius. “The Darker Side of Lean: An Insider’s Perspective on the realities of the Toyota Production System.” Academy of Management Perspectives (2006): 21- 42. Print.
Nepal, Bimal, Om Yadav, and Rajesh Solanki. “Improving the NPD Process by Applying Lean Principles: A Case Study.” Engineering Management Journal 23.1 (2011): 52-68. Print.
Roulo, Candace. “GE Uses Lean Principles, Plumbers’ Input to Design, Build GeoSpring.” Contractor Magazine Mar. 2012: 53-54. Print.
Sim, Khim, and Bea Chiang. “Lean Production Systems: Resistance, Success and Plateauing.” Review of Business n.d.: 97-110. Print.