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Basic Principles of Lean Production 5
Abstract
Lean production as it appears in the literature and the various publications of
consulting companies focuses on the avoidance of waste emphasizing that
enterprises operate with inherent waste incorporated in their activities. This
perception is not readily accepted among those with management responsibility
in organizations that have seen growth, very good performance and remarkable
profits for several consecutive years. So, why is there is so much noise about lean
production and why should a successful company change their mode of
operations in order to become lean? Is there perhaps a kind of fashion, a trend
of the times that sometimes pushes enterprises without any real reason to follow
that trend? This chapter addresses the issue.
5.1 Introduction
Lean production as it appears in the literature and the various publications of
consulting companies focuses on the avoidance of waste stressing that enterprises
operate with inherent waste incorporated in their activities. This perception is not
readily accepted from those who have management responsibility, especially in
organizations that for many consecutive years have seen growth, very good perfor-
mance and remarkable profits. Therefore, why is there is so much noise about lean
production and why should a successful company change their mode of operations
in order to become lean? Is there perhaps a kind of fashion, a trend of the times that
sometimes pushes enterprises without any real reason to follow that trend? If one
looks closely at the issue, one will discover that this phenomenon has happened
repeatedly in the course of the evolution of production management. Many of us
sufficiently long in the business of manufacturing will remember various strategies,
to name a few: Just In Time (JIT), Business Process Re-engineering (BPR), Zero
Lean production is a one way street for the enterprises, especially today
A.C. Tsigkas, The Lean Enterprise, Springer Texts in Business and Economics,
DOI 10.1007/978-3-642-29402-0_5, # Springer-Verlag Berlin Heidelberg 2013
43
Defects (0-Defects), Total Productive Maintenance (TPM) and others which were
widely implemented, quickly became fashionable with a lot of fanfare, while after a
period of time this noise died out and the moment of absolute silence arrived.
Should we anticipate something similar happening to lean production? This is
superficial for the following reasons. Every era uncovers its own needs and expects
responses to these needs. Especially in manufacturing, every era is characterized by
a main differentiating element. In the 1970s, the main differentiating element was
advances in technology. Enterprises promoted their advanced technology in order
to differentiate themselves from competitors. In the 1980s, the new differentiating
element became quality. Technology on its own was no longer the differentiating
element because it had been introduced to the production process in a large number
of enterprises. In the 1990s, speed to customer took the lead from quality to become
the main element of differentiation in the market. Since both advanced technology
and high quality were widespread in a large number of organizations, the next level
of differentiation came in the arena of competition. In the decade of 2000, compe-
tition quits the level of the factory to move to the supply chain, with the trend that
many enterprises relocated much of their activities to other companies. Outsourcing
on a large scale took place worldwide. High technology and quality in combination
with high response to customer service, was the main feature that differentiated
companies from each other. In the new competition arena, the competing entities
are not factories alone but whole supply chains. 2010 is the era with strong trends in
markets seeking individualized products. The new competition will sustain the
existing elements of differentiation and will look at new ways of cooperation and
value creation far from those of mass production. We strongly believe that this
decade will become the beginning of the era of mass customization, as the successor
social system of production, distancing itself from the capitalist division of labour, a
characteristic of mass production society. Since about the year 2000, implementa-
tion of lean production in the West, has helped many organizations achieve their
targets towards quick customer response, reductions in the cost of production and
zero working capital. It is therefore not a fashion, but especially in today’s difficult
economic conditions, lean production is a one-way street with no return, firstly for
the survival and secondly for the preparation of the organization towards an open
lean and mass customization era.
5.2 The Road of Toyota to the West
The Toyota production system (Ohno 1988) made its way to the West via the
United States and Great Britain, mainly as daughter companies of multinational
enterprises which had established themselves in Europe and had already
implemented the system in the USA. The system combines behaviours, issues
and special techniques into a socio-technical system of production. Taiichi Ohno,
Shingeo Shingo and Eiji Toyoda initially developed the system between 1948 and
1975. As the Toyota production system (TPS) expanded throughout Japan and
towards the West, it acquired different names and several variations emerged.
44 5 Basic Principles of Lean Production
Toyota themselves had no specific name for their production strategy until 1970.
The founders of Toyota paid a lot of attention to the work of Deming and the scripts
of Ford. However, when they arrived in the USA to study the assembly line mass
production technique that had made Ford rich, they were not impressed at all. Later,
when visiting a super market, they observed the simple idea of a drinks dispenser,
where whenever the customer wished a drink, he/she took one away and another
replaced it. The idea of Kanban as a material pull mechanism was born. In 2001
Toyota put together their philosophy, values and ideals of production and gave it the
name The Toyota Way 2001. The principles and the behaviours that underlie TPS
are incorporated into the Toyota Way as the individual road of Toyota. It consists of
two major pillars with two key areas: (1) continuous improvement and (2) respect
for people described briefly hereunder:
5.2.1 Continuous Improvement
The principles for continuous improvement include the establishment of a long
term vision with the aim of confronting challenges, continuous innovation and
seeking the cause of the problem:
1. Challenges
Form a long term vision with courage and creativity
2. Kaizen (continuous changes for improvements)
Improve business activities continually with a perpetual target of innovation and
evolution
3. Genchi Genbutsu (go and see)
Go to the source and look for the real facts in order to make the right decisions,
create consensus and achieve targets as quickly as possible.
5.2.2 Respect for People
The principles related to respect for people include ways of developing respect and
group work.
1. Respect
Respect others. To undertake every effort for mutual understanding, undertake
responsibility and do everything possible in order to develop mutual trust.
2. Group work
To encourage personal and professional development, share opportunities for
development and maximize individual and group performance.
Toyota, through their established principles and behaviour, created a core
philosophy for management and people. Many researchers, especially in the US,
tried to offer the American companies ways of transferring the Toyota philosophy
to the production shop floor. In 2004 Jerry Liker, an American professor from
Michigan, wrote a book entitled The Toyota Way (Liker 2004). In this book Liker
calls the path of Toyota a system designed to provide the tools to the people so that
5.2 The Road of Toyota to the West 45
to be able to improve their work. The system can be summarized in 14 principles.
According to Liker, the 14 principles of the Toyota Way are grouped into four
areas:
1. Long-term philosophy
2. The right process will bring the right results
3. Add value to the company through the development of the people
4. Solving problems at the root creates a learning organization
The Toyota Way passed firstly to the USA and gradually to the rest of the
Western world. However, American companies tried to imitate implementing the
tools developed by Toyota without developing principles to fit their operations.
This is the root of the problem. Principles based on a completely different life
philosophy and culture regarding the personal, professional and social attitudes,
are not easily transferable outside of Japan. If there is a set of principles to be
transferred to a different country, then there is a major risk that these principles will
adopt sooner or later a tooling character. That has happened with the Toyota Way in
the majority of enterprises in the West. For example, implementation of the
principle of continuous improvement, where applied, was sustainable only by
using disproportionate effort. The reason is due to the fact that management forces
it from above rather than coming intuitively from the people involved in the work as
something natural, implicit and familiar. Not to forget that Toyota worked more
than 30 years in developing the system.
5.3 Old and New Perception on Waste
We have referred extensively to value in the introductory chapter. Waste is defined
as anything that does not add value. However, this definition should never satisfy
us, because non-adding value does not necessarily mean wastage. For example,
something that needs to happen in order to facilitate addition of value at a following
stage should be excluded from the above statement. Moreover, if waste is
eliminated it does not necessarily mean that value is added. Nevertheless, the
medium-term task is the redesign of operations flow. The term waste traditionally
refers to work, materials, space and time. The old perception of waste according to
TPS includes the following causes:
1. Overproduction
2. Waiting for work
3. Conveyance
4. Extra or wrong work
5. Inventory
6. Motion
7. Correction of mistakes
Observing the seven causes of waste, one can easily deduce that overproduction
is the independent cause of further six other dependent causes that are sources of
waste by themselves. We should add more energy consumption in production than
necessary as a form of waste to the list. We refer to the use of energy that is
influenced by the implementation of lean production excluding energy for
46 5 Basic Principles of Lean Production
electricity and heating buildings. One of the effects of lean production is the
reduction in energy requirements above and beyond energy savings for production
operations. Savings achieved through energy conservation exclusively address the
decrease in the cost of energy consumed. An environmentally sound production
system contributes to the reduction in waste of energy resources, from whichever
sources they come from, both renewable and non-renewable energy sources. In this
way lean manufacturing is by definition green manufacturing, a trendy word
nowadays. Furthermore, lean production contributes to the new perception of
waste reduction and avoidance. Over-consumerism, promoted by marketing and
long supported by the banks, has its roots in the old capitalist system. It is, however,
a logical consequence of the twenty-first century that lean enterprise cannot be
compared and must not correspond to the lean enterprise of the mass production era
where Toyota emerged and grew up. Toyota as a car constructor and producer
developed and refined its production system in an era (1945–1975) when mass
production was at its peak, resulting in an immense reduction in the cost of labour
and increase in speed throughout the factory. Today with the cash flow crisis in the
market, Toyota faces similar problems, one of the reasons being that their factories
have reached perfection in synchronizing everything, mainly through automation.
Such perfection and automation abolishes flexibility and agility when demand
reflects increased variety and individual needs something very common and fre-
quent nowadays. A displacement of an enterprise to a lean topos on the one hand,
while maintaining strategies of mass production on the other, will not have a huge
impact just because of the elimination of internal waste. The reason is that, being in
a lean topos, the company will be much quicker in piling up inventories and filling
up store volume than before.
References
Liker JK (2004) The Toyota way: 14 management principles from the world’s greatest manufac-
turer. McGraw-Hill, New York
Ohno T (1988) Toyota production system: beyond large-scale production. Productivity, Inc.,
Portland
References 47
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