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