Placing Lean Manufacturing In Historical Perspective
BY NELSON TEED
"Build it and they will come." Like Kevin Costner in "Field of Dreams," managers in search of quality and productivity heard voices. Train the masses, create teams, win a quality award and gains will come. Come when? How big? Measured how? We weren't sure, but we had faith.
Total quality management in various forms from the mid-1980s to present, is a set of activities designed to change culture and only indirectly improve operating performance. Cultural change is difficult to measure and even more difficult to link by cause and effect to operating performance.
Then why is there so much faith in cultural change? Thank W. Edwards Deming, an opinionated, confrontational physicist / statistician who came to prominence in the early 1980s by attempting to explain Japan's quality and productivity dominance. His message: American management was too autocratic, hierarchical, short sighted and numbers driven. Deming denounced numerical goals, performance ratings and merit pay. Scientific management was labeled as outdated and dehumanizing in spite of the fact these work study methods, pioneered by American Frederick Taylor in the early 1900s, are highly regarded in Japan.
In hindsight, Deming was both right and wrong. American management needed to change, but the reasons behind Japan's dominance were more basic. Deming's contributions to statistical process control in Japan, and later in America, are immense and lasting. The same cannot be said for his "14-Point" management system that became the model for later TQM programs. Activity based and aimed at cultural change, his management system is a set of beliefs prone to loose interpretation and is not a business strategy. Its lasting impact, if any, is unclear. As late as 1989, Deming knew of no company that had successfully implemented all 14 points.
Culture is real, and its effect on performance is real, even if difficult to measure. The cultural differences between Japan and the United States are profound and should not be ignored. Empowerment, flatter management structures, teamwork and continuous improvement are crucial to success. But Deming and others didn't recognize that "creating" these qualities in companies whose manufacturing systems do not rely upon or promote these attributes is problematic. Companies using the Toyota system exhibit these qualities largely because their system encourages and reinforces them.
Joseph Juran and Philip Crosby advocated a quality-focused approach to improving performance, stressing statistical methods similar to Deming's, but with more focus on reducing cost of quality as the key to competitiveness. Along with Deming, they made up the "Big Three" of what came to be called the "quality revolution."
As the title implies, Richard Schonberger's "Japanese Manufacturing Techniques" (1982) tells a deeper story. Shonberger, as appropriate for an industrial engineer, analyzed Japanese manufacturing by carefully describing all its component parts. This "nuts and bolts" approach was better suited to manufacturing management and the shop floor. He explains in clear detail how the Japanese use a different, better manufacturing system, pioneered by Toyota and built around single piece flow, waste elimination, just-in-time production and delivery, and other simple principles independent of culture. But Schonberger did not gain the notoriety of his more "colorful" counterparts.
"The Goal," "The Race" and "Theory of Constraints" is a popular series of books by Eliyahu Goldratt published between 1985 and 1990. A physicist by education, the outspoken, diminutive, cigar smoking Goldratt preached the importance of inventory and cycle time reduction, increasing throughput, and treating manufacturing as a system whose performance is controlled by the bottleneck process. He recognized the superiority of the Toyota Production System, which he called "synchronous manufacturing," in achieving these goals. Goldratt advocated a variation he called "drum-buffer-rope" and delved deeply into the psychology of change and logic-based decision making.
MIT's five-year study of the world automotive industry, "The Machine That Changed the World" (1990), reinforces Schonberger's 1982 conclusions. Widely read, it focuses on comparisons of quality and productivity. Conclusion: plants using the Toyota system, renamed "lean production," significantly outperform traditional plants -- whether located in Japan or not. The definition and building blocks of lean became widely understood.
The effort to convert to lean gained momentum. A reliable means of implementation emerged when kaizen events became the accepted vehicle for the transformation. Hundreds of American companies have conducted thousands of kaizens. These cross-functional, six- to 10-member teams spend two to five days focused on a defined area of the plant. Using standardized tools and techniques, they analyze, brainstorm, implement changes, measure effect and document the new system.
Typical gains of 25 percent in productivity, reductions of 90 percent in WIP, 50 percent in floor space and 75 percent in travel distance are real and immediate. Lean works -- quickly. It's results based and measurable. Faith is replaced with a bias-for-action.
Sounds great! Run kaizens until you've completed the conversion to lean and enjoy all the benefits. Right?
What have we learned?
Shonberger's book is now 18 years old. America's understanding of lean is growing quickly, and many companies have experienced big improvements applying lean principles. But there's much learning to be done, and some companies have had mixed results.
We've learned that lean manufacturing is a better manufacturing system, but it is not a cure all. A company's lean conversion must be part of a more comprehensive strategic plan.
The combination of narrow focus, management mandates, tight deadlines, bias for action, cross-functional team effort and simple yet powerful analysis tools allow kaizens to quickly reshape the plant floor.
But the kaizens have limitations. They cost money and can be overused. The kaizen time studies are only good approximations -- trained industrial engineers and broad time study data are not usually part of the kaizen. All analysis is based on a snapshot view of conditions at the time. Improving equipment flexibility, portability and reliability are critical to achieving the full benefits of lean. Continuing kaizens when the key to further improvement is equipment changes creates inefficiency and frustration. Capital may be required to "right size" as the conversion progresses.
We know a lean conversion cannot progress beyond the beginner level without support from customers and suppliers. If so, it becomes a game of reducing your raw material and WIP while increasing finished goods -- for both you and your suppliers. Don't complain if your customers and suppliers push you to accept and ship smaller, more frequent lots. They are making your total lean conversion possible.
Achieving gains through kaizen is easier than maintaining them. Digesting the rapid changes is a major challenge for shop-floor personnel. Operators must be retrained; displaced operators reassigned and retrained. The lean manufacturing system requires the learning of new skills and strategies to cope with post-kaizen changes in product design, mix and volume. Kaizens, which are so important and effective in the lean conversion's early stages, are of little use for the critical, ongoing task of consolidating and maintaining the gains and for adapting to changing conditions.
Proper pace is important and the lean effort must advance on all fronts simultaneously. Completing a kaizen event the organization can't support is like an army division advancing too quickly, outrunning its supplies and exposing its flanks. The kaizen gains become islands of isolated, unsupported change, which quickly wilt and die.
We know that meeting these challenges requires support from the entire organization. Manufacturing, where almost all value is added, must take the lead. Talent, authority and responsibility must reside at the plants and on the plant floor. Support areas such as engineering, maintenance, marketing, purchasing and scheduling need to adapt.
One example is MRP. Traditional MRP and lean may be incompatible. MRP is management by report; data entry is non-value added and single piece flow conflicts with batch and queue. Some MRP functions -- such as long-term capacity planning -- will remain. Line managers need the organizational clout required to lead these changes.
That's because parallel organizations seldom work. Outside help is probably necessary in the beginning. But the earlier line managers take complete ownership of the kaizen effort and the new system it creates the better. They should be among the first to participate as kaizen members, learn to lead the kaizens and then learn to identify future kaizen opportunities through shop floor analysis. Knowledge of lean should be a prerequisite for hiring in key positions.
Most practitioners now recognize that all lean conversions need a roadmap. Analyzing the operation's unique combination of products, equipment, materials, processes and links with suppliers and customers prior to the kaizens helps ensure success. What's needed is a clear understanding of where the operation stands today compared with the lean vision of a continuous stream of value-adding steps stretching from the first supplier to the end user. "Value stream mapping" is one method to achieve this. Other components of a proper analysis are determining moveable and non-moveable equipment (called "monuments"), grouping products with identical process paths into families and targeting growth products as first priority.
Lean's advantages have proven greatest for high quantity, continuous production. The Japanese recognized this and pursued a strategy of increased market share. They achieved market domination by combining lower costs and higher quality to create more value for the customer. This was a triumph of their superior manufacturing, not marketing.
Growth and lean are great partners for another reason. Positive employee reaction to lean is crucial to success but is not automatic. Lean improves productivity by reducing the number of people needed. Layoffs and employee involvement don't mix; it's the surest way to kill a lean conversion. The freed personnel must be absorbed by growth and natural attrition.
Even without job losses, fast-paced change of this magnitude is stressful. Broader duties, steadier work pace, shift reassignment, more responsibility and new emphasis on flexibility and teamwork can lead to resistance. Increasing pay to compensate for the new demands is often justified and aids the transition. Stressing the many positive aspects such as better ergonomics, more variety, higher job satisfaction, job security and more input into improvements in safety, methods, equipment layout, tools, etc., also helps.
Teamwork, employee involvement, continuous improvement, communication, self-direction -- sounds like we're talking about culture change again.
We are. But unlike the failed activity-based programs of 10 years ago, this is "on demand" cultural change. The need for it is obvious, even pressing. It is immediately applicable to supporting change on the shop floor. The need for, and the mission of, the long touted "knowledge worker" of TQM fame finally becomes clear. Staff positions and management levels are reduced; authority and responsibility are driven down to the plant floor; barriers fall; communication improves. But this time it's because we have no choice. The lean system won't tolerate errors and demands real-time management by those closest to it. The companies willing to make these changes will continue to reap huge benefits.
Exactly where the lean manufacturing revolution will take American industry is not yet known and there will continue to be challenges along the way. Its form will likely evolve. Americans have always led the way in embracing, and then improving upon, new manufacturing methods. The American "melting pot" is quickly making this Japanese invention part of our own culture.
What we have learned is that lean is here to stay.
-- Nelson J. Teed is founder and president of Polymer Development LLC, a consulting firm located in Summerfield, N.C. specializing in lean manufacturing implementations. He can be reached by phone at 336-643-8183 or by E-mail at email@example.com.