The Lean, Mean Machine < Part-1 / Japanese Management : Art and Practice > ...

One of the most heard word now-a-days is the 'LEAN'... is it same as Thin/Slim or the opposite of Fat/Big ? Please follow to understand this ...



The original ideas might have come from across the Pacific, but it was two Japanese -- Kiichiro Toyoda, the head of Toyota, and Taiichi Ohno, his right-hand man -- who transformed these theories into a new system of production. They did so by turning themselves into students of management -- visiting American plants for months on end during the 1950's and studying mass production, to see what made it so successful and how it could be bettered. They found the system rife with Muda -- a Japanese term that encompasses wasted effort, wasted material and wasted time. Nobody except the assembly worker was adding much value, they noticed, and the emphasis on keeping the line running at all times meant that errors multiplied endlessly.

The two executives eventually put all the pieces together to produce an entirely new system of production -- dubbed the Toyota manufacturing system by Toyota and "lean production" by almost everybody else. Its genius was to shift the focus of manufacturing from economies of scale to "economies of time."
It did this in three ways. The first was by making every employee a quality checker, responsible for spotting errors as they happen and correcting them immediately. Instead of installing a quality department, as its American rivals did, Toyota gave workers the right to stop the production line as soon as they saw errors.


The second improvement came from introducing "just-in-time" production. In the rest of the world, manufacturers made their components "just in case" they were needed. They filled bins, pallets and warehouses with days' or even weeks' worth of costly parts, which gathered dust until they were finally needed. The Japanese started making components "just in time," with parts arriving just as they were needed on the production line.

The third way to save time was "demand pull." Components in Western factories were traditionally delivered by "supply push" arrangements, with goods piling up when they were not needed. With "demand pull," they are made to order. At Toyota, for example, a kanban, or card, is attached to every box of supplies describing its contents. Returning the card to the supplier automatically reorders a further shipment.

This procedure challenges the entire basis of mass production, which was (and in many parts of the world still is) the dominant manufacturing philosophy. Mass production depends on two things, economies of scale and specialization. Workers, it is supposed, need to get more and more specialized in order to do their jobs more efficiently. And factories need to get bigger and bigger to achieve economies of scale. However, as the Japanese realized, this system also entails two costs.



The first is the inability of a classic mass-production system to respond to rapid changes in demand. Mass producers tend to be much keener on keeping standardized designs in production than in experimenting with new products, partly because of the heavy costs of changing the production line and partly because their specialized workers are happiest with what they know. A change in fashion may mean that the factory has to close down for months as machines are recalibrated and workers retrained. It may also force producers to throw away huge quantities of expensively stored but now obsolete inventory. By the time it is capable of mass producing the new product, the demand may have changed once again.

The second cost is an unacceptably high rate of faulty products. Large batches make it difficult to detect defects. This means that a defective part may not reveal itself until the finished car finally breaks down. It is easier for the next person on the assembly line to check a small batch. And a worker making only a small batch is likely to feel more like a craftsman, and less like a cog in a huge machine.

In fact, the trouble with mass production is that it usually produces its economies of scale by reducing jobs to drudgery. By contrast, lean production continues to engage at least some of the intellectual gifts of the workers. The employee can see the impact of his workmanship -- good or bad -- on the company's manufacturing process. Pats on the back from his colleagues result from a job well done, scowls from a job skimped.

Lean production also involved rethinking the boundaries of the firm -- in particular its relationship with its suppliers. In the West, auto makers have been through two stages. First, they tried to make virtually all of the car themselves, setting up their own parts-making divisions. When the fashion turned against such "vertical integration," Western companies then opted for a second system based on competing suppliers. They provided a large number of suppliers with a detailed drawing of what they wanted and then offered a one-year contract to the supplier who could come up with the best price.

The classic form of Japanese supply-chain management, again pioneered by Toyota, works in a different way. The suppliers can be formally separate companies, or they can be members of the same keiretsu (linked by cross-shareholdings). Either way, the parent company treats them as partners, rather than playing them off against one another. The suppliers provide the goods "just in time," in return for long-term relationships with the main manufacturers. Companies cement these relationships by sending mid-career managers to high-level positions in supplier companies or other members of a keiretsu. This means all parts of the supply chain can pool resources and also share information -- thus once again cutting down on time-wasting. Even today, Toyota can design and build a car twice as fast as Detroit can.