Lean production brings precision to industry. Ever since lean production methods turned Toyota from a modest Japanese car company to the biggest car manufacturer in the world, its success has led many manufacturers, and even more consultants, to ask themselves if these could be copied in other companies and in other cultures. But an important, often overlooked aspect of lean manufacturing is that lean companies invest in their employees as their main source of improvement. Commitment is essential to lean production.
Precision and lean production are everywhere nowadays, even where it is not called by those names. On 2 August 2016, the BBC broadcast a programme on the production of potato chips in their series ‘Inside the factory’. ‘Precision’ was the term in which reporter Gregg Wallace summed up the entire process. Within 35 minutes after arrival at the factory, the potato is already on its way to the consumer, washed, peeled, sliced, fried, seasoned, weighed and packed. Precision is in every step of the production process. Firstly, the farmer grows only certain varieties of potato for the production of chips, low in water and sugar contents. He ships them to the factory only when they have reached the required condition. Inside the factory, potatoes of low quality are removed by hand. They are sliced at an unimaginable speed, each slice of the same thickness. Frying conditions are tuned to potato quality. Chips of inferior quality are spotted by camera on conveyor belts that move at great speed, and automatically removed. Then, the chips are seasoned, weighed and packed in an atmosphere of nitrogen, an inert gas that preserves taste. Ready to be loaded on trucks on their way to the consumer. A carefully selected tasting panel controls the quality of the seasoning and develops new tastes. Most employees do very specialized work, overseeing or maintaining large machinery. Manual work is done only where it cannot be mechanized, most importantly on the tasting panel. The general mood on the work floor seems to be happy. One woman, interviewed on her attitude towards her job, said that she worked for the company for thirty-two years already, and that she looked upon the crew as family.
The Toyota production system
Lean production is inevitably connected to the name of Toyota, and through Toyota to Taiichi Ohno and Shigeo Shingo. The shortest catchphrase for lean production is the elimination of waste. Anything that does not add value to the product as perceived by the customer should be eliminated; like buffer stocks of intermediary products, unnecessary movements of personnel or parts, and underutilized machines. Lean exists in many forms. Initially, Toyota did not formalise the principles of its production system. Indeed, it is of the essence of Toyota’s achievements that ameliorations were made piecemeal, by trial and error, over a long period. Therefore, as often observed, the principles of the Toyota production system are only loosely connected and, at least at an intellectual level, sometimes contradictory. This left the door wide open for (notably American) consultants to devise their own principles of lean production, sometimes to be completed with courses, grades, ‘belts’ etc.
We have particularly been inspired by Kevin Meyer and Bill Waddell, two sceptical observers who ran a blog Evolving Excellence for many years and collected some of their favourite posts in a book with the same name (iUniverse, 2007). These authors are motivated by the desire to move manufacturing industry back to the US (a highly actual topic again); they hold that this is feasible if only industry should become lean; but they also show that very often, lean principles are misunderstood or merely used as window dressing, with very few successes to celebrate. What attracted us in the approach of Meyer and Waddell is their deeply humanistic approach of Lean. They stress that lean production requires putting trust in production workers and investing in their practical knowledge, even to the point of lifetime employment. Therefore, this conception of ‘lean’ is diametrically opposed to most projects to make companies ‘lean and mean’. More often than not, such projects involve scaring the workers for competition from low-wage countries, laying off half of the workforce, hiring some of them back from ‘service companies’ at a lower wage, and outsourcing the main production lines abroad – activities that are often very well received by the stock markets but could well jeopardise the continuity of the company. Lean on the other hand is always directed (also) towards the longer term.
Lean production management
Support of top management is essential to lean production, but equally essential is the involvement of middle management and blue collar workers. Often, workers have good ideas for improvement, but they need to be invited to come forward with them. This happens in ‘kaizen events’ in which everyone participates, intended to develop new ideas. In the Toyota context, kaizen or ‘continuous incremental improvement’ is principally looked for on a daily basis. Kaizen events, when done correctly, also have humanistic goals: to eliminate muri (overly hard work) and to involve workers in spotting and eliminating waste. The idea is to find improvements trough encouragement, participation and praise, in short to combine productivity increases with better worker self-esteem. Therefore, it is also essential to lean production to raise the skills of the workforce. Well-trained workers are major assets to lean companies – and not liabilities that have to be paid every month; even though it may be tough to stick to this in times of adversity. ‘All employees ask is that management make the same sort of commitment to them as they have been asked to make for the company’ (Waddell).
The benefits of flexibility
A sustained effort to become lean will over time lead to better product quality, improved productivity, increased flexibility, and shorter cycle times, in short to precision. It is these benefits that have propelled Toyota to its present position; and also the reasons why consultants like Meyer and Waddell promote lean production methods in ‘old’ industrial countries like the US. They figure that the cost benefits offered by plants in low-wage countries may be compensated (and more) by better quality, increased flexibility, shorter delivery times and better opportunities to comply to customers’ wishes, at the same or a just marginally higher price. In particular, Lean will have good results in markets with a large variety in consumer preferences, if the manufacturers succeed in short changeovers of production machinery. In this way, flexibility might beat economies of scale. In comparison to the quality potentially delivered by lean domestic producers, products from low-wage countries will appear to be uniform, poor in quality, and slow to deliver.
It is well known that in order to achieve this, buffer stocks need to be reduced or even eliminated. Buffer stocks appear to be the excuse for many forms of waste. If components are not made precisely to measure and there is a certain variation in them, the buffers will be called upon if a certain component does not fit exactly. Conversely, the buffer then becomes the excuse for less-than-excellent work. Reducing the buffer will be an incentive to workers to produce better quality, if they do not wish to embarrass their colleagues further down the production line. The ultimate lean plant will produce only on the customer’s demand, doing away even with buffers of finished products waiting to be sold. The sales agreement will trigger and steer the production process. Specifications can be made exactly to the client’s wishes – important in markets like automotive with many models, fuels, engine powers, interior and exterior colours, accessories etc. But production on the customer’s demand can only be successful if production times are short (say a couple of weeks), and if the factory is not located overseas (with long shipping delays).
Social benefits of lean production
Meyer and Waddell do not fail to note that becoming lean can be quite difficult, and not just because it will require an overhaul of the entire organization in which everyone will get other tasks. Particularly there are difficulties for companies registered on the stock market. Becoming lean is a project for the long term, perhaps for a decade or more (it took Toyota some twenty years), and the stock market is only interested in results next quarter. The announcement of companies going lean has often bitten quite a dent off the value of their stocks – with its consequences for the CEO’s bonus etc. Maybe it is for this reason that family owned manufacturing companies are overrepresented in those that have successfully implemented Lean.
Lean production carries great social potential. To be sure, this can only be reaped if its methods bring stability and trust through commitment: commitment of employees to the company and its goals, commitment of management to the employees. This is a hard lesson to learn in our society that seems to value the egoistical pursuit of gain above everything else. But the mere success of lean companies might turn the tides in due course. Lean production has great potential for bringing precision with its benefits to society. Its potential needs to be explored well beyond the factory gate.