Lean manufacturing – Being Proactive To Be Reactive

We have different definitions for lean manufacturing from different people. We have discussed some of them in our past blog posts. I believe simplicity of its concepts is one of lean’s key success factors. So we should understand lean in the simplest possible way. When I answered (once again) the question of “what is lean manufacturing?” I thought it can be simply answered as “lean is being proactive to be reactive”. Let’s discuss this answer in some detail. But before we go into details do not forget to leave your ideas as a comment to this post. You can do this by clicking on the comments link at the bottom of this post. I really value them.

Lean is about developing a system where we can deliver what customer wants, where they want in quantities they want. In the process lean thinks how to remove any waste from this system making the product or the service higher in quality, lower in cost and higher in reliability. But if you take any business regardless of they being lean or not they want to achieve the same things. They want to satisfy their customers by satisfying their needs.

In delivering the value to their customers any business owner will tell you that they need to be proactive. These business will be proactive in purchasing raw materials, proactive in planning their capacities and proactive in scheduling their deliveries and so on. They will use advance tools like ERP and use the functionalities of MRP to plan their demands and supplies. As a result they would not run out of raw materials and they will not have any capacity issues when it comes to producing what their customer wants.

Lean is very proactive in its approach too. But they do not order raw material in advance nor are they going to block capacities for possible future orders. So how lean is proactive? Lean is proactive in developing a system which will allow them to change with the changing needs of their customers. So they would not need to order RM before they actually see a real demand from their customers for an example. For me this is being reactive to the changing situations of the markets and customer needs. Lean system is very flexible so it can run with virtually no buffers, no large chunks of stocks and can change from one product to another in a matter of minutes. So this system can produce exactly what customer wants in the way they want in the quantities they want.

Reactive approach of lean will save the manufacturer (or the service provider) a huge amount of capital since there is no requirement for them to maintain higher level of inventory. This system will not produce something the market do not need making write downs a lesser problem. Low inventory levels and coupled with other simple lean techniques will make sure on time delivery and superior quality.

At the end of the day lean manufacturer will make a better product (or a service) than its traditional competitors. All these will be achieved with lesser cost making them much more profitable.

It is very good to be proactive. But proactive for what is the question. If you try to absorb the costs of changing market demands and associated risks in the name of being proactive, you will not be successful as you can be. Worst you can fail in your business. Instead if you create a system which can quickly to adjust to the changing market conditions you will be much more successful. All the popular lean manufacturing tools like JIT, SMED, Kanban(Pull system) are aligned for this purpose.

The lean machine

Lean manufacturing has a definite set of inputs and it is intended to give certain set of outputs. It consumes energy in various forms and requires maintenance in operation. It requires setup and time to time health checks. Objective of lean is to generate the desired output by optimizing the resources used. Sounds like a machine. In fact it is. It is a very productive machine.

Lean systems can be modeled as machines. This will give us clarity in thought process and will make it easy to understand systems. A lean system gets inputs in the form of raw materials, electricity, human resource and management. It creates the products or the services by utilizing them. The system is aligned so that it can give output of one piece using one piece of RM as the input. In other word there is no requirement to enter inputs in bulk to get the output. And this large machine is consisting of number of interdependent small machines.

The lean machine is intelligent enough to understand the variations occurring in it. And it will correct those variations by itself. If it can not do the correction by itself, it will stop and will get the third party involvement in correcting. It will not pass the defective parts forward. So this machine is fool proofed.

This machine works with simple logic. When there is a requirement it will pull the raw materials or the semi finished goods from the early process and will process them. There will be minimum amount of products inside the machine at any given time making the WIP very low.

Continuous monitoring and upgrades are required to make sure this machine works correct. Improvements and fine tuning will make the machine more and more effective. People are the gears and electronics and the computer chips of this machine. If they do not work correct, the machine will fail. So it is very important to keep people motivated. Training and educating people is also very important.

Lean machine needs energy. This needs to be provided by top management. Part of the energy is generated within the system itself with the effects of synergy. Starting the machine requires lots of energy. But once started it can run with very little of it.

Lean is an effective, efficient and very simple machine. Creating and operating this will take time and effort. But once done it will add great value to the organization.

Is Toyota really following the lean manufacturing as we understand it?

I got an interesting news item delivered to my inbox on lean manufacturing recently. There were some interesting insights to Toyota and its philosophy and its operations. Among them there was some information which surprised me.

In this article it said “During full-production periods, when the plant is running 24-7, employees work incredible amounts of overtime — and during slow times, they all know they will still get their paychecks” I am very happy the way Toyota treats its employees and specially the security they have when it comes to their jobs. But I am little surprised to see the variation in production. This article sounds like Toyota is going through very high level of variations. But in the lean concept level production or Heijunka is a key initiative. So this makes me as a reader to think and question the way Toyota actually operate.

On the other hand it was very interesting to note the comment on employee activities in slow times. In this article it says “Hoseus said during slow times, all employees work on becoming more efficient, brainstorming ways to out-do their competition (they’ll bring in competitors cars and tear them apart, looking for ways to improve their own vehicles), and all become actively involved in seeking ways to save the company money

Kaizen is a corner stone of lean. So finding ways and means of improvement is very important. But I am little surprised to see Toyota bringing competitors cars in and study them to learn from them. Learning new ways and doing things is fine. But I am not sure whether Toyotas competition will enjoy this.

But on the other hand I am very interested in the way Toyota works with community to find the most important resource for any lean manufacturer, the human resource. And the skills they are looking for are very interesting. “Finding employees who fit into Toyota’s mindset has been a problem, Hoseus said, and its nonprofit organization was developed to overcome those problems by working with the community and educators to train people to be the kind of employees Toyota wants: flexible people with a teamwork attitude and problem-solving skills

I am a firm believer of lean manufacturing. Toyota may be the pioneers of lean, but lean concepts are the driving force behind it. When it comes to lean manufacturing Toyota can be considered as a very important and experienced lean implementation. In other words it is very important to differentiate lean manufacturing with Toyota production system (TPS). TPS is the way lean is practiced in Toyota. It satisfies the requirements of Toyota not your organizations needs. So it is important to take lessons from pioneers like Toyota but also you need to remember lean is not 100% equal to TPS.

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Lean manufacturing – Toyota and over production

Throughout this blog I have talked about lean manufacturing and its concept and application and even success stories and failures. All the time I have taken Toyota as the example and as the benchmark. In fact being the initiators of lean, Toyota knows their system well than anyone else.

But recently I was reading a post on lean blog (http://www.leanblog.org). It compares Toyota to the GM on sales and the stock levels they maintain. The obvious conclusion is Toyota having lesser inventory since both of them have almost similar sales according to this post. But the reality is not that. Actually Toyota had more inventory than the GM. Interesting isn’t it. Does it mean that Toyota is not following their own system? At a glance it looks like.

Although back in our minds have a picture of no work in progress and inventory attached to lean manufacturing, the reality is lean never talks about minimizing inventory. It always talks about inventory as a waste and a reflector of the wastes. But if we think about it very carefully, lean always worried about the bigger picture. Although it is true to say inventory is a waste, reduction of inventory needs to be weighed. If the cost of reduction of inventory is higher than loss of opportunity or costs in production variations due to technical or other reason the balance must be found. Lean is about finding the balance between all of these. So in that sense Toyota is actually just living their culture, not violating concepts of lean.

This is a very good lesson to all of us. Lean is not about eliminating the entire inventory completely at any cost. It is about looking at the bigger picture and taking the action required to get the optimal out come. If you thought lean is about removing inventory from your system, think again.

Lean manufacturing and changing mindset

When I was talking to one of my colleagues at work, he came out with an interesting argument about lean manufacturing and its key concepts on changing the mind set of people. I thought of sharing his ideas with you.

Lean often talks about change in thinking, how to inbuilt quality to the system and how to manufacture good product with lesser cost and with higher quality. It talks about how to react fast to the changing customer demands. Interestingly Toyota system can be studied by anyone. It is even open for its competitors. With all these Toyota seems to be very confident about their system.

When it comes to markets if you are given the choice to buy a Ford or a Toyota with the same price tag and other options what would you go for? Most of the people will go for a Toyota. But why people go for a Toyota. Well there may be other reasons but one of the main reasons is their image in the automobile manufacturing field. Lean manufacturing or the Toyota production system has created a unique image among customers. People feel comfortable in buying a Toyota than any other brand since they know a product out from Toyota is coming through the error proofed, quality assured manufacturing system.

When more and more people visit Toyota and when more and more people adopt lean manufacturing techniques in their manufacturing units, Toyota indirectly gets the benefit. They become famous while all the other lean followers become followers of Toyota.

It is true to say lean is about change. Change in culture, change in thinking and acting. But Toyota is also changing the mind set of the customers. They are building an image in the minds of the customers. This is an image of trusted quality, value for money and an image of a leader. Lean is not only an operational excellence concept today. It is a powerful marketing tool for Toyota.

Lean thinkers, should they be single track thinkers?

The heart of lean manufacturing is lean thinking. In the heart of lean thinking is the lean thinkers who align their thinking patterns with lean manufacturing concepts and principles. In a way lean thinking is formatting the thinking patterns such that problems are identified, analyzed and solved in the lean way. But should they be single trackers in their thinking. In other words should all the people in your organization think in the same way?

Just for a moment think about great people and their specialties. In this world all the outstanding personalities have challenged the existing systems and practices and they have proposed and implemented alternatives for those. All the great religious leaders, political leaders like Mahatma Gandhi are examples of their differences in thinking and practicing what they believed as correct. On the other hand Taichii Ohno who is the guru of Toyota production system later became lean manufacturing, challenged age old techniques of bulk manufacturing and economy of scale concepts and changed the manufacturing world upside down. So why all of your employees should think in the way a manager does, or at least similarly? The real power of humans lies in their thinking. So why by any means someone should try to format all the people in the same mould.

One reason can be to handle people easily. In a situation where all the employees think similarly, there are no conflicts between them in their work, especially they will not have any conflicts with their managers. So what an organization would get out of this? A group of employees who are very good at their day to day work, a workplace without conflicts and culture of non arguing and acceptance of ideas. But what an organization would miss in this scenario? They will miss the path to their long term success. Challenging ideas outside the scope of thinking will not be generated or will not be encouraged if not penalized. They will happily do what they do, and will try to improve in their limited scope.

This is not what lean thinking promotes. It is the free thinking and looking for new way of doing things, but with the guidance of core disciplines of lean. If in an implementation of lean, if lean thinking is used to carbon copy the manager’s mindset to the others it is not other than inability of manager to handle people. In simple terms this is poor management. Managers and lean leaders must be skilled enough to promote the advantages of lean and meanwhile listen to the others and change with the suggestions of the others.

People are great when they are on their own. They can do wonders for your organizations. So do not make them handicaps mentally. Definitely not in the name of lean manufacturing. Personally I love to see people asking me the question WHY, although it makes me uncomfortable at times. I know they will make the organization a better place one day.

What is a lean supply chain?

Lean has evolved from just in time manufacturing to lean manufacturing and to a lean enterprise. In each of these stages there was an addition to the scope of lean manufacturing. For an example from the early manufacturing focus, lean manufacturers started looking at their full organization in the process of value creation. Then the lean manufacturers extend their boundaries to their customers and suppliers in order to create value.

Lean manufacturing is all about eliminating wastes form the system. A system contains many components in it. Any components when taken isolated from other components, has wastes which are born within those components. But there are many other wastes generated in the interaction points of these components. For an example in the manufacturing context, manufacturers themselves generate wastes. Over manufacturing, waiting for bulk manufacturing are some of them. On the other hand wastes are generated in the supply chain itself. For an example if the suppliers of the manufacturer is supplying only in bulks and if the lead times are longer, then the time of the manufacturer is wasted. The end result would be lengthening the lead time of the customer who sits in the other end of the supply chain and may be the cost of the products. Even the customers can contribute to the wastes in supply chain. For an example if the necessary information to the manufacturers is not passed on time, manufacturers and the suppliers to them will have to suffer consequences of to and ultimately will affect the customer himself apart from the other members in the chain. You can refer to my previous articles on lean manufacturing customers and suppliers for more thoughts on this topic.

So it is clear that a single unit in the supply chain can do very little in eliminating the wastes in the system. To effectively remove wastes from the system and gain value everyone throughout the supply chain must contribute. Everyone must be aligned to the needs of each other and must accept other as their partners. This will help all the parties including suppliers, manufacturers and the customers to achieve low costs, higher quality standards and lower lead times. Apart from these main business indicators reduction of wastes is an absolute requirement in today’s world. There are no resources to be wasted. Environmentally a lean supply chain is a blessing.

What is lean manufacturing?

Interesting question isn’t it? Lots of people talk about lean manufacturing, but when it comes to defining it, it is not easy. In fact lean is a philosophy which evolved for many years based on some simple concepts. Understanding these concepts and principles will help us in understanding the lean manufacturing itself.
Lean manufacturing is a manufacturing methodology where wastes are identified and removed continuously from the system in order to create value. Earlier the term just in time manufacturing is used to identify similar concepts. In Toyota’s website they define Jikoda and Just In Time as main pillars of lean manufacturing. Jikoda is the concept where if there is a defect it is identified and solved immediately. For an example if there is a problem in machine, the production line will be stopped and the problem will be fixed immediately. JIT or the Just In Time is the manufacturing philosophy where goods are made available in the correct quantities in the correct time and in the correct place.

History of lean manufacturing has a very closer link to the Henry Ford’s early line assembly system. Sakichi Toyoda who was the founder of Toyoda group and the inventor of automatic loom stopping system converted his business into automobile manufacturing in 1930’s. His son Kichiro visited Ford manufacturing facility and got the understanding of the concepts behind it and more importantly the problems incorporated to that system. This is a very strong evidence to prove the closer relationship between Ford system and Toyota system.

Although the concepts were developed by the owners themselves in the initial stages, the real guru of lean manufacturing is considered as Taiichi Ohno. He understood the principles behind lean and then developed them to suit the requirements of Toyota. Concepts and tools like Total Productive Maintenance (TPM), Single Minute Exchange Of Dies (SMED), TAKT time, KanBan, Kaizen, Pokayoke, Jikoda, which are very important to the success of any lean manufacturer are developed over the time to facilitate this manufacturing philosophy.
Definition of waste, maintaining customer supplier relationship internally and externally, empowerment and respect to people, idea generation and using of ideas generated by employees to the betterment of the organization, organic management structures, ability to adopt to the fast changing situations, looking into the bigger picture by avoiding sub optimization, simplicity are among the key features of any lean system.

Today the lean concepts have reached many other industries including healthcare, service providers and even military. The variety of organizations that are practicing lean concepts in them goes to show the universal applicability of lean concepts or lean thinking. Lean technologies may be unique to the implementation but the lean thinking is universal.

It is important to understand that lean is not about just tweaking the current systems. It is a conceptual change to the system. This requires lots of change management and care for people. People are the most important resource for any lean manufacturer. If any manufacturer wants to cut down in number of heads it should not be in the name of lean. Lean is not about cutting corners either. It is about elimination of waste from the system continuously. Many implementations of lean fail due to the lack of understanding on basic lean concepts and general knowledge, not because of the problems in lean itself.

Now the lean has gone over its manufacturing premises and lean manufacturers are now becoming lean enterprises. Lean enterprises consist of customers and suppliers of the manufacturer. They help each other in the process of value creation and ultimately getting rewarded collectively for their efforts. Large amounts of wastes do exist in interfaces where each party separated in the supply chain. In today’s competitive markets most of the manufacturers are willing to reach their suppliers and customers and treat them as partners not as separate parties. In fact it is very hard to become a lean manufacturer without having a good supplier base at least.

Lean has a great potential for the future. Lean concepts can be used in almost all the areas. Achievable of lean including low prices, high quality, ability to supply on demand, waste free way of manufacturing and eco friendliness and human resource development are the requirements of future.