While I would like to think that all of my blog posts are important to someone, the fact is that mos...

1. Lean Manufacturing | Kevin Meyer
While I would like to think that all of my blog posts are important to someone, the fact is that most of
you cannot find any direct link between your lean battle and what an Irish minister had to say about
quality, or whether Delphi won another Shingo prize or not. This post, however, is important - if
you are trying to get your plant or your company leaner, then you need to know this.
I have all the respect in the world for Mike Wroblewski over at Get Boondoggle, and for Mark
Graban at the Lean Blog, but today Mike posted a piece called Kaizen Priorities, which Mark
endorsed. (Note Mark's comment below) In spite of that respect, I cannot agree. Only my
opinion, of course, but please hear me out. Mark is attempting to put a rest to the nonsense and
chaos that swirls around lean and six sigma about where to focus kaizen activities. The shotgun
approach is rightfully criticized, and both kaizen events and six sigma have a sad track record of
generating great improvements, in theory, that cannot find their way to the bottom line. Mark's
solution is to suggest a combination of priorities, including resolving bottlenecks and going after big
or easy opportunities. It is easy to see the logic behind that recommendation. It misses the
central point of the Toyota Production System, however.Â
To Art Smalley's point that he has so clearly and with great authority made in his two recent articles
- Lean and The Law of Unintended Consequences and TPS vs Lean - Additional Perspectives, this
solution clearly smacks of starting with a tool kit, then looking for a problem that fits it. Most
important, it ignores the core lessons Taichi Ohno and Shigeo Shingo preached over and over ad
nauseum. Nowhere do either of them say to go out and look for bottlenecks, nor do they say to go
look for cost savings opportunities in major product lines, or for easy improvements. For that
matter, they did not say to create a quality improvement project or a customer satisfaction
improvement project for every cost reduction project you start, as my friends in the Six Sigma world
did last week in Las Vegas. These are all latter day, American ideas that well intentioned,
intelligent people have conjured up to figure out the best way to use the tools. The problem is that
there is no significant, long term lean manufacturing success story that was built on any of this.
There is a long term success that was built on Ohno and Shingo's message - Toyota.
Here's the deal: Inventory and cycle time have a direct relationship to each other. Inventory is
simply the manifestation - the visible, physical result - of cycle time. The focus of the Toyota
Production System is the reduction of cycle time. I have put this quote from Ohno in several blog
posts, and built my book around it:
"All we are doing is looking at the time line, from the moment the customer gives us an order to the
point where we collect the cash. And we are reducing the time line by reducing the non-value
adding wastes."
Using the Toyota tools to improve something other than the time line - operations costs, defects,
machine reliability, or anything else - does not necessarily add much to manufacturing. For those
of you under the age of 40, please understand that prior to Toyota and lean, we may not have been
great manufacturers (it was hard what with all the dinosaurs walking around), but we were not

2. stupid. We knew all about bottlenecks and defects. You say 'kaizen', we said 'cost reduction
project'. Couching it in Japanese terms, involving the production workers more and laying it all out
on an LEI approved Value Stream Map form is not really that much of an improvement over the old
ways.
But what Ohno said changes everything. He said go after the cycle time. In fact, the system was
defined as the "simultaneous improvement [reduction] of time and space". That is what is new and
powerful about TPS - not the tools. When Motorola first developed Six Sigma, it was built on a
mathematical interpretation of this cycle time principle. You have also read often in my writing
that Mot's principle was that the "best quality producer is the shortest cycle time producer, and the
shortest cycle time producer is always the best cost producer." In bringing this to life in their
factories, they focused on the mathematical notion of variability. The variability in a process has a
direct, linear relationship to the cycle time of the process - the greater the variability at any point,
the more inventory is needed to buffer the rest of the process from the impact of that variability.Â
Toyota's principle was that there is also a direct relationship between variability and waste - or
excess cost.
To find the greatest waste elimination opportunity - look for the greatest variability. To find the
greatest variability - look for the greatest block of cycle time. That logic will take you to the target
for your kaizen, or six sigma, or whatever you want to name your project. The power of this is that
it leads you to great cost reduction areas that the accounting system misses - things like overly long
set ups, or quality problems, or poor plant layout and excessive material handling costs. This is the
great power of lean - not the tools.
Where Just In Time fits into all of this is in the variability calculation. Any stumble bum
manufacturer can be linear when measured in monthly terms. Output for a given product per
month from a machine, or a process or a plant is usually a pretty straight line. Take that down to
output per week and the lines on the graph start to get a little squiggly. Take it down to output for
any one product per day, then down to output per hour and the lines are incomprehensible. Those
lines are showing the variability, and the waste elimination opportunities.

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from a machine may be a steady 98% per month. It may even be a steady 98% per week. But at
the daily level, the graph shows 49 consecutive days of 100% yield, then a day of 0%, then 49 more
at 100%, etc... That huge variability drives the plant to buffer production with a days worth of
inventory in order to protect itself from the random 0% days. That day's worth of inventory pushes
cycle time out by a day.
The TPS is simply that in reverse: Chart the process and calculate the cycle time. Go through the
Why?, Why?, Why? etc... routine until you know why the days worth of inventory is there. Reach
into the TPS toolbag and pull out the stick needed to kill the quality snake, get rid of the inventory
(along with the cost and space it was sucking up), then start hunting for the next biggest block of
cycle time in the process.
Continuous Improvement means continuous compression of cycle time, at least that what Ohno
thinks, and I am not about to argue with him. The decay of Six Sigma from Motorola's heady days
was the result of taking the tools for analyzing and eliminating variability out of the cycle time
context in which it was originally conceived. Taken out of context, the TPS tools and the Six Sigma
tools are inevitably applied to problems as seen through the crappy old cost system we all use. All
it knows is direct labor - so these tools become weapons for laying people off. It may come as news
to many, but we did not need Toyota or Six Sigma to tell us how to find ways to lay people off. We
had that to an art form long before Toyota came along. When the tools are used to improve
overhead cost in the old structure, those are all part of an invisible allocation mess and the savings,
if they actually occurred, can never be traced.
The power of cycle time compression is that it forces cost reduction, quality improvement, inventory
reduction and delivery performance improvements at the same time. The tools applied outside of a
cycle time framework, often result in trade offs - lower costs with more inventory, better quality with
higher costs, etc...

4. There is a chart that lays this out on my web site. Click here to get it - print it out, study it, send
me as many emails as you need to asking as many questions as you have to, but please understand
this very fundamental point. Better yet - get a copy of Shingo's 'Green Book' - the original Study of
Toyota Production System from Industrial Engineering Viewpoint. Suffer through the wretched
translation and you will find it all there.
And by the way, just about all of my writing flows from this point ... the Irish Minister was wrong
about quality because she was advocating taking quality improvement out of the cycle time context
and allowing trade offs between cost and quality; Delphi won its Shingo Prizes becasue they
deployed all of the lean tools beautifully - but to the old system instead of to cycle time compression,
and they too got tradeoffs resulting in nothng to the bottom line. Applying the tools to the old
system yields 'Looking Lean'. Applying the tools to Ohno's time line yields 'Being Lean'.
... and one last note - The reason I hammer on accounting, and work so hard to push lean
accounting, is that lean accounting is essentially putting the company on a cash flow basis, instead
of one in which inventory is an asset. When the financial system drives the plant towards
improving cash flow, all of the hidden costs of excess cycle time come to light and the financial
benefits of Ohno's wisdom become crystal clear.