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  1. 1. JANUARY/FEBRUARY 2002: INTERVIEW LEAN TIME, LEAN MEASURES – By Michael San Filippo Jim Womack has spent nearly 25 years studying, analyzing and teaching Lean production. Not only does he think Lean, he speaks Lean. His words are uninterrupted by pauses, tangents or uncertainties; they come fast and on target, completely waste free, truly Lean. Of course, one should expect nothing less from Womack, widely regarded as the world's foremost expert on Lean production and the co-author of two books, The Machine That Changed the World and Lean Thinking, which brought the fundamentals of Lean to a mass audience in the 1990s. The Lean production philosophy that he extols is based upon the Toyota Production System; however, he has advocated its use not only in manufacturing, but in other areas as well, including health care, construction and distribution. Lean production has seen a rise in popularity as the U.S. economy has settled into recession: Lean Thinking, published in 1996, recently resurfaced on the Business Week Best-Seller List. “Lean Thinking was written for the recession of 1997, which never happened,” Womack says. “It’s a wonder we sold as many copies initially as we did. “We ‘Lean’ guys had a tough decade because any moron could make money. It’s hard to be heard when everyone’s making money. Companies could simply solve problems with more hardware; they weren’t taking a hard look at their processes. Well, now the ‘90s are over, Clinton is long gone, the party’s over. And what do you know, now you’ve got to work for a living. Suddenly people are stopping and saying, ‘We’ve got to take the waste out. We’ve got to get Lean.’” Introducing Lean The term “Lean production” was first identified by Womack, Daniel Jones and Daniel Roos in 1991’s, The Machine That Changed the World. In the book, based on a five-year, $5 million study of the automobile industry, Womack, Jones and Roos took an in-depth look at the Japanese manufacturing system, exemplified by Toyota, which combined the best features of craft production (high-quality, individualized, custom-made products) with mass production (manufacturing in large quantities to satisfy broad consumer needs at lower prices). The book, which was one of the first to thoroughly examine Toyota’s highly successful business system, concluded that Toyota was dominating the automobile industry because it optimized the value delivered to customers while minimizing the time, human effort and capital required to create this value. Womack followed up on this study into Lean production with Lean Thinking, co-authored by Jones, which provided companies with a practical guide to apply Lean production to their industry. To become Lean, Womack advises, companies should concentrate on the whole rather than the parts. “The fundamental objective is to shift the focus of management from the existing organization, technologies and assets to the product itself,” Womack says. “This will allow companies to differentiate value from waste. “Instead of manufacturing products in a disconnected and geographically dispersed process, companies should recreate their process by working backward from the end product at the point
  2. 2. of delivery to the customer. This permits the product to respond to the needs of the customer rather than being pushed ahead to keep existing assets and machinery fully occupied.” In Lean Thinking, Womack highlights five principles to guide managers in the fight against waste: • Value: Specify value from the perspective of the customer, not the firms, departments and facilities that comprise the supply chain. • Value Stream: Identify the value stream for each product or service, comprised of every action responsible for its design, order and provision. Eliminate actions that create no value. • Flow: Align all value-creating steps so that the design, order and product itself move steadily and rapidly toward the customer with no detours, waiting or scrap. • Pull: Make products flow only at the pull of the customer, so the exact good is provided at exactly the right time. • Perfection: Re-evaluate every value stream to make value flow faster at the precise pull of the customer. According to Womack, by following these principles and implementing a Lean production system, the amount of effort needed to produce a product can be reduced by 50 percent to 75 percent; time elapsed from order to delivery can be reduced by 90 percent; and inventories of work-in- process and finished goods can be reduced by 90 percent. Lean Production in Lean Economies It is only in times of great economic stress, Womack says, that advances in Lean production are made. “Taiichi Ohno at Toyota was able to push the Toyota Production System [TPS] through the entire Toyota Motor Co. in 1950 during the great crisis that left Toyota on the brink of bankruptcy,” he says. “He had been trying for several years but was making slow progress until the collapse in sales that forced Toyota to reduce its work force permanently by 25 percent. Toyota offered employment guarantees to those who remained, provided they learned to work together in new ways. “The first oil shock of 1973 was the moment Toyota seized to push TPS through its entire supply base in Japan. Ohno had formed the Operation Management Consulting Group at Toyota in the late 1960s for the purpose of teaching TPS to suppliers, but there was little progress until many faced bankruptcy in the economic crisis of 1973-1975 unless they learned to run their businesses according to Lean principles. “The recession of 1981-1982, coinciding with the arrival of the first Japanese transplant, was the first time American car companies took Lean thinking seriously. “The recession of 1991-1992 marked a great leap in awareness of Lean thinking by the aerospace industry, general manufacturing and the European motor industry. This generated the Lean conversion stories at Pratt & Whitney, Wiremold, Lantech and Porsche that Dan Jones and I told about in Lean Thinking.” Womack rejects the claims made after Sept. 11 that certain elements of Lean production are impractical due to additional security and subsequent delays in border crossings, and that businesses should increase inventories to buffer against supply chain interruptions. “The problem, of course, is that this advice is wrong, and it’s hurtful to those [businesses] implementing Lean,” Womack says.
  3. 3. Unless a product can flow continuously from start to finish, or demand is perfectly consistent, there will be points where inventory must be present to supply customers effectively. While a certain amount of inventory is acceptable to cover potential delays, Womack warns against stockpiling massive amounts of parts or products. “Extra stocks should be kept aside – out of the path of the value stream but not in some remote warehouse – and their presence does not in any way effect the logic of Just-In-Time parts supply,” Womack says. Each downstream process needing parts should still signal directly to the upstream supplying process when more parts are needed and these should be supplied frequently in small lots. The one adjustment necessary over time, if bottlenecks persist at border points, may be longer reorder times. Otherwise Lean production can proceed as in the past. “However, if you think border crossings will be a problem for you in the future, why not move all value-creating steps in one place?” adds Womack. “Why not compress your value streams for each product family to put all of the value creating steps in one area – as at Toyota City – or even in one facility? Depending on factor costs and customer expectations, the appropriate location may be in a high labor-cost area – close to end users – or in a low-cost area for price sensitive products where customers are willing to wait. In either case, you will be better off if as many steps as possible are colocated.” Based on his study of the previous two recessions, Womack has outlined the following steps companies should follow to implement Lean production during the current downturn: • Assign value-stream managers: Their responsibility should be to map the stream and quickly implement a future state with lower costs, less inventory and better customer response. “Do not settle for ‘point interventions’ that improve only one small part of the stream without benefit for the end customer or your bottom line.” • Empower value-stream managers: Give these managers full support by removing obstacles to smoother flow, including outdated facilities, balky internal functions and inefficient relationships with suppliers. “If the future state looks only a little better than the current state, your firm may not have a future.” • Compress value streams: “Consider pulling activities for each value stream back from suppliers to compress throughput time and take out even more cost while defending your people.” • Remove waste: Take out all of the excess inventories, space, machines and people from each value stream as quickly as possible. “Then, when growth resumes, figure out how to increase output without more inventories, space, machines or people. This is how permanent gains are secured.” • Cash or profits: Decide which of these is your priority. “If you need cash, eliminate inventory and sell assets immediately. If you need to improve your profitability, remove the inventory and assets from the value stream to reduce costs but defer disposition until later.” • Be honest: Tell your people the truth about what needs to be done and do it quickly. “People can stand the truth. What they hate are lies, drip torture and managers with no believable plan for the future.” Womack is optimistic that further advances in Lean production will occur during this recession, as they have in the past. “I’m bullish, I think there’s going to be a big leap in Lean consciousness and implementation in the near future,” he says. “Let’s hope I’m right, and some good will come out of the bad.”
  4. 4. Resources: • In Lean Thinking, authors Dan Jones and Jim Womack extract the principles supporting lean production from the original lean system, the Toyota Production System. Then, using examples gathered during a four- year research effort from diverse industries, such as aerospace, distribution, capital equipment, wire and cable management, and automotive, they explain how you can apply the principles. They layout an action plan for implementation, describe the objectives of a lean enterprise, and illustrate the benefits lean holds for everyone, including engineers, line workers, managers and executives. • The Machine That Changed the World gave lean production its name and the world its first comprehensive analysis of this revolutionary new way of working. This lean production classic challenged the fundamental ideas of how we make things based on a rigorous study of the world automotive industry.