Lean Thinking

Lean thinking is a business methodology that aims to provide a new way to think about how to organize human activities to deliver more benefits to society and value to individuals while eliminating waste. The term “lean thinking” was coined by James P. Womack and Daniel T. Jones to capture the essence of their in-depth study of Toyota’s fabled Toyota Production System. Lean thinking is a way of thinking about an activity and seeing the waste inadvertently generated by the way the process is organized. It uses the concepts of:

• Value
• Value streams
• Flow

In the business world and has evolved in two different directions:

• Lean thinking converts who keep seeking to understand how to seek dynamic gains rather than static efficiencies. For this group of thinkers, lean thinking continuously evolves as they seek to better understand the possibilities of the way opened up by Toyota and have grasped the fact that the aim of continuous improvement is continuous improvement. Lean thinking as such is a movement of practitioners and writers who experiment and learn in different industries and conditions, to lean think any new activity.
• Lean manufacturing adepts who have interpreted the term “lean” as a form of operational excellence and have turned to company programs aimed at taking costs out of processes. Lean activities are used to improve processes without ever challenging the underlying thinking, with powerful low-hanging fruit results but little hope of transforming the enterprise as a whole. This “corporate lean” approach is fundamentally opposed to the ideals of lean thinking, but has been taken up by a great number of large businesses seeking to cut their costs without challenging their fundamental management assumptions.

Lean thinking would challenge line managers to look differently at their own jobs by focusing on:

• The workplace: Going and seeing first hand work conditions in practice, right now, and finding out the facts for oneself rather than relying on reports and boardroom meeting. The workplace is also where real people make real value and going to see is a mark of respect and the opportunity to support employees to add value through their ideas and initiative more than merely make value through prescribed work. The management revolution brought by lean thinking can be summed up by describing jobs in terms of Job = Work + Kaizen
• Value through built-in quality: Understanding that customer satisfaction is paramount and is built-in at every step of the enterprise’s process, from building in satisfying features (such as peace of mind) to correctly building in quality at every production step. Built-in quality means to stop at every doubtful part and to train yourself and others not to pass on defective work, not to do defective work and not to accept defective work by stopping the process and reacting immediately whenever things go wrong.
• Value streams through understanding “takt” time: By calculating the ratio of open production time to averaged customer demand one can have a clear idea of the capacity needed to offer a steady flow of products. This “takt” rhythm, be it a minute for cars, two months for software projects or two years for a new book leads to creating stable value streams where stable teams work on a stable set of products with stable equipment rather than optimize the use of specific machines or processes. Takt time thinking leads to completely different capacity reasoning than traditional costing and is the key to far more frugal processes.
• Flow through reducing batch sizes: Every traditional business, whether in production or services, is addicted to batch. The idea is that once work is set up one way, we’d better get on and quickly make as many pieces of work as we can to keep the unit cost down. Lean thinking looks at this differently in trying to optimize the flow of work in order to satisfy real demand now, not imaginary demand next month. By working strenuously on reducing change-over time and difficulty, it is possible to approach the lean thinking ideal of single piece flow. In doing so, one reduces dramatically the general cost of the business by eliminating the need for warehouses, transports, systems, subcontractor use and so on.
• Pull to visualize takt time through the flow: pulling work from upstream at takt time through visual devices such as Kanban cards is the essential piece that enables lean thinkers to visualize the gaps between the ideal and the actual at the workplace at any time. Pull is what creates a creative tension in the workplace by both edging closer to single-piece-work and by highlighting problems one at a time as they occur so complex situations can be resolved piecemeal. Pull is the basic technique to “lean” the company and, by and large, without pull there is no lean thinking.
• Seeking perfection through kaizen: The old time sensei used to teach that the aim of lean thinking was not to apply lean tools to every process, but to develop the kaizen spirit in every employee. Perfection is not sought through better, more clever systems or go-it-alone heroes but through a commitment to improve things together step-by-small-step. Kaizen literally means change for the better and Kaizen spirit is about seeking a hundred 1% improvements from everyone every day everywhere rather than one 100% leap forward. The practice of kaizen is what anchors deep lean thinking in people’s minds and which, ultimately, leads to complete transformation. Practising kaizen together builds self-confidence and the collective confidence that we can face our larger challenges and solve our problems together.

Advantages

Worker Satisfaction

Implementing lean principles in your company requires input and participation from your production staff. They are often in the best place to see where waste and inefficiency occurs. Not only do they serve as a resource for you, employees usually respond in a positive way to sincere efforts to involve them in improvement processes. When they see suggestions and ideas incorporated, a sense of ownership and satisfaction about their contribution is more likely to follow.

Eliminates Waste

Lean principles aim to minimize all forms of waste, from sources as varied as material defects to worker ergonomics. Many sources of waste are easy to identify and correct, such as a machine that is out of adjustment, producing a high volume of defects. Other forms of waste include environmental conditions that impede worker efficiency. Better lighting may help a worker read production instructions; moving a file cabinet might eliminate wasted time for a clerk.

Just in Time

JIT is a strategy that suggests large inventories are wasteful of company resources. Business equity tied up in inventories of raw and finished goods interferes with cash flow. Money is also saved through reduced warehousing needs. The perfect JIT scenario would have the raw materials purchased and delivered at the moment production needs them, and the finished product is sold and delivered the moment it comes off the line. While this scenario may be impossible, lean philosophy suggests making improvements toward the ideal.

Competitive Advantage

Beyond simply reducing costs and improving efficiency, lean production techniques introduce systems and develop skills with your staff that support changes in the workplace that new sales create. Space saved on warehousing may be used to add new product lines. The same is true of time savings. Your staff can absorb new work and react quickly to changes in client demand. Producing work quickly, in short iterations, without waste and delivered on time enhances your advantage over your competition.

Disadvantages

Low Margin for Error

JIT principles work best with stable system components. Delivery times for raw and finished goods are known, and the elements of production can be scheduled accordingly. Being overly aggressive with JIT scheduling leaves you vulnerable to systemic bottlenecks. Supplier delivery issues may cut off your raw materials, interrupting your production flow. Maintenance emergencies can reduce your production throughput. Any constraint not accounted for in your JIT planning potentially jeopardizes the entire system. Margin for error and system waste may be difficult to balance.

New Inefficiencies

Lean techniques can be overused. When tracking of productivity and waste starts to impact the time used for production, the solution becomes the problem. When lean principles are first applied, you can expect larger returns than later down the road. It is tempting to push those expectations, but you must examine the value of improvements. If you refine throughput to 1,000 parts an hour in one section that you can supply with only 500 parts from a previous stage, you haven’t improved your result.

Worker Frustration

When a certain level of refinement is met, using lean methods to squeeze more economy from production can discourage workers, reversing positive motivation and undermining your leadership. Trends of backsliding in previous improvements may indicate worker resentment. Striking a balance between stasis and continuous improvement is a challenge in any lean environment. A small business may be more prone to reaching such a refinement because of its less complex nature. Be aware of how incorporated changes affect your staff to gauge how effective further pushes will be.