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Chapter 2 as a guide, this breakdown is easier to follow:
A holistic view of supply chains, beginning with product concept through final delivery to the customer
A team approach based on a multi-skilled workforce and employee input
Commitment to continuous improvement of all processes
Elimination of waste throughout the supply chain
Mentality
The lean mentality can be succinctly characterized as the relentless quest for the removal of waste in all operations. For the lean manufacturer, waste appears in the form of excessive inventories, long cycle times, rework, underutilized floor space and the presence of personnel on the production floor who add no real value to the process. Elimination of this type of waste is achieved through the utilization of multi-skilled work teams bent on continuously improving all aspects of the manufacturing function.
It should be emphasized, however, that lean thinkers do not initiate their continuous improvement efforts on the production floor. The lean mentality is much broader in the sense that practitioners seek to build quality into all upstream processes that feed into the production environment. Starting with a customer-focused plan for product design, this practice revolves around the idea that it is better to feed quality into the process upstream as opposed to constantly fixing the same problems downstream. Basically, lean thinkers believe that the cost of quality is much less than the expense of fixing mistakes, especially after consumers already have made their purchases.
Because of all the challenges and potential for waste associated with a production environment, it made perfect sense for lean thinkers to focus their initial efforts there. Of major significance to the development of global supply chain management, however, is the fact that zealous lean companies have not stopped their initiatives with manufacturing. Now known as lean thinking, [1] the crusade to eliminate waste via continuous improvements has been applied to the entire supply chain.
If one considers the potential application of the lean mentality to other areas of business, the opportunities for improvement are endless. Most businesspeople agree that 20 to 30% of every sales dollar is consumed by non-value-adding activities or fixing mistakes. One can only envision the potential for applying the lean mentality in areas as diverse as bid responses, order management, billing and accounts receivable. The important point at this juncture is to adopt the lean mentality. Without it, analysis and applications in the areas of manpower, machine and methodology will never reach their full potential.
MUDA AND MAJOR LEAGUE BASEBALL
Ask Major League Baseball players Hideki Matsui and Ichiro Suzuki the meaning of the Japanese word "muda" and they will tell you it means "waste." Ask Major League Baseball Commissioner Bud Selig the meaning of the word and he will tell you it translates into lower attendance, smaller television audiences and big chunks of lost revenue.
Disciples of lean manufacturing know that the primary goal of any process improvement is to eliminate waste from all activities, including cycle times. Major League Baseball has discovered that its audiences are dwindling in part due to the length of the games and the minutes wasted during a cycle time of nine innings. Pitching changes, between-inning warm-ups and just plain stalling have all contributed to games going into the late hours of an evening. As such, fans are less likely to attend or watch entire games on television.
Major League Baseball is a business that has taken the time to bring operational definition to its critical-to-quality characteristic of game length. From an all-time slow in 2000 of three hours per game in the American League, the figure has improved each year. Major League Baseball set a goal in 2003 of 2 hours and 46 minutes, and as cycle times come down, many more fans will come back.
Manpower
The original intent of lean manufacturing with regard to manpower was to develop individuals with multiple skill sets. Employees who could multi-task would eliminate the need for so many people on the production floor. It is for this reason that manufacturing personnel have been trained not only in machine operation but also in basic problem solving, changeovers and machine maintenance. With newly acquired skills, employees can join multi-discipline work teams to pursue the continuous improvement initiatives so important to productivity.
Lean thinkers are convinced that the greatest amount of knowledge about a job, function or process lies closest to where the action takes place. The ability to harness the knowledge that production employees possess is integral to the lean thinking process. More implicit in this activity, however, is the need for employees to want to share their knowledge. The transformation of employees from corporate subjects to proactive citizens is perhaps the greatest challenge for lean thinking (or any other management discipline, for that matter). When employees believe that the company is truly interested in their opinions, ideas and general welfare, that transformation can begin.
The idea of the "commercial contract" presented in the Introduction to this book has strong ties to this component of lean management. However, in order for any contract to work, there must be an element of quid pro quo between the contracting parties. If employees are expected to make the extra effort and not just do the minimum required, there has to be reciprocity on the part of management. The early Japanese practitioners of lean manufacturing offered workers employment for life and advancement based on seniority. Cleary untenable in the new millennium, management and labor must work together to find new ways to create mutual interest in the well-being of the organization.
As also mentioned in the Introduction, training and education are integral to the development of proactive and concerned employees. Beginning with an education on the philosophy, value system and strategy of the organization, employees can begin the journey to a different professional lifestyle. The lean approach certainly emphasizes long-term investments in employee development, but also takes the concept a step further.
The lean mentality involves training for employees outside their field of expertise, often asking new, non-production employees to spend their first weeks in manufacturing. This mentality also extends beyond the walls of the company in the form of sponsoring employee exchange programs between suppliers and customers. In the global arena, it is now common to see promising young executives spend time in operations overseas, gaining invaluable experience in market tastes, cultures, business practices and languages.
Just as the lean mentality can extend beyond the manufacturing floor, so can the specific practices associated with the application of manpower. Quality circles, for example, can be developed in an office environment and include functions like purchasing, human resources, information technology or sales. Office staff who are oftentimes far removed from the "front line" should have frequent opportunities to visit plant sites, suppliers or even customers.
There is perhaps no more fertile ground for cross-training than the administrative or functional areas of a company. Cross-training not only shifts an employee's frame of reference from a functional to a process-based orientation but also contributes to productivity. If people are trained to do more than one job, they are intellectually stimulated, have greater self-esteem and are more valuable to the organization. A multi-functional background also makes it easier for employees to move about the company, gain more experience and make more money.
The application of these elements of lean management to all aspects of an enterprise can create a virtuous circle where continuous improvement becomes second nature. Whether in manufacturing, logistics or some far-removed back-office function, the harnessing of manpower to eliminate waste is a prerequisite for success in global markets. Without it, the sheer scope of international operations will create an organization with too many people engaged in activities that bring no value to the customer experience.
Machinery
It could be said that the entire lean movement began with the need to better utilize machinery. For the Japanese, this was born more of necessity than anything else. Right after World War II, Japanese companies had very little funds to invest in mass production technology. They needed equipment that was multi-purpose and that could be utilized in small production runs. It was this reality that compelled Japanese engineers to design innovative ways to change over machines quickly, as well as use the same machines for multiple production purposes.
Quick changeovers and multi-purpose machines allowed engineers to use less space and better utilize the scarce assets they possessed. Also, the combination of operator problem solving and small production runs caused any defects to show up almost immediately, instead of at the end of the production run. Early defect detection practically eliminated the need for rework areas, thus saving space due to the versatility of the machines employed. This effect was probably the first step in the virtuous circle of lean manufacturing, promoting and perpetuating the benefits of lean thinking through the entire manufacturing process.
By now, it should be clear that the lean mentality can be applied to any facet of a business. But if machinery is only found in the factory, how can the principles of lean thinking for plant and equipment be used in an office environment? While this may seem like a perplexing question at first, some examples will illustrate its transcendental effectiveness.
There are certainly no production machines in an office, but there are plenty of desktop computers, fax machines, scanners, printers and telephones. Any lean-inspired factory layout is designed to minimize the amount of walk time for employees. The same can be done in an office by organizing copiers, faxes, etc. to allow quick and easy access. Three people waiting in line to send a fax is no less wasteful than a bottleneck on a production line.
Too many people sharing a network printer is but another example of waste and lost productivity. Perhaps the greatest of offenders is an overloaded system, which can cause wait times between screen changes that add up to hours of lost time every day. Most people can recall an instance when they waited far too long at their laptop for a critical e-mail attachment to finally download.
If you are still not convinced about the application of lean principles to office equipment, think for a moment about the nature of the latest innovations in this area. The Japanese have led the charge in eliminating discrete copiers, scanners and fax machines. Cutting-edge equipment incorporates all features into one unit, eliminating not only walk time between pieces of equipment but the machines themselves. Also, because the units are integrated and increasingly smaller, they take up less office space. It is clear that the need for space can easily be cut down in a well-designed office layout. It is no coincidence that the Japanese brought this innovation to world markets based on the principles of lean product design.
Methodology
It is relatively easy to articulate the principles of a business discipline when it is broken down by mentality, manpower and machinery. Things become a bit dicier, however, when it comes to describing the specific methods used to achieve better productivity and profitability. The history of lean manufacturing abounds with examples of how work teams, multi-purpose machines and small lot sizes achieve monumental gains in product variety, quality and reliability. In a world characterized by globalization and outsourcing, it is best to shift the conversation on methodology to the two most pressing aspects of the lean school: inventory management and supplier relationship management.
[1]James P. Womack and Daniel T. Jones, Lean Thinking, Simon & Schuster, 1996.
