Copyright: 2003
Publisher: Free Press
ISBN: 0-7432-4927-5
This edition of "Lean Thinking" is an update of the 1996 book by these authors. Womack and Jones do an excellent job of capturing the essence of lean business processes, and more importantly, the essence of how to implement lean practices. The book is full of anecdotal evidence of the power of lean thinking and is well organized to present the material to even those readers who may not be familiar with lean concepts. The historical information regarding the evolution of lean thinking is comprehensive and thoughtfully presented.
Muda
One of the key concepts of lean thinking is that of muda. Muda is simply put, waste. Taiichi Ohno was the Toyota executive who was most notorious for his campaign against waste in an organization. He identified seven types of waste that occur in organizations as they seek to produce value for their customers:
- Defects
- Overproduction
- Inventories (in process goods)
- Unnecessary processing
- Unnecessary movement (of people)
- Unnecessary transport (of goods)
- Waiting
Womack and Jones added an 8th:
8. Design of goods and services that do not meet the end users' needs
Using different categories of waste, you can categorize every activity in a firm according to the following items:
- Activities that create value
- Activites that don't create value but are necessary under the current system (Type One muda)
- Activities that don't create value for the customer and are not necessary (Type Two muda)
The obvious first step in leaning out a process is to eliminate the third category immediately and then being changing processes so that the second category can be eliminated. In order to do that however, you must first identify exactly what IS the value you are creating for your consumer.
Value
It is dangerous to assume that what you THINK you are producing is actually creating value for your customer. The authors give the example of a company in the early 90's called Wiremold. They created electrical products for use in construction of factory and other high-use commercial applications. The engineers designed their products to be durable, safe and as inexpensive per unit as possible. Unfortunately there was no regard to the needs of the actual customer... the construction company that was installing the units. When the company began to redefine value they realized that their customers were willing to pay more for a product that was easier to install because the total cost of installation was reduced. This represented value that was not being defined properly by the company.
Value Stream
Once value is defined, you are now ready to map out your value stream. You start by identifying every step that it takes to produce a single product. At every process along the way one of two things happens: value is added or value is not added. If value is not added then it is obviously a wasted process. This would be the case when a case of product sits in a production queue waiting for the next step in processing. That time is wasted time... sitting on a shelf or in a bin on rollers does not add value from the customers perspective. When you add up the total time of work done that adds value and compare that to the total time it takes to produce an item, you get an idea of the level of waste in the system.
Here is where the authors tend to live in the utopian world that a lot of lean authors live in, namely, the world of "everything should always be lean." They use the example of a can of cola and map out it's value stream. On the surface it is a very impressive case study and you get the impression that you really could save a lot of waste by moving to lean production processes. No doubt some of the lean methods would work, but I am unconvinced that lean production is always applicable in the production of commodities. As we will see, the primary benefit of a lean system is the reaction time to customer demands.
Flow
Before jumping to the reaction to customer demands, we first must make our value stream flow. The concept of flow is important in lean production because you don't want batches of inventory lying around waiting for the next step in a process. You want an item to finish one step and immediately be able to go to the next step. Typically you find that the in process waits are at points where machinery needs to be switched from one mode to the next. A press needs a new die in place, a CNC machine needs a new program loaded, a paint booth needs new pigment added and the old paint cleaned out. Typically production is done in batches with a queue of parts waiting their turn at the beginning of the process. What if the machinery could be made to be more easily switched from one mode to the next? Then no matter what part comes down the line, you can always be ready to process it and move it on to the next step.
This concept is crucial to the lean thought process. Many manufacturers today believe that the only way to be more productive is build bigger, better and faster machines. These machines typically do one thing well and they do it very quickly. Unfortunately getting them to do something else is often a painful process so firms quickly fall into batch and queue processes. The authors contend that smaller machines, with easier changeovers can be utilized more fully by workers to produce just what is needed, just when it is needed, the famour "Just In Time" concept.
Again, with regard to highly homogenous products with very large runs of production, I question whether it makes sense to have machines that can quickly change from one produce to the next. In the case of the can of cola mentioned above, does it not make sense for Coke and Pepsi to have large machines that can run continuously cranking out a beverage that doesn't change much from one year to the next? Despite the authors best efforts to convince me otherwise, I am still not sold on lean production for mass produced items.
Pull
Information technology often utilizes the term pull with regard to how information is disseminated. You can either "push" information out (radio and TV) or consumers can "pull" information (the internet). In lean production, the concept is similar only instead of responding with information, you respond with a product. The concept is that the customer initiates the chain of events that results in a product being made. As soon as the customer wants an item, the LAST step in production sends a request up to the next to the last step for the item that it needs. In this way, a single item is only created in response to a customers demand. At each step in the process then, only the items necessary to produce that single piece for the customer is demanded and then run through the step.
Toyota made use of the Kanban cards, which essentially used to signal the next process upstream that you needed a new item of a particular type. That was the signal... the only signal... for a process to begin creating an item. In order to achieve steady flow, you must use a pull system to ensure that no backlogs of product end up at the beginning or end of any given process.
Success Stories
The bulk of this book consists of well told stories of firms that put lean into action. The authors cover a variety of firms that differ in industry, size and nationality. These are worth reading if one wants to see many different aspects of the details of lean thinking in action. While the stories are well told and well documented, they can be somewhat slow reading and could have benefited from some updating. I found it rather curious that a book that was so heavily dependent on anecdotal evidence would be re-published without updating the stories. Reading about the decisions that firms made in the mid-90's dates the book considerably and lends to the feeling of "dreamy eyed wishful thinking" that the authors tend to have at times.
The authors actually have a chapter entitled "Dreaming of Perfection." If this were about perfecting processes or how to implement continuous improvement, the authors might have been forgiven for taking this liberty, however they truly are dreaming about a fundamental change in the structure of modern business. Perhaps it will happen someday but I would not base any long term decisions on the likelihood of that happening!
Management or Economics?
One question that Womack and Jones did not address that needs to be addressed by lean thinkers is whether or not lean thinking is a question of management theory or economic theory. The authors approach it from the standpoint of a management theory and thus are very practical in addressing the problems of businesses. However even a cursory overview of lean is enough to convince someone that it really is an economic theory. It is a different way of viewing micro-economics and how firms interact within themselves and among themselves.
The lingering question for me (the one that I hope will be answered in my further reading of lean books) is whether lean really is applicable in all situations. It would seem that Adam Smith's pin factory still validates specialization and division of labor for simple process products with minimal variety. Mass produced commodities still seem like they could benefit from the batch and queue methods required by huge runs of a particular product. It is in the realm of complex products with wide variety that perhaps lean is best applied. When Henry Ford set about to mass produce a complex machine like the automobile, the critics said it could never be done. Something of that complexity could only be produced by craftsmen if any level of quality were to be achieved. Perhaps the critics were right and that we still need multi-skilled craftsmen to create the wide variety of complex products that modern consumer have become accustomed to purchasing. In light of that, lean production seems to offer a methodology that organizes that craftsmen into production cells that are responsible for their own quality and that produce only at the direct behest of the consumer.
Perhaps production Utopia is more than just a dream after all!