news

What is lean manufacturing and just in time manufacturing?

by

Lean manufacturing is a production method in business that’s designed to reduce waste and maximise efficiency.

Lean manufacturing was pioneered by Toyota and is also known as just in time manufacturing.

While it helped to revolutionise manufacturing primarily, the methodology can be applied to all kinds of project management.

Businesses in industries from hospitality to computing have all benefited from lean techniques. What can you implement in your business?

Control or cooperate?

by

Pick any lean tool. What do you intend with it? Take Just-in-Time, for example. Do you mean to use it to control the amount of inventory you have in your supply chain or to make sure the different parts of the chain cooperate better with each other?

Take time study at a workstation: with it, do you intend to check that the operator is following the standardized work exactly or do you wish to have a conversation with them about their difficulties with the work and the ideas on how to make the job easier?

Don’t dismiss this question too quickly. Kiichiro Toyoda formulated the concept of Just-in-Time as he set out to realize his belief that “the ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste.” He conceived methodologies and techniques for seeing waste between lines and processes so that people could collaborate in eliminating it.

Similarly, the andon’s stop-and-call at the sight of an abnormality starts with a check of the standard work. This is not meant to control that the person correctly “follows” standards, but to check there is a common understanding of the standard. This is why lean thinks in terms of loss functions and boundary conditions: “OK or not-OK” is not about someone doing something in the right or wrong way, but about ensure there exists a shared understanding of what is normal vs what is abnormal. This fundamental insight turns the hierarchy from a chain of command to a chain of help – and is a true source of cost reduction, as it progressively eliminates defects and rework.

The origins of management theory are often traced back to Frederick Taylor’s “scientific management”, which aimed to replace every rule-of-thumb practice with “scientifically” determined work instructions. Engineers would observe the work, determine the “one best way” and then ensure worker compliance with these work methods. In the 1920s, this subordination of the people who do the work to the people who design it was further reinforced by the managerial adoption of Weber’s theories on bureaucracy: the vertical chains of command-and-control, punish-or-reward, and promote those who dutifully follow instructions and procedures. Subordination theory (you accept to obey instructions, follow procedures, and be punished or rewarded by your manager for pay) developed the twin components of technocracy (experts design the best system, the rest implement) and bureaucracy (executives give instructions in silos, the rest comply and report). This model became completely dominant from the 1970s onwards, prompted by Milton Friedman’s exhortation for business to only focus on making profits and activist funds’ obsession with controlling executive behavior through outsized financial incentives.

However, at that time, the mainstream view of the firm was Chester Barnard’s looser theory of cooperation. In this approach, the main role of the executive is not to ensure subordination, but to coordinate people’s efforts towards achieving a common goal. This means prioritizing the communication system over the formal organization and securing essential services from members according to their own aims and demands. The set-up should balance effectiveness (getting the job done at lowest cost) with efficiency (making sure the unintended consequences of getting the job done would not become overwhelming by ensuring that each participant finds their own personal benefit in participating).

All but forgotten now, Barnard was very influential in management circles in the 1940s. He is seen as the first proponent of a general theory of collective action and a key influence on Fritz Roethlisberger at Harvard and John Dickson of Hawthorne Studies fame. Barnard was also a mentor to Herbert Simon, a key architect of post-war organization theory. Barnard saw organizations as systems of cooperation depending on the willingness of subordinates to accept the authority of their supervisors, according to the meaning and personal benefits they saw in cooperating with the collective effort.

The cooperative approach was dominant throughout the war years and is obvious in the construction of the great post-war multinational concerns, both public and private. In this perspective, it seems self-evident that the interests of each party must be considered by the whole in order to keep people wanting to be involved, not just forced to do so. In the lean field, cooperation for instance is very visible in the Training Within Industry wartime programs of job instructions, job methods and job relations. Supervisors were rapidly trained to run war industry workshop by teaching them how to better collaborate with workers in their charge.

Yet, in the 1960s, at a time of absolute world domination of US businesses, subordination came to the forefront. Peter Drucker was inspired by General Motor’s manage-by-the-numbers approach to formulate his management by objectives theory (still alive and well today in the form of Objectives and Key Results, etc.). Early Boston Consulting Group and Bain consultants would rationalize business lines to focus – scientifically – on the most profitable products exclusively.  Later, activist investors became obsessed with agency theory: how to make sure the CEO would work exclusively for shareholders and not for her own benefit, or that of other stakeholders. The answer to that problem was outsized bonuses for CEOs based on shareholder value.  Power loves subordination – it’s simple and reassuring. The downside is that it leads to poor outcomes overall, as we can see by the steady fall of company performance measured by Return on Assets:

 

READ more HERE

The power of suggestions

by

TPS is the most prominent and visible element of Toyota’s story, but it’s not the only one. There is a relatively hidden – if not invisible – part of the story that is often overlooked and yet contributed so much to the company’s success: harnessing the power of suggestions and taking on ideas from employees. Indeed, suggestion schemes and the work of the creative ideas office is the backbone of any Toyota operation from a team member engagement perspective.

The creative ideas office is constantly capturing ideas, identifying potential solutions to the many minor problems that team members experience every day at the workplace. These ideas and suggestions inform the use of the TPS tools and methods.

The activities of the suggestion system are seldom publicized or talked about as a process in the broader sense of the term. Usually, TPS tends to be the attention grabber. Yet, suggestions systems make up an essential element of team member and people engagement. They are a cultural enabler that takes team members’ direct input on what could be improved and how to make the work “a little bit easier”, as the mantra goes. They highlight improvement opportunities.

Such an approach to harvesting ideas and nurturing suggestions has been used and refined in Japanese plants since the early 1950s. However, it is not unique to Japan. To varying extents, it has also been rolled out at many of Toyota’s offshore sites. The deployment of suggestion schemes has been prevalent across the company since the late 1980s, when Toyota moved into the North American market and started to build a global manufacturing footprint.

Suggestions and creative ideas have contributed to a constant reduction in Toyota’s internal manufacturing costs in prior years. Tens of millions of suggestions and ideas have been captured and synthesized over the decades, ultimately impacting their bottom line. These well-entrenched method for collecting and assessing suggestions goes through a rigorous screening process: team members always present ideas to their managers to ensure they thoroughly understand them and can explain the benefit they would lead to.

Ultimately, the entire process is directly overseen and led by the most senior company officials. Why is that? You have to consider the scale and the scope to take the creative idea or suggestion and then have the authority, power, and oversight to imagine the benefit of implementing it everywhere. As a senior executive at Toyota leading this process, you can make these changes happen everywhere if you can prove they would result in a robust improvement with a multi-site impact. No matter how small the improvement, you can get considerable gains if you apply it across sites.

Toyota widely acknowledges that if you want to successfully run a business as CEO or President, you need to have led or overseen the suggestion/creative ideas office in Japan to qualify for a shot at the big chair. This means that such a process is seen as a solemn part of servant leadership development for corporate executives.

Has your business and lean approach got a grassroots suggestion scheme in operation that looks at creative ideas like Toyota does? How are you directly connecting with your employees to grasp concepts and nurture the generation of suggestions from within the operations? Are you using a process or system that is accessible and open to all employees? Are you continuously harnessing these ideas from all your employees in a forum where you can grasp powerful or great concepts?

Maybe it’s time to rethink your strategy and make a change, perhaps re-aligning and reigniting your business’ interest in tapping into this pool of potential wealth.