Comparing lean and mass production strategies

The term “lean” has been coined by Wormack and Jones to chacterise the production method of the Japanese car manufacturers in contrast to traditional mass production. Since Toyota production Engineer Ohno published his work on the Toyota Production System (TPS), manufacturing firms the world over have been working on implementing lean principles. They are however fewer examples of lean in service environments however Linker (2004, p 269) quoting the Chairman of Toyota states that “applying TPS outside the shop floor can be done but this takes some creativity”. To some extent lean has replaced the traditional mass production-line approach and lean recognises techniques such as six sigma, TQM, ISO 9000 and others as part of its toolbox of flexible concepts. The lean principle of flow is defined as the “progressive achievement of tasks along the value stream so that a product proceeds from design to launch, order to delivery and raw materials into the hands of the customer with no stoppages, scrap or backflows” Wormack and Jones (p.306)

Chapter 1 The rationale, evolution, and future of Lean Manufacturing. Critically discuss the differences, using examples, between the Lean and Mass (Traditional) Production strategies.

Lean manufacturing aims to increase profits by reducing costs through complete investigation and elimination of waste in the production process. Womack et al. (2003) states that the lean enterprise is more than a production philosophy it includes also product/process design, and the whole value chain of a firm. They have tried to set up the key principles for lean enterprise and point out that lean thinking can be summarized into five principles namely: specified value; the value stream; flow; pull and perfection.

The history and development of lean production however goes back to early management pioneers such as Eli Whitney and his manufacturing concept of interchangeable parts in 1799. Whitney had signed a contract to supply muskets to the U.S. Amy and claimed that he would make every part interchangeable. This revolutionary promise back at that time marked the early start of mass production. The next major step in the development of manufacturing history came from Frederick Taylor in the 1890’s. Taylor purported scientific management with a theory that suggested that the most efficient manufacturing concept was one that studied the individual workers’ work methods to find the optimum way of manufacturing. Following Taylor, Frank and Lillian Gilbreth developed process charts and motion picture techniques to record and analyze work methods. They recommended such innovative tools as improved working condition including rest periods and fostering positive attributes to boost morale and productivity Karwatka (2006). The next major development came from Ford who invented the conveyor belt system and introduced the first assembly line for the production the Model T automobiles with only one model and one colour. This paradigm was the result of worry over falling sales which forced Toyota to terminate a large part of its work force Womack (2007). In their drive to discover ways for improving production Ford believed that they have to eliminate all waste in the manufacturing process. In the USA there was waste of manpower, material, space and time, Dahlgaard (2006). Reducing setups to minutes and seconds allowed small batches and an almost continuous flow which became the original Ford concept, the birth of the Toyota Production System (TPS) and ultimately lean production Arnheiter, Maleyeff (2005). More recently, agile manufacturing appears to have followed lean in the evolution of production techniques. It is a concept that aims to make organizations more flexible by satisfying customer needs. Agile manufacturing does includes “leanness” because it suggests spare capacity in order to be able to meet changing customers’ demands. This type of flexibility is however more financially risky.

Together Ohno (1988) and Sinigo (1985) developed the TPS manufacturing system. TPS is build on the philosophy that all waste is unnecessary and should be eliminated The theories behind Toyota production are present as a house. It is represented in this way because a house is a system and only as strong as the weakest part of the system. With a weak foundation or

a weak pillar, the house is not stable even if of other parts are very strong. The parts work together to create the whole, Morgan & Liker (2006).The TPS house has become a culture icon in the manufacturing world today.

Ohno (1998) describe that the TPS model means eliminating waste and has identified seven major non-value-adding activities in manufacturing processes: overproduction; waiting; transportation or conveyance; over processing or incorrect processing; excess inventory; unnecessary movement and defects.

In the book “The machine that changed the world” Womack, et al (2007) introduced for the first time the term “Lean”. Lean production is “Lean” because it uses less than mass production – half the human effort, half the manufacturing space, half the investment in tools, and half the engineering hours to development a new product in the half time. The best way to describe this innovative production system is to contrast it with other production techniques. Craft production uses highly skilled workers and simple but flexible tools to make products to meet customers’ expectations whereas mass producers use narrowly skilled professionals to design products on expensive, single-purpose machines. Lean producers on the other hand combines the advantages of craft and mass production, while avoiding the high costs. It employs teams of cross trained workers at all level of the organization and uses highly flexible, increasingly automated machines to produces volumes of products. The food industry is often typical of lean organizations as they seeks to reduce waste and cut costs while the more recent agile manufacturing seeks to satisfy customers even if this means higher costs. This mean that lean is in fact different from the other concepts and initiative to implement all of these business processes will also have to be different. They differ in philosophy/vision, strategy and manufacturing culture. In lean organizations the goal is to be more efficient by eliminating waste and producing higher quality products in less time with flatter structures, that encourages participation and communication from staff. Mass manufacturing organizations however tend to have taller structures which can cause alienation between organizational levels.

Although the concept of lean manufacturing is quite effective in a range of industries in some organizations that are not typical manufacturing it is sometimes impractical. In organization with a strong management and control ideology such as the army, the food and clothing industries it works quite well, perhaps because of its standardization and scientific management roots.

Chapter 2 The organisational, operational and human barriers that may need to be overcome in order to ensure a successful implementation of the Lean Manufacturing strategy.

There are so many benefits to be gained from going lean; however there are also barriers to its successful implementation. Quite clearly, there are problems in practice which are not explored by the theory. A major barrier is certainly the personnel resources in an organization. If employees are not committed to the lean principles then firms can struggle to implement lean initiatives. Employees and management need to be committed to the lean philosophy and strategy in order to have successful implementation. The lean process is likely to fail if the lean initiatives are not supported, as staff seek to pursue other individual agendas. This can cause resistance. The lean initiatives should permeate all the activities and roles within the organisation as partial implementation will not lead to success but rather create weak links in the structure. The philosophy of the lean paradigm needs to be holistically embraced to get commitment and ensure success. The process represents major change and hence must be planned for, involve training and have change agents ready to manage unexpected problems. This is transformational change and the lack of trust and insecurity can inhibit the process as individuals develop their own defence mechanism for coping. The lean organization will need to foster whose mental models that are incompatible lean philosophy, which, in practice can be challenging. Since lean is based on continuous improvement then there must be a learning environment where mistakes can be learnt and shared to prevent them from recurring.

Although companies of Porsche and Toyota have often boasted of their success in lean processes, it is clear that if lean is not integrated into the total management system it is likely to fail. Further these improvements can actually worsen the organization’s business performance leading to low morale, commitment problems and this can trigger the opposite of what lean is meant to achieve. Moreover since lean is about cutting costs and wastage then this often entails laying off staff and Porsche found that during this time it was difficult to motivate people of improve productivity.

Flinchbaugh (2010) states that “lean is a journey that never ends. There is a tendency for companies to declare “We’ve done it. We’ve achieved lean.” The truth is, lean is a constant, never-ending process. Consider Toyota — no matter how much better they are than their competition, they continue to find more and more opportunities to improve each and every year. Nevertheless in 2010 there was evidence that the lean principles were not applied properly and leading to safety issues which resulted in the recall of several vehicles. The problems appear to have been in company’s engineering department and forces firms to remember that lean does not necessarily mean cutting cost but rather eliminating waste.

“Many dimensions must work together and in alignment for problem-solving to be successful. Most problem-solving efforts focus on one dimension or the other. Most company-driven problem-solving initiatives focus just on the tools. We roll out another tool, from Six Sigma to 5 Whys to A3s to 8D, each time expecting a different result. But, more likely, if the tool is not delivering the intended results, it is not the fault of the tool. It’s more likely that the thinking and behaviors are not in alignment, or the systems aren’t capable.” Flinchbaugh (2010)

3. From a company of your choice, investigate the challenges, issues and problems that it faces in terms of the quality of its process, product or service. Critically discuss what quality improvement philosophy, methodology or tool (e.g. ISO 9000, TQM, Six Sigma, SPC, etc.) may help it to overcome it and explain why. In addition, comment on how it would help it to enhance its quality strategy and market position in the long term.

Stoneferry is a leading manufacturer and supplier of building materials in Yorkshire. It is strongly committed to energy efficiency and environmental sustainability. Their strategy involves developing IS393 certified energy-management systems to drive energy efficiency. They wish to become certified to the standard in their three quarries by the end of 2011. Preliminary data analysis suggested a variability in the amount of energy required to process batches and which could vary by up to +/-10%. This indicated that the process is not in ‘statistical control’. A problemsolving technique was required to reduce the rejection rate of aggregate materials, as this was the most evident issue in the process and it had a direct influence on energy usage. Energy performance indicators (EPIs) are used by Stoneferry to

demonstrate continuous improvement of the energy performance of the plant. Six Sigma could not be used as the timeframe did not allow it.

Stoneferry can investigate an opportunity to perform Deming’s plan, do check and act (PDCA). Tague (2004: 390) suggests that PDCA “is a four-step model for carrying out change. Just as a circle has no end, the PDCA cycle should be repeated again and again for continuous improvement”. In planning (Tague: op cit: 392) states we must recognize an opportunity and plan a change. Doing she adds will test the change by perhaps carrying out a small-scale study. The checking phase will review the test, analyze the results and identify what is learnt. Finally, take action. Did it work? What lessons have been learnt? How can this be used to plan new improvements. If it did not work then go through the cycle again. PDCA is a continuous-improvement technique that could allow Stoneferry to measure and analyse to determine the main contributor(s) to a problem and its root cause. The problem could be faulty equipment, contamination, leaks, etc. An action plan is then implemented to correct the problem, while verification and standardisation steps are set up to check if the change is successful. Data-analysis tools help to highlight the energy invested in each of the product ending up in the reject bin, Quality has a direct bearing on their energy usage per tonne of production. Quality techniques such as TQM could also be used. An energy-performance-indicator league table may be used to compare how other plants in the Stoneferry are performing. Plants with less favourable ratings should be monitored and their percentage rejects measure to make energy-performance improvements. The company’s IS393 certification should play a vital role in ensuring that the improved energy performance of the plants is maintained into the future. The implementation of best practice can lead towards sustainability. The focus of improvement programmes can be expanded to include and embrace sustainability themes. The tools and techniques of Lean can also be used with other techniques to allow Stoneferry improve performance by focusing on techniques that extending the prominence on waste elimination to more efficient energy management and the involvement of employees in improvements.

4. Over recent years, a number of key approaches have become very significant to organisations as an alternative to manage and improve their operations and products. Four of these approaches are:

continuous imporvement methods such as

Kaizen

Wang (2011, p7) suggests that kaizen events create one pillar in lean manufacturing. This creates the ground for every employee in an organization to participate in the process of decision making. It requires a flatter structure as upward communication channel are need for participation and decision making. This fosters commitment. From real life examples, kaizen appears to works on small and continuous improvements as it is easy to implement and creates less or no resistance. Perhaps as the changes are small, and causes less upheaval so there is more likely to be support for it. This type of continuous improvement process ensures that systems and processes are up to date continuously rather than transformationally as the firm competes in its products and markets. Kaizen emphasises the human resource rather than capital investments and must be managed carefully to ensure trust and commitment from staff.

Just-in-Time

Just-in-time manufacturing means producing the necessary items in necessary quantities at the necessary time. It is a philosophy of continuous improvement in which non-value-adding activities (or wastes) are identified and removed. Many companies today will not be able to survive without it, particular supermarkets and other manufacturing concerns. In this sense JIT is similar to Kaizen however it focuses on inventory management whereas Kaizen can be organization wide but on a small scale.

This systems is a new way of thinking process from conventional production processes. As materials are delivered as and when they are ready. JIT benefits organizations from reduced operating costs, better quality, increased flexibility and greater performance. By streamlining the chain’s warehouses Tesco was able to exposed the lateness of their suppliers. They were then able to manage their inventory better to allow them to improve sales and profitability.

Total Quality Management (TQM)

Total Quality Management (TQM) is an approach used companies to achieve organizational excellence. However, the TQM literature suggests mixed success stories across the business world. Reports on the high rate of failure are evident and the very nature of the process makes visible improvements difficult to see. This greatly undermines the concept and some authors like (Shin 1998) state that the high failure rates at a level of 60% to 67% quoted in the literature has made many companies believe that TQM has not delivered according to its promise (Shin, 1998).

Nevertheless, most of the researchers (Black and Porter, 1996; Flynn and Saladin, 2006) agree that TQM is a useful philosophy and if properly planned and implemented properly it could be fully integrated into the business.

Many TQM implementation models and frameworks have been designed and proposed but none of these models explicitly identify these individual sets of variables and the relationships between them in the context of enhancing the success rate of TQM implementation.

Six Sigma

“over the last 15 years or so, Six Sigma has been increasingly recognized as a powerful approach to achieve business process improvements in both manufacturing and, more recently, service and transactional industries, (Hayler and Nicholas 2007, p. 5)

“Today, Six-Sigma is either a revolution slashing trillions of dollars from Corporate inefficiency, or it is the most maddening management fad yet devised to keep front-line workers too busy collecting data to do their jobs.” (USA Today, 21 July 1998)

Since then six-sigma has created a huge impact however conflicting views are ripe on the concept. At General Electric it has gained a reputation for operational excellence based on six-sigma initiatives. Many are stunned at the success of Six-Sigma in GE which has brough increase in sales and share value. The literature however does show some confusion and unclear boundaries between Six-Sigma and other techniques such as TQM and Lean sigma.

Six-sigma was however invented at Motorola but GE remains the real six-sigma revolution while others such as DuPont and GlaxoSmithKline have also followed.

The Six Sigma standard of 3.4 problems per million opportunities is response to the increasing expectations of customers and the increased complexity of modern products and processes, (Pyzdek 2004, p. 3). The key success factors differentiating Six-Sigma from TQM are its emphasis on statistical science and measurement; a rigorous and structured training deployment plan; and a project-focused approach with a single set of problem solving techniques.

Six-sigma combines the notion of cutting waste and the science of the statistical processes of measurement to achieve excellence in production. Authors like Juran sometimes comment that six-sigma is TQM on steroid, which is difficult to disagree with.

All these methodologies for improvement require commitment from staff and management in order to succeed. They all require a series of steps being followed to the end. Lean does not however appear to fit the TQM-six sigma family. JIT and TQM work together very well. Neither has claimed to be a successor to the other. This is more structured than JIT, but this process analysis is the same, to eliminate the waste in the process.