On Lean Thinking: Strategic Value and Challenges - Case Study Example

On Lean Thinking: Strategic Value and Challenges Introduction In order to increase the competency and living standards of the coming generations, one key that people should look at is improving the performance not only of private offices and service processes providers, but most importantly the public ones. One of the most successful approaches in dealing with the industrialization of such offices and providers is lean thinking which was pioneered by Toyota. Many industries have already started this journey. Most significantly, it is at these failing economic times that it is more proper for organizations to be more attentive with cutting costs and boosting the bottom line (Womack & Jones, 1998). The concept of leanness has captured the imagination of many in different fields of activity and this also includes those that are in the public sector. In service-oriented industries such as the call center services, lean thinking was successfully applied to improve live agent call handling. Through merging Agent-assisted Voice solutions to the principles of lean waste reduction and its practice, a company trimmed down handle time; decreased between agent variability; decreased accent barriers; and attained near perfect process adherence (Womack & Jones, 1998). In the manufacturing industry, the greatest benefit of lean thinking is in the elimination of waste from the many process manufacturers which are relying to anticipate, respond to, fulfill and serve the demands of their costumers which will make them even more aligned and responsive to the unmet needs of the clients in the process (Hirano & Furuya 2002). In a study conducted in 2006 on behalf of English Executive by Cambridge University, it was found out that Lean methods can be successfully applied to the public sector, but then most of the results had been achieved using a much more restricted domain of techniques than Lean provides. But in general, it was concluded that it can be applied to the public sector (Womack & Jones, 1998). In general, one of the challenges in moving Lean to services is the lack of widely available references on its implementation to make individuals recognize how it will work and its impact. This is one of the difficulties since strength of belief is necessary for strong implementation. Another is that the concept of leanness lack publicity. The techniques and tools used are not yet extended into a service context in the publicity area which should have helped those who are taking it into consideration or those who are already planning to start the implementation of the change (Womack & Jones, 1998). Origin of Lean Thinking Economic chaos, nationalism, World War II, and strong attachment to craft production prevented European automakers from widely adopting mass production until the 1950s. When the Europeans did adopt mass production techniques, low wage costs and innovative features gave them a burst of success in world markets. The success was dampened, however, during the 1970s, by which time wages had increased and work hours have decreased to the point where European cars where no longer competitive in the global market. In 1973, the Oil Embargo hit; gasoline prices worldwide soared. Even though the typical US car was a gas-guzzler and the average European car was smaller and more fuel-efficient, the latter was also at a higher price and posed no real comptettetive challenge to US automakers. Elsewhere, however, the real challenge was forming, though it was totally unperceived. It was in Japan (Colombus, 2005). The Toyoda family had been in the textile business since the 1800s. It begun producing cars in 1935, but they were crude and poorly made. In 1950 young Eji Toyoda visited the Ford River Rouge plant to learn the methods of mass production. The Rouge plant seemed to him a miracle of modern manufacturing. Almost everything that went into an automobile-parts, components, and assemblies-were processes in that one monstrous plant. In one end went raw materials like iron ore and out the other end rolled cars, 7000 a day. Toyoda wanted to learn how the Americans did that. At that time, the Toyoda Motor Company over its entire history had produced fewer than 2700 cars (Hirano & Furuya, 2002). After months of studying the plant, however, Toyoda concluded that Ford’s production system was unworkable in Japan. Since Japan had few auto manufacturers at that time, Toyoda wanted to make a variety of cars in just one plant. Because of strong Japanese company unions, he knew he could not readily hire and fire workers as was common in American firms. Moreover, because of the short supply of capital, he could not invest heavily in modern equipment and technology. Another consideration was the short supply of capital, from which he realized could constrain him not to invest heavily in modern equipment and technology (Hirano & Furuya, 2002). Returning home, he called on his production engineer Taiichi Ohno, to help him develop a workable system. Ohno was no stranger to the ways of mass production, but he had no allegiance to them either. Because of the constraints, Ohno designed a system that would be less wasteful, more efficient, less costly and more flexible than traditional mass production. The system he and Toyoda developed, called Toyota production system, is the prototype of the lean concept of production system. Though developed for automobile production, the ideas behind the system have since been applied in all kinds of industries (Hirano & Furuya, 2002). Elements of Lean Production In a typical manufacturing plant it is easy to find wastes such as defects, transportation, inventory, overproduction, waiting time, processing and motion by just walking around. It is also relatively easy to identify these wastes by observing many of the contributors or sources of these wastes by observing management directives, shop-floor practices, and working conditions (Colombus, 2005). Some of the sources of these wastes are large lot production, inefficient setup procedures and long changeover times, poor operating performance and breakdown of equipment, poor layout of equipment for the processes required, inefficient procedures and lack of performance standards and poor shop-floor coordination and control (Colombus, 2005). Some of the sources of waste are outdated or incorrect notions about relationships between production costs, quality, efficiency, and demand. For example, when changeovers are costly and time-consuming, large-hot production is favored as a way to keep some costs down, in spite of the fact that large lot sizes contribute to overproduction and large inventories, which keep other costs up (Colombus, 2005). Yet still, some of the some wastes are the result of neglect. Consider the following instances: process and equipment changeovers and set ups take a long time because no one tries to find ways to do them better and faster; machines run poorly and are unreliable because no one attends to them until they are barely running or break down completely; processes consist of wasteful steps and inefficient procedures, or provides standards to which the operations should conform; materials on the shop floor have to be moved long distances and then wait for long times between operations because equipment is poorly situated for the process; and no one rearranges the equipment to make it better (Levinson & Rerick, 2002). Sometimes, wastes are caused by neglect, errors in judgment, or outdated notions; but simply by the inadequacy of the system of production, planning and control in meeting the requirements of the production process and customer demand (Levinson & Rerick, 2002). To the extent that all of these waste contributors are somewhat interlinked, eliminating waste and improving processes in manufacturing requires that all of them be addressed. For example, one ought to start with the premise that small-scale production is generally preferable to large-scale production. If, then, one decides to reduce the size of production batches, someone probably first have to reduce the time and effort of production changeovers, possibly dramatically. To be able to economically process those many small batches (as opposed to a few large ones) through multiple operations, one probably also have to rearrange factory facilities so operations are closer together (Levinson & Rerick, 2002) . Challenges to Becoming Lean and Suggested Solutions Everyday, organizations, not even the public ones are exempted, face challenges to becoming lean. More often than not, the center of attention of these lean activities is not extended to management practice where simplicity is sometimes ignored. The mobility of management is one of the biggest barriers in government and public offices management improvement. The excessive mobility of management is what makes improvement in these areas difficult. For one, this is owed to the fact that exceptional managers frequently move up the ladder or move out before the changes that they have started take a firm hold (Hirano & Furuya 2002). If one looks at the lean initiatives in the public sector, it is more than sensible to separate political from operational efforts. Ideally, these political decisions which will greatly affect the management of this sector should be advised by management technocrats. But in reality, political decisions have only very little space for non political advice (Hirano & Furuya 2002). Within these areas, a framework for the elimination of wastes is indeed a great yet difficult goal. Even the most basic question on how savings from elimination of waste should be used and what is the approach to be used are again political questions (Hirano & Furuya 2002). In Toyota, which innovated lean thinking, there is a common saying which says komaranakereba chie ga denai which means one will not use his brain unless he has problems. So the premise is that when times are bad, one makes better decisions. The challenge is for organizations who want to follow the path to leanness is how to create a sense of tough times when times are good (Miller, 2007). How will tough times be used to focus the cognition of people concerned to make better decisions and improvements? How will they free the concerned individuals from distractions when they are making a company be in the position of a so-called “good times”? Tough times have the tendency to help a corporation focus on the central issues involved in making a decision. During such times, one does not have the luxury of just slacking when problems arise. The problem is, when times are good, there is a tendency for that organization or the members thereof to be complacent. There is a probability that they may just let things go and be contented to what is there. There is the level of uncertainty regarding having to change if one is doing okay (Miller, 2007). So the best approach, as laid down by Toyota, is to be never satisfied and to always seek improvement. Complacency should not be an option and that one should not take the easy way out just because one can afford to. In order to address this, corporations should continually examine and improve the processes. Documenting decision making and evaluating these overtime and in the process, finding the systematic weaknesses will substantially reduce the barriers to becoming lean (Miller 2007). The concept of lean manufacturing which introduced lean thinking to all most all kinds of corporation be it public or private is an overall approach which sought to minimize the inputs required for production through eliminating wastes or non-value added activities which expands costs, lead times and inventory requirements and highlights the use of preventive maintenance, quality improvement programs, pull systems and flexible forces and production facilities (Levinson & Rerick 2002). One cannot deny the fact that lean manufacturing holds the potential to substantially reduce costs but like other management approaches, it is not exempted to challenges. The nature of the lean process is based on a scrupulous coordination between all of an organization’s activities and functions. Therefore, it can be said that the implementation of such may be very difficult and time-consuming. In order to solve this, a software provider can offer a comprehensive lean manufacturing solution with lean expertise and experience which can lessen the complexities associated with the implementation of lean practices (Rother & Shook, 2003). In the process of becoming lean, the challenge of a synchronized approach of the process which causes the waste mentioned earlier. In a study, it was noted that some of the problems to change in how manufacturing is perceived; not as costs but as a means of better serving customers (Rother & Shook, 2003). The road to leanness was never said to be an easy one. Implementing major changes to business and public services culture and process is always risky. One way to lessen the risk is by equipping the organization with the necessary tools such as proper knowledge and training of lean manufacturing, which will increase the probability to success (Rother & Shook 2003). Conclusion This paper will close by stating that the value of ‘leanness’ has not been over stated, but the importance of its rigorous implementation may in fact often be underestimated. It was shown that lean manufacturing/production can offer a great deal of savings across the life cycle of a wide range of products and services. In order to produce this savings, however, an entity- be it a corporation (private or public), factory etc. must take on a mindset that the resources of manufacturing variation are the primary target. When symptoms such as high inventories and cycle times are viewed as the target, mush smaller gains, if any, are seen. As with the treatment of a medical patient, actions must be taken that address the root of the problem. When an infection is treated only with aspirin, the primary symptom of pain and fever may be temporary controlled, but the underlying situation may continue to degrade. Only with a more basic intervention can the patient’s long term prognosis improve. References Colombus, L. T. (2005). Best practices in manufacturing. Cincom Manufaturing Business Solutions, 23-34. Retrieved March 20, 2009 from www.cincom.com Guitar, M. (2006). A problem-solving approach: One size does not fit all. Retrieved March 20, 2009 from www.mmsonline.com Hirano, H. & Furuya M. (2006). JIT is flow: Practice and principles of lean manufacturing. PCS Inc. Needham, MA: Allyn and Bacon, pp. 77-84. Levinson, W. & Rerick R. (2002). Lean enterprise: A synergistic approach to minimizing waste. ASQ Quality Press, 667. Miller, J. (2007). When times are tough, do you make better decisions? Transforming Your Value Streams Journal, 4-16. Retrieved March 20, 2009 from Gemba Academy Online Rother, M. and Shook, J. (2003). Learning to see. Journal of European Business, 12, 9-11 Womack, J. and Jones, D. (1998). Lean thinking . Free Press Online, 16. Retrieved March 20, 2009 from www.freepressonline.com Read More