Lean Production in a Changing Competitive World - Japanese Perspective - Article Example

Operation Management In their article, ‘Lean production in a changing competitive world: a Japanese perspective’, Hiroshi Katayama and David Bennett describe lean production concept and the trend taking place in Japanese manufacturing. This trend has been towards a cycle which comprises of cost reduction, proliferation of new products, price competition, increased break even points, higher fixed costs, and lower profits. However, this cycle has been broken by Japan’s recent recession. Internal and external environment factors have influenced the lean production viability within the competitive climate of Japan, causing the need to have a new approach to production systems design where changes in demand are treated sensitively by costs. Lean production is a Japanese management approach focusing on eliminating waste while maintaining quality, applied to all business aspects; design, production and distribution. It aims at cutting costs, creating efficiency in the business and responding quickly to the market needs. Any activity that does not add value to the production process is cut out including repairing faulty products, holding stock, unnecessary movement of product and people around the plant. Just in time production (JIT), quality circles, cell production, and Kaizen (continuous improvement) are among the most important aspects of lean production. Katayama and Bennett examine the lean production’s role and significance within the context of Japan’s current economic and industrial environment. They explore the pressure companies in Japan are undergoing and the response they demand to the new emerging conditions brought about as a result of continuously changing industrial, competitive and economic situation. The researchers provide empirical evidence of recent experiences of four manufacturing plants in Japan; a final assembly plant of a major automobile manufacturer, electronics plant of a telecommunications equipment company, plant manufacturing refrigerators and plant making domestic air conditioners. These case studies demonstrate that concepts developed in the 1980s can no longer be relied on by Japanese companies, and the opportunity of having large production volumes at home is affected by overseas operations of these companies. The researchers acknowledge the superiority of lean production through its elements including fewer resource inputs required by the manufacturing system (shorter production operations, less set-up time, fewer parts and less material), and higher output performance (greater product variety, higher technical specifications and better quality). This is expected to result into greater customer satisfaction, thus leading to gaining larger market share than the competitors. However, the rising concern in Japan is the ability of lean production to help companies cope with future market and economic conditions, to meet their competitive companies; increase market share, increased revenues, increase rate of new product development, and cost reduction. According to Katayama and Bennett, these objectives cannot be achieved because of the economic factors (levelling of disposable incomes, increase in interest rates and the increasing value of the yen). This proves the point in that interest rate and increasing value of the yen leads to increase in prices of materials, which in turn makes the end product prices to be high. The demand for these products then decreases. External environment and internal production environment factors also affect the application of lean production system in Japanese manufacturing. One of the external environment factors is the increase in traffic caused by small and more frequent deliveries of materials to factories. This causes urban congestion and long queues of delivery vehicles on the main high ways. This environmental factor is not a convincing evidence that lean production system can no longer work in Japan manufacturing. The government of Japan should think of building more highways to deal with long queues and congestion. It does not necessarily mean that those queuing up are doing small deliveries. The public’s reaction to introduction of new products in the market at an increasing rate is also an external environment factor. Customers feel like there are many products to choose from which become obsolete as soon as they are introduced in the market. This reason too is not satisfying as lean production system relies on the customer’s interest and order and delivers exactly what is needed. Lean production does not invent anything outside from the needs of the customer. The sentiments of customers towards ever increasing products in the market have nothing to do with the influence of lean production. Setting-up of Japanese-owned factories abroad is another external environment factor that Katayama and Bennett claim influences lean production, in that it becomes cheaper to manufacture products abroad and import them rather than manufacturer domestically. This causes decrease in demand on domestic factories. Still this has no relation with lead production system in Japan manufacturing. The concept of lean production itself is separate from wherever the production is done. Whether production is done abroad or domestically lean production system is not affected in any way. Katayama and Bennett present workforce as the main internal environmental factor affecting the application of lean production. The current workforce is aging and the young vibrant, energetic, creative, and easily adapt to new technologies is very low. Due to achieving the longest life expectance in the world, Japan comprises of a very large number of older employees who are not versatile, less productive and need high annual wage. This factor affects the application of lean production directly. Without energetic, creatively and productive workforce the movement of materials from the supplier to the factory, the production process and the distribution of finished products to the customers, and the responding to the market needs will be slow. This will lead to faulty products, holding stock, unproductive people moving unnecessarily around the factory, resulting to unhappy customers and increase in costs. Besides the ageing population, the researchers assert that the nature of work itself is proving to be unpleasant for young workers, due to long working hours and exhaustion. For lean production to work young and energetic workforce need to be present. Therefore, Japan manufacturing need to shorten the working hours and create shifts with an attractive pay in order to attract quality workforce. As a solution to the discussed problems adaptable production system seems viable. With this production system, companies remain profitable with changes in demand, adjustment of production rate will be done to accommodate changes in demand resulting to lower fixed costs and higher variable costs. The adaptable production system software is flexible to future changes in quantities, variances and products. In case of new product development ignited by fewer changes, there will be fewer replacements of equipment leading to lower fixed costs. Adaptable production system uses human operators forcing easy adaptability rather than expensive flexible machines. To shorten set-up times and reduced work-in process variety grouping of parts and products into families is possible. The adaptable production system proves to be worthwhile to the changing competitive world. Its features are attractive to any manufacturing companies that need to maintain lower costs and increase revenue and profits. Lean production system is a common concept in many manufacturing companies in Japan. However, regardless of its highly praised benefits that Japan has enjoyed for many years, there is need for a new system like adaptable production system which will enable Japan manufacturing to adapt to the changing competitive environment, in order to increase revenue and profits. The world is changing and the manufacturing company that works smart and quickly adapts to the constantly changing environment will gain competitive advantage. Reference Katayama, H., & Bennett, D. (1996). Lean production in a changing competitive world: a Japanese perspective. International Journal of Operations & Production Management, Vol. 16 Iss: 2, pp.8 – 23 Read More