Lean Thinking, Manufacturing, Enterprise

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Background

Lean Thinking was born out of studying the rise of the Toyota Motor Company from a bankrupt Japanese auto maker in the early 1950s to today's dominant global player.

At every stage of its expansion, Toyota remained a puzzle by:

Capturing new markets with products deemed relatively unattractive
Systematically reducing their operating costs, without following the usual established management practices.

When studying the company closely, it appeared that it had:

A unique group of elders, each known as “Sensei”
Coordinators, i.e. Japanese (trainers from) dedicated to help managers think differently.

LEAN

Thinking
Manufacturing
Services
Office
Kaizen
Kanban
Startup
Enterprise
Tools

Contrarily to every other large company, Toyota's training in its formative years was focused on developing people's reasoning abilities rather than pushing them to execute specialist-derived systems.

What is “Lean Thinking”?

The term was coined by James P. Womack and Daniel T. Jones, authors of the best-selling book “The Machine that Changed the

World”.

The intend was to capture the essence of their in-depth study of Toyota Production System” (TPS).

“Lean” is a word used to reflect the Japanese business approach in performing all aspects of business operations:

Using “fewer” people
Spending less time
Putting less effort
Spending less money/ capital
Consuming smaller quantities of parts and materials
Creating less waste
Having fewer accidents.

Lean can be defined as:

Set of techniques to identify and eliminate waste (muda) from day-to-day operations.
System of organization principles to maximize value and eliminate waste.

Examples of Lean waste:

Paying people to stand around waiting for something that is late to arrive
Customers waiting in a queue
Incurring the cost of inventory, i.e. storing something that has not already been sold
Making products no one wants to buy
Adding features to a product that the customer has not asked for
Producing more than the customer has ordered
Being blocked in your programming.

Lean Thinking is a specific way of observing a business task/ activity and identifying the waste inadvertently

generated by the way the process is organized and performed.

It uses the concepts of:

Value
Value stream
Flow
Pull
Perfection (true North).

What is the aim of Lean Thinking?

The aim is to create the Lean Enterprise, that:

Sustains growth by aligning customer satisfaction with employee satisfaction
Offers innovative products or services profitably while minimizing unnecessary overhead-costs to customers, suppliers, and the environment.

The insight of Lean Thinking is that if you train every person to:

Identify wasted time and effort in their own daily job, and
Work together to improve processes by eliminating such waste, then …

... the resulting Lean Enterprise will deliver more value at lower cost, while developing every employee's confidence, competence, and the ability to work with others.

Lean Thinking vs. Lean Manufacturing

The idea of Lean Thinking gained popularity in the business world, and has evolved in two directions:

Lean Thinking
Lean Manufacturing.

Lean Thinking

Lean Thinking is a business management philosophy aiming to provide a new way of thinking about how to organize

human activities to deliver more benefits to society and value to individuals while eliminating the 8 forms of Lean waste (muda).

Lean Thinking converts are seeking to understand how to achieve dynamic gains rather than static efficiencies.

For this group of thinkers, Lean Thinking:

Continuously evolves, as they seek to better understand the possibilities of the "Toyota Way"
Is about practising Kaizen (continuous improvement), the purpose of which is to achieve small incremental improvements, made every day, by everyone, everywhere using Lean tools and techniques
Is a movement of Lean practitioners and writers who experiment and learn across different industries and conditions, to “Lean-think” any new operational activity.

Lean Manufacturing

Modern management philosophy inspired by the Japanese concept of Kaizen, the strategy of

continuous improvement, that aims to eliminate waste in the production system.

It is like getting rid of unnecessary “fat” and waste in the workplace that has no added value to a product.

The goal of Lean Manufacturing is to improve and speed up production by eliminating quantifiable

waste as far as manufacturing/ production is concerned.

Lean Manufacturing adepts have:

Interpreted “Lean” as a form of operational excellence
Turned to company programmes aimed at reducing operating costs associated with core business processes.

The Lean Production approach is the reason why Toyota has been so successful in their chosen

industry for decades.

It is also the reason why manufacturing industries world-wide are adopting the same Japanese production

discipline, to varying scale and style, to achieve the same level of success as Toyota.

Critics of Lean Manufacturing point out that:

1. Lean manufacturing activities:

Are used to improve business processes without challenging the underlying thinking
Although they achieve impressive results with "fruits on the ground" and "low-hanging fruits", an analogy used for identifying and eliminating "easy waste", have little hope of transforming the culture of the enterprise.

2. The “corporate Lean” approach is fundamentally opposed to the ideals of Lean Thinking

However, it has been taken up by a great number of “big” businesses, seeking to cut their operating costs without challenging their fundamental management assumptions.

What is “Lean Enterprise”?

An organisation where everyday, everyone, everywhere practices Lean Kaizen.

The term "Lean Enterprise" refers to a production principle stating that any component that fails to directly

add value/ benefit a final product is superfluous.

The Lean enterprise:

Is a practice focused on value creation for the end customer/ user with waste and processes.
Focuses on value creation and delivery in the form of products and services while waste and non-essential

processes.

The term has historically been associated with Lean Manufacturing and Six Sigma (or Lean Six Sigma) due to:

The Lean principles being popularized by Toyota in the auto mobile manufacturing industry
Lean Thinking and Lean Manufacturing being subsequently popularised in the electronics and internet

software industries

Six Sigma being introduced by Motorola and popularised by General Electric (GE) under the leadership of

CEO Jack Welsh.

The Lean Enterprise aims to:

Eliminate waste.
Build quality in.
Create knowledge.
Defer commitment.
Deliver fast.
Respect people.
Optimize the whole.

Lean Enterprise = Green Enterprise

The importance of Lean Thinking goes beyond improving business profitability.

In their seminal book “Natural Capitalism”, authors Paul Hawken, Amory Lovins and L. Hunter Lovins explicitly reference "Lean Thinking" to achieve profitable and sustained business growth, whilst minimising the impact of operational activities on the environment.

Lean Thinking seeks to eliminate waste in the form of muri (overburdening), mura (unevenness) and muda (unnecessary resource use) is proven practical way to solve complex business problems through continuous improvement and action-taking.

Toyota industrial sites are:

Well-known for their environmental sustainability efforts
Ahead of the "zero landfill" goal, where waste is recycled on-site, without need to send waste to the landfill.