Title: Lean around the World
1Lean around the World
- What better way to stay ahead of the global
competition?
2Lean around the World
- In developed and developing countries around the
world, lean principles have secured beachheads in
local auto industries and are gaining footholds
in other manufacturing industries as well as some
service sectors, but progress varies greatly from
country to country, according to reports from 11
regional affiliates of the Lean Enterprise
Institute (LEI).
3Lean Manufacturing in Brazil
- Toyota introduced lean principles to Brazil in
the late 1950s when it established its first
plant outside Japan near São Paulo. The site was
used by Taiichi Ohno to develop his initial ideas
for setup reduction. Ohno is the Toyota executive
credited as the chief architect of the Toyota
Production System..
Gradually, local auto assemblers and parts
makers introduced lean concepts as isolated tools
along with improvement techniques such as quality
circles and, later, ISO certification. In the
last few years, companies are realizing the tools
must be deployed as part of an integrated lean
business system. However, very few companies have
total lean management systems in place.
4Lean Manufacturing in UK
- During the last three years (2003-2007) in the
UK, lean principles have spread very rapidly
beyond their roots in manufacturing to utilities,
financial services, construction, healthcare,
local and national government, according to
Daniel Jones, founder and chairman of the
UK-based Lean Enterprise Academy.
- In the last decade UK manufacturing underwent
fundamental change. - Jet engine maker Rolls Royce
- Aircraft maker BAE Systems
- Auto parts company GKN
5Lean Manufacturing in UK
- Automakers like Toyota, Nissan, and Honda have
all grown in the UK, as has BMW with its very
successful Mini. Multinationals. - A government initiative called the Regional
Manufacturing Advisory Service is spreading lean
concepts to many smaller manufacturers that are
carving out new niches by producing high variety
products quickly for local markets.
Firms are just beginning to spread lean across
their supply chains and into new product
development. The leaders in doing so have not
come from manufacturing but from firms like the
distribution specialist Unipart and the very
successful retailer Tesco.
6Lean Manufacturing in UK
Tescos lean supply chain
Tesco can provide all the things one needs to run
a household, literally from soup to nuts and
everything in between.
7Lean Manufacturing in Turkey
- The pace of lean implementations in Turkey has
gathered momentum in recent years, after a slow
start in the mid-1990s, according to Yalcin
Ipbuken, president, Lean Institute Turkey. - Turkish companies, led by the large automotive
and textile sectors, began implementing lean
principles to become globally competitive in
quality, delivery, and cost. - Lean efforts are under way in automotive supply
chains. - Local units of Fiat, Ford, Mercedes, Renault,
Goodyear, and Pirelli have active trans formation
efforts.
Turkish managers, engineers, and its young
workforce (50 of the population is under 24
years old) are very enthusiastic to participate
in lean activities and practice kaizen in their
plants.
8Lean Manufacturing in Spain
- Lean implementation in Spain is scarce and
uneven, says Victor Conde, executive director of
the Lean Management Institute in Spain. - It is primarily located around the big automakers
such as Ford, GM, Citroen, Nissan, Renault and
some of their Tier One suppliers such as Denso,
Donnelly, Johnson Controls, Valeo, Visteon, and - signs have been seen that the lean movement is
broadening, led by the fashion industry,
especially global player lnditex and its Zara
retail stores. The way it moves material,
controls stocks, and replenishes stores is based
on lean applications. - Multinational giants GE and Airbus also have
launched lean efforts at their Spanish units. - Small and medium-sized companies led by
entrepreneurs and visionaries have embraced lean.
- Overall, lean awareness in the country is quite
low.
9Lean Manufacturing in Poland
- Industrial Companies across Poland are pursuing
lean transformations, including automotive,
chemical, medical device, and low-volume/high-vari
ety manufacturers, according to Tomasz Koch and
Tomasz Sobczyk at the Lean Enterprise Institute
Poland. - The service industry is starting to show interest
in how lean systems could boost competitiveness,
especially the banking, telecommunication,
financial, and information technology sectors. - The best practices may come from the automotive
industry as some car manufacturers and their
vendors work hard on implementing lean principles.
10Lean Manufacturing in Poland
- Lean concepts are being widely spread through
training, university courses, articles,
professional papers, conferences, and translated
books. - Still, Polish lean thinkers report struggling
with the same obstacles faced by the lean
community globally, including - Lack of management involvement.
- Expectation of quick financial gains,
primarily from reduced labor costs. - Emphasis on implementing tools
instead of a complete lean business system. - Pushing inventory back to suppliers.
- Use of traditional accounting and
performance measurement systems.
11Lean Manufacturing in Germany
- The Lean Management Institute Germany estimates
that just 1015 of all German companies are
pursuing lean - transformations. This is mainly due to a bad
translation of the English word lean a decade
ago that led to a public misunderstanding of lean
methods as targeting headcount reductions and
putting more pressure on employees, says Bodo
Wiegand, institute president.
The misunderstanding is changing as more and more
examples of successful lean transformations are
presented at conferences, in training programs,
and in the German media.
12Lean Manufacturing in Germany
- Manufacturers are applying lean to improve
efficiency, quality, and the stability of
processes, not only in production but in
administration and maintenance. - Service companies are starting to apply lean
concepts, particularly in insurance and facility
management providers. - Some hospitals are taking their first lean steps,
notes Wiegand. -
- A key obstacle to lean transformations in
Germany - The traditional organization of companies,
which tend to have very strong vertical
organizations. Top-level managers, with their
typically strong technical or engineering
backgrounds, often get deep into details of
products and production issues. To become
successful lean leaders, German managers might
have to adopt new forms of closer cooperation
with their employees to create true lean
organizations, says Wiegand.
13Lean Manufacturing in Mexico
- M. Bednarek and L.F.N.Luna had surveyed 24 small
and medium manufacturing enterprises in Mexico. -
The Selected Problems of Lean Manufacturing
Implementation in Mexican SMEs, International
Federation for Information Processing, 2008,
V257, pp.239-247.
The findings of their research are a)The Lean
Manufacturing is the concept developed in Toyota
and it seems difficult to implement it in Mexican
SMIEs because of different organizational and
social culture of Mexican enterprises and
labor. b)The concepts related to lean
manufacturing have been frequently misunderstood
in Mexican enterprises because of poor employees
training and educational program.
14Lean Manufacturing in China
- In our opinion, manufacturing in China is at a
crucial crossroads. If the wrong path is chosen,
Chinese manufacturing will find that they no
longer have a competitive advantage in attracting
foreign investment and continuing to build a base
for global manufacturing.
Jeffrey K. Liker, Principal of Optiprise,
Holland, Ml. Also, he is author of The Toyota Way
(2004). David P. Meier, President of Lean
Associates Inc. Lexington, KY. He is
co-authors of The Toyota Way Fieldbook (2005) and
Toyota Talent (2007).
Globalization and international capital flow have
spawned manufacturing opportunities in many
competing countries. Countries such as China
which have benefited from low labor rates in the
past will find it more difficult to retain and
entice new companies.
15Lean Manufacturing in China
- We have seen a similar trend in the past, as
manufacturers sought low labor rates in Mexico
and other countries. The US-based companies would
typically move a poor process across the border,
and then have an operation with lower cost, but
not better performance. It appears that the same
trend is occurring in China. The labor hour
content in the Chinese factories we have visited
seems to he about 2-3 times that of similar
companies in the US, but even with the additional
labor content, the total labor cost is lower than
in the US. If we add on other costs such as poor
quality, costs of transportation, and
difficulties in the supply chain, we would see
that the cost advantage is further diminished.
16Lean Manufacturing in China
- If China is to remain competitive, it must
learn to provide benefits greater than just
low-cost labor. Mexico has never learned to be
globally competitive, and long ago lost its labor
cost advantage to China and a host of other
countries. Chinese manufacturers would he wise to
review the situation in Mexico as a case study.
Chinese manufacturers must decide either to
compete only on labor rate, which is a sure road
to nowhere, or to improve process capability and
make sustained efforts to adopt Toyota Production
System (TPS) lean manufacturing principles.
17Lean Manufacturing in China
- A colleague noted that at a recent lean
conference there were no companies presenting
case studies that had been on the lean journey
for more than two years.
18Lean Manufacturing in China
Chinese companies are not so much implementing a
true lean process as they are chasing a quick
victory and an easy path to success. What they
end up with is a facade the appearance of a
strong process, but below the surface there is no
substance. We see Chinese companies pushing to
get lean and wanting to show off their
workcells or single-piece flow, but beyond the
initial effort there is no significant
improvement or change. There seems to be quite a
bit of misunderstandingin China and
elsewhereabout what it means to be lean.
19Lean Manufacturing in China
An organization that is pursuing lean is
constantly improving the performance of the
business in terms of safety, quality,
productivity, cost, and delivery, in ongoing
incremental steps, in such a way as to provide
the greatest benefit overall to the customers,
the company, the employees, and the community.
20Lean Manufacturing in China
As Toyota Chairman Fujio Cho explained in a
speech in February 2006 The soul of the Toyota
Production System is a principle called
Kaizenits essence is the notion that engineers,
managers, and line workers collaborate
continually to systematize production tasks and
identify incremental changes to make work go more
smoothly.
21Lean Manufacturing in China
- There is no such thing as being lean. All
organizations, including Toyota, are simply
attempting to become leaner by continually
eliminating waste. - An organization is not considered to be lean if
they have single-piece flow, if they are using
kanban, if they do single-minute changeovers, or
even if they have zero inventory. These items
simply indicate use of a tool or performance on
an internal metric, but the concept of continuous
improvement mandates that any level of
improvement is only one step on the path to the
next improvement. - When we evaluate a company, we must consider
whether the philosophy of waste reduction has
reached the innermost circlethe individuals. If
the lean effort is still directed by management,
a key portion of a lean system is missing. - The organization must have a systematic method of
driving continuous improvement.
22Lean Manufacturing in China
Chinese managers would be wise to adopt a
different view of employees they are the
greatest strength in the organization not the
cheap worker. On the lean journey, we must
always consider whether people are increasing in
their capabilities. Are they becoming more
skilled at managing their operations? Are all
members focused on improvement and the
elimination of waste? We have to look around the
organization and consider whether we see signs of
employee growth. If an organization is having
difficulty advancing the lean results or
sustaining them, it is a good bet that the people
are not capable of handling the new challenges.
23Lean Manufacturing in China
Toyota has a very clear understanding and
fundamental belief in the value of
people. They understand that only people
and systems set any company apart from other
com- panies. Toyota understands that the
real power of people lies within their
thinking ability. The ability to think effec-
tively and to approach the process in a
systematic (inten- tional and
deliberate) way will ultimately produce desired
results. Effective thinking produces
understanding. Understanding and action
produce correct results. Continuously
producing correct results will, in the end,
produce incredible capability.
24Lean Manufacturing in China
we define Toyotas management systems in
terms of four levelsreferred to as the 4P
model. These are philosophy, process,
people, and problem solving. These
levels are defined as follows
PhilosophyLong term investment in people and
systems to add value to customers and
society. Process Eliminating waste
from the core technical work activity
of the organization that adds value through
methods like pull and flow and standardized
work. PeopleRespecting people by
continually challenging and
developing them. Problem
SolvingContinuous improvement through
root-cause problem solving and organizational
learning.
25Lean Manufacturing in China
Carrot Metaphor
A colleague has defined TPS as being like a
carrot. What we see on the surface is
the leafy green stuff that looks nice
and tempting, but what we really want is what is
below the ground. This is where the good
part is. It is not possible to get to
the carrot unless we dig it up. It is dirty and
messy work, but what truly good thing
has ever come without
effort? The lean tools and other things, like
measurements and value stream maps, are
all part of the attractive and tempting
carrot greens. We are suggesting that Chinese
companies pursue the real meat of the carrot
rather than just the tempting surface
greens. We advise digging deeper into
the development of a lean system, and
understanding the context of the lean
tools within a system.
26Lean Manufacturing in China
Basic requirements to implement the lean
- Equipment must run properly and produce quality
products. - Workers must be trained precisely and must have
multiple skills, so they can go to where they are
needed. - Materials must arrive on time.
- Suppliers must also be capable.
- It is simply not possible to operate Toyotas
system with weakness in any area.
This photos is from Caterpillars Asia Trak
facility in Tianjin, China, where lean efforts
are leading to operational improvements.
27Lean Manufacturing in China
Carrot Metaphor
A colleague has defined TPS as being like a
carrot. What we see on the surface is
the leafy green stuff that looks nice
and tempting, but what we really want is what is
below the ground. This is where the good
part is. It is not possible to get to
the carrot unless we dig it up. It is dirty and
messy work, but what truly good thing
has ever come without
effort? The lean tools and other things, like
measurements and value stream maps, are
all part of the attractive and tempting
carrot greens. We are suggesting that Chinese
companies pursue the real meat of the carrot
rather than just the tempting surface
greens. We advise digging deeper into
the development of a lean system, and
understanding the context of the lean
tools within a system.
28Lean Manufacturing in China
Jeffrey Liker and David Meiers Comments to
Chinese Companies
- Must learn to compete in areas other than labor
cost. - Must be known for developing people who can
design and produce superior products. - Must be known for servicing customers promptly
and without mishap. - Must take a position on the world stage as being
a clear choice for manufacturing operations over
other countries. - Must not duplicate the mistakes passed on from US
and European companies. - Must decide to pursue the development of a
systematic method of driving continuous
improvement in their operations. - Must pursue the challenge of becoming lean.
- Chinese companies need to get it right to ensure
long-term growth and strengthening of the
competitive base.
29Lean in United States
Multiple companies beyond the automotive industry
have tried to replicate the success of TPS. Some
have achieved this, and even Toyota would say
some have surpassed its success.
Most companies have focused on lean manufacturing
and the fundamental tools that are included in
the lean toolbox, such as 5s, visual controls,
standardized work, problem solving, and many
more. They have conducted thousands of kaizen
events in their facilities, which improved
quality, productivity, and cost.
However, many more have failed and spent a lot of
money with little to no benefit.
30Lean in United States
The Detroit Three - Chrysler, Ford, and General
Motors
The Detroit Three have invested time and money to
train both hourly and salary team members in lean
concepts. Through these efforts, the companies
have dramatically improved their initial quality
to near parity with Toyota and, in some cases,
surpass it. US automakers also have reduced labor
inefficiency, achieving better productivity than
some of their competitors through the
implementation of lean manufacturing.
31The Detroit Three - Chrysler, Ford, and General
Motors
- GM has made the most progress, driving a common,
global implementation of lean while sharing best
practices. The maturity of its plants lean
execution rivals Toyota plants around the globe. - Chrysler has made significant development as
well, given that many Chrysler leaders came from
GM and were some of the early implementers of
lean. Chrysler is moving quickly at all plants,
and is achieving huge cost savings. - Ford, which launched the Ford Production System
in the mid-1990s, struggled early with execution
at the plant level, but has recently made
progress in its facilities.
32Arrogance, Culture Barriers Limit Detroit Three
- Detroit Three are still significantly behind
companies like Toyota in the most critical metric
- profitability. In 2006, depending on which of
the Detroit Three you look at, Toyota was 2000
to 4000 more profitable per vehicle. A
significant portion -
- Discrepancy attributes
- The legacy issues including retiree health care,
pension costs, and certain union-negotiated items
such as the Jobs Bank and Supplemental
Unemployment Benefits. - The culture of a company.
- The culture of the Detroit Three and many
suppliers has been one of arrogance.
33Arrogance, Culture Barriers Limit Detroit Three
The reward system of Detroit Three
Traditionally, product engineers were rewarded
for designing and developing unique components.
This was how they achieved their next promotion
and bonus. Over the years some great vehicles and
features were developed, but at high costs.
Additionally, people have been rewarded for
success within their own business silos without
regard to how that success impacts other areas of
the organization.
The reward system of Toyota
in contrast, is based on teams. Each new
program includes a cross-functional team of
people. If any one area optimizes business at the
expense of another, no one is rewarded. They are
charged with solving the problem to the benefit
of the cross-functional team.
34References
- Society of Manufacturing Engineers, Lean
Manufacturing 2007, Supplement to Manufacturing
Engineering, 2007. - Society of Manufacturing Engineers, Lean
Manufacturing 2008, Supplement to Manufacturing
Engineering, 2008. - Charles M. Parks (2003), The Bare Necessities of
Lean, IE Industrial Engineer, 35(8), 39-42. - http//www.strategosinc.com/lean_manufacturing_his
tory.htm