Where now for lean? As globalisation and technology trends change the way manufacturing networks function and measure success, how is the sector’s favourite efficiency tool set and philosophy evolving? Two interviews from Lean Management Journal give insight.
Roberto Priolo: Is lean evolving as a methodology?
Daniel T Jones: I think the lean movement is facing an important threshold. There is a growing incompatibility between external and internal consultants – and staff-driven programmes to teach tools to eliminate waste and the essence of a lean transformation. At its core, a lean transformation is about solving specific business problems in their context by developing the skills of line managers and team members to unblock the flows of value creation in their value streams. But while solving a problem is fine, the lasting value is the capability to solve the next set of problems.
RP: Do the recent recalls issued by Toyota discredit lean as a methodology?
DTJ: Toyota is not perfect and it grew faster than its ability to grow the capabilities of its associates and suppliers. It is still the model to learn from in using the scientific approach in everything we do.
RP: Many struggle to understand that value flows horizontally in a business, across departments and functions. Vertical silos persist as typical business structures. Why?
DTJ: Toyota itself is as vertically organised as any organisation. This is the right way to deploy knowledge and resources. But the company has also found a way to manage the horizontal flows of value creation that cross these vertical pillars. Strong value stream engineers gain agreement across functions on the actions necessary to streamline the whole end-to-end value stream, with strong top management support but no authority over the resources necessary to accomplish these actions. This is a conundrum other organisations will have to learn to solve.
RP: Supply chain security and complexity are rising concerns. How can companies use lean to tackle them?
DTJ: As we wrote in The Machine that Changed the World, the logic of lean is to build design, production and supply bases in each major region. Long supply chains across oceans in search of low wages can never ultimately compete with closely integrated supply chains responding quickly to demand. This is now beginning in all kinds of organisations, from GKN to Bosch, GE, Apple, Nike, Hugo Boss and so on. The challenge is for multiple organisations and different functions within those organisations to see the whole value stream together in order to design the appropriate, compressed supply chains for the next generation of products.
RP: New lean solutions are a growing feature of the business IT market. Do they really get results?
DTJ: Trying to automate processes before leaning them out leads to disaster. Strong line management able to define the needs of the process is the right basis for designing IT systems that enhance the flow and speed up communication along it. The ultimate contribution of IT and the web is that they open up quite new process opportunities and business models for helping consumers create more value in their lives. The key is to see consumers and the processes they go through to create this value as an integral part of the extended value stream, from design through to production to ongoing support in use.
Roberto Priolo: From a lean perspective, what happened at Chrysler after Fiat came into the picture in 2009?
Mauro Pino: One of the keys to our future was the implementation of World Class Manufacturing (WCM), a production system that Fiat developed with great success. A very important aspect of the contract between Chrysler and Fiat was that the labour unions were involved from the very beginning and that the application of the World Class Manufacturing system in all North American manufacturing facilities was provided for. This represented a clear path for Chrysler to get out of bankruptcy, and of course helped a lot in terms of leadership engagement.
RP: Chrysler had and existing lean system before the merger. How did you get past the difficulties of replacing that exisiting approach with the WCM model?
MP: Introducing WCM represented a huge change. The WCM system has 20 pillars, of which ten are technical that include quality, safety, people development, environment, logistics, and maintenance. The other ten are, crucially, managerial. These focus on having the correct people in the correct place and the motivation of operators. These are critical when you consider there are more than 49,000 hourly and salaried employees in manufacturing within Chrysler around the world. This was the real big difference from what we had before. The system is based on people, and this changed the perspective of the lower levels of our organisation deeply. Until then, workers were considered executors of the technical system we put in place to manage lean and change the business. After WCM was introduced they were seen as a key part – 50% effectively – of that system. They were on our side.
RP: What is the difference between the Toyota Production System and WCM?
MP: The Toyota Production System is the foundation of World Class Manufacturing. WCM started with the collaboration between the Japanese and the Europeans, in particular the Swedes and the Italians. This melting pot produced a rigorous, technical framework that is based on working with people. TPS is a great system that fits very well with the Japanese reality. In America and Europe, perhaps, we need more of the managerial side than they do in Japan.
RP: How can you deliver a consistent lean programme globally in the face of differing business regualtion? For example workforce and health and safety regulation.
MP: This is a very important point for the global application of WCM. Differences in regulation are in place and sometimes they are huge. Think about diesel application in Europe and the US and the percentage of cars sold because regulation differs. Or think about the pollution limits you are allowed to have in California or in the Shanghai area today. For WCM, these differences are only reflected in the KPI levels that we set as our goals, but they can’t change the way we deliver improvement. Levels of pollution may be very different in the two places, but the approach to performance is the same. As well as being a system, WCM is a language, a way to communicate easily between us. And as with all languages, you need to study it.