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Lean around the World

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Title: Introduction to lean Author: Shaojun Wang Last modified by: swang Created Date: 3/21/2001 1:22:54 AM Document presentation format: On-screen Show (4:3) – PowerPoint PPT presentation

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Title: Lean around the World


1
Lean around the World
  • What better way to stay ahead of the global
    competition?

2
Lean 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).

3
Lean 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.
4
Lean 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

5
Lean 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.
6
Lean 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.
7
Lean 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.
8
Lean 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.

9
Lean 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.

10
Lean 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.

11
Lean 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.
12
Lean 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.

13
Lean 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.
14
Lean 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.
15
Lean 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.

16
Lean 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.

17
Lean 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.

18
Lean 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.

19
Lean 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.
20
Lean 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.
21
Lean 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.

22
Lean 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.
23
Lean 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.
24
Lean 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.
25
Lean 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.
26
Lean 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.
27
Lean 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.
28
Lean 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.

29
Lean 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.
30
Lean 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.
31
The 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.

32
Arrogance, 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.

33
Arrogance, 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.
34
References
  • 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
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