- February 12, 2003
by Tim Wilson
It's not about making people work harder or cutting jobs; it's about reducing waste
Lean manufacturing has been around for a long time, and refers to processes that increase customer value. It’s often identified with the Japanese automobile company Toyota and its efforts to reduce waste while increasing efficiency. But its roots go back further than that.
“The originator of lean is Henry Ford,” says Gregg Gordon, senior director of the manufacturing process group at Kronos, which provides workforce management software. “But Toyota has proven that lean is extremely valuable. Japan, for example, has been in recession since 1985, yet in 2009 the company became the number one automobile manufacturer in the world. Lean saved it.”
Lean, in its emphasis on processes that reduce waste to enhance customer value, has a heavy focus on labour. This isn’t about making people work harder, or cutting jobs, but about turning workers into allies in an ongoing effort to reduce waste. A lean company isn’t only an operation that adopts a set of practices, it is also an organization that embraces certain kinds of cultural change.
“Lean includes a methodology for continuous improvement,” says Gordon. “It has founding principles, but it also represents a moving target. You have to be flexible and adaptable.”
In this sense lean is unlike six sigma, which is more rigid and disciplined. Six sigma was developed by Motorola, and focuses on aggressive targets for defect detection and reduction in manufacturing environments.
Lean, by comparison, is more of a manufacturing philosophy of waste reduction. The Japanese refer to this waste as “muda”, with continuous improvement known as “kaizen.”
“I do so much lean that my guys think I’m tight,” says Craig Beal, the owner of Number One Machining in Dieppe, NB. “We’ve changed a lot of stuff around here.”
Ten years ago Beal was booking about $500,000 a month making cell phone boxes for Nortel. When that ended, he embarked on a long-term transition to aerospace, which now accounts for almost half his business. He is not yet back to the capacity he built a decade ago, and has had to stay lean during his multi-year transition into a heavily regulated industry. Staying viable means finding practical savings wherever he can.
“We have changed how we start our machining in the morning,” says Beal. “In the first two months we dropped our power bill by $800. But we didn’t stop. We have now brought it down from $2,900 to $1,700.”
Though Beal does not use the terminology, he is in fact following the Japanese concepts of reducing waste (muda) by maintaining rigorous and ongoing attention to improving operational practices (kaizen).
“I watch and train my guys on the floor, and do a min/max on all tooling,” he says. “Do they use the tooling they had before, or go grab a new one? When people are busy they seem not to consider that, but when things are tight they look to save a dollar.”
Number One Machining has had success staying the course. It supplies to Sikorsky as well as Boeing, where it is a gold supplier–the highest level. And it has achieved this with 15 people on payroll compared to a former peak of 35.
But for a smaller shop like Number One Machining, it is possible for the owner to eyeball efficiencies; with larger companies a software solution may be in order.
“Engagement through interactivity saves time by improving our ability to retain information,” says Paul Franchetto, president of Turning Technologies Canada Inc., Barrie, ON, which makes response software. “Our software can help management brainstorm ideas on various lean strategies, training the implementation team on lean tools. It allows for evaluation of results and encourages feedback.”
Workforce management software can also drill deeply to better control labour costs and boost productivity.
“We can reduce the cost of technology ownership, bring in real time operational efficiencies by looking at machine utilization, check out the financials for work orders, and help out with human resources for things like time keeping, absence management, and accurate paychecks.”
It’s important to make sure that a lean program serves its own purposes. There are examples of efficiency initiatives that have added to costs.
For Kronos, return on investment is part of the sell. As well, much of this advice is available free of charge from companies like Kronos.
“There are three cultural areas that any company can look at,” says Gordon. “First, they should avoid picking on the person–instead, look at the process. Second, when you find productivity gains, take that back to the workers to make their jobs easier. And third, consider profit sharing.”
Given that lean concepts require significant employee buy-in, it makes sense that workers share in some of the benefits. If the focus is only the acceleration of profits, then workers will be reluctant to engage–and without constant engagement, a lean process will have a hard time getting off the ground. Or, if it does, it will soon fizzle out.
Specifically, James P Womack has argued in The Machine That Changed The World: The Story Of Lean Production, with labour as a fixed cost, hire-and-fire policies are inefficient, and investments in team-based, well-trained workers pay off. Womack claims lean manufacturing can
bring about dramatic savings, using “less of everything compared with mass production,” and halving everything from overhead costs to engineering hours.
There is a risk, however, that a lean approach can rely too heavily on managers–not always the most productive members of a workforce. This is where a software approach can make sense, by effectively automating many expensive managerial functions.
“You can meet stubborn managers who just don’t believe in employees,” says Gordon. “And that’s where you have a failure.” SMT
Tim Wilson is a contributing editor based in Peterborough, ON.