Fundamentals of Lean Thinking

Written by Francisco Pulgar-Vidal, fkiQuality

fpulgarvidal@fkiquality.com

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presents the Executive Education Series

Discovering Lean and Deming

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Goal of this presentation: Describe fundamental Lean ideas and how they relate to Deming’s methods of management.

We will cover these topics: 1. History of Lean

2. Structure of TPS thinking

3. Customer focus

4. Operational improvement

1. History of Lean

Lean is what an MIT team has called the Toyota Production System.

Toyota developed a Japanese method of automobile production with the intent to “catch up with America” shortly after the end of WWII.

The Toyota system aims to improve overall efficiency and enhance the work environment.

The Toyota Production System is thus business-centric and human-centric.

Management focused in improving both the business and the person is a contribution of W. Edwards Deming.

Deming’s “chain reaction” links the prosperity of both business and person.

Deming’s “chain reaction”:

Improve quality

Decrease costs

Raise productivity

Decrease prices

Increase market share

Stay in business

Provide employment

back to start

Business prosperity (increased market share) and personal prosperity (employment) begin with quality.

But quality requires

knowledge.

How do you get knowledge about your work?

… about your product?

… about your team?

… about your customers?

… about your suppliers?

Are these sources of knowledge?

Gain knowledge by continuously doing and with the support of a sound theory.

2. Structure of TPS thinking

The Toyota system aims to improve overall efficiency and enhance the work environment.

Those who seek to implement Lean to justify layoffs because of efficiency gains are not doing Lean.

Toyota Production System (TPS) has two pillars:

a. Just-in-time

b. Autonomation

a. Just-in-time: Is a way to produce economically when long production runs do not reduce the cost of making an automobile.

Just-in-time occurs when each process receives an item needed, at the time it is needed and as many as needed.

In real situations, this synchronization is too hard to achieve from start to end or “push” production.

So just-in-time reverses the order, giving the production plan (desired types of cars) only to final assembly.

This is “pull” production.

So, just-in-time moves materials by having a later process pick up needed parts from an earlier process.

The earlier process makes only the parts picked up.

The communication of needed parts is achieved via signals called “kanban” cards.

Task coordination from end to start is easier and produces less waste.

Just-in-time gives Toyota the ability to make more types of automobiles than what is possible with mass-production.

b. Autonomation Is a way to build judgment in machines to prevent making bad parts.

Autonomation endows machines with an automatic stopping device.

A stopped machine alerts the operator to act. So operators are not tied to a machine.

Operators can work on several machines at the same time.

In addition to higher worker productivity, autonomation makes abnormal conditions more visible. Then abnormalities will get fixed.

Autonomation gives Toyota the ability to understand problems better and start improving.

3. Customer focus

Before 1929 things were designed, made and sold (as much as possible).

For example, all Ford cars were black.

In 1929 Walter Shewhart introduced a feedback- based way of making things.

1. Design the

product

2. Make it, test it

internally

3. Put it on the market

4. Find out what user

thinks

For the first time, customer feedback was integrated with production.

Japanese companies became good at finding what customers wanted.

Japanese companies became good at filling needs that customers did not know they had.

Toyota made “satisfying customer needs” its most important value.

Satisfying customer needs became the value that would lead the growth of the Toyota business.

From this value, Toyota developed two principles to guide all decisions:

a. Just-in-time (materials flow)

b. Jidoka (awareness)

Principles Values

Satisfy customer needs

Just-in-time

Jidoka

We already saw how just-in-time creates a smooth flow of materials.

Awareness of operational performance and abnormal conditions comes from autonomation and various techniques for managing visually.

To implement each principle, Toyota applied or invented methods and tools.

Tools Methods Principles Values

Satisfy customer needs

Just-in-time Kanban Production

kanban

Jidoka Visual

management 5S

Any study of Lean or TPS must focus on values and principles.

Then a business may develop its own tools.

Copying from Toyota will not lead to Lean.

4. Operational improvement

Lean is a state of achievement with constant improvement. It is not static.

So you cannot say, “this operation is now lean”.

Thinking that Lean can be “achieved” is a by-product of equating Lean with just its methods and tools.

However, values and principles can always move a business toward the future.

Managers must focus on values and principles to create a positive work atmosphere.

A positive work atmosphere is filled with joy.

Joy comes from innovating product, service and process.

Joy comes from improving product, service and process.

Workers cannot find joy in a work environment that does not foster innovation and improvement.

1. Plan

2. Do 3.

Study

4. Act

PDSA is a tool for innovation and improvement.

Plan, do bomb in the

USA.

Act and try again, with

success.

The result of many PDSA

cycles …

Toyopet

First Toyota Corolla in U.S.

Toyota Corolla now

References: • Out of the Crisis, by W. Edwards Deming, 1982

• This is Lean – Resolving the efficiency paradox, by Niklas Modig & Par Ahlstrom, 2012

• Toyota Production System: Beyond Large-Scale Production, by Taiichi Ohno, 1988

Next presentations will discuss:

• Concept of a system.

• Constancy of purpose.

• Quality built-in, not inspected.

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