Lean is about motivating and engaging employees in creating continuous improvement, in paying attention to waste in the production process and in creating more value for the customers and more earnings for the farm.
Lean means creating more value for customers with fewer resources. It is all about working smarter, not harder. It is about eliminating waste and using resources to work efficiently with the tasks. It is also about engaging employees in improvement, creating value for customers and thus value for the company.
The Lean history has everything needed to create a good story, as it tells the story of the leader who travels far and wide to find the philosopher’s stone when his people are in need. He returns full of hope, and together with his people he finds the happy ending. It all started in the 20th century with the Japanese Toyoda family, who produced automatic looms. These looms were not like other looms. The fact is that they stopped automatically when the thread broke. None of the competing producers of looms had this feature. This meant that the employees in Toyoda’s weaving mills could operate more looms at a time, and fewer manufacturing defects occurred. The patent on this fail-safe mechanism was sold in 1929, and the payment for the rights was used as initial capital in the Toyoda family’s car factory, which was established at the beginning of the 1930s. In 1937, the factory became the Toyota Motor Company that we know today.
In 1937, Eiji Toyoda went to the United States to study Ford’s automobile industry. He noticed high productivity but also great waste, which got him thinking. He returned to Japan and started production. His son, Kiichiro Toyoda, was responsible for the company, which during the first years only produced trucks.
Kiichiro was an engineer and an expert in building engines, so he had a great understanding of production and manufacturing processes. Therefore, one of the basic ideas in Lean became that all leaders should know what is happening on Gemba (factory floor) because this is where value is created, and problems arise.
Toyota was well on its way to success, but then World War II came, and in 1950 Toyota was on the verge of bankruptcy. Like other countries, Japan got Marshall Plan aid to rebuild the country. As part of this reconstruction, a number of Japanese engineers were sent to the United States to study. They were taught production techniques by Professor Deming. His starting point was TQM (Total Quality Management), consisting of 14 points, which Deming considered the basis for efficient and flawless production. The Japanese followed his recommendations and put the theories into practice.
During a visit to the United States after the war, Eiji Toyoda had seen Ford produce 8000 cars in one day. Toyota produced 40. The Ford employees were ten times more productive than Toyota’s. Nevertheless, Eiji Toyoda was disappointed that Ford’s production had not changed since the 1930s. There was still too much capacity and excessive consumption of resources at Ford.
He also visited American supermarkets and was fascinated by the efficiency of retail supply chains in the United States.
This gave inspiration for a showdown with mass production. As it was, Toyota did not have the resources to mass produce cars, which would tie up capital unnecessarily in warehouse space. Taiichi Ohno asked Deming to come to Japan and help develop their production methods. This was the beginning of the production philosophy known as TPS, or “Toyota Production System”.
After Eiji Toyoda’s return, 1600 employees were asked to retire “voluntarily”. This led to strikes and demonstrations. The management and employees at Toyota, therefore, entered an agreement: The employees were guaranteed lifetime employment in return for being loyal and actively working to create improvement in the company. This was the beginning of what we call Kaizen, which means “continuous improvement”.
Eiji Toyoda asked his factory manager, Taiichi Ohno, to increase productivity to be up to the standard of Ford’s. Ohno set two conditions:
■ He wanted Eiji Toyoda’s full support when resistance against the necessary changes arose.
■ He wanted at his disposal every fifth employee released from production.
Eiji Toyoda accepted the conditions but with two reservations:
■ No employees were to be fired. Therefore, as efficiency would increase, sales also had to rise.
■ There was no money for neither new, big machinery nor warehouse space.
In addition, only the quantity demanded by the customer was produced and the customer always set the delivering time. Only what customers demanded was produced. This concept has since been called Just-In-Time (JIT).
Taiichi Ohno built on the principles and tools that Toyota had used until then. As he developed the techniques, productivity rose drastically. The methods were collected in the so-called TPS. The company achieved great growth, and productivity far exceeded that of other car manufacturers – also in Toyota’s satellite factories in the United States.
Characteristics of a Lean Company
Focused: Lean organizations are obsessed with customer value.
Aligned: In a Lean organization, every member of the team understands the mission, values and strategic priorities.
Humble: One of the central tenants of Kaizen is that there is always room for improvement.
Collaborative: Silos have no place in the practice of Lean.
Tenacious: Lean organizations do not opt for simple answers to complex questions.
Engaged: Lean is a business process methodology that leverages the skills, input and observations of every employee.
Methodological: Improvement work is most effective when intentional practices are applied.
Proactive: Lean organizations inspect processes, not products, to prevent problems and waste before they happen.
Documented: Standard work is documented and continually reviewed.
Resilient: Resilience is the ability to anticipate trouble spots and improvise when the unexpected occurs.
Progressive: Realize that the improvement process requires the support of enabling technology.
Grateful: For Lean culture to take hold employees must feel valued and recognized for their contributions to improvement.
Revised from Maggie Millard, KaiNexus, 2015
1.1.2 Lean – Less of Everything
During the 1980s and 1990s, more and more people discovered Toyota’s success and started to copy their methods. Two scientists, Jim Womack and Dan Jones, went to Japan and researched for five years why Toyota was getting ahead of American car manufacturers. In 1984, they published the book The Future of the Automobile, in which they demonstrated that the Japanese car manufacturer outperformed American manufacturers on all key ratios. After this, they investigated what it really was that made the Japanese better than everyone else.
They found that Toyota had
■ Fewer employees to develop, produce and service their products
■ Less investment for a given amount of production capacity
■ Fewer defects and less rework in internal processes
■ Fewer suppliers, which in turn had greater expertise
■ Less inventory at every step from order to delivery, and in after-sales service
■ Fewer employee injuries and diseases
The code word throughout was less of everything, and the word Lean describes exactly that.
It was not until 1996, however, when Womack and Jones introduced the term “Lean Thinking” (in the book by the same name), that TPS won the West. Womack and Jones summarized TPS in some simple and easily understandable concepts, starting with the five Lean Principles:
1. Specify value from the point of view of the customer
2. Identify the value stream and eliminate waste
3. Ensure a steady flow of work
4. Replace push with pull
5. Continuous improvement
The five Lean Principles are the backbone of Lean and show you how to handle any Lean implementation. The principles are universal and can be used for production, administration and service. The principles are described in Chapter 3.
In Chapter 9, managers from other companies recount what they achieved by using the Lean Principles. It has not been without challenges, but on the other hand, they have had great returns. Thus, managers from Arla Foods talk about the company’s growth strategy, where Lean is used as a method of generating capacity for growth without investing in new plants.