It is estimated that about 70% of organizations initiating lean programs don’t realize the promised or anticipated success. So it would seem that either lean is a bad idea or lean is not properly understood. Given Toyota’s notable success, I think we’ll go with the latter!
So why are most initiating lean programs? Likely it is to increase profit through the elimination of waste. After all, look at how successful Toyota has been with their now famous Toyota Production System! Who wouldn’t like to realize low-cost producer status as they have? Accordingly, among those in management the likely thinking is, reducing costs will lead to greater productivity and increased profit so let’s squeeze whatever we can out of our operations; and initiating a lean program will give us the tools to do just that!
With the global environment leading to increased competition, it is understandable why for many it is time for just-in-time! Unfortunately though the challenge is there, the understanding isn’t, and correspondingly the reason for doing it is not quite right. As a result there are far too many starts and stops—which ironically increases costs—in the implementation of a program designed to reduce waste and improve flow of work.
Obviously something is not quite understood. What that is, is that lean is simply one component within a system for managing business toward the improvement of quality. It is an activity within the context of quality.
The meaning of anything is always contextual. Consider the word ‘bark’, what is it, what does it mean. Is it the protective outer sheath of a tree or a sharp cry of a dog or aggressive commands of a manager or a misguided line of thought? ? Until it is put into context we don’t know, we really can’t say. Clearly if we take something out of context all we have is misunderstanding; and proceeding on this is never the way of the wise.
Context of Lean
As told in Out of the Crisis, in every meeting with top-level management in industry in Japan in 1950, Deming wrote the following chain reaction (which is actually a continuous loop) on the blackboard to help everyone focus on quality and its effects:
Improve Quality–>less rework/fewer delays/better use of resources–>
Productivity improves–>Capture the market with better quality & lower price–>
–>Stay in business–>Provide jobs—>
Clearly the elimination of waste comes from a very serious commitment to quality—the context is clear. Unfortunately what many initiating lean programs are committed to is improving profit by reducing costs through the elimination of waste. What’s missing is the context that gives meaning to lean. That is, what most don’t have are an understanding of and a commitment to quality.
If we were to walk through a Toyota facility you would without a doubt have no problem seeing people using lean tools and techniques, it would be quite visible. Consequently it seems that all that other’s are seeking to do is copy and implement the tools and techniques within their operations. Just as those before them had done with quality circles and statistical process control charts. So some might ask, what about the success of the Toyota Production System? Haven’t they shown that the use of the very same lean tools and techniques lead to low-cost production and higher productivity? Yes, but Toyota has the right context! Deming would no doubt add, management doesn’t know what to copy!
In our walk through the facility, what would not be so visible but every bit present—and the foundation for success—is everyone’s commitment to quality improvement. So the use of tools is not the thing: Their use within a context—a culture—of quality is!
As revealed in Richard Donkin’s book, Blood sweat and tears: The evolution of work, prior to World War II Toyota had been investigating just-in-time delivery as a way of reducing inventory and waste. Having been well schooled in the fundamental principles of quality—by Deming, Juran and Sarashon—at the end of WW II, the Japanese (and in particular Toyota) had taken quality to heart and developed a system of quality unmatched in the world. This provided Toyota with the right foundation, the right context, for making their just-in-time system meaningful. The evidence of the appreciation for Deming’s contribution to rebuilding business and industry within Japan is reflected in the creation of the Deming Prize that recognizes companies that realize major accomplishments in quality improvement.
Although all of Deming’s 14 points constitute a system for quality, only a few of his points will be highlighted here to illustrate the system’s relevance to the foundation of a lean program. It is evident that Deming’s point # 4 which explicitly calls for the need to work with suppliers as partners, making them part of the production process, is foundational to a just-in-time system. For example using this point as a springboard to deeper understanding a sample of critical questions to explore would include what they are doing in regards to improving: the quality of incoming materials; the quality of the process of how suppliers are chosen; the basis of the relationship with suppliers, the quality and flow of information/resources from process to process; and how constancy of purpose supports your work with suppliers?
Point #5 speaks to the need to improve constantly and forever every process for planning, production and service. Clearly the Toyota Production System is evidence of their commitment to the Deming quality philosophy as the way to manage and organize one’s business. They have clearly followed all of Deming’s 14 points, most notably point #2 (Adopt the new philosophy) and point #1 (create constancy of purpose for improvement of product and service).
A Lesson from Toyota
However Toyota has recently taught us another lesson about what happens when those in management deviate from point #1. When you lose commitment to quality bad things happen. More specifically in Toyota’s case, by focusing attention on becoming the largest automotive company in the U.S.—which they did achieve in surpassing a declining GM—they changed the business of their business from providing quality to customers to maximizing material gain for themselves. They grew but they most assuredly did not realize progress: With management deciding in favor of growth the organization was placed in a worse position relative to future prospects. Although they grew they lost; they lost in gaining the wrong-headed goal. Yes they still had the famous production system but they weakened the foundation upon which it was built. This was a teaching moment for them so they re-committed to quality. They did what those seeking lean should do first, commit to quality.
For those who have begun a lean program, stop and re-think what you are doing. Ensure that you are proceeding based on a deep understanding of the principles of quality. Then, and only then, will you understand that reducing cost and eliminating waste in isolation and absent of a context of quality can be detrimental. These activities should result from efforts reflective of your commitment to quality.
For those thinking about initiating a lean program, don’t do so without first committing to understanding and then adopting the new philosophy. Don’t proceed with a lean understanding rather proceed only with an understanding of lean and its dependence upon a commitment to quality. Doing otherwise, organizations will lose especially if they win! Toyota has taught this lesson to us twice.