Lean Production

Toyota invented Lean Production in the 1940s and 50s. The company focused on eliminating wasted time and material from every step of the production process, from raw materials to finished goods. The result was a fast and flexible process that gives the customers what they want, when they want it, at the highest quality and most affordable cost. Toyota improved production by:

· Eliminating wasted time and resources.
· Building quality into workplace systems.
· Finding low-cost yet reliable alternatives to expensive new technology.
· Perfecting business processes.
· Building a learning culture for continuous improvement.

Our view at Resource Dynamics is that Lean Production as embodied in the Toyota Production System is a
keystone methodology for achieving operational excellence that can be a powerful source of competitive
advantage. While some elements of Lean have been broadly adopted by many companies, in our experience the
truly transformative power of Lean only comes about if it is embraced in a disciplined and holistic manner as
an integrated system to drive continuous, evolutionary improvement at all levels.

Virtually every business organization that makes products or provides services can benefit by applying Lean Production principles to reduce waste and cycle time, increase resource and asset utilization, and minimize working capital. While many companies utilize some elements of Lean in their daily operations, few have realized its full potential for optimizing business and production processes. Like Six Sigma, the application of Lean Production concepts often suffers from shallow management understanding and a tendency to adopt selected tools (e.g. 5S, visual controls, pull systems, kaizen, etc.) without considering the systemic issues that must be addressed in unison to transform operational performance.

True optimization of business operations for competitive advantage only comes about when an organization’s People, Process, Materials, Equipment, Systems and Technology work together toward common goals under an integrated system that consistently achieves excellence at the point of execution. Since every organization has a unique combination of customer, product and process requirements, a unique history and culture, and a unique set of gaps to “best in breed” practices, management’s challenge is to select an organizationally efficient improvement process that is best suited to its unique circumstances. The “secret” to effectively transitioning from current practices to optimized operations is to customize the implementation process without eviscerating the transformative power of the resulting system (e.g. TPS).

For example, many companies attempt to implement “pull” systems without first moderating the disruptive impact of unstable, unpredictable or unreliable processes. Others utilize a “kaizen blitz” approach that generates multiple scattered improvements but falls far short of having the expected cumulative impact needed for sustainable transformation. Some multi-location companies utilize a cookie-cutter approach to replicate internal “best practices” which are not “best in breed” and therefore have no chance of achieving competitive advantage. Many others fail to invest in honing the skills and core competences of employees, who form the competitive backbone of every organization.

Too often, these efforts are driven by management’s desire to harvest “low hanging fruit” without truly understanding or committing to the organizational changes needed to achieve a high performance culture characterized by involvement, empowerment, accountability, pro-activity and commitment to continuous improvement at all levels. Rather than casting about for quick results by employing a “Flavor of the Month” approach, senior managers would be better advised to deeply understand what it takes to develop an integrated system for their company’s unique conditions that will lead to operational excellence, and then fully commit relevant organizational resources to relentlessly drive the implementation process forward without interruption to attain sustainable competitive advantage.

Proactive Asset Management

Asset maintenance as practiced in many organizations is often highly reactive and crisis-oriented. This leads to unreliable equipment, unstable processes, batch processing, production interruptions and reliance on buffer inventory. In order to realize the full potential of Lean Production, companies must adopt more proactive approaches to asset management across the equipment life cycle that assure operational reliability, support Just-In-Time production and reduce total cost of ownership (COO).