Abstract
This chapter aims to provide an elementary background on lean methodologies from its beginnings at Toyota through current applications of lean processes at local companies. Via case studies, a greater understanding of the advantages of lean systems will be attempted along with a discussion of the future of lean practices. Notable improvements to the lean philosophy, such as successful implementation of six-sigma techniques, are addressed through interdisciplinary case studies of successful best business practices. Therefore, we need a cluster of metrics, certainly more than just cost. If we cannot adequately measure customer satisfaction and utility, we need to have more subjective ways to measure it in order to understand its complexities. Unfortunately, it is unlikely that there is a one-size-fits-all solution, as many managers are more prone to try something that has worked elsewhere in times of crisis, but has limited applications to other dissimilar problems.
TopIntroduction
In theory, the ultimate goal of lean is perfection. Eliminating waste, creating value through efficiency, constructive and collective organizations are themes central to lean methodology. The delicate balancing between employee satisfaction, process improvements that create value for a company, and the external needs of customers is typically the give and take struggle that lean-thinking strategies that many companies face. Lean manufacturing, for example, relies heavily on the use of Kanban tools for effective management of the warehousing function of Supply Chain Management (SCM) systems. Kanban is one of the lean tools designed to reduce the idle time in a production process. In essence, lean methodologies use cards as a signaling system that triggers an action to supply the process with its needs either from an external supplier or from a warehouse (Sabry, 2010). As Kanban was originally invented as a part of the famous Toyota Production System (TPS), it is associated with the design of pull systems and the concept of delivering JIT (just-in-time) goods and services. A demand-based pull system designs processes based on customer demand. It is expected that each process produces each component based on the exact expectation of delivery from the customer. By following lean practices, it is the end goal that businesses produce only what is deliverable and processes become leaner due to reduction in excessive stock levels of raw, partly-finished, or finished materials. Hence, a demand-pull system allows management to produce only what is required at the right quantity at the right time. Ultimately, inventory levels of raw materials, components, work-in-progress and finished goods must be kept to a minimum. Management is then forced into a system that only through careful planned scheduling and flow of resources that JIT targets can be meet. Much of this sophisticated production scheduling software to timely plan production is done through information sharing that is exchanged with suppliers and customers through a fully implemented Electronic Data Interchange (EDI) systems.
Toyota Motor Company is often credited as the first example of a company implementing lean methodology and thinking. Toyota’s penchant for lean processes can be traced back as far as 1890, before the current iteration of Toyota that is currently practiced (Jain & D'lima, 2018; Kache & Seuring, 2015; Ketikidis, Hayes, Lazuras, Gunasekaran, & Koh, 2013). In 1926, Sakichi Toyoda founded the company, Toyota Loom Works (Emilani, 2006). Kiichiro worked closely with his father, and it was ultimately Kiichiro’s decision to expand Toyota Loom Works to include an automobile manufacturing division. Toyota Motor Corporation was founded in 1937, backed by the forward thinking ideologies of both Kiichiro and Sakichi (Emilani, 2006).
The first formalized lean methodology was the Toyota Production System (TPS). Toyota’s forward thinking approach has helped create an environment that promotes continuous innovation and internal assessment. The two employees who are credited with creating the system were Taiichi Ohno and Shigeo Shingo (Emilani, 2006). They often attributed some of the ideas with TPS to Henry Ford and other American industrial practices. One of the most influential systems they cited was the United States’ plan during World War II to increase production for the war effort, the “Training Within Industry Service” program (TWI) (Emilani, 2006).
Key Terms in this Chapter
Toyota Production System (TPS): TPS is an optimum set of approaches to inventory production planning systems achieved by creating economies of scale while producing in relatively small-batch volumes. The aim of the process is to apply scientific methods to obtain the best available quality, lowest costs, and shortest lead times via simultaneously reducing waste or non-value-added activities. TPS has two major considerations, JIT and Jidoka.
Case Study: A qualitative business case study is a method of inquiry of which the individual firm that is reviewed is the basis of study, not the method of inquiry. The basic goal is to understand the complexity of a case via the most appropriate descriptive sources of data available to the researcher. In general, qualitative methods that describe best business practices were used in this chapter.
Kanban: A note, card, or signal, a Kanban used to trigger a series of processes, usually downstream in the supply chain, in order complete tasks, products, and/or services. As part of a workflow management systems, timely Kanbans allow for efficient operations that enable agile, just-in-time (JIT), and lean philosophies to work.
Six Sigma: It is series of tools and/or processes to continuously improve workflow processes through its proper measurement. Six sigma is a highly structured and data-driven approach and methodology for reducing waste or non-value added activities and associated costs.
Enterprise Resource Planning (ERP) Systems: ERP systems are designed to take advantage of a single communication platform that allows users access to the various components of the production process from inventory, order management, human resources, accounting and financial systems, Customer Relationship Management, and manufacturing systems to help standardize and promote the communication process. In essence, it allows information sharing to the se stakeholders in the production process.
Supply Chain Management: In basic terms, supply chain is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. The configuration and management of supply chain operations is a key way companies obtain and maintain a competitive advantage. The typical manufacturing supply chain begins with raw material suppliers, or inputs. The next link in the chain is the manufacturing, or transformation step; followed the distribution, or localization step. Finally, the finished product or service is purchased by customers as outputs. Service and Manufacturing managers need to know the impact of supply on their organization’s purchasing and logistics processes. In general, supply chain performance and its metrics are often difficult to develop and actually measure.