1.

INTRODUCTION TO LEAN
MANUFACTURING

Manufacturing vital
source of wealth for
almost all industrialized
nations.
20- 30% of GNP.
High level of
manufacturing activity
high standard of living.
(from Schey, J., Introduction to Manufacturing
Processes, 2nd. Ed., McGraw-Hill, 1987)

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High manufacturing capacity ability to survive war.

American Civil War: North.
WWII: America and Russia.

Importance of manufacturing to a countrys

prosperity, survival cannot be overestimated.
Throughout history, various approaches to
manufacturing have propelled nations to manufacturing
preeminence. Latest of these: lean manufacturing.
To fully understand lean manufacturing, necessary
to understand its historical origins.

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1.1 EARLY MANUFACTURING

4000 BC 1700s: hand-made items (copper, gold, brass).

highly-skilled craftsmen, crude tools.
=?
human and animal energy.

Mid-1700s: Division of Labor (Adam Smith).

divide work into tasks.
each worker specializes in a separate task.

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1760 1830: Industrial Revolution (England).

first machine tools.
steam engine (James Watt).
Factory system organization based upon division
of labor.

1798: Interchangeable Parts (USA).

muskets (Eli Whitney),
1798.
prerequisite of mass production.

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1800 1920: Second Industrial Revolution

i) Scientific Management (Taylor)
Separate planning from production.
Single best way time/motion studies.
Assign jobs (short, repetitive tasks) to workers.
Workers do assigned jobs: no input.
While Taylorism often viewed negatively, many
of Taylors pioneering ideas remain in use today:
T
M
S

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ii) Mass Production (Ford)

Early 1900s: automobiles via craft production.
Extremely expensive, months to produce.
Each car unique in design and construction (no
interchangeable parts).
Fords goal: automobile
that was easy to
manufacture, repair,
and affordable.

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 Fords first steps:

i) New machining practices machining of pre-hardened parts.
ii)
Allowed interchangeable parts on a large scale.
Next steps:
- Reduce quantity of parts, simplify assembly
process (engine block casting, glass).
- Have parts delivered directly to work areas.
Result:
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 Finally, Ford had a revolutionary idea: workers

remain stationary, work moves past them.
The moving assembly line
linked independent
processes, improved
stability, further
increased throughput.
Greatly decreased time,
effort needed to produce a
vehicle. Vast quantities now possible at low cost.
This revolutionary system was called ?
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 Fords first success: Model T.

- 1908 1926.
- 15,000,000 vehicles!

Trouble keeping profits down!

- 1908-1920: real cost of
an automobile reduced by almost 70%.
- Doubled assembly line worker wage (to $5/day).
- In one year, refunded $50 to each customer.
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 Fords contribution to American

industry and manufacturing
cannot be overstated. He is
largely responsible for America
becoming the worlds leading
manufacturer, wealthiest country.
- Model T: created $7B of wages and income.
At that time, this was more than the estimated

combined wealth of 35 of the 48 states!

Revolutionized not only manufacturing, but also

society in general.
A
M
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1920 1970s: Rise of Mass Production

i) Management and Accounting (Sloan - GM)
profit centers
Focus on management and accounting.
ii) Union Movement
Mass production = mindless, dehumanizing work.
Unrest led to labor agreements between UAW
and the Big Three in late 1930s.
Result: job classifications, seniority-based
compensation, and ultimately two camps:

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1.2 SHORTCOMINGS OF MASS PRODUCTION

Despite their success, mass production facilities

inherently plagued with several problems:
i) Excessively large, inflexible equipment
Economies of scale.
ii) Excessive inventories and flow times
Expensive equipment keep it busy!
L

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iii) Worker Alienation

Mindless, repetitive work job dissatisfaction,
frequent absenteeism, high employee turnover.
Little/no management support (US vs. THEM).
Shop floor viewed as drudgery, last job choice.
iv) Poor Quality
Emphasis on throughput.
Production vs. inspection workers (unions).
P
Final inspection, repair departments.
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1.3 A NEW BEGINNING

Lean manufacturing started with one company:

Post-WW II: Japans economy in shambles.

consumer spending nearly non-existent.
many companies in financial distress.
credit restricted, so borrowing difficult.

Toyotas top management given the monumental task

of catching up with the US auto industry in 3 years.

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At that time, Toyota similar to Ford (mass production).

Fords system designed for
large, stable market; minimum diversity.
ample materials and resources available.
capital to invest in large, high-volume machinery.

None of these conditions, however, existed in Japan!

Small, diverse market.
1950:
Limited materials and resources.
Negligible capital.

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Result: mass production was not working (and would

not work) for Toyota.
Something different needed for Toyota to catch up
with US auto industry.

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1.4 THE TOYOTA PRODUCTION SYSTEM

1950: Eiji Toyoda, a young Toyota engineer, visits

Fords immense Rouge plant. Studies the facility in
great detail.
After returning to Japan, Eiji and his production
assistant, Taiichi Ohno, reach two pivotal conclusions:
M
I

Ohno then charged with coming up with a new system

of production for Toyota.

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Around same time, Toyota flirting with bankruptcy.

In desperation, Toyotas president, Koichiro Toyoda,
proposed firing a quarter of the workforce. But
Toyota had a strong union (due to Americaninstituted labor laws passed in 1946) which opposed.
After much negotiation, compromise reached:
Proposed terminations accepted.
Koichiro Toyoda resigned as Toyotas president.
Remaining employees received two guarantees:
i)
ii) Pay strongly tied to seniority, bonuses based
upon company profitability.

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Groundbreaking agreement, with deep implications:

No firing of workers workers now a fixed cost.
Should thus base system on people.
Seniority-based pay workers not likely to leave.
Toyota could thus rest assured that investment in
worker skills, training, etc., would pay off.
B
Us vs. Them mentality replaced with
one of cooperation, involvement, and
mutual benefit.

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Ohno thus based his system on ?

Problems remaining: limited supplies and capital.

Limited materials make things right the first time,

reduce waste in all processes.

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LLimited capital no dedicated equipment.

Each machine: many different parts, in
relatively small quantities.
To make this possible, Ohnos workers
invented machines for which changeovers
could be done very quickly.

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Faster changeovers reduced batch sizes. Led to

Reduced flow times
Improved flexibility (can more
easily produce different products).
Improved quality (defects detected
earlier, fewer items affected).

Focus on workers, making things right the first time,

and use of inexpensive, flexible equipment laid
foundation for the Toyota Production System.
Ohno spent thirty more years refining TPS: Toyota
became one of worlds greatest manufacturing firms.

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1.5 FROM TOYOTA PRODUCTION SYSTEM TO

LEAN MANUFACTURING

Following success of TPS at Toyota, next step was to

have Toyotas suppliers adopt the system.
O

1969: Ohno establishes the Production Research

office to work with Toyotas largest suppliers.
End of the 1970s: TPS in use throughout Toyotas
supply chain.

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This led to increased visibility/interest in the system

by Japanese and non-Japanese companies alike.
Doubts, however, that system could work outside Japan.

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1980s: Toyota brought TPS to

the US via a joint venture with
GM called New United Motor
Manufacturing Incorporated
(NUMMI).
Converted an old plant in
Fremont, CA to TPS.

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Fremont plant had been closed for

several years.
Prior to closing, had been the worst
GM plant worldwide.
lowest quality scores, absenteeism
over 20%, frequent strikes.

Following implementation of TPS,

absenteeism dropped to 2%,

plant broke all GM records for
cost, quality, and delivery.

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Facility remained a model of successful TPS

implementation in America for decades.
2009: Pontiac Vibe production discontinued.
Toyota and GM could not find a suitable
replacement product.
J

Following NUMMI, interest in TPS grew in the US.

Companies slowly started adopting the methods in
their facilities during the mid-1980s.

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1984: MIT began 5-year, $5M study of the global automobile industry (International Motor Vehicle Program).
best-selling book The Machine That
Changed The World (Womack et al.,
1990).

Major finding: Toyotas manufacturing system so

radically different from mass production that it should
be recognized as a totally new kind of manufacturing.
Vastly superior to mass production in terms of quality,
productivity, and customer response.

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Most distinguishing feature of the new approach: used

less of everything as compared to mass production
(Womack et al., 1990):

half the human effort in the factory, half the

manufacturing space, half the investment in tools,
half the engineering hours to develop a new product
in half the time. Also, it requires keeping far less
than half the needed inventory on site.

As a result, the term lean manufacturing was coined.

MIT study results further spread interest in the
Toyota Production System, i.e., lean manufacturing.

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Today, there are a great many successful lean

implementations in the US and abroad.
A great many more firms have yet to take the lean
journey, however.
As with Ford and mass production, Toyota must be
recognized as developing a new manufacturing
paradigm that changed (is changing) the world.

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Additional References

Dennis, P., Lean Production Simplified, Productivity

Press, New York, NY, 2002.
Levinson, William A., Henry Fords Lean Vision,
Productivity Press, New York, NY, 2002.
Liker, Jeffrey K., Becoming Lean: Inside Stories of
US Manufacturers, Productivity Press, Portland, OR,
1998.
Womack, James P., Jones, Daniel T., and Roos, D., The
Machine That Changed The World, Macmillan/Rawson
Associates, 1990.

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BIRTH OF LEAN: TOYOTA, or FORD??

1982: Ford Motor Company executives visit Japan

auto manufacturers, to learn about Japanese quality
and improvement methods:

One Japanese executive referred repeatedly to the

book. When Ford executives asked about the book,
he responded Its Henry Fords book, of course your
companys book.
(Book: Henry Fords Today and Tomorrow, 1926).
Source: Stuelpnagel, T.R. 1993, Deja-Vu: TQM
Returns to Detroit and Elsewhere. Quality Progress
(September), 91-95.
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BIRTH OF LEAN: TOYOTA, or FORD??

Norman Bodek, former president of Productivity Inc.,

in his forward to a reprint of Henry Fords Today and

Tomorrow:
I was first introduced to the concepts of just-in-time
(JIT) and the Toyota production system in 1980.
Subsequently, I had the opportunity to witness its
actual application at Toyota on one of our numerous
Japanese study missions. There I met Mr. Taiichi
Ohno, the system's creator. When bombarded with
questions from our group on what inspired his
thinking, he just laughed and said he learned it all from
Henry Ford's book.

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