Chapter 2

Part 1
Lean Logic

Lean Manufacturing: Foundational Theories

Knowing the history of a customer, a situation, a theory, or a process can give you a well-rounded perspective on the entire process.
Many events and foundational theories have led to the development of the lean manufacturing approach. This includes the reasons
why lean manufacturing accepts or rejects earlier methodologies.

Batch-and-queue
Batch-and-queue means that products or parts are created in quantity, or batches, and are stored in queue until needed. And batch-and-
queue philosophy has been a critical catalyst for the lean manufacturing approach. The shift in philosophy from one-at-a-time
methodology to large product inventories may be the true beginning of the batch-and-queue philosophy according to Taiichi Ono,
former vice president of Toyota Motor Company.

Assembly-line production
In 1913, model T Fords were all the rage and selling at $500 apiece. Henry Ford was a manufacturing process innovator who
effectively increased efficiency and reduced production effort by changing how his product was produced. He sequenced all machines
in the correct order necessary to produce Model Ts, thereby creating an assembly-line production.

Essentially, what Henry Ford did was create a continuous production flow so that one part could be delivered to the next production
phase sequentially and quickly. His idea is an early seed for the lean manufacturing flow principle.

What are the strengths and weaknesses of Henry Ford's assembly-line production? What made his approach so effective then, but
perhaps not so effective today? The answers to these questions can provide insights.

Assembly-line production:

• Uses continuous flow and increases production levels. These are both strengths of this production approach.
• Decreases worker effort by increasing efficiency. This is another critical strength of this production style.
• Requires high production volumes to maintain flow, which is one of its weaknesses.
• Supports continuity but not customization. This inability to customize is another downside of assembly-line production.
• Supports product singularity but not product diversity. It cannot change over equipment to produce more than one type of
product at the same time.

Just-in-time production
Toyota's conception of just-in-time production was another critical juncture in the lean manufacturing evolution and a well-intended
attempt to accommodate higher customer demand. The concept supported an even more coordinated process that went beyond simply
sequencing production steps. Now, production activities controlled flow-enabling parts to be completed minutes or seconds before
they were needed for the next stage of production.

To implement just-in-time production you just coordinate upstream and downstream activities efficiently. The quick changeovers and
constant resetting of equipment require more rigorous equipment maintenance and inspection.

Just-in-time production presents many advantages over assembly-line production. Yet, lean thinkers criticize many of the attempts to
create just-in-time production, stating they did not go far enough and ended up creating just-in-time supply without really reducing
inventories.

Total quality management

In the mid 1980s the concept of Total Quality Management (TQM) emerged. TQM proposed that if you can change the organizational

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culture, then performance would improve. Listening to the voice of the customer and using a team-based approach to manage change
became popular. Some other TQM initiatives included zero-defect order taking, customer-service hot lines and audits, shipping
simplifications, and more technologically advanced machinery.

Lean thinkers were not satisfied with these indirect improvements or outcomes. They still were not convinced that the picture was
complete. Could changing the organizational culture truly lead to performance-based improvements?

Re-engineering approach
In the late 80s and early 90s, the re-engineering approach, a TQM offshoot, emerged. It was partially a response to an economic
recession in which companies tried to do more with less.

Re-engineering focused on:

• evaluating and measuring processes

• redesigning processes to add customer value
• reorganizing and eliminating departments in favor of teams or small groups.

Again lean thinkers argued that by segmenting the organization into processes, concepts were still disconnected. Re-engineering often
became an excuse to reduce the workforce and sometimes alienate employees.

Lean production is born

While others were learning about TQM and re-engineering, the Toyotaproduction system gained popularity and success in the United
States as a viable manufacturing approach. It was around 1985 when the Toyota system was relabeled lean production.

Lean production incorporates:

• work standardization
• continuous improvement
• visual production performance cues
• flow and pull techniques
• crossfunctional workforces.

Chaos theory and learning organization theory also surfaced during lean manufacturing's evolutionary time line, but these theories
were not incorporated. Lean thinkers believed that both applied more readily to service industries.

The full spectrum of factors influencing the lean manufacturing methodology include; batch-and-queue, assembly-line, just-in-time,
total quality management, re-engineering, and Toyota's production system. At each critical juncture along the lean time line, important
problems were solved and steps taken to increase the efficiency of the manufacturing process. Every step involved shedding old ideas
and embracing new leaner ones.

Lean Manufacturing: A Working Definition

To implement lean manufacturing into your business, you must first define what lean manufacturing is. By defining lean
manufacturing you will have a framework to operate from and a sense of what must go into a successful lean transformation.

The lean manufacturing definition can be broken down into several important elements. These elements are:

• Concurrent improvement
This means improvements take place simultaneously in all areas of manufacturing. The shop floor may be focused on right-
sizing equipment while the IT department is reconfiguring the database system. Improvements are not limited to one area of
production.
• Wasteful activity removal
This means eliminating activities that do not add value to the manufacturing process. A line employee who must wait for a
machine to finish its cycle before completing the next task is an example of a nonvaluable activity.

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 • Organized improvement projects to create efficient processes and quality products
This means specific production improvement initiatives. These could be projects designed to reorganize the shop floor or an
effort to use visual cues for line workers to see production levels.
• Reorganization of workforce effort to support improvements
This means designing processes and strategies that apply employee effort in the best way to attain the most value. This might
mean retraining employees to be able to perform each function in a manufacturing cell or help develop a new product line.

It is the combination of these elements that creates the alchemy of lean manufacturing.

Michel Baudin, a lean manufacturing expert, has come up with a concise and straightforward definition of lean production that
incorporates all four elements. He defines lean manufacturing as: "The pursuit of concurrent improvement in all measures of
manufacturing performance by the elimination of waste through projects that change the physical organization on the shop floor,
logistics and production control throughout the supply chain, and the way human effort is applied to both production and support
tasks."

Becoming lean
Lean manufacturing is a systematic and sustained effort to eliminate as much waste as possible from systems, processes, and
organization. This does not happen overnight, and it can affect minor and major activities.

Being flexible
Getting lean means being flexible and willing to carry out multiple improvement projects supported by appropriate communication,
and sharing of lessons learned. Being lean is not about shrinking the workforce when processes become more efficient. Displaced
employees can go on to other improvement projects, get trained in new skills, or educate others about what having a leaner vision can
do. The education and training aspect of lean manufacturing is paramount in order to convince everyone that the counterintuitive
practices will work and will work well.

Working together
You have to look at how everything works together; not just focus on one project to bring immediate success. It is simply not enough
to decide what activities are wasteful and plan to eradicate this waste. Plans and ideas must be put into action with specific initiatives
and manageable time lines.

Organizational synergy
Lean manufacturing is measured by decreased throughput times and increased productivity, but it is truly defined by its ability to
create an organizational synergy, a synergy that brings all members of the organization together making things better as equal
contributors.

Perhaps you can begin to see why the word lean is part of the phrase lean manufacturing. The leanness describes the ability to do
more with less: less inventory, less time, less effort, less space, and less long-term frustration. Going lean takes stamina. Companies
and individuals who expect immediate gains without long-term effort will be sorely disappointed. Becoming lean can be difficult to do
but is worth the effort in the long run.

Enemies of Lean Manufacturing

Every good comic book or action film has a superhero and an evil enemy who attempts to thwart the superhero's efforts. In the case of
lean manufacturing, the evil enemy is waste or in Japanese, muda. Waste is defined as any activity that uses resources but does not add
value. It can exist in five different forms.

Wasteful activities
Each of us has experienced delays while attempting a business-related task. Some delays were even extreme. For example, you may
need to conduct a supply inventory, complete purchase orders, get appropriate signatures, and wait for processing and shipping of
orders by vendors. The actual time determining what supplies you need may take only an hour, but the whole process may take three
weeks that include lots of waiting between activities.

The activity of waiting actually required resources such as making calls, checking on whether an order was processed or to make do
without needed supplies. The waiting provided no value. These checking activities and waiting periods do not help you get the
supplies any faster. This is a simple example of how wasteful activities can slow processes down and cause frustration.

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The following is a list of the five types of waste:

• Overproduction and excess inventory

Overproduction and excess inventory means producing parts at the beginning of the process when no need has been created
at the far end of the process, or when the supply exceeds what is needed to satisfy consumer demand.
• Waiting
Waiting means any nonactivity that occurs between production phases. This nonactivity is referred to as down time and is
essentially a halting of effort.
• Transportation
Transportation refers to the exact path a part must take to complete its transformation. So the part's movement from one
machine to another or from one place to another is considered transportation.
• Processing and unnecessary motion
Processing refers to the time and energy wasted by repeatedly inspecting, adding to inventory, and storing raw material as it
moves between locations. Unnecessary motion occurs when workers have to hunt and gather resources.
• Defective products
Defective products are products that need rework or additional inspections to be certified.

In a particular process, some or all of the five types of waste may be evident. It is important to recognize where and why the waste
exists before planning lean manufacturing initiatives.

According to lean thinkers, the five types of waste can be sorted into two distinct categories:

• Less detrimental waste—This consists of wasteful activities that create no value for the customer and can be immediately
removed. Lean gurus strive to remove all waste, but wasteful activities that can be handled quickly with minimal resources
tend to be less detrimental for companies. Simple practices can be enforced to remove these non-value-adding activities.
• Detrimental waste—This consists of wasteful activities that create no value but are currently necessary because of
associated systems or processes. Detrimental waste is deeply entrenched in an organization's way of operating. It is not as
easy to remove because any change will affect or can be affected by a number of processes, systems, organizational culture
issues, union activities, and more.

Evaluating your business processes for incidents of the five types of waste is an important part of the transition to lean manufacturing.
Some types of waste can be easy or difficult to remove depending upon the practices of a particular organization. In a complex
organization that has become used to doing things in a certain way, waste removal will take dedicated effort and planned improvement
initiatives.

The Lean Philosophy: A Foundation for Action

In the face of constant change, how do you stay centered and focused? It can be helpful if you have a set of beliefs and a particular
philosophy to count on. You want your philosophy to best support what you hope to achieve.

For example, the logic behind setting up a 5,000-piece mailing production process according to the batch-and-queue methodology
illustrates how far-reaching and deeply ingrained it has become to compartmentalize tasks and activities. By separating activities into
folding, stuffing, sealing, and stamping, you are batching activities. You may not be wrong, but a change in philosophy might improve
efficiency.

A lean machine
An understanding and appreciation of the lean philosophy can be an anchor in the swirling seas of change. Lean gurus propose that an
organization's decisions and actions must be inspired by the four lean tenets. Otherwise, lean implementation can become unstructured
or misguided, lose momentum, and fail to make long-lasting improvements.

To gain an understanding of this philosophy, you must understand the following four tenets of the lean philosophy:

• tenacity
• transparency
• transition
• totality
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Tenacity
Tenacity means a willingness to put forth the effort and take the time to effectively go lean. It means looking at difficulties as
challenges and following through with lean solutions even if they will take tremendous stamina to put in place.

To be tenacious, an organization must be willing to invest time for a lean undertaking; commit to maintain the current workforce and
not eliminate jobs; and educate the workforce, suppliers, and vendors about lean practices.

Transparency
Transparency means a commitment to openly share information, financials, and lessons learned with every member of the
organization with the belief that doing so can strengthen the lean transformation.

To be transparent, organizations must openly share financials with suppliers, visually track progress of all lean projects, freely
communicate with every faction of the organization, and benchmark internal processes.

Transition
Transition means an understanding of the proper pacing of lean improvement projects. It requires a prioritizing of efforts with an
appreciation for practical day-to-day matters.

To transition appropriately, organizations must improve incrementally, have a transition plan that suggests which types of waste to
address first in what areas, address organizational culture issues, and use appropriate performance measures.

Totality
Totality means having a holistic and complete perspective of the organization and all its contributors to go fully lean. To incorporate
totality, organizations must define whole product value, encourage support from all members, invest energy in mapping out the entire
value stream, and affect every area of the organization when implementing projects.

A guideline for action

Although the lean philosophy gives you a guideline for action, it does not guarantee that others will be lean philosophers too. You still
need to justify lean actions and decisions. Doing this requires a complete understanding of the lean philosophy and why it exists.

You must never lose sight of the lean philosophy as you progress on your journey to attain leanness. If you do, lean solutions might
evade you, and fellow lean mates may abandon the journey. Becoming lean is just as much a personal endeavor as a professional goal.
When in doubt, review the four foundational tenets of the lean philosophy and make sure that your actions and decisions are aligned
with it.

Value in Lean Manufacturing

How many times have you heard the word value tossed around superficially? Someone may say that they value your input or that an
idea really has value. But what does value really mean? It is easy to sprinkle the word value in everyday conversation without
analyzing what it means. It has become such an overused term that people hear it and tune out.

You might think you know what customers' value but when was the last time you went out and talked to your customers? You may
think that customers do not really change that much, that what they wanted yesterday is what they want today with some minor
adjustments. Those minor adjustments might be quite important.

Talking to customers is necessary. You might consider what your competitors promise to deliver to customers. To ascertain whether
product value is being defined correctly, your organization will need to ask three questions.

These three questions are:

• How does an organization determine product value?

Companies may assume they know what customers value. Yet, it's only internal employees who are defining value—
engineers, salespeople, or line supervisors. That's why going to the source instead of making assumptions is important.
• Has a value stream analysis been conducted properly?
A value stream analysis looks at every action needed to create a product, whether these take place in-house or not. It means

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 envisioning a product passing through each step until finished. What happens? Who touches the parts? How are parts
transformed? How are steps sequenced?
• What nonvalue-added steps can be removed from the value stream?
Steps in the value stream must be challenged to see whether value is truly being added. Some steps in a process can be
removed or some actions within a step can be purged to eliminate waste and ultimately create more value.

By asking appropriate questions, your organization can redefine value sooner rather than later, which ultimately leads to a more
successful lean transformation.

An organization must take the time to define product value appropriately, or else activities aimed at creating flow or achieving pull
may be misguided. Value is an important lean principle. In fact, most organizations don't dedicate enough attention to the value
principle. This can lead to worker, supplier, vendor, and manager noncompliance during lean efforts.

Continuous Flow in Lean Manufacturing

Do you pay all of your bills at the same time and mail them out together or do you pay each bill as it comes and mail each separately?
If you pay your bills all at once and mail them together, you are operating from the batch-and-queue methodology. If you pay each bill
as it comes in, you may be using the lean flow principle.

The lean flow principle is about creating continuous movement to eliminate stoppages that slow down production. Production
stoppages can occur in traditional batch-and-queue operations and impede flow. Therefore, you must understand batch-and-queue
manufacturing characteristics first as a basis for comparison.

Batch-and-queue manufacturing characteristics include:

• Departments and functions

Batch-and-queue thinking compartmentalizes companies into departments and functions. Departments handle certain tasks
only. Each one has a specific function or boundary it adheres to. Employees within departments are trained to only complete
specific functions.
• Tasks grouped in batches
Batch-and-queue manufacturing requires that products, parts, and tasks be grouped together. You wait until you have so
many claims to be processed, widgets to be welded, or metal pieces to be stamped before performing that task. This is
considered efficient.
• High-speed equipment
Batch-and-queue manufacturing proposes that efficiency is defined by how quickly the machines can complete a single task.
In this situation, high-speed equipment is favored.
• Equipment dictating production
Batch-and-queue manufacturing assumes that equipment should dictate how the product is made. High-speed equipment,
technology, and tools will determine the best processes and steps to follow.
• Hierarchical organizational structures
Hierarchical organizations are valued in batch-and-queue organizations. Information flows from the top down and orders are
followed by line workers who must do as they are told.
• High-volume production
Batch-and-queue techniques are based on the belief that small lot production is a waste of time. In the eyes of a batch-and-
queue proponent, it is better to accumulate inventory than to do small runs of products.

All of these characteristics are an integral part of how products are produced or services are delivered in a batch-and-queue
environment. They affect the entire production and delivery format.

A comparison
Now, look at the lean manufacturing characteristics for comparison. These characteristics allow for more continuous production flow
and seem to be in direct opposition to previously discussed batch-and-queue traits.

Lean manufacturing characteristics include:

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 • Cells and teams
Rather than organizing by functions and departments, lean manufacturing proposes that all of the needed tasks for a particular
product or phase of production are completed within a cell, which is a U-shaped production area. Each cell member knows
how to complete all cell tasks.
• One-at-a-time production
An entire widget, air bag, suitcase, or lawnmower is fully completed before the next one is produced.
• Right-sized equipment
Right-sized equipment can handle all tasks equally well or can be quickly changed over to accomplish an entirely different
activity.
• Product dictating production
Instead of trying to arrange production around what the equipment can do, the goal is to most efficiently create the product
even if that means designing new equipment.
• Flat organizational structures
Organizational structure encourages the flow of information laterally and rewards employee initiative. It complements strong
communication and trains workers cross-functionally.
• Low-volume production
Lean manufacturing argues that producing more types of parts or products in lower volume is ideal. Quickly changing over
tools and right-sizing equipment allows different products and production steps to be conducted in close proximity.

Lean experts propose that all lean manufacturing characteristics must be present to maximize the lean flow principle. These
characteristics create continuous movement to eliminate stoppages that slow down production.

Continuous production flow

Continuous production flow is also referred to as single-piece flow. The concept is to pass pieces one at a time through various
operations with a first in, first out prioritization schedule. To do this, production operations cannot treat every part in the same way as
they have done in the past.

Lean experts propose that certain methods can be used to eliminate batch-and-queue characteristics and create more continuity. In a
recent study, 23 percent of manufacturers were widely using continuous-flow production. This statistic has risen 2 percent since 2000,
an encouraging trend. How do they do it?

Some methods to achieve continuous flow include:

• Determining the right tools and equipment

Examine each activity to determine what tools could be right-sized or created to permit products to flow without delays.
• Changing over tools quickly
Analyze machine set-up procedures and redesign the set-up process to get quicker changeover.
• Creating production cells
Shift and resequence production steps using manufacturing cells.
• Using a preventative equipment maintenance schedule
Inspect and analyze equipment breakdown logs to determine how often each equipment piece needs to be serviced.
Implement a preventative maintenance schedule.
• Alternating between low-, mid-, and high-volume part production
Categorize products by low-, mid-, and high-volume demand. Base daily production schedules on the demand levels for these
specific products and set machine usage according to these schedules.
• Standardizing work practices
Document and translate best work practices into standardized procedures.

Purging the batch-and-queue characteristics from your organization is not an easy task. However, to truly achieve the lean
manufacturing principle of flow, this is where your organization must begin. Overall, by creating more continuous flow to eliminate
stoppages, your organization will reduce its amount of rework and reduce production of defective parts.

The Pull Principle in Lean Manufacturing

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A supermarket is a great example of continuous flow and customer pull. You can go into the grocery store and literally pull the items
you need right off the shelves. It would not be practical to arrange grocery stores any other way. Yet, the ability to pull products when
needed is not as evident in other industries.

Achieving Pull
The lean pull principle, along with the flow principle, addresses the consumer's need to have a product exactly when wanted. It helps
organizations to have customer demand drive production instead of creating large product inventories that must be peddled to
customers.

For example, a sporting goods store hosts monthly close-out sales to move excess inventory from the store shelves, and a popular
office supply retailer delivers orders placed in the morning to the buyer in the afternoon of the same day.

The office supply retailer is letting customers pull products while the sporting goods store is pushing products to customers. Pull is
accomplished when a request upstream triggers downstream production. A breakfast cook wouldn't think of scrambling eggs until the
customer ordered them. The cook's action is the downstream production and the customer's order is the upstream request.

The pull principle will help your organization to avoid creating products until they are needed. To achieve pull, organizations need to
accomplish the following:

• Balancing flow and pull

Balancing flow and pull means creating systems in which one aspect of production pulls the next activity, and this process
creates continuous flow.
• Setting production schedules based on customer demand
Setting production schedules based on customer demand means good organization. Instead of creating inventory and then
fulfilling orders, take the orders for the next month and base production exactly on what's already been ordered.
• Being flexible by creating more than one type of product at a time
Being flexible enough to create more than one type of product at a time means diversifying production. Sorting products into
different categories and then using level scheduling to plan production of each of these products is an example.
• Providing incentives for purchasing smaller orders more frequently
Providing incentives for customers to purchase smaller orders more frequently means strategizing. An example might be if a
company reduced shipping charges for small orders.

Obstacles to the pull principle

The lean pull principle sounds simple, but it is actually more difficult to put into practice. Think about how many times you have
needed a product or service and could not pull this product or service right away.

The obstacles that prevent organizations from applying the pull principle include:

• Attempts to forecast customer demand instead of responding to actual demand

Many organizations have software programs that attempt to predict customer demand based on formulas or past order
histories. These rarely work and end up being forecasts rather than realities. Customer orders need to be directly linked to
systems that set daily production quotas.
• Warehouse practices
Most warehouses have been designed to store large quantities of frequently used products. They are not designed to have a
wide variety of less requested products or parts. They cannot respond to smaller orders for less popular products or parts
efficiently.
• Fears of high shipping and transportation costs
Companies' attempts to stave off expensive ground and airfreight costs have caused many to remain stuck in batch-and-queue
processes. But by fulfilling smaller orders more quickly with lean suppliers, these fears can be minimized.
• Fears of letting go of control
Many organizations use their line supervisors as watch dogs spurring on employees to work harder and faster. Lean
manufacturing advocates the use of more visual controls and systems that automatically start and stop production. These new
processes must be trusted.
• Fears of re-evaluating every aspect of the business
When the lean pull principle is applied, the domino effect occurs. The entire organization may be turned upside down to truly
become lean. The thought of this is frightening for most, but this fear can be overcome with proper lean training.

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These obstacles can cause organizations to overlook opportunities for applying the lean pull principle. It is only with proper education
and training that these obstacles look less monumental to organizations and their employees.

There can be many obstacles in the way of reaching true pull. Most of these obstacles result from fear and lack of knowledge.
Addressing the fears and lack of information effectively can quickly lead a company in the right direction. It is with the proper
combination of the lean value, flow, and pull principles that organizations can charge ahead with lean manufacturing.

Applying the Lean Perfection Principle

You may believe that if you get something right the first time, you will not have to revisit it time and time again. This may be true for
simple activities like cleaning the dishes or replacing a watch battery. However, this is not true for improving processes or changing
behaviors and it is especially not true for lean improvement initiatives.

Striving for lean

The lean perfection principle is about understanding that an organization can always be made leaner even if initial lean efforts were
performed very well. Lean perfection means striving for continuous improvement with no judgment about how long it might take, or
how much effort must be expended.

Waste removal needs to become a habit and an opportunity to continuously improve. Organizations can get in the habit of initiating
continuous improvement.

The following actions will be necessary to apply the lean perfection principle to your organization:

• Taking as many steps as necessary to strive for leaner practices

Each year, productivity and production should be evaluated and steps taken to improve these processes over the previous
year's standards.
• Competing against higher standards
Encourage your team to compete against its own higher standards. Set goals that are challenging and aim high.
• Keeping goals in clear view
Redefine lean goals every three to six months and made sure to communicate goals to every member of the organization. You
might want to post goals and achievements in a visible location.
• Establishing appropriate time lines for continuous improvements
Carefully select projects and map out realistic time frames for success.
• Prioritizing projects
Develop a set of criteria to evaluate improvement projects. Consider only those that match criteria and scrutinize them
carefully before giving a green light.

You must understand that improvement is ongoing. Although lean initiatives can become tiresome, the constant momentum keeps
productivity ahead of the marketplace curve. Lean experts describe the search for perfection as a series of endless steps. Organizations
must appreciate this description without weighing themselves down with projections about the description's consequences.

It is important to remember that the journey to perfection is more important than the ultimate goal of being perfect in any lean
manufacturing undertaking.