The idea of lean operations (also known as just-in-time, lean synchronisation, continuous flow operations, and so on) spread beyond its Japanese roots and became fashionable in the West at about the same time as TQM. And although its popularity has not declined to the same extent as TQM, over 25 years of experience (at least in manufacturing) have diminished the excitement once associated with the approach. But, unlike TQM, it was seen initially as an approach to be used exclusively in manufacturing. Now, lean has become newly fashionable as an approach that can be applied in service operations.
What is ‘lean’?
The lean approach aims to meet demand instantaneously, with perfect quality and no waste. Put another way, it means that the flow of products and services always delivers exactly what customers want (perfect quality), in exact quantities (neither too much nor too little), exactly when needed (not too early or too late), exactly where required (not to the wrong location), and at the lowest possible cost. It results in items flowing rapidly and smoothly through processes, operations and supply networks. It is best illustrated with an example. Figure below 9a) shows a simple threestage process. The traditional approach assumes that each stage in a process or supply network will be ‘buffered’ from the next stage downstream. These buffers ‘insulate’ each stage from its neighbours, making each stage relatively independent, so that if one stage stops operating for some reason, the next stage can continue, at least for a time. The larger the buffer inventory, the greater the degree of insulation between the stages, but throughput times will be slow because items will spend time waiting in the inventories. The main argument against this traditional approach is that when a problem occurs at one stage it will not immediately be apparent elsewhere in the system, so the responsibility for solving the problem will be centred largely on the people within that stage. By contrast, with a pure lean process, as shown in Figure below (b), items will flow from one to another only when the subsequent stage requests them. This means that problems at any stage are quickly exposed. The responsibility for solving the problem is now shared and is more likely to be solved. By preventing items accumulating between stages, the operation has increased the chances of the intrinsic efficiency of the process being improved. The lean approach exposes the process (although not suddenly) to problems, both to make them more evident and to change the motivation towards solving the problems.
The Elements of Lean
Return to our simple example illustrated in Figure 3.4. Note how the trigger for any activity is the direct request of the internal customer. This reflects the emphasis that lean places on meeting the needs of customers exactly. Second, note how, in the absence of inventories, items flow in a smooth and synchronous manner. In fact the term ‘lean synchronisation’ is perhaps a more accurate name for what we are here calling the lean approach. Third, note how the synchronisation leads to fewer inventories in the process, which in turn leads to a change in people’s behaviour, involvement in, and motivation for, improvement. Finally, note how this motivation to improve reinforces the quest for seeking out and eliminating waste within processes. It is these four elements of customer-based demand triggers, synchronised flow, enhanced improvement behaviour, and waste elimination that mesh together to form the lean approach (see Figure below). We will examine each briefly in turn.
Customer-based demand trigger
In the lean approach, demand is to be met exactly when it is needed, no more no less, not early not late, and always to exact levels of quality. This is obviously easier when demand is predictable and, preferably, relatively steady. The implication of this is that the ability to implement lean principles is much enhanced when an organisation understands (and to some extent controls) the nature and level of the demands on its resources. The most common approach to achieving customer-based triggering is by utilising ‘pull’ control as opposed to push control. Push control was illustrated in Figure 3.4(a) when any items that are processed by a stage are immediately pushed forward to the next stage irrespective of whether that customer stage actually requires them at that time. Pull control is implicit in Figure 3.4(b) where items are ‘pulled’ forward only in response to a specific customer request.
Synchronized flow
Synchronised flow means that items in a process, operation or supply network flow smoothly and with even velocity from start to finish. This is a function of how inventory accumulates within the operation. Whether inventory is accumulated in order to smooth differences between demand and supply, or as a contingency against unexpected delays, or simply to batch for purposes of processing or movement, it all means that flow becomes asynchronous. It waits as inventory rather than progressing smoothly on. Of course, once this state of perfect synchronisation of flow has been achieved, it becomes easier to expose any irregularities of flow which may be the symptoms of more deep rooted underlying problems.
Involvement behavior
The lean approach has always stressed the importance of staff involvement. However, often the way in which this was expressed, using terms such as ‘respect for humans’ and ‘enlightened vision’, did not always resonate with Western perspectives on organisational behaviour. Indeed, the lean approach often seemed naïve, patronising, or worse to liberal Western eyes. Yet return to the fundamental idea as illustrated in our simple example and we have something that is not fundamentally countercultural, namely that smooth flow and the absence of inventory motivate individuals to help their colleagues improve the whole process rather than focusing exclusively on their own area of direct responsibility. So behaviour is partly a function of synchronous flow, which is itself a function of customer-based triggering of demand. Furthermore, it is these changes in motivation and behaviour that in turn lead on to the fourth element – waste elimination
Waste elimination
This is arguably the most significant part of the lean philosophy: the elimination of all forms of waste, where waste is any activity that does not add value. Identifying waste is the first step towards eliminating it. Toyota has described seven types. Here we consolidate these into four broad categories of waste that apply in many different types of operation.
- Waste from irregular flow. Perfect synchronisation means smooth and even flow through processes, operations and supply networks.
- Waste from inexact supply. Perfect synchronisation means supplying exactly what is wanted, exactly when it is needed. Any under or over supply and any early or late delivery will result in waste.
- Waste from inflexible response. Customer needs can vary, in terms of what they want, how much they want, and when they want it. But unless an operation is flexible, it can make change only infrequently. This mismatch is the cause of much inventory, for example because machines make a large batch of similar products together.
- Waste from variability. Synchronisation implies exact levels of quality. If there is variability in quality levels then customers will not consider themselves as being adequately supplied. Variability therefore is an important barrier to achieving synchronised supply.
Some organisations, especially now that lean is being applied more widely in service operations, view waste elimination as the most important of all the elements of the lean approach. In fact, they sometimes see the lean approach as consisting almost exclusively of waste elimination. What they fail to realise is that effective waste elimination is best achieved through changes in behaviour. It is the behavioural change brought about through synchronised flow and customer triggering that provides the window onto exposing and eliminating waste.
Capacity utilisation may be sacrificed in the short term
A paradox in the lean concept is that it may mean some sacrifice of capacity utilisation. In organisations that place a high value on the utilisation of capacity this can prove particularly difficult to accept. It occurs because, when stoppages occur in the traditional system, the buffers allow each stage to continue working and thus achieve high capacity utilisation. The high utilisation does not necessarily make the system as a whole produce more, because the extra production goes into the large buffer inventories. In a lean process, stoppages will affect the rest of the operation. This will lead to lower capacity utilisation, at least in the short term. However, there is no point in producing output just for it to increase inventory. In fact, producing just to keep utilisation high is not only pointless, it is counter-productive, because the extra inventory produced merely serves to make improvements less likely.
Criticisms of lean
The lean approach to people management can be viewed as, at best, patronising. It may be less autocratic than some earlier Japanese management practice, but it is not always in line with ‘Western’ job design philosophies. Even in Japan the just-in-time (JIT) approach is not without its critics. Kamata wrote an autobiographical description of life as an employee at a Toyota plant called Japan in the Passing Lane. His account speaks of ‘the inhumanity and the unquestioning adherence’ of working under such a system. Similar criticisms have been supported in some studies that point out some of the negative effects of the flexibility principles within the lean approach.
Lean principles can also be taken to an extreme. When lean ideas first started to have an impact on operations practice in the West, some authorities advocated the reduction of between-process inventories to zero. While in the long term this provides the ultimate in motivation for operations managers to ensure the efficiency and reliability of each process stage, it does not admit the possibility of some processes always being intrinsically less than totally reliable. An alternative view is to allow inventories around process stages with higher than average uncertainty. This at least allows some protection for the rest of the system. The same ideas apply to just-in-time delivery between factories. The Toyota Motor Corporation, often seen as the epitome of lean, has suffered from its low inter-plant inventory policies. Both the Kobe earthquake and fires in supplier plants have caused production at Toyota’s main factories to close down for several days because of a shortage of key parts. Even in the best-regulated manufacturing networks, one cannot always account for such events.
Arguably, the major weakness of lean principles is that they can break down when fluctuations in supply or demand become extreme, especially when they are also unpredictable. The pull control of hamburgers in a fast-food restaurant works perfectly well when demand stays within predictable limits. However, when subjected to an unexpected large influx of customers, it leaves most of those customers waiting for their meal. Similarly, in very complex and interrelated processes, lean principles are sometimes difficult to apply.
Lessons from lean
Looking back to when the lean approach was first introduced into Western manufacturing, it s easy to forget just how radical and, more importantly, counterintuitive it seemed. Although ideas of continuous improvement were starting to be accepted, the idea that inventories were generally a bad thing, and that throughput time was more important than capacity utilisation, seemed to the more traditionally minded to border on the insane. So, as lean ideas have been gradually accepted, we have likewise come to be far more tolerant of ideas that are radical and/or counterintuitive. This is an important legacy because it opened up the debate on operations practice and broadened the scope of what are regarded as acceptable approaches.
Similarly, the idea that protecting parts of the operation (by buffering them with inventory) is not sensible in the long term has also had profound effects. Opening up an operation’s resources to its external customers is now seen as promoting the same behavioural change as reducing inventory between the stages of a process. It exposes the operation to the realities of the market and forces it to adapt to what the market really wants, often by increasing the flexibility of its resources.
A further legacy that the absorption of lean ideas has brought operations in general concerns the interdependence of a number of important ideas. Before the lean approach there was relatively little understanding of how inventory, throughput time, value-added and waste elimination, utilisation and flexibility all related to each other. Although the way in which lean philosophy integrated these ideas was novel, it was at least coherent. In fact, it legitimised the whole idea of a philosophy of operations. Prior to lean, operations was a relatively loose collection of ideas from the scientific management era of the early twentieth century, some elegant but relatively naïve mathematical modelling, and simple practical ideas based on pragmatic operations practice.
It is also worth remembering that when Taiichi Ohno wrote his seminal book on lean (after retiring from Toyota in 1978) he was able to portray Toyota’s manufacturing plants as embodying a coherent production approach. However, this encouraged observers to focus in on the specific techniques of lean production and de-emphasised the importance of 30 years of ‘trial and error’. The success of Toyota has much to do with the process of fit (see ‘alignments’ in Chapter 9). Staff at Toyota worked over decades to ensure alignment between their intended market position and their operations resources. Maybe the real achievement of Toyota was not so much what they did but how long they stuck at it.
Source: Nigel Slack & Michael Lewis, 2011, OPERATION STRATEGY, 3rd edition, Pearson Education Limited,