Lean Management Beyond Manufacturing: A Holistic Approach

300 Pages·2015·3.362 MB·English

by  Sanjay Bhasin (auth.)

Sanjay Bhasin
Lean
Management
Beyond
Manufacturing
A Holistic Approach
Lean Management Beyond Manufacturing
Sanjay Bhasin
Lean Management Beyond
Manufacturing
A Holistic Approach
123
SanjayBhasin
NOMSCollege
Coventry
UK
ISBN 978-3-319-17409-9 ISBN 978-3-319-17410-5 (eBook)
DOI 10.1007/978-3-319-17410-5
LibraryofCongressControlNumber:2015936680
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Preface
The significant problems we face cannot be solved by the
samelevelofthinkingwhichcausedthem
AlbertEinstein
A Brief Summary of the Rationale for This Book
The decision to carry out this project has been triggered from various sources; in
general, there are six very diverse yet interconnected reasons.
In the first instance, I have been requested on numerous occasions to undertake
this.OftenclientshaveindicatedthatwhentheyfollowthenumerousLeanmanuals
and “how to” guides, they still encounter practical and everyday issues which are
notclearlyidentifiedwithintheliterature.Whilsttheterm“Lean”wasconceivedin
excess of thirty years ago by Krafcik (1988), there still remain erroneous illustra-
tionsoftheconceptLeanasaperception.Despitetheadvancementmadeasregards
the ingredients professed as vital for Lean to be successful within an organisation,
undertakings to deliver a translucent comprehension of the philosophy have been
and continue tobe relatively mystifying. Therecurrently blatantly existprocedural
and philosophical cavities in the prevailing literature which attempts to clearly
exemplify the indisputable and decisive requirements which any organisation
attemptingtoadoptLeananditsideologyshouldbothconsiderandintegratewithin
their own Lean journeys.
Secondly and regrettably, I still find efforts to align the Lean initiative to the
prevailing culture of organisations rare. In my experience, the majority of Lean
initiatives whichfail toachievetheirintended objectives can becontributed tothis
factor coupled with the change management principles adopted by the respective
organisations. Lean always needs to be envisaged as an everlasting expedition.
Inherentlywithinthisvoyage,effortsneedtobemadetoaltertheprevalentculture
v
vi Preface
of the organisation in question which is often either overlooked or measly efforts
madetoaccommodatethis.TheorganisationthenseemsflabbergastedthatitsLean
efforts have not materialised into a successful implementation.
Thirdly, I still encounter too many Lean efforts focusing upon the immediate
organisationorparticularfunctionswithinthatorganisation,namelymanufacturing.
Leanshouldalwaysbeviewedasaholistic ideologywhichalso requires aneedto
embracesuppliersratherthanviewingthemasadversaries.ThefullbenefitsofLean
can never be realised unless the continuous improvement principles are applied
throughouttheorganisation’svaluechain.Withinthisbook,thereisawarenessthat
increasing product obsolescence, tighter launch deadlines and shrinking profit
marginsareforcingorganisationstolookformanywaystoreducethecostandtime
involved in manufacturing. Once we add the pressures of sustainability demands
and a struggling global economy, a Lean supply chain becomes imperative to
success.Thebookproceedstoindicatethenotionofoutsourcing,whichistypically
and erroneously employed to save costs. Very few companies are in a position to
produce everything in-house, and the financial investment to do so would be
unfeasible.
Fourthly,Leanisandconstantlyshouldbeobservedasintegratingacommercial
perspective; this has been clearly represented by Toyota who is devoted towards
discovering improved methods of creating cars; with this in mind, performance
management should be clearly integrated within any efforts to integrate Lean. A
comprehensive investigation will be demonstrated in order to decipher whether
organisationsembracingtheLeanprinciplesaspartoftheiroverallstrategicoption
managed to secure a competitive advantage. The intention is to decipher the
potential benefits an organisation experiences by analysing the impact that the
organisation’s Lean journey has on its financial and operational efficiency levels.
Thisisconsidered toassistinestablishinganidealpromotional opportunityofany
Lean initiative. I am often perplexed when Lean champions state to me that their
organisationisseekingthereturnoninvestmentfromtheirLeaninitiative;yetinthe
first instance, no efforts had been made to integrate effective performance param-
eters. A balanced portfolio of metrics is often necessary. Lean does not easily
correlate itself to the traditional accounting systems; it is for this reason that or-
ganisationsneedtoembracesystemswhichcansuitablymeasuretheimpactLeanis
makingwithintheirownorganisations.Undeniably,Leandoesinvolveasubstantial
investmentwhichsubsequentlyreapsexponentiallyagreaterdegreeofsavings.Itis
for this reason that it is important to gauge reliably the impact of Lean; this
information is vital for policy makers within the organisations to make evidence-
based decisions. A modified balanced scorecard will be discussed and recom-
mended which embraces strategic, operational and indices focused towards the
future prospects of an organisation.
Fifthly, the implementation of any major initiative requires bespoke and dedi-
cated interjections required at particular junctures of the initiative; consequently, a
considerable effort will be made to exemplify the phases of a Lean journey which
oftenorganisations,whilstespousingtothecontinuousimprovementideology,pay
scant attention to. It is considered vital to plan out the Lean journey and then be
Preface vii
able to categorise the stage of Lean an organisation exhibits in its overall imple-
mentation journey. This presents a prospect to guide an organisation of precise
prerequisitesitneedstogratifyifthecompanyisseriousregardsembracingLeanas
an ideology. I have witnessed numerous Lean audits which can often be placed at
two extremes of a continuum; they are too vague and consequently not supporting
manyorganisations’Leanjourney;alternatively,theyaretooprescriptivewithlittle
flexibility. In the latter’s case, the organisations struggle to apply the audit effec-
tively. In this case, I have devised a comprehensive audit which organisations can
suitably adapt to gauge their progress.
Lastly,ifoneseriouslyproposestheaboveobjectives,itisimportanttopromote
the view of Lean as an overarching ideology. An exhaustive review is needed
focusinguponthefundamentalingredientsofmodern-daythinkingsuchasculture,
the strategic inferences of Lean, implementation problems, obstacles to Lean, and
performance measurement. This includes an evaluation as to whether Lean is
indeed a panacea to all manufacturing problems. Lean should not be viewed as
another process or initiative; instead, it requires a total radical transformation of
existing practices and interconnections. Neither should its principles be viewed as
gospel since they constantly need challenging in order to move things forward.
However, this needs to be undertaken systematically through evidence-based
decision-making and not in isolation without considering the impact upon other
areas both within the organisation and across the value chain. This can only be
undertaken,inmyview,whenLeanisadoptedandexecutedbytheorganisationas
an overarching ideology.
Reference
Krafcik,J.(1988).Triumphoftheleanproductionsystem.SloanManagementReview,41,41–52.
Acknowledgments
There are two people who unquestionably warrant mentioning and without whose
supportthisprojectwouldeitherhavenotmaterialisedinthefirstinstanceorwould
have been adversely impacted in a variety of different ways.
In the first instance, my gratitude goes to my wife Hardeep, whose unremitting
encouragement, support, and reassurances afforded during the compilation of this
bookonlyproceedtoinformpartofthesupportstructureshebestowed.Itwasalso
herconsiderableproficiencywithinthefieldofITandunrelentingpatiencetowards
any modifications required which were both emphatically valued and wholeheart-
edly appreciated.
Secondly, it is my late mother, Rampiyari Bhasin, who unfortunately passed
awayduringthecompilationofthisbook.Itwillalwaysbethevaluessheespoused
of integrity, diligence, and endurance which besides being a considerable comfort
to me in the last few months will constantly continue to inspire me for the rest of
my life.
ix
Contents
1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A Reliable Definition of Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Brief History of Lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Principles of Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Scope Covered by the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2 Clarification of the Lean Concept . . . . . . . . . . . . . . . . . . . . . . . . 11
Understanding the Concept of Lean . . . . . . . . . . . . . . . . . . . . . . . . 11
Lean Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Procedural Requirements for Lean . . . . . . . . . . . . . . . . . . . . . . . . . 14
Predicted Benefits of Lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Empirical Evidence on the Benefits of Lean . . . . . . . . . . . . . . . . . . 15
Rationale for the Low Numbers of Successful Lean Initiatives. . . . . . 16
HRM Implications for Lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Relevance of an Organisation’s Culture. . . . . . . . . . . . . . . . . . . . 17
Considerations for an Appropriate Change Strategy . . . . . . . . . . . . . 18
Potential Issues Associated with Lean. . . . . . . . . . . . . . . . . . . . . . . 19
Lean and Performance Measurement. . . . . . . . . . . . . . . . . . . . . . . . 20
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3 Lean Cultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Culture Investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The General Perception of Organisational Culture . . . . . . . . . . . . . . 29
The Magnitude of Culture for Lean . . . . . . . . . . . . . . . . . . . . . . . . 31
Culture Should Reflect the Lean Journey. . . . . . . . . . . . . . . . . . . . . 33
Favourable Cultural Features for Lean . . . . . . . . . . . . . . . . . . . . . . 34
The Significant Cultural Considerations. . . . . . . . . . . . . . . . . . . . . . 36
The “Halo” Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
xi
xii Contents
Fit an Appropriate Change Strategy to Lean . . . . . . . . . . . . . . . . . . 40
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4 Lean Process Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
The Technical Components for Lean to Flourish . . . . . . . . . . . . . . . 51
Lean and Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . 52
Lean Extended to Outsourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Potential Pitfalls of Outsourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Lean and IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Lean and Six Sigma. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
The History of Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Lean Sigma—Bringing Them Together. . . . . . . . . . . . . . . . . . . . . . 72
The Lean Sigma-Based DMAIC Approach . . . . . . . . . . . . . . . . . . . 73
Business Benefits from Lean Six Sigma . . . . . . . . . . . . . . . . . . . . . 75
Lean Sigma and Agile Manufacturing. . . . . . . . . . . . . . . . . . . . . . . 76
Leagile Implementation Factors for Consider. . . . . . . . . . . . . . . . . . 80
Sustainability of a Leagile System . . . . . . . . . . . . . . . . . . . . . . . . . 81
Lean and Strategy Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Lean Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
5 Impediments to Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Lean Witnessed as a Never-Ending Process. . . . . . . . . . . . . . . . . . . 103
Lean is Required to Transcend Beyond Manufacturing . . . . . . . . . . . 104
Communication of Lean Internally . . . . . . . . . . . . . . . . . . . . . . . . . 104
Impact of Subcultures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Influence of Organisational Structures. . . . . . . . . . . . . . . . . . . . . . . 106
Relevance of IT on Lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Individuality of an Organisation’s Lean Journey. . . . . . . . . . . . . . . . 108
Promoting the Lean Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
The Alliance Between Lean and Accounting Procedures. . . . . . . . . . 109
Need to Maintain the Lean Initiative. . . . . . . . . . . . . . . . . . . . . . . . 111
Misunderstanding of Lean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
A Lack of Broad Organisational Development. . . . . . . . . . . . . . . . . 112
Mediocre Consultants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
6 Lean and Performance Management. . . . . . . . . . . . . . . . . . . . . . 117
Role of Performance Measurement in Lean. . . . . . . . . . . . . . . . . . . 117
Measures Beyond Traditional Financial Analysis . . . . . . . . . . . . . . . 119
Qualities of Good Metrics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120