Question

Question 4 Lean Thinking Divine Denim

Helen Croker has been discussing production costs with others in the garment industry. Lean thinking was a term other producers have been discussing as a way of controlling costs. Climbing costs are eating away at Helen's profits, so to reduce costs she thought of moving production offshore. Going offshore will make it more difficult to maintain quality while keeping production onshore enables her to contribute to her local community. She has come to you, a partner in Good Numbers, asking for some information about lean thinking.

Required:

Prepare a report for Helen which describes the concept of lean thinking. In this report identify a business discovered through your internet searches that has adopted lean thinking.

Using the business you identified as a case study:

1. explain how lean thinking has been implemented and used.
2. outline the benefits achieved by adopting lean thinking.

(max 1,200 words)

Answer 1

Lean Thinking is a methodology used by various businesses across the globe to provide a new way to think about how to organize human activities to deliver more benefits to society and value to individuals while eliminating waste. The aim of lean thinking is to create a lean enterprise, one that sustains growth by aligning customer satisfaction with employee satisfaction, and that offers innovative products or services profitably while minimizing unnecessary over-costs to customers, suppliers and the environment. The basic insight of lean thinking is that if you train every person to identify wasted time and effort in their own job and to better work together to improve processes by eliminating such waste, the resulting enterprise will deliver more value at less expense while developing every employee's confidence, competence and ability to work with others.

The best example of a business that adopted lean thinking is Toyota Motors company. The company has risen from a bankrupt japanese company to today's market leader in its industry.

At every stage of its expansion, Toyota remained a puzzle by capturing new markets with products deemed relatively unattractive and with systematically lower costs while not following any of the usual management dictates. In studying the company firsthand it appeared that it had a unique group of elders (sensei) and coordinators (trainers from Japan) dedicated to help managers think differently. Contrarily to every other large company, Toyota's training in its formative years was focused on developing people's reasoning abilities rather than pushing them to execute specialist-derived systems.

The masters in lean thinking would challenge line managers to look differently at their own jobs by focusing on:

1. The workplace: Going and seeing firsthand work conditions in practice, right now, and finding out the facts for oneself rather than relying on reports and boardroom meeting. The workplace is also where real people make real value and going to see is a mark of respect and the opportunity to support employees to add value through their ideas and initiative more than merely make value through prescribed work. The management revolution brought by lean thinking can be summed up by describing jobs in terms of Job = Work + Kaizen
2. Value through built-in quality: Understanding that customer satisfaction is paramount and is built-in at every step of the enterprise's process, from building in satisfying features (such as peace of mind) to correctly building in quality at every production step. Built-in quality means to stop at every doubtful part and to train yourself and others not to pass on defective work, not to do defective work and not to accept defective work by stopping the process and reacting immediately whenever things go wrong.
3. Value streams through understanding "takt" time: By calculating the ratio of open production time to averaged customer demand one can have a clear idea of the capacity needed to offer a steady flow of products. This “takt” rhythm, be it a minute for cars, two months for software projects or two years for a new book leads to creating stable value streams where stable teams work on a stable set of products with stable equipment rather than optimize the use of specific machines or processes. Takt time thinking leads to completely different capacity reasoning than traditional costing and is the key to far more frugal processes.
4. Flow through reducing batch sizes: Every traditional business, whether in production or services, is addicted to batch. The idea is that once work is set up one way, we'd better get on and quickly make as many pieces of work as we can to keep the unit cost down. Lean thinking looks at this differently in trying to optimize the flow of work in order to satisfy real demand now, not imaginary demand next month. By working strenuously on reducing change-over time and difficulty, it is possible to approach the lean thinking ideal of single piece flow. In doing so, one reduces dramatically the general cost of the business by eliminating the need for warehouses, transports, systems, subcontractor use and so on.
5. Pull to visualize takt time through the flow: pulling work from upstream at takt time through visual devices such as Kanban cards is the essential piece that enables lean thinkers to visualize the gaps between the ideal and the actual at the workplace at any time. Pull is what creates a creative tension in the workplace by both edging closer to single-piece-work and by highlighting problems one at a time as they occur so complex situations can be resolved piecemeal. Pull is the basic technique to “lean” the company and, by and large, without pull there is no lean thinking.
6. Seeking perfection through kaizen: The old time sensei used to teach that the aim of lean thinking was not to apply lean tools to every process, but to develop the kaizen spirit in every employee. Perfection is not sought through better, more clever systems or go-it-alone heroes but through a commitment to improve things together step-by-small-step. Kaizen literally means change for the better and Kaizen spirit is about seeking a hundred 1% improvements from everyone every day everywhere rather than one 100% leap forward. The practice of kaizen is what anchors deep lean thinking in people's minds and which, ultimately, leads to complete transformation. Practising kaizen together builds self-confidence and the collective confidence that we can face our larger challenges and solve our problems together.

Lean thinking improves efficiency, reduces waste, and increases productivity.

• Increased product quality: Improved efficiency frees up employees and resources for innovation and quality control that would have previously been wasted.
• Improved lead times: As manufacturing processes are streamlined, businesses can better respond to fluctuations in demand and other market variables, resulting in fewer delays and better lead times.
• Sustainability: Less waste and better adaptability makes for a business that’s better equipped to thrive well into the future.
• Employee satisfaction: Workers know when their daily routine is bloated or packed with unnecessary work, and it negatively affects morale. Lean manufacturing boosts not only productivity, but employee satisfaction.
• Increased profits: And, of course, more productivity with less waste and better quality ultimately makes for a more profitable company.