Enterprise Ireland and Lean | Irish Times

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“The Japanese are renowned worldwide for their car production where the concept of the management philosophy Lean derives from. It all began at Toyota when the car manufacturers discovered a new, more efficient method of producing cars valued by customers all over the world. The principles learned at Toyota became known as Lean which is claimed can be applied to almost any business. The core principle is creating value by reducing waste and unnecessary risk.”

Michel Baudin‘s insight:

While informing us that the Irish government has an agency promoting Lean, this article reflects common misconceptions.

No, it’s not a “Japanese management philosophy.” it is an approach developed by individuals who happened to be Japanese, which is not the same. Most Japanese today do not know or practice it, and quite a few non-Japanese do.

And this emphasis on “creating value” is an American talking point, not the Toyota Production System.

According to the article “Toyota benchmark themselves constantly,” which is news to me. While it is clear that Toyota is on the lookout for new ideas, I had not heard of Toyota doing benchmarking surveys of competitors. My understanding is that Toyota’s management considers such surveys to be a waste of time.

The article equates Lean with Continuous Improvement, giving the impression that it’s all there is to it.

And finally, the article repeats the Business Week claim that the Shingo Prize is “the Nobel Prize for operational excellence.”

See on www.irishtimes.com

Absence of “Value Added” in the TPS literature

When improving operations, the only distinction of practical relevance is between necessary and unnecessary activities (See Occam’s Razor… and Whack-a-Mole). It really doesn’t matter whether they physically transform a product or whether a hypothetical customer would be willing to pay for them; the only thing that matters is whether they are needed to get the job done. Eliminating the unnecessary means getting the right things done, or being effective. The step after that is getting these things done right, or being efficient.

The American literature on Lean is centered on Value Added — defined as “what the customer is willing to pay for.” As I indicated, this is not the case for the Japanese literature or even the American literature on the Toyota Production System (TPS). I listed some examples from my personal library in Occam’s Razor…, and would like here to give more specifics.

1. “Value Added” in the TPS Literature

The following books on TPS — ranging in vintage from 1977 to 2009 — contain no reference that I could find to value added:

  • Fundamental Principles of Lean Manufacturing, Shigeo Shingo (1977). The English title contains “Lean Manufacturing,” a term that wasn’t coined until a decade after this book came out. Shingo’s title translates to “Original intent of plant improvement” (工場改善の原点的志向).
  • Zero Inventories, Robert W. Hall (1983). This was the first book in English to cover the technical content of TPS. ‘Doc’ Hall is an American academic, who researched Japanese sources. He is still active today in the AME, and was inducted in the Manufacturing Hall of Fame in 2012.
  • Kanban, Just-In-Time at Toyota, JMA (トヨタの現場管理:カンバン方式の正しい進め方, 1985). This is based on training materials from one of the oldest manufacturing consulting firms in Japan.
  • The Evolution of a Manufacturing System at Toyota, Takahiro Fujimoto (1999). Fujimoto is an academic who studied the emergence of TPS in the history of Toyota and, in the process, explains many details of its development in the 1990s.
  • The heart of introducing TPS (トヨタ生産方式導入の奥義)Mikiharu Aoki (2009). The author left Toyota in 2004 after 26 years to become a consultant. He is still in his fifties, and what he describes is not your grandfather’s TPS. Still, there is not a word about value added.

There are mentions of value added in a few books on TPS, but they are brief and no connection is made with customers’ willingness to pay. In these books, what is called “value added” is what physically transforms the product, a definition that, incidentally, has its own problems. Following are the books I have on TPS that contain a fleeting mention of value added:

  • Toyota Production System, Taiichi Ohno (トヨタ生産方式, 1978). “Value Added” is discussed on pp. 57-58, and that’s it: two pages out of a 132-page book. The English translation includes the following diagram, which does not quite match the Japanese original:


The original, Japanese diagram was as follows, with my  own annotations in red:


There are differences in both style and content:

      • The “Value-added work” caption in the translation does not make sense in its context and does not match the original, which is just one word, “sagyo” (作業) which just means work or operation.
      • The bullet lists in the translation do not match the starred captions in the original, which only contain the first two items. I don’t know why the translator added items to each list.
      • The original figure is in the style of a comic strip, which is almost standard for the Japanese literature on manufacturing. It is not intended to impress readers of the Harvard Business Review, but to communicate with people who read manga while riding trains to work.

One vital feature of this discussion is that it is exclusively about the breakdown of operator movements. It is not about materials handlers, managers or any kind of support groups, whose work is branded as intrinsically “non-value added” by managers who have read the US Lean literature.

Why this narrow focus on production operators? Most organizations have a subgroup of members who fill its purpose while all others support them. In a hospital, it is the surgeons; in aviation, the pilots; in the military, the shooters; in car racing, the drivers. In a manufacturing company, it’s the production operators. And their time is particularly precious because they work in sequence, so that, if you delay any one of them, you delay the entire production line. This is not true of the support staff, who work mostly in parallel.

Even in the restricted sense that he uses, if Ohno had felt that this was an important concept for TPS, he certainly would have used it elsewhere in his book. But he didn’t.

  • Toyota Production System, Yasuhiro Monden, 2nd Edition (1993). Monden is a professor of production management at Tsukuba University, who has been granted extensive access by Toyota. Value Added appears once, on p. 179 of this 423-page book, where he repeats what Ohno had written. 
  • 25 keywords of the Nissan Production Way (実践日産生産方式キーワート25, 2005). This book is about Nissan, not Toyota. Keywords 11-15, on pp. 62-83 are about “the pursuit of Value Added production” (付加価値生産)。 “Value-added tasks,” however, are simply defined as the ones that physically modify the product.
  • The Birth of Lean, Koichi Shimokawa and Takahiro Fujimoto (Ed.) (2009). There is one instance of “value added” on p. 52.
  • The Toyota Way, Jeffrey Liker (2003). On p. 27, it says “The first question in TPS is always ‘What does the customer want from this process?’ (Both the internal customer at the next steps in the production line and the final, external customer.) This defines value. Through the customer’s eyes, you can observe a process and separate the value-added steps from the non-value-added steps.”
  • Since “internal customers” are really downstream operations that don’t pay, the willingness-to-pay criterion is not applicable, which explains why Liker changes it to what the customer “wants from the process,” and it may not be a physical transformation. For example, what car assembly wants from painting inspection is the assurance that the bodies started on the final assembly line are free of paint defects.

    Later, on p. 89, the concept migrates to an engineering office. Finally, on p. 280, value-added work is “the actual transformation process core to the service that the customer is paying for.” So the willingness to pay that was excluded on p. 27 is back in, and so is the physical transformation, apparently mashing together the US Lean and Japanese TPS versions of value added. Again, this concept is only referenced in three of the book’s 330 pages, which strongly suggests that it is not important. Toyota is just not that into it.

2. Value Added in Lean

In light of this, why have American Lean authors focused on value-added? They zoomed in on a minor detail, changed the meaning from physical transformation to willingness to pay, and made it the foundation of Lean.

My personal guess is that they felt it necessary to attract decision makers under the influence of business schools and  uncomfortable with TPS plain talk. If we need to intellectualize the notion of waste elimination, however, we can do it in other ways, for example by stating as principle that a factory in never Pareto-optimal, meaning that it can always be improved.

In fact, it is fortunate that the concept of value added plays such a negligible role in TPS, because, as discussed in More Musings on Muda,  its definition in terms of physical transformation doesn’t withstand scrutiny much better than that in terms of willingness to pay. In particular, it is not applicable to anyone who does useful work that does not physically change a product.

In addition, in both senses, “value-added” is an attribute that an activities possesses or lacks. In economics or game theory, value added is a quantity of money.

In economics, the value added of a business is the difference between sales and external inputs, where the external inputs are materials, energy, and outsourced services. In other words:

Value\: Added = Sales - \left ( Materials + Energy + Outsourced\: Services \right )

This is the basis for Value-Added Taxes (VAT) in countries that charge them and. Aggregate it over an entire country, and you get its Gross Domestic Product (GDP).

Out of this Value Added, companies have to pay for people, facilities and equipment, and taxes. I have found this concept useful in several contexts. For example, a plant’s value added per employee is a better measure of productivity than sales per employee, because you can’t game it by outsourcing.

I have also found it useful to compare a company’s value added per employee with industry averages that you can retrieve from sources like the US Bureau of Labor Statistics or the Economic Census. But it is clearly not applicable to one production operator at one work station.

In game theory, the value added of a player is the amount by which his presence increases the size of the pot. A player who joins a poker table puts more chips in play. A company that sells software to run on a given hardware platform increases the value of this platform, while a competitor providing alternative hardware to run the same software reduces it. As explained in Brandenburger and Nalebuff’s Co-opetition, it is a useful concept in business strategy, but also irrelevant at the level of an individual work station.

Yet another use of the term is found in corporate finance, where the Economic Value Added (EVA)  is the difference between a company’s net, after-tax profits and its cost of capital.  The idea is that, unless a company has a positive EVA, its investors would be better off putting their money elsewhere.

None of these uses is applicable to a work station on the shop floor of a manufacturing plant, and there is no way any of them is connected to the notion of willingness to pay.

Focusing on what customers are willing to pay for is a direction that might be given to Marketing. Top management must of course be concerned with customers, but also with suppliers, employees, the local community, the environment,  local and national governments, not to mention creditors and investors.

Because TPS is a system that was developed by an actual company with all these stakeholders and more, it encompasses approaches to supply chain management, human resources, corporate social responsibility, and finance. In this context,  the notion that only activities add value only if customers are willing to pay for them is not helpful and is inconsistent with the more general usage of “value added”  as a technical term.

Canada, a Model for Australia’s Automotive industry? | Business Spectator

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Work station at Dortec

Work station at Dortec

“Ford Australia’s move to close its two Australian plants from 2016 and transition to import-only brands only reinforces the sense of a looming death knell. But that isn’t the case with every developed-world auto sector struggling to compete with high domestic production costs and cheaper, mostly-Asian-built imports. Canada’s auto sector has also struggled with factors that would sound familiar to an Australian onlooker, such as its own high dollar, volatile domestic demand, offshore competition and wavering government subsidies.

But as much as those conditions in Canada instigated uncertainty, cuts and job losses, that struggle, which gained pace as the global financial crisis took hold, has also produced a level of productivity-focused innovation worth noting for any manufacturer or policymaker wondering if Australia’s auto sector has crossed its rubicon.”

Michel Baudin‘s insight:

Ford is closing its plants in Australia, which threatens the entire local automotive industry. The author looks to Canada for a model Australia could follow for this industry to survive and thrive. The article is mostly about Canada, and specificially about the Magna Dortec door latch plant Northeast of Toronto.

See on www.businessspectator.com.au

This “respect for people stuff”

The following two-minute dialogue between Jeffrey Liker and British consultant John Seddon has caused a stir in the US, primarily for Seddon’s saying “…all this respect for people stuff  is horseshit…”

Note: For a video of the full 45-minute session from which it is excerpted, see Panel discussion – Lean Ísland 2012 (08). The third participant in the conversation, the woman sitting between Jeffrey Liker and John Seddon is Yr Gunnarsdottir.

While dramatically stated, Seddon’s point is actually not that controversial. If you listen closely, he says that respect for people is not a “point of intervention,” meaning not a subject for which you bring in consultants or start projects. Mark Graban pointed out that he had never seen a company have a respect-for-people project, and I never have either. In his comments on Graban’s post, Rob van Stekelenborg writes “Still, more and more often I notice, Lean is attempted primarily as a leadership and a formalized (thru methods), bottom-up continual improvement effort without much attention for the strong industrial engineering roots it also has.” While I agree with Rob, I am not sure this is what Seddon meant.

Digging deeper, the following paragraphs quote some of my preferred authors/bloggers on the subject, with my own comments added:

1. Jeffrey Liker on Taiichi Ohno’s people skills

The video starts with Seddon asking Liker to rate Taiichi Ohno’s people skills  in a short answer, and Liker answers “terrible.” I would not have answered that. By whatever means he accomplished it, Ohno got thousands of people to work with him to develop and deploy the Toyota Production System, and it makes him only one in a long line of effective business leaders, sports coaches, and military commanders who don’t ooze charm from every pore.

My understanding of people skills is as the art of working with, through, and for other people and that the degree to which a person possesses these skills is measured not by their manners but by their achievements. Some of Ohno’s statements on people issues are surprising. Ohno’s open bursts of anger were not due to lack of self-control but were on purpose, as he explains on p. 93 of Workplace Management:

“I never get angry at the workers. However, with supervisors and above I will get very angry. The gemba is a convenient place to get angry at people. There is a lot of noise so they can’t really hear what l am saying. When I scold the supervisors on the gemba, the workers see that their boss is being yelled at and they sympathize with their boss.

Then it becomes easier for that supervisor to correct the workers. lf you call the supervisor away to a dark corner somewhere to scold him, the message does not get through. The gemba is a noisy place anyway, so if l am yelling at them and the person being scolded doesn’t really know why they are being scolded, this is okay. However, when the workers see their boss being scolded and they think it is because they are not doing something right, then the next time the supervisor corrects them, they will listen.”

For a higher-level manager never to scold workers is consistent with standard management practice going back to Sun-Tsu. On the other hand, that you should publicly scold supervisors for no particular reason in front of their subordinates to generate sympathy and make it easier for supervisors to do their jobs is a strange idea.  I have never done it, nor have I ever recommended it. In the plants I am familiar with, sympathy for supervisors among operators is in short supply, and a public scolding would do nothing more than undermine their limited authority.

Yet, I don’t think Ohno would write this unless it had worked for him as a manager at Toyota. As he explains, he was trained to praise in public and criticize in private, but he did the opposite on purpose. Had he failed, you could use this practice as evidence of terrible people skills, but he didn’t fail.

2. Art Smalley on the meaning of respect for people

Back in 2010, Art Smalley gave a detailed explanation of what respect for people means in the Toyota context, as he experienced it while working there. In a recent post on the ISPI conference in Reno, I wrote “Lean relies on people to improve operations, provides them with safe and secure jobs, and supports their professional development as a strategy for the company to gain market share, enhance profits, and grow.” While it was not my intention, I think it summarizes Art’s points.

Art also quoted the following excerpt from a TWI Job Relations training manual from World War II as evidence that it is not a new concern:

JR training manual excerpt

But we can dig further. In The Visible Hand, p. 69, Alfred Chandler quotes British textile expert James Montgomery writing in 1832, that “To assure good feeling and understanding, while guarding against too much lenity (modern: leniency) on the one hand, to be careful to avoid too much severity on the other, […] be firm and decisive in all measures, but not overbearing and tyrannical  — not too distant and haughty, but affable and easy of access, yet not too familiar.”

In other words, since the industrial revolution, advisers have been telling manufacturers that it was good business to show respect to their employees, but few have acted on this advice. Taylor’s “scientific management” went in the opposite direction, and so did Ford in its early assembly lines. It could be explained by the prevalence of immigrants from many different countries with limited education in the manufacturing work force of early 20th century America. But  in California 100 years later, Injex was using TPS to make auto parts for Toyota with great success and a workforce with 19 different nationalities and varied levels of education and English proficiency.

3. Mark Graban on Toyota, Respect for People, and Lean

On 2/26, Mark Graban wrote an extensive rebuttal of Seddon, to which I had also added the following:

In concrete terms, I have found disrespect easier to explain than respect. For example, giving a person a job that requires doing nothing 50% of the time is saying “your time is worthless,” and therefore “you are worthless.”  Many managers do not realize how disrespectful this attitude is, particularly where labor is cheap.

Ignoring complaints about minor safety issues, like sharp edges on a cart, is also showing disrespect. There are many such issues that must be addressed before asking people to participate in improvement and contribute ideas. The Frank Woollard quote in Bob Emiliani’s comment explains why you should pay respect to your people. It’s not about being nice. In the long run, you cannot compete unless your organization fires on all intellectual cylinders.

Frank Woollard was a British industrial engineer in the 1920s, and Bob Emiliani’s quoted him saying:

“This principle of ‘benefit for all’ is not based on altruistic ideals – much as these are to be admired – but upon the hard facts of business efficiency.”

In his article, Mark includes a photo of an exhibit at the Toyota museum, that contains the following text:

Toyota museum photo from Mark GrabanIt is in English, Japanese, and Mandarin, but the titles have slightly different meanings. The Japanese title means “Respect for Humanity,” not “Respect for People,” and the Mandarin title means “People-oriented.” To be even more specific, in Japanese, ningensei (人間性) means humanity in the sense of human nature, not humankind, which would be jinrui (人類).

On the other hand, the English paragraph is an accurate translation from the Japanese and clarifies the difference in the titles. Saying “please” and “thank you” is showing respect for people, but it does not imply any consideration for their specifically human sensory, intellectual and cognitive abilities.

I don’t know what the paragraph in Mandarin says, but it is visibly shorter than the other two. Mandarin is concise, but not this concise.

4. Rob van Stekelenborg on teaching respect for people

Rob van Stekelenborg,  blogging as Dumontis, also posted on this subject, introducing the new word “resp-act.” What Rob does here is go beyond general statements and give examples of how to show respect for people in situations involving suppliers, customers, or employees.

After all the theorizing on the true meaning of respect for people, it remains a vague and fuzzy guideline for anyone on a  shop floor today and tomorrow, and what Rob does to bring it into focus reminds me of the Critical Incident Technique I heard about from Steven Villachica at the ISPI conference.

Toyota’s IT Vision at Industry Week’s Best Plants Conference | Chain of Thought

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“‘…Toyota Motor’s group leaders were complaining about the systems IT was delivering. They wouldn’t let them focus on being out on the production line. So IT’s focus became providing tools to allow group leaders to be more efficient…”

Michel Baudin‘s insight:

The article’s author is challenged about getting to the point but, when he eventually does, it is worth reading. What I found most original is IT focusing on the needs of group leaders, Toyota’s name for first-line managers, who oversee four to six teams of four to six operatiors each. It is a constituency is definitely underserved by IT in most manufacturing organizations and whose potential is underestimated.

Most companies expect little from first-line managers beyond expediting parts, tracking time and attendance, and disciplining workers to make their numbers. In fact, being both part of management and in direct contact with production operators on the shop floor puts them in a unique position as agents of change.

This is why TPS puts them in charge of smaller groups, with the expectation that they will spend time leading improvement projects and supporting the professional growth of their teams. Most IT groups pay more attention to the executive suite than to the shop floor, where, in particular, you are not just interacting with people through screens but also with machines through their controllers. This requires a different set of IT skills, and the article says that Toyota partnered with Rockwell Automation for this purpose.

See on mhlnews.com

Achieving one-piece flow | Darren Dolcemascolo

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“Sometimes referred to as “single-piece flow” or “continuous flow,” one-piece flow is a key concept within the Toyota Production System. Achieving one-piece flow helps manufacturers achieve true just-in-time manufacturing. That is, the right parts can be made available when they are needed in the quantity they are needed. In the simplest of terms, one-piece flow means that parts are moved through operations from step to step with no work-in-process (WIP) in between either one piece at a time or a small batch at a time. This system works best in combination with a cellular layout in which all necessary equipment is located within a cell in the sequence in which it is used.”

Michel Baudin‘s insight:

In the current issue of Reliable Plant, Darren Dolcemascolo explains the concept and the value of one-piece flow in simple terms, including the prerequisites for it to work.

See on www.reliableplant.com

Lean = Green? | ThomasNet Industrial News Room

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ThomasNet Industrial News Room
Is Lean Manufacturing Green Manufacturing?
ThomasNet Industrial News Room
Can lean manufacturing, as exemplified by the renowned Toyota Production System, be a path to greener manufacturing?

See on news.google.com

Lean efficiency pays dividends | Packaging Digest

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“Aerofil Technology Inc. (ATI) began its operations in Sullivan, MO, in the fall of 1988 with two small aerosol lines and less than 50,000 sq ft of space. Since then, ATI has greatly expanded and now serves clients around the world. Its capabilities, customer base and facility size have grown exponentially during the past 25 years. Today, ATI is a Lean contract packager with a continuous-improvement culture with approximately 350 full-time employees and 16 production lines in a 400,000-sq-ft facility.”

See on www.packagingdigest.com

How Toyota brought its famed manufacturing method to India | The Economic Times

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“…Nakagawa, who has been a TPS practitioner for four decades, doesn’t believe in seeing things on his computer screen -he prefers to go where the action is. “Can a computer smell? Genchi Genbutsu is very important because only on-site will your sensory organs be alert – smell, sound, vision,” he says….”

Michel Baudin‘s insight:

Perhaps, Mr, Nakagawa has not heard of Google Nose, the app announced on April 1.

In all summaries,TPS has two pillars, but never the same. In this article, the pillars are “respect for people” and “continuous improvement.” To Ohno, they were Just-in-time (JIT) and Jidoka, with JIT covering production control, logistics, and supply chain management, while Jidoka was a complete approach to the engineering of production lines where humans interact with machines.

You could try to implement Ohno’s JIT and Jidoka without respect for people or continuous improvement, but it would not work well. Conversely, if all you focus on is respect for people and continuous improvement, you won’t get TPS either. You need both, and, perhaps, two pillars are not enough.

Broadly speaking, the two pillars in this article are about management; Ohno’s pillars, about technology. As TPS is based on the interplay of management and technology, perhaps these are its real “two pillars.”

See on economictimes.indiatimes.com