Innovation, Logistics, and Lean


Amonth ago, a reader asked Michael Ballé “If lean really is about innovation, why does so much of it seem to be about logistics, with truck preparation areas, leveling boxes, small trains, kanbans and so on?” His short answer “because logistics is the way into innovation” is a head scratcher and I fail to see any support for this assertion in the rest of his response.

While TPS and, more generally, the Toyota Way are innovative in the management and technology of operations, discussions of innovation are usually about products. Even in the car industry, which companies come to mind today about product innovation? Which ones would you want to learn from? Most likely not Toyota but Tesla for its electric cars and Alphabet/Google’s subsidiary Waymo for self-driving cars, both based in Silicon Valley.

According to The Lean Strategy (p. 227), “The Lean theory of innovation is fundamentally different from the superficial ‘disruption’ narrative. The Lean starting point is the intent to solve a problem that customers have now, rather than looking for new things that a new technology could do for them.”

Sakichi Toyoda spent 30 years making incremental improvements to one of the oldest machines known to humans. Yes, it was innovative and yes, this philosophy has served Toyota well. It is, however, complementary to more radical innovation and not a substitute for it.

Having spent most of my life in Silicon Valley, I can testify that there is nothing superficial about the disruption from innovation and that it has not taken the form of “looking for new things that a new technology could do.” Technology has usually come first.

When personal computers first arrived in the early 1980s, their makers had no clue what uses they would be put to, and the same was true for tablets and smartphones 30 years later. A key feature of innovation as practiced in Silicon Valley is that it is not driven by market research, focus groups, or customer surveys. Instead, technology is made available for users to invent useful applications.

The next part of the question was about why so much of Lean is about logistics, which, as the author of the first book on Lean Logistics, I have to comment on. According to Crispin Vincenti-Brown, manufacturing operations have the following four dimensions:

  1. Engineering
  2. Logistics and Production Control
  3. Organization and People
  4. Performance management and accountability

When you study TPS and the Toyota Way, you find principles, concepts, and tools covering all four dimensions. In Lean, on the other hand, you find almost nothing about engineering, and what is said on the management topics — organization, people, and performance management — is largely warmed-up ideas from American business schools with the “Lean” label slapped on. This leaves logistics and production control as the only dimension with a substantive technical content in Lean.

When I first got involved with production planning and scheduling — in the semiconductor industry — my boss warned me that everybody was an expert on that subject. Those who are not familiar with the key points of a process and the operations of the machines and lines that execute it usually do not get involved in production engineering discussions. On the other hand, cases, pallets, trucks, planning boards, etc., are similar across industries and look easy to understand and are an attractive topic.

The reason Logistics is overrepresented in Lean when compared to, say, Engineering is not that it is “the way to innovation” but that the loudest voices in Lean have no engineering background. Instead, they are political scientists, economists, social scientists, and MBAs.

It doesn’t mean that engineers would do a better job because they might instead focus the discussion exclusively on jigs, fixtures, control systems, etc., at the expense of everything else. Regardless of its focus, an imbalanced approach won’t work any better than Lean has over the past 25 years. What is needed instead is paying attention to all the dimensions. Mastering all of them may be too much to ask of an individual, but not of a team.

#Innovation, #Logistics, #Lean