Mod -1: Lean Production System
Growing Dysfunction Birth of lean production
09/13/2024 01:14 AM BMEE309L Lean Manufacturing 1
Module:
Lean Production System 5 hours
1
Birth of lean production:
Types of production systems-Craft Production-Mass Production-Ford
System, Growing Dysfunction, Birth of lean production, Virtue of
necessity, Lean revolution at Toyota.
Lean production system: Why lean production? Systems and Systems
thinking, Basic image of lean production, Customer focus, Muda, Mura,
Muri.
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Growing Dysfunction
Problems of traditional mass production.
(4) Engineering
Mass production also sowed the seeds of dysfunction in the engineering
profession.
Just as shop floor labor was minutely divided, so too was the work of
engineers.
As products became more and more complex, engineering branched
into myriad
specialties.
Engineers had less and less to say to other engineers outside their
subspecialties.
This led to design problems: the less engineers talked to one another. The longer
it took to bring a product from design to production.
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BMEE309L Lean Manufacturing
Birth of lean production
In the spring of 1950, a young Japanese engineer named Eiji Toyoda visited Ford’s
vast Rouge plant in Detroit.
Both Japan and the Toyota Motor Company, which his family had founded in 1937,
were in crisis.
After thirteen years of effort Toyota had only been able to produce 2,685
automobiles, by contrast Ford’s Rouge plant was producing 7,000 per day.
Eiji Toyota studied every corner of Rouge, the world’s biggest and most efficient
manufacturing complex.
Upon his return to Japan, Eiji and his production genius, Taiichi Ohno concluded
that
mass production would not work in Japan.
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Birth of lean production
They also concluded, famously that “There are some possibilities to improve the
production system”.
Toyota faced daunting challenges:
The domestic market was small and demanded a wide range of vehicles
- large trucks to carry produce to markets,
- small trucks for farmers,
- luxury cars for the elite, and
- small cars suitable for Japan’s narrow roads and high energy
prices.
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Birth of lean production
The Historic Bargain
Japan was in the throes of a depression. The occupying Americans had decided to
attack inflation by restricting credit, but they overdid it.
As car sales collapsed and its bank loans became exhausted, Toyota faced
bankruptcy.
Toyota’s president Kiichiro Toyoda proposed firing a quarter of the work force – a
desperate measure.
The company quickly found itself facing a major revolt.
The company’s union was in a strong bargaining position due to strong labor laws.
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Birth of lean production
After extended negotiations, the family and the union worked out a
compromise.
A quarter of the workforce was terminated as originally proposed.
Kiichiro Toyoda resigned as President to take responsibility for the company’s
failure.
The remaining employees received two guarantees:
1) Life time employment
2) Pay steeply graded to seniority and tied to company profitability
through bonuses.
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Birth of lean production
The union and company had struck a historic bargain. In effect “We will take you for
life, but you have to do the work that needs doing, and you have to help us to
improve”.
And thus the workers became part of the Toyota Community.
This remarkable agreement remains the model for labor relations in the Japanese
automotive industry. It had deep implications:
The workers were now a fixed cost, like the company’s machinery – more so,
in fact, because machines could be depreciated. Therefore, the
company had to get the most out of its human capital.
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Birth of lean production
It made sense to continually enhance the workers’ skills and to gain benefits
from their knowledge and experience.
It made sense for workers (or managers, who were covered by the agreement)
to stay with the company.
A forty-year old at Toyota doing the same work as a twenty year-old received
substantially higher wages.
If the forty-year-old were to quit and join another company, he would have to
start at the bottom of the pay scale.
Thus the foundation was created for an entirely different employment
contract – one based on cooperation, flexibility and mutual benefits.
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Birth of lean production
Taiichi Ohno already knew that workers were his
most valuable resource.
Withholding of information or ideas, so common in
the mass production plants, would rapidly lead to
disaster in the fledgling Toyota system.
In the years to come, Ohno and his team developed
activities to fully involve team members in
improvement – an utterly novel Idea.
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Birth of lean production
A Virtue of Necessity
Lean production was the solution to Toyota’s problems but, like any change agent,
Ohno faced daunting obstacles.
In each case they made a virtue of necessity and each step forward depended on the
skill and creativity of shop floor members.
Example: Instead of using one stamping machine for one part, Toyota used one
stamping machine to make many parts by developing SMED* technique which was
able to change the die in few minutes.
*Single-Minute Exchange of Dies (SMED)
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Birth of lean production
A Virtue of Necessity
Also, Ohno found that producing smaller batches with quick changeovers
actually resulted in cost savings.
Also small batches helped to find the defects quickly and reduced lead times,
because there was less work-in progress.
Many of his subsequent discoveries also proved to be counter-intuitive.
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Birth of lean production
Lean revolution at Toyota
Ohno pushed his innovations across Toyota production facilities by 1960’s.
In 1969, Toyota started Operations Management Consulting division through
which it monitors the Implementations of Lean and Kaizen projects across its
production divisions and Suppliers.
Every division has to do one major Kaizen every month.
Toyota compelled the transformation in suppliers by demanding continual
price reductions in parts every year.
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Lecture 1
