Final Copy of Dissertation - Philip

Table of Contents
TABLE OF CONTENTS
LIST OF FIGURES..............................................................................................4
LIST OF TABLES................................................................................................5
ABSTRACT..........................................................................................................6
DECLARATION..................................................................................................7
COPYRIGHT STATEMENT.............................................................................8
ACKNOWLEDGEMENT...................................................................................9
CHAPTER1: INTRODUCTION AND STRUCTURE OF DISSERTATION

1.1 Introduction…………………………………………………………………..10
1.2 Aim & Objectives………………………………………………………….....12
1.3 Methodology……………………………………………………………........13
1.4 Limitations………………………………………………………………….. .14
1.5 Structure of the dissertation…………………………………………………..15
CHAPTER2: LEAN THINKING VS MUDA

2.1 Introduction…………………………………………………………………..17
2.2 The Concept in Detail………………………………………………………...18
2.3 History and Evolution of Lean Thinking……………………………………..20
2.4 Perspectives on Lean……………………………………………………….....24
2.5 Principles of Lean Thinking…………………………………………………..26
2.5.1 Value…………………………………………………………………....27
2.5.2 Value Stream…………………………………………………………...29
2.5.3 Flow…………………………………………………………………….37
2.5.4 Pull……………………………………………………………………...44
2.5.5 Perfection……………………………………………………………….51
2.6 Summary………………………………………………………………………54
CHAPTER3: LEAN THINKING IN SUPPLY CHAIN

3.1 Introduction……………………………………………………………………55
3.2 Overview of the concept: Supply chain Management………………………..56
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Table of Contents
3.3 Structuring and Tiering…………………………………………………………58

3.4 Characteristics that make Supply chain different………………………………62
3.5 Supply chain Performance……………………………………………………...63
3.6 The Unique Misconception of People……………………………………..........64
3.7 The Lean Supply chain………………………………………………………….66
3.8 Why Lean.............................................................................................................66
3.9 Lean Supply chain Process……………………………………………………...68
3.10 Lean Practices…………………………………………………………….........71
3.11 Attributes of a Lean Supply chain……………………………………………..75
3.12 Components of the Lean Supply chain………………………………………..79
3.13 7 Deadly Supply chain wastes……………………………………………........82
3.14 Benefits of Lean system in Supply chain………………………………………86
3.15 Path forward in Lean supply chain……………………………………………..87
3.16 Summary………………………………………………………………………..88
CHAPTER 4: LEAN ELEMENTS AND TECHNIQUES

4.1 Introduction……………………………………………………………………...89
4.2 Why Lean techniques? The Importance…………………………………………90
4.3 Andon……………………………………………………………………………91
4.4 Heijunka………………………………………………………………………….94
4.5 Jidoka…………………………………………………………………………….97
4.6 Kaizen…………………………………………………………………………...100
4.7 Muda& Mura& Muri……………………………………………………………103
4.7.1 Muda………………………………………………………………………105
4.7.2 Mura………………………………………………………………………107
4.7.3 Muri……………………………………………………………………….108
4.8 Poka-yoke……………………………………………………………………….109
4.9 Kanban………………………………………………………………………….110
4.10 Takt time………………………………………………………………………113
4.11 5S……………………………………………………………………………...115
4.12 Shojinka……………………………………………………………………….118
4.13 Ugoki………………………………………………………………………….118
4.14 Ninben no tsuita jidhoka……………………………………………………....118
4.15 Kaizen Teian………………………………………………………………......119
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List of Figures
4.16 Summary……………………………………………………………………..119
CHAPTER 5: COMPARATIVE STUDY OF LEAN PRINCIPLES IN THE

CONSTRUCTION & AEROSPACE INDUSTRY
5.1 Introduction……………………………………………………………………..120
5.2 Nature of Construction Industry…………………………………………...........121
5.3 Lean Construction: Brief History……………………………………………….121
5.4 Nature of Aerospace Industry…………………………………………………...123
5.5 Key drivers of lean in Aerospace………………………………………….........123
5.6 Transferring lean into Aerospace- the challenges………………………………125
5.7 Why Aerospace and Construction? – The differences …………………………126
5.7.1 Introduction……………………………………………………………….126
5.7.2 Structural Differences…………………………………………………….126
5.7.3 Relation with Government………………………………………………..127
5.8 Comparison of Lean Thinking Principles across Construction and Aerospace...128
5.8.1 Value……………………………………………………………………...129
5.8.2 Value Stream……………………………………………………………...131
5.8.3 Flow…………………………………………………………………….....133
5.8.4 Pull………………………………………………………………………..135
5.8.5 Perfection…………………………………………………………………136
5.9 Summary………………………………………………………………………..138
CHAPTER 6: MOVING ON- BEYOND LEAN THINKING

6.1 The Lean Life style……………………………………………………………...139
6.2 Winding up………………………………………………………………….......139
6.3 Beyond Lean Thinking………………………………………………………….142
REFERENCES........................................................................................................143
BIBLIOGRAPHY…………………………………………………………………151
APPENDIX………………………………………………………………………...152
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List of Figures
LIST OF FIGURES
Figure 1.1: Lean Thinking Principles…………………………………………........19

Figure 2.1: Product Family Matrix…………………………………………………30
Figure 2.2: Value Stream Maps…………………………………………………….32
Figure 2.3: Value Stream for Cola Cans……………………………………………34
Figure 2.4: Confluence of Cola Value Stream……………………………………....36
Figure 2.5: Bicycle Plant Layout and Flow………………………………………...41
Figure 2.6: Lean Bicycle Plant Layout and Flow…………………………………...43
Figure 2.7: Push (vs.) Pull…………………………………………………………..44
Figure 2.8: Toyota PDC before Lean Thinking……………………………………..49
Figure 2.9: Toyota PDC after Lean Thinking……………………………………….51
Figure 3.1: Conceptual Framework of Supply Chain………………………………..59
Figure 3.2: Complex Supply Chain Network………………………………………..60
Figure 3.3: Supply Chain System + Tiering…………………………………………61
Figure 3.4: Benefits of Lean Supply Chain………………………………………….68
Figure 3.5: Seven Wastes of Lean Thinking………………………………………....82
Figure 4.1: Elements and Techniques of lean.……………………………………….91
Figure 4.2: Traditional Andon Board………………………………………………...92
Figure 4.3: Modern Andon Board……………………………………………………93
Figure 4.4: Ohno’s Teachings………………………………………………………..94
Figure 4.5: Heijunka Box…………………………………………………………….96
Figure 4.6: Japanese Perception of Job function……………………………………101
Figure 4.7: Improvement broken down into Innovation and Kaizen……………….101
Figure 4.8: Muda + Muri + Mura…………………………………………………...104
Figure 4.9: Kanban System…………………………………………………………111
Figure 5.1: Comparison of Lean Principles………………………………………...129
Figure 5.2: Institutional Market…………………………………………………….130
Figure 5.3: Development Market…………………………………………………...130
Figure 5.4: Flows in Construction………………………………………………….134
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List of Figures
LIST OF TABLES
Table 2.1: Value Stream Details of Cola Carton……………………………………35

Table 2.2: Continuous Improvement of FNGP…………………………………….54
Table 4.1: 5S………………………………………………………………………..116
Table 5.1: Construction and Its Clients…………………………………………….132
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List of Tables
ABSTRACT
With the current trend of globalisation in the market and around the globe, companies
are finding it difficult to cope up and sustain their competitive edge which is leading
to lower profitability and results. Employees of companies must make an effort to
adopt innovative managerial concepts to sustain with market competition. But the
biggest problem that companies face is that the employees of the company believe
that their practices are the best and no other managerial concepts is better than the
company’s current practices. Such a misconception generally leads to negative and
failed results. Initiative for implementation of innovative concepts should start from
the top level management and then spreads throughout the organisation.
Lean thinking, an innovative concept which has revolutionised industries in the

twenty first century, is the concept which can be applied to stay competitive. It is used
as a competitive tool by companies and has derived many benefits by creating value
to customers and eliminating Muda in the process.
The dissertation helps in explaining and making the concept of lean thinking
understandable. It includes all the elements and techniques related to the lean
implementation process.
An attempt is made to disclose this topic by critically examining the existing

literature. Data was gathered from books and company websites to analyse and show
the practicality of the concept.
The dissertation concludes by making the reader understand the principles of lean
thinking. It also shows how lean thinking in supply chain produces better and faster
results than ordinary supply chain management. The wide scope of lean is presented
by comparing the principles of lean thinking in two massive but very different
industries.
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Abstract
Keywords: Lean, Lean thinking and techniques, Lean construction and aerospace.
DECLARATION
No portion of the work referred to in the dissertation has been submitted in support of
an application for another degree or qualification of this or any other university or
other institute of learning.
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Declaration
COPYRIGHT STATEMENT
Copyright in the text of this dissertation rests with the author. Copies (by any process)
either in full or in extracts may be made only in accordance with the instructions
given by the author. Details may be obtained from the appropriate Graduate Office.
This page must form part of any such copies made. Further copies (by any process) of
copies made in accordance with such instructions may not be made without the
permission (in writing) of the author.
The ownership of any intellectual property rights which may be described in this
dissertation is vested in the University of Manchester, subject to any prior agreement
in contrary, and may not be made available for use by third parties without the written
permission of the University, which will prescribe the terms and conditions of any
such agreement.
Further information on the conditions under which disclosures and exploitation may
take place is available from the Head of the School of Mechanical, Aerospace and
Civil Engineering.
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Copyright Statement
ACKNOWLEDGEMENT
I would like to express my gratitude to those who had helped me with the preparation
of this dissertation.
Firstly, I must thank God for giving me the strength to complete this study for my
master’s degree course.
To my father, Mr Vinod Thomas, thank you for your advice, continuous support and
encouragement.
To my mother, Mrs Betty Thomas, thank you for being a constant source of strength
and showing me the power of faith.
To my Sister, Sumina Thomas, thank you for your love and support.
I am grateful to my supervisor, Mr Callum Kid, whose guidance, advice, critiques,

supervision and expert feedback during many informative discussions concerning
concession contracts had put all things together to bring this study to fruition.
Special thanks to my other professors, lecturers and administrators from the School of
Mechanical, Aerospace and Civil Engineering (MACE) and library staffs at the
University of Manchester for their assistance in supporting my academic aspiration
I would also like to thank my classmate Bobo Bania for her useful insights on the
topic and the drawings she helped me with.
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Acknowledgement
CHAPTER ONE
Introduction and Structure of Dissertation
1.1 Introduction
In the words of Peter Drucker “the industries of industries”, the automobile

manufacturing till today is considered the largest manufacturing activity with nearly
50 million new vehicles being produced every year. This industry is very important to
mankind and has changed our most fundamental ideas of how we make things.
(Womack et al., 1996)
At the time of World War 1- Henry Ford and Alfred Sloane moved the craft
production of the European firms into the age of mass production in the United States
which resulted in them dominating the global economy.
But then the industries were worsened by customers who have a higher demand for
service and quality. Not just the manufacturing industry but just about any industry
such as construction, aerospace, service industry etc are facing the same challenge
from their customers demanding good service and better quality.
Studies have highlighted the need for a better concept to breakaway from the barriers
of traditional practices. These practices which have produced low, earned lesser
profitability and failed to provide clients with acceptable service and good value for
money. Research have shown that industries in the past worked in intense
fragmentation, there was no integration between the suppliers both upstream and
downstream resulting in conflicts between the different companies. (Harrison et al.,
2005)
According to Womack et al. (1996) the increase competition, customer demand and
complexity had continued to stimulate and increase in the potential of such destructive
relationships. It was a time to change and integrate the industries – a better concept
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was needed. By the end of World War 2, Eiji Toyoda and Taiichi Ohno at Toyota in
Japan pioneered the concept of the Toyota Production System (TPS) which was later
perfected by them. It was given the name Lean by Womack and Jones. It is this very
concept that helped Japan to rise to its current economic superiority.
At first, it was adopted in the manufacturing industry and when asked the question:
what is lean production? Perhaps the best way to describe it is by contrasting it with
craft and mass production. The lean production combines the advantage of both while
avoiding the high cost of the former and the rigidity of the latter plus by focussing on
the elimination of waste in the production system. (Womack et al., 1996)
The concept of lean thinking works with a combination of 5 principles:

Value
Value stream
Flow
Pull
Perfection
Though this concept of lean has its root in the manufacturing industry, it has been
adopted and applied in various other industries and results have proved that lean
thinking practices have been successful giving better services and quality to the
customers in the other industries. This concept has changed the culture in industries to
be less adversarial and be more aspirational. (Womack et al., 1996)
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1.2 Aim & Objectives
Given the background presented in the introduction of this chapter, the aim of the
dissertation is understood.
The primary aim of this dissertation is to study and understand the lean thinking
model and revealing the efficiency of the supply chain by applying concepts of the
lean thinking model.
The dissertation does this by pursuing the following objectives:
To carry out an extensive literature review on the concept of the lean thinking
model.
To provide an overview of the concept of supply chain and supply chain

management.
To illustrate that the supply chain can be made efficient and effective when
applying lean.
To study the different elements and techniques of lean.
To compare and contrast the principles of lean in the aerospace and the
construction industry.
To show the future of lean management.
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1.3 Methodology
The dissertation methodology was organised into four major parts:
Once the topic of my dissertation; Information requirement of the Lean thinking

model, was decided, the next involved planning and preparation of the dissertation. In
this stage, the scope and the limitations of the dissertation was considered based on
which the aim and objectives was written. A rough dissertation plan was drawn
estimating the time and resource requirement for each dissertation activity. The reason
to have a plan was to proceed in an organised manner and to monitor progress at
every step and also as a basis of re-planning when the unexpected happens.
The second part of the methodology involved and intensive literature search on the
lean thinking model, theories and practices of the Supply chain industry, construction
industry and aerospace industry. Also literature search was done on the applications
of lean in the above industries. The source of such data was from extensive range of
information sources, such as: a wide range of written literature including books,
journals, and the electronic medium (World Wide Web); also detailed discussions
with professors who had knowledge on the respective topics.
The third and important part was the literature review and the analysis. First aim was
to study and understand the concept of the lean thinking model and how it can be
applied in different industries. Secondly, the natures of the Supply chain industry and
how it can be made efficient with application of the lean thinking model. Thirdly, to
show a wider scope of the concept of lean; comparing the lean model within the
aerospace and construction industry proving that it can be applied successfully in any
industry.
Fourthly and finally, were the structure of the dissertation and the compilation of the
data and the critical analysis.
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None of this would have been possible without my dissertation supervisor. A

consistent meeting with the supervisor was perhaps the most valuable activity in the
preparation of this dissertation.
1.4 Limitations
The dissertation was influenced by the following limitations.
A. The biggest limitation that the dissertation faced was the fixed time scale. The
time scale was undoubtedly short. There was not enough time to carry out a
detailed literature analysis on the topic. Also the time scale did not permit to
conduct interview with the leading manufacturing, construction and aerospace
companies implementing the lean thinking principles.
B. The dissertation was characterised by low budget. This prevented the

enrolment of seminars and reports organised by companies. It also prevented
the purchase of expensive seminars, conferences material and books.
C. Due to shortage of time, quantitative analysis of the benefits of lean could not
be carried out but an effort has been made to explain the benefits qualitatively
with the help of case studies and examples.
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1.5 Structure of the dissertation
The dissertation has been prepared into six chapters including this one, to validate the
aim and objectives. The dissertation has been structured in a way that the concept of
lean is firstly understood, secondly its efficiency in another industry and finally the
wide scope of the concept. A better understanding of the structure of the dissertation
is given in detail below.
A decade ago, if anyone in any industry or company was asked, ‘What is lean?’ a
majority of them never knew the answer to this question. But this very concept has
changed the entire process system of many companies enabling them to earn better
efficiencies. The concept of lean was born in Toyota – Japan and it was called the
Toyota Production System, after which Womack and Jones (1996) coined it the term
lean. It was coined lean for the view centred on the elimination of waste with the goal
of creating value. The lean thinking system focuses on the five principles and Muda
which are the basis for the concept of lean in the different industries. So, for the
implementation of lean in any industry, it is very important firstly, to understand the
lean thinking system which is why the second chapter explains about the five
principles of lean and the value it creates when applying these principles. It also
shows the various Muda which can be identified and eliminated in the different
processes of the companies.
Today's business climate has rapidly changed and has become more competitive as
ever in nature. Businesses now not only need to operate at a lower cost to compete, it
must also develop its own core competencies to distinguish itself from competitors
and stand out in the market. In creating the competitive edge, companies need to
divert and apply innovative concepts to focus on areas like supply chain. But why
supply chain? This is because the supply chain plays an important role for the success
of any product, company, or industry. The supply chain helps the company to connect
both the upstream suppliers and the downstream customers without which no industry
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can survive. Therefore applying concepts like lean into the supply chain of the
organisation are the ways in which they can have a competitive edge over its
competitors. The third chapter explains the concept of supply chain, and then it
focuses on the concepts of lean in the supply chain.
As we already know, lean thinking focuses on the five principles to create value and
on the identification and the elimination of waste. But the implementation of lean in
any industry is not possible just by applying these rules. Lean implementation is
successful and efficient only when there is a combination of the lean thinking system
and the lean thinking elements and techniques. The Fourth chapter focuses on
explaining the principles and concepts of these elements and techniques. It also shows
that the techniques when applied benefit the lean thinking system and helps the lean
management in the successful implementation of the concept.
The misconception about lean is that people believe that lean is a concept which can
be applied only in the manufacturing industry. This is not true as lean is a universal
concept. Just as much as lean principles are applied in the manufacturing industry, it
can be applied in the aerospace, construction and other industries and generate
affirmative results. The fourth chapter compares the principles of lean in the
construction and the aerospace industry. It shows how the principles are applied to the
industry but in different ways.
Finally in the last chapter, the entire dissertation is summarised by showing that the
aim of the dissertation is accomplished. It ends by discussing about the future of lean
thinking.
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CHAPTER TWO
LEAN THINKING VS MUDA
2.1 Introduction
Muda the one word of Japanese we all need to know. It sounds really awful as it rolls
of our tongue and it should, because Muda means “waste”. According to James P.
Womack (2003) “specifically any human activity which absorbs resources but creates
no values” is called waste. It involves mistakes which require rectification, production
of items no one wants so that inventories pile up, processing steps which are not
actually needed, transport of goods without a purpose, people in the downstream
activity standing around waiting because the upstream activity has not delivered on
time and goods and services which don’t meet the needs of the customer.
Fortunately, there is a powerful antidote to Muda: lean thinking. Lean thinking

provides a way to specify value and line up value creating actions in the best
sequence, and if the lean thinking principles are practiced effectively, Muda can be
completely eradicated from the process. (Womack et al., 2003)
In short lean thinking is lean because it provides a way to do more and more with less
and less – less human effort, less equipment , less time and less space – while coming
closer and closer to the providing the customers with what they want. (Hogg, 2007)
In today’s day and age where competition has no bounds, the one thing companies are
adopting to become competitive and improve their operating efficiency and
profitability are the principles of lean thinking. It has been describes as the quest for
“brilliant process management”.
Lean thinking - a way to convert Muda into value.
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Lean Thinking VS Muda
2.2 The Concept in Detail
Though the concept of lean is rooted in the manufacturing industry, the principle of
lean thinking is universal and can be applied successfully in a wide range of
industries- not just in traditional production environment but also in service industries,
software development, construction, complete supply chain. (Construction
Excellence, 2004)
Lean Production is ‘lean’ as it uses less of everything when compared with mass
production- half the human effort in the factory, half the inventory, half the
manufacturing space, half the investments in tools, half the engineering hours to
develop a new product in half the time. The advantage of keeping half the inventory
on site is that, it results in fewer defects, and produces a greater variety of products.
Michael Dell, while on tour with a large customer saw technicians customising the
new Dell computers with their company ‘standard’ hardware and software when the
host asked “Do you think you guys can do this for me”, without waiting he replied
“Absolutely we’d love to do that”. With in weeks the, Dell was shipping computers
with factory installed, customer specific hardware and software. What took the
customer an hour could be done in the factory in minutes and further more computers
can be shipped to the end user rather than making a stop in the corporate IT
department. Shortening the value chain is the essence of lean thinking (Poppendieck,
2002). Companies which rethink the value chain and who find ways to provide their
customer value with significantly fewer resources than their competitors can develop
an unassailable competitive advantage. The principles of lean are :( Construction
Excellence, 2004)
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The Lean Principle:
Eliminate Waste
Precisely specify Value from the perspective of the ultimate customer
Clearly identify the process that delivers what the customer values ( the Value
Stream) and eliminate all non value adding steps
Make the remaining value adding steps Flow without interruption by
managing the interfaces between different steps.
Let the Customer Pull - don’t make anything until its needed, then make it
quickly
Pursue Perfection by continuous improvement
Figure 2.1: Lean Thinking Principles…
Lean Thinking is designing and operating the right process and having the right
systems, resources and measures to deliver things right first time. The primary focus
is on moving closer to providing a product that customers really want, by
understanding the process, identifying the waste within it, and eliminating it step by
step. (Poppendieck, 2002)
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Lean Thinking focussed on value more than cost and seeks to remove all the non
value adding components and (especially) processes, while improving those that add
value. It aims to define value in customer terms, identifying key points in the
development and production process where that value can be added or enhanced. The
goal is seamless integrated process (Value stream) where in products ‘flow’ from one
value adding step to another all driven by the ‘pull’ of the customer. (Construction
Excellence, 2004)
As Lean focuses on the elimination of waste in its process, it is important to know that
Taiichi Ohno (1912 – 1990), the Toyota executive was the first to identify the first
seven types of Muda which will be discussed in detail in the third chapter. There are
probably more than seven, but as said Lean is a concept which can be applied in
different industries, so Muda and the source of Muda will differ from industry to
industry but the philosophy of converting Muda into value is what matters in the
concept of lean thinking. (Womack et al., 2003)
2.3 History and Evolution of Lean Thinking
Today many people believe that the concept of lean or lean manufacturing and its
practices were developed by and for the Toyota manufacturing System. This is correct
to certain extent. But when taking the concept of lean thinking, its history actually
dates back a little more than that.
The lineage of lean thinking practices in manufacturing and Just in Time (JIT)
Production goes back to the time of Eli Whitney (1765 -1825) and his concept of
interchangeable parts. Eli Whitney is famous as the inventor of cotton gin. However
the gin was just a minor accomplishment when compared to his perfection of the
interchangeable parts. (Bodek, 2004; Flinchbaugh, 1998)
In the U.S., Eli Whitney saw the potential benefit of developing interchangeable parts
for the fire arms of the U.S military, and in 1798, he build around ten guns all
containing the exact parts and mechanism, and disassembled them before the
congress. He placed all the parts in a pile and reassembled all the weapon right in
front of the congress.
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For the next 100 years manufacturers primarily concerned themselves with individual
technologies. During this time our system of engineering drawings developed, modern
machine tools were perfected and large scale processes such as the Bessemer process
for making steel held the centre of attention.
But as products moved from one discrete process to the next through the logistics
system and within factories, few people concerned themselves with:
What happened between processes?

How multiple processes were arranged within the factory?
How the chain of processes functioned as a system?
How each worker went about a task?
This changed in the late 1890's with the work of early Industrial Engineers.
Frederick W. Taylor (1856 -1915) began to look at individual workers and work
methods. The result was Time Study and standardized work. He called his ideas
Scientific Management. The concept of applying science to management was sound
but Taylor simply ignored the behavioural sciences. In addition, he had a peculiar
attitude towards factory workers.
Frank Gilbreth (1868 -1924) (Cheaper by the Dozen) added Motion Study and
invented Process Charting. Process charts focused attention on all work elements
including those non-value added elements which normally occur between the
"official" elements.
Lillian Gilbreth (1878 – 1972) brought psychology into the mix by studying the
motivations of workers and how attitudes affected the outcome of a process. There
were, of course, many other contributors. These were the people who originated the
idea of "eliminating waste", a key trend in JIT and Lean Thinking. (Bodek, 2004)
Starting about 1910, Henry Ford (1863 – 1947) and his right-hand-man, Charles E.
Sorensen, fashioned the first comprehensive Manufacturing Strategy. They took all
the elements of a manufacturing system-- people, machines, tooling, and products--
and arranged them in a continuous system for manufacturing the Model T automobile.
Ford was so incredibly successful he quickly became one of the world's richest men
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and put the world on wheels. Ford is considered by many to be the first practitioner of
Just in Time and Lean Manufacturing.
But then the world began to change, the Ford system began to break down and Henry
Ford refused to change the system.
For example, Ford production depended on a labour force that was so desperate for
money and jobs that workers would sacrifice their dignity and self esteem. The
prosperity of the 1920's and the advent of labour unions produced conflict with the
Ford system. Product proliferation also put strains on the Ford system. Annual model
changes, multiple colours, and options did not fit well in Ford factories. (Sorensen,
1956)
At General Motors, Alfred P. Sloan (1875 -1966) took a more pragmatic approach.
He developed business and manufacturing strategies for managing very large
enterprises and dealing with variety. By the mid 1930's General Motors had passed
Ford in domination of the automotive market. Yet, many elements of Ford production
were sound, even in the new age. Ford methods were a deciding factor in the Allied
victory of World War II. (Womack et al., 1996)
Ironically, Henry Ford hated war and refused to build armaments long after war was
inevitable. However, when Ford plants finally retooled for war production, they did so
on a fantastic scale as epitomized by the Willow Run Bomber plant that built "A
bomber An Hour."
Now the Allied victory and the massive quantities of material behind it ("A Bomber
An Hour") caught the attention of Japanese industrialists. They studied American
production methods with particular attention to Ford practices.
At Toyota Motor Company, Taiichi Ohno (1912 – 1990) and Shigeo Shingo, began
to incorporate Ford production and other techniques into an approach called Toyota
Production System or Just in Time. They recognized the central role of inventory.
The Toyota people also recognized that the Ford system had contradictions and
shortcomings, particularly with respect to employees. With General Douglas
MacAurthur actively promoting labour unions in the occupation years, Ford's harsh
attitudes and demeaning job structures were unworkable in post-war Japan.
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Toyota soon discovered that factory workers had far more to contribute than just
muscle power. This discovery probably originated in the Quality Circle movement.
Ishikawa, Deming, and Juran all made major contributions to the quality movement. It
culminated in team development and cellular manufacturing. (Bodek, 2004)
Another key discovery involved product variety. The Ford system was built around a
single, never changing product. It did not cope well with multiple or new products.
Shingo, at Ohno's suggestion, went to work on the setup and changeover problem.
Reducing setups to minutes and seconds allowed small batches and an almost
continuous flow like the original Ford concept. It introduced a flexibility that Henry
Ford thought he did not need. (Womack et al., 1996)
All of this took place between about 1949 and 1975. To some extent it spread to other
Japanese companies. When the productivity and quality gains became evident to the
outside world, American executives travelled to Japan to study it.
They brought back, mostly, the superficial aspects like kanban cards and quality
circles. Most early attempts to emulate Toyota failed because they were not
integrated into a complete system and because few understood the underlying
principles.
Norman Bodek first published the works of Shingo and Ohno in English. He did
much to transfer this knowledge and build awareness in the Western world. Robert
Hall and Richard Schonberger also wrote popular books.
By the 1980's some American manufacturers, such as Omark Industries, General

Electric and Kawasaki (Lincoln, Nebraska) were achieving success.
Consultants took up the campaign and acronyms sprouted like weeds: World Class
Manufacturing (WCM), Stockless Production, Continuous Flow Manufacturing
(CFM), and many other names all referred to systems that were, essentially, Toyota
Production System.
Gradually, a knowledge and experience base developed and success stories became
more frequent.
In 1990 James Womack wrote a book called "The Machine That Changed the World".
Womack's book was a straightforward account of the history of automobile
23
manufacturing combined with a study of Japanese, American, and European

automotive assembly plants. What was new was a phrase-- "Lean Manufacturing."
Lean Manufacturing caught the imagination of manufacturing people in many
countries.
This is how the concept of lean thinking evolved into what it is today. Though
pioneered in the car manufacturing industry in Japan, it has been implemented
successfully in the American, European manufacturing industry and is being applied
widely outside the automotive industry. (Garnett, 1998; Murman et al., 2002)
2.4 Perspectives on Lean
In 1990 Jones, Womack and colleagues published the book ‘The Machine That
Changed the World’ as a description of the Toyota Production Systems , and coined
the term Lean. The book itself was an offshoot of their research project, funded by the
Western automobile manufacturers, to define World Class in automotive manufacture.
The answer, Toyota’s system, did not surprise anyone in the industry, but what the
research failed to adequately address was not what Lean was, but how to implement
the concept of lean. (Jones, 1999)
There are at least three different perspectives on Lean.
The first was Shigeo Shingo ’s industrial engineering perspective:

There are currently ongoing debates about Shingo’s influence on the Toyota system.
The facts are that he taught Industrial Engineering courses at Toyota for over 25 years
from 1955 onwards. He taught the very people who implemented Lean the
engineering principles behind it. He saw Lean in terms of Non-Stock Production –
producing with minimal inventory. Shingo was a theorist as well as an engineer, and
his theory was articulated as far back as 1946.
The theory was that manufacturing is a network of process (product flow) and
operations and that non-stock production meant focusing on flow not individual
operational efficiency. He derived this from Henry Ford’s dictum that the longer
anything is in the factory, the more it costs, at exactly the time when Sloan and GM
were doing the direct opposite. How much Toyota was influenced by this theory, or
24
how far Shingo’s theory is just an explanation of Toyota’s developing practice is

being debated, but there is a match between theory and practice.
The second perspective is Professor Fujimoto’s Evolutionary Learning perspective:

This is detailed in his book ‘The Evolution of a Manufacturing System at Toyota. The
evolutionary perspective is particularly valuable in explaining why the Toyota
Production System works. Professor Fujimoto identifies three characteristics of the
Toyota learning system – reliable standard methods, reliable standard problem solving
techniques and experimentation.
Again, Toyota would never describe them in this way, although they would applaud
the emphasis on standard methods.
An example of a multiple perspective approach would be to consider Jidoka,
autonomation. In most descriptions this is one of two pillars of the Toyota
Production System , but it is interpreted in very different ways.
Jidoka is essentially a process to decouple people from machines. It was the
foundation of Toyota’s original weaving loom business as Mr Toyoda patented a
device to stop a loom as soon as a thread broke.
This meant that workers did not have to closely watch looms, prepared to react to a
break in the thread. The word came to be applied to any system that allows a machine
to take action in response to problems, rather than rely on the observation of an
operator.
From an engineering perspective, it is a form of automation designed to eliminate
waste – the waste of an operator watching a machine, rather than performing value
adding work. From a process management perspective it is a form of Poka-Yoke –
enabling the process to inspect itself and using this in-process inspection to stop
defects being passed on to other operations or the customer – it is a form of process
control. From a learning perspective it is a way of releasing people from the drudgery
of watching machines, enabling them to engage in value-adding activity.
25
This third perspective has seen it interpreted as ‘Respect for People’:

How you interpret Jidoka effects how you try to implement Lean. Do you see it as a
way of removing waste from the process, a way of controlling processes or a way of
developing people? In reality it is all three, and we need to acknowledge all three in
our attempts to emulate the success of Toyota, which is ultimately the goal of
businesses implementing lean. A narrow waste elimination perspective misses a lot.
Many companies have struggled to implement lean approaches. One reason may be
that they have too narrow an understanding of lean, and have attempted to copy the
superficial elements of the process, rather than understanding the place of these
elements in a lean system. A multi-perspective approach can help avoid this and
should be part of the learning process for all the lean leaders. (Jones, 1999)
2.5 Principle of Lean Thinking
Lean Overview
For any organisation, before they embark on a change programme, regardless of any
intention, there need to be some fundamental ingredient that needs to be in the right
place to ensure future success for the organisation.
Most of the time, organisation adopt a programme of change that are not clearly
understood throughout the business, they are often labelled as initiatives. Indeed the
word ‘initiative’ alludes to something that will enable the business to get out of the
current crisis only.
To sustain the benefits of lean, the following must be understood and communicated
in order to create an environment that can accept a change transformation. They are:
Why should we change?
• What is the need for change? What happens if we don’t change?
Where do we want to be?
• What is the vision?
Who will be involved?
• What capacity can be committed to support this change programme?
How can we involve our people?
What should we do now?
• Is there a strategy for change? Do we have objectives for a business&
plans to achieve them?
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It is possible that any of the previous failed attempts to change in the organisation
could be of the fact that, they were weak in any of the above.
But for an organisation to realise the true benefits of lean, it is very important that the
business must look beyond the ‘current crises to the future challenges such as how
will the market change? How will we need to function? Who are our customers? Etc.
The organisation needs to realise that the process is continuous which can be very
difficult to conceptualise.
Though the sections below are going to describe the principle, the core element to the
success of this type of change is the development of people through involvement
(Kedem, 2003). Products, tools, systems, techniques etc can be mimicked in any
organisation but it is the people that offer the greatest potential for differentiation to
their competitors.
2.5.1 Value
Specify Value
The customer is the only reason why a business exist, therefore it is very important to
understand what the customer actually requires which is essentially the strategy of a
lean organisation - Who are they, what do they want, how do they want and when do
they want should be clearly defined. It is very important for an organisation to realise
that these definitions are likely to change in a highly competitive environment.
Organisations which ignore such changes will ultimately fail in the long run.
Therefore it is very important for a lean organisation to specify the value of its end
product which it’s going to deliver to the end customer. According to Womack et al.
(2000) the concept of value can be best described as the element of the product/
service that the customer is willing to pay for. (Womack et al., 2003)
Due to increase in competition and globalisation, the market price for a product is no
longer determined by the producing organisation. The customer has now the power to
define the market price. For a lean organisation to remain profitable, they must
concentrate on how to maximise the value and how they create it in their product or
service (Wood, 2004). Because of such focus on value, the lean practitioners need to
work close with the customer specifying and creating value, But where to start?
27
Start by challenging the Traditional definition of ‘Value’
Let us consider a real life example of specifying value from the book ‘Lean thinking’
by Womack and Jones.
Steve Maynard, the vice president for engineering and product development at the
Wiremold Company was trying to deal with the very problems of bringing about a
change in the product development system of the company. Wiremold developed new
products through a conventional departmentalised process. The system was generally
when an opportunity was identified; usually a gap in the market or a weakness in the
product of the competitor, a design was developed by the product engineer
immediately, and then tested by the prototype group. If it worked according to
specification, the design proceeded to the engineers designing the machines to make
the products and finally it went into production.
This system by Wiremold Company produced designs lacked imagination which the
customers often ignored. Simply speeding up the process through simultaneous
engineering and then broadening product variety would jut bring in more bad designs
to the market- ‘Pure Muda’
To overcome this problem and traditional system, Steve Maynard’s solution was to
develop a team for each product to stick with the product during its entire production
life. The team – consisting of a marketer, a product engineer, and a process engineer-
proceeded to enter into dialogue with the leading customer in which all of the old
products and solutions were ignored. Instead they focused on the value the customer
actually needed.
As the new system was adopted, it developed product with exact specification of how
the customer wanted. In two years, the sales of these products increased by more than
40 percent and the gross margin soared.
So companies like Wiremold and others need to search for new capabilities that will
permit them to create value in unimagined dimensions for the customer.
Value definition in terms of the whole product
Another reason a company finds it difficult to get its value right is because value
creation often flows through many firms and this tends for firms to define value in
different ways to suit their own need. When different definitions of value are added
28
up, they generally don’t create any value. So its very important to remember that
when a company defines value, it should define it in terms of the whole product and
not just its own interest.
2.5.2 Value Stream
“Whenever there is a product for a customer, there is a value stream. The challenge
lies in seeing it.”
Mike Rother & John Shook, Learning to See
Once Value has been specified, the next step is to identify the Value stream.
The value stream is all the specific actions required to bring a specific service or
product through three critical activities in any business: Product/Service definition –
from concept through detailed planning through launch Information management –
from order taking through detailed scheduling to delivery Physical transformation –
initial concept, to the receipt of the service/product by the customer. The
identification of the value stream makes the specific value flow through the system
(Chitturi, 2007). Identifying the value stream also exposes enormous amounts of
waste in the form of unnecessary steps, backtracking, and scrap, which travels from
department to department and company to company. (Womack et al., 2003)
Womack and Jones (Lean Thinking, 1996) visualize the value stream as this: raw
materials along with knowledge and information enter the system upstream (the
suppliers); and, products or services of value flow out from the system downstream
(the customers). The individual processes that take place in between are those that add
value to the product or service as it flows through them. It is a simple but powerful
model. If an activity or process does not add value, it is eliminated. Understanding
the value stream is to gain a clear understanding of the various families and the
associated processes that are required to manufacture them. Generally such
information is not very clear. In order to understand the various value streams in the
organisation or in a manufacturing process, a Product Family Matrix can be used.
29
Product Family Matrix
To create a product family matrix, we need to list our products down to the left of the
column. Then we process steps, working backward form the customer along the top.
In many cases it is not necessary to list all the steps. Usually it’s the ones closer to the
downstream are enough for us to differentiate product families. After we have listed
the products, we look at the products which have a common process so that these
products can be grouped into families.
Figure 2.1: Product Family Matrix…
Source: Lean Thinking- Banish Waste and Create wealth in your Organisation By
Womack and Jones, (2003)
‘Downstream’ are those steps which are closer to the customer and ‘Upstream’ are the
steps closer to the raw material. The process steps need to be identical, so that later on
a flow can be created in a way that products can pass through each step with some
slight detours if required. What is amazing is that the results found from the usage of
this tool. For e.g. some products which were totally different form each other are
having a common set of process steps, so that in such cases they can be grouped in to
product family matrix.
30
With the help of this we can understand how value added and non value added
activities have an effect on the product as it progresses from raw material to handover
to the final customer. To illustrate this information we can use Value stream Maps.
Value Stream Maps
The Value Stream Map is used to illustrate both the ‘Current State’ and the desired
‘Future State’ of a process. The map contains the following information: (Womack et
al., 2003)
1. Customer/Supplier
2. Material push, pull, flow etc
3. Inventory
4. Processes & process data
5. Information Flow (electronic/verbal/written etc)
6. Relationship between lead time & actual in process time
The Value Stream Map highlights the 7 Wastes and is used to provide a basis for
developing plans to implement lean tools and techniques. Given below is an example
of a value stream map. (Please turn over)
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Figure 2.2: Value Stream Maps…
Source: (National Research Council, 2004)
The value stream map, developed at Toyota, is a tool that:
allows you to diagram your current value stream;
Identifies the bottlenecks that prevent you from making what your customers
want, when they want it;
Develops a vision of what your future lean system should look like.
Value stream mapping gives you the “Aha!” feeling – things become obvious.
Easy Steps to Mapping the Value Stream: (National Research Council, 2004)
Select the product or product family you want to map. You may want to begin
with your biggest customer and select the product you deliver to them.
Draw the current state value stream map.
Draw the future state value stream map.
Implement the action plan.
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Value Stream for a Cola Carton
This is a case study developed by Nick Rich of the Lean Enterprise Research Centre
and presented in the book Lean thinking by Womack and Jones. But before looking
into it, we have to understand that in the production process there are three types of
work.
Value added: that is the work what the customer is prepared to pay for
Non Value added: that is what the customer is not prepared to pay for, but is
an integral part of the production process
Waste: that is what the customer is not prepared to pay for in the production
process.
There are 7 integral wastes that have been identified in the production process such as
transport, inventory, motion etc which will be discussed in detail in further chapters.
When looking into the value stream for a carton of cola, the results of the study
conducted is fairly horrific, it involves a lengthy set of actions extending to over three
hundred days, most of which consume resources but creating no value at all and is
therefore Muda (Womack et al., 2003)
When looking at the raw material required in manufacturing a cola can. It requires
water which is supplied from the local water authority, and then other basic
ingredients such as the ‘essence’. The other raw materials are beets for sugar, corn for
caramel, colouring agent, fir trees for cardboard to make the cartons and bauxite and
aluminium for the can. Since the can was the most complex aspect in terms of
identifying the value stream, the analysis was done on the flow of aluminium as the
other ingredients join the stream further down the valley.
33
Figure 2.3: Value Stream for Cola Cans…
Source: Lean Thinking- Banish Waste and Create wealth in your Organisation by
34
Table 2.1: The Value Stream details of Carton of Cola…
Incoming Processing Finished Process Cum Cum

Processes Storage Time Storage Rate Days Scrap
1 Mine 0 20 min 2 weeks 1000 t/hr 319 0
Reduction
2 mill 2 weeks 30 min 2 weeks 305 0
3 Smelter 3 months 2 hrs 2 weeks 277 2
Hot
rolling
4 mill 2 weeks 1 min 4 weeks 4 ft/min 173 4
Cold
rolling
5 mill 2 weeks < 1 min 4 weeks 2100ft/min 131 6
Can
6 maker 2 weeks 1 min 4 weeks 2000/min 89 20
7 Bottler 4 days 1 min 5 weeks 1500/min 47 24
Tesco
8 RDC 0 0 3 days 8 24
Tesco
9 Storage 0 0 2 days 5 24
Home
10 Storage 3 5 min 3 [90]
5
Total months 3 hours 6 months 24
Source: Lean Thinking- Banish Waste and Create wealth in your Organisation by
♦ Cumulative scrap is the percentage of the original aluminium scrapped.

The jump in scrap at the maker is due to the loss of about 14 percent of
material in the punch. The loss from the bottler is mainly from
damaged cans rejected as they are loaded in the filling machinery.
♦ The jump in scrap rate at the home of the customer, show in brackets,
is the consequence of recycling only 16 percent of the 76 percent of the
original aluminium which reaches the customer.
35
From the table it is clearly seen that the amount of time value is actually being created
is about three hours which is infinitesimal when compared to the total time of three
hundred and nineteen days from bauxite to recycling bin. Firstly more than 99 percent
of the time the value stream is not flowing at all: Muda of waiting. Secondly the can
being picked up and put down more than thirty times, from the customers perspective
none of this will add value: Muda of transport. Thirdly the cans are moved through
fourteen storage lots and warehouses, and the cans are palletized and unpalletized four
times: Muda of inventory. Fourthly and finally around 24 percent of the energy
intensive and expensive aluminium never makes it to the customer: Muda of defects
(causing scrap)
From here, it is seen how the identification of the value stream helps in the showing
the amount of actual value and waste created. This helps the enterprise in making
necessary changes. Given below is the entire value stream of Cola cans.
Figure2.5: Confluence of Cola Value Streams
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2.5.3 Flow
The next stage in the lean principle after the identification of the value stream is Flow.
According to Womack et al. (2003) Flow is defined as producing a product from raw
material to completion without unnecessary interruption or delay (i.e. waste). The aim
is to achieve single-piece flow in each process, ensuring work flows smoothly from
one stage to the next, one at a time, increasing flexibility, thus reducing work in
progress, parts movement, parts handling, quality defects and therefore, the lead time.
It is about how the items or people that we are processing move from the start to the end of our
interaction with them. It is about what happens to them and how the process overall compares to what
could be seen as a perfect process. Many of principles of Flow are linked with Just-in-Time (JIT).
These state that the best way to run a process is to use the minimum re source and minimum elapsed
time to move an item from the start to end of the process. Flow is also about having a highly efficient
process system.
Why Do We Get Poor Processes?
An obvious question is why the processes we operate at the moment are not Lean.
There will be many reasons. The first is that in the real world we will never get a
perfect process. There will always be some room for improvement, cost reduction and
cycle-time reduction. However, the reason why most business processes are so far
away from perfection is not that achieving perfection is impossible, but rather that we
have never attempted to reach, or even define, perfection. (Ad Esse Consulting, 2007)
The reasons for not achieving what would be regarded as a Lean process are:
No understanding of what ‘good’ looks like.

The processes are not designed
No understanding if the current processes well enough
No comparison made against perfection
Optimisation of individual steps and not the whole process
37
Principle of Lean Flow
Good processes are designed with a few, very simple principles in mind. (Ad Esse
Consulting, 2007)
Lean Flow is:
Focus on value- adds. For each step we need to be sure that it is adding value
from the customer’s perspective. Many steps in a process add no value at all.
The time for any individual item or person being processed to move from the
start to the end of the process should be as short as possible. Elimination of
waiting time in a process should be one of the key concerns.
Work should be pulled through the process rather than pushed. Demand from
downstream should define activity upstream.
Batching should be avoided wherever possible.
Doing anything before it is required by the next step in the process is over-
production and should be avoided.
No duplication of activity. Duplication should be eliminated, usually by

improving the quality o f the initial process step.
Techniques of Flow
The concept of flow in lean thinking plays a vital role when applied in any industry.
Although applying flow to the full range of human activities will not be easy or
automatic. For managers who are new to the concept will find it hard to even see the
flow of value and therefore grasp the value of flow.
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So how do we make this concept of value flow continuously in our system? First once
value is defined and the entire value stream is identified it is important to focus on the
actual object- the specific design, the specific order and the product itself.
To second step in order to make the first step possible is by ignoring the traditional
boundaries of jobs, carriers, functions and focussing on becoming a lean enterprise
removing all impediment to the continuous flow.
The third and final step is to rethink specific work practices and tools to eliminate
backflow, scrap etc so the production of the specific product can proceed
continuously. Generally all these three steps have to be processed continuously.
To make this approach understandable, let’s take a concrete example of the design,
order and production of bicycle from the Lean Thinking of Womack and Jones.
The reason the authors had selected this as a study is due to the disintegrated nature of
the bicycle industry, with the final assembler making only the frame and buying the
rest of the components from numerous suppliers.
Design
Traditionally in the bicycle industry, it worked on the principle of batch and queue
when only a need was addressed by the marketing department, the product engineers
would design a product to serve the need. The design for a new product moves from
department to department, waiting in the queue in each department. Most times it
returned to previous departments for rework or change in the raw material. There was
no flow in the process. Also a major disadvantage in the traditional practices were that
the product team was just a committee of staff that send the bulk of the actual
developments work back to the departments, where it still waited in queue. There was
lacking a standardized approach to the flow of material.
But taking the lean approach, it aims to create truly dedicated product teams and all
the right skills needed to conduct value specification, general design, detailed
engineering, purchasing, tooling, and production planning in one room in a short
period of time using a proved team decision making methodology commonly called
Quality Function Deployment (QFD). This enables the team to standardise the work
also so that the same and the efficient approach can be followed every time.
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Order – Taking
The historic practices of order taking in the bicycle industry have been to task the
sales department with obtaining orders from the retailers. Once the orders are fully
processed and to make sure that the buyers are credit worthy, they are send to the
scheduling department in operations to work the algorithm for the firm’s product.
Then the shipment date is sent back to the sales and to the customer. To check the
progress of the sales, the customer call the sales and the sales in turn calls the
scheduling which leads to the wastage in time of communicating from department to
department.
In the lean enterprise or when applying lean, the sales and the production scheduling
are considered to be core members of the product team. They are in a position to plan
the sales campaign as the product design is being developed and sell with a clear eye
of the capabilities of the production system so that both orders and the product can
flow smoothly from sale to delivery.
One of the tools used by lean to implement this approach is takt time, which
precisely synchronises the rate of production to the rate of sale to customers. This tool
is very important for the success of calculating the production slot in a lean enterprise,
the concept of this tool will be discussed and explained in further chapters.
Production
In the past, practices in the bicycle industry was to differentiate production activities
by type and to create department for each type of activity such as tube cutting, tube
bending, mitering, welding, washing, painting and the final assembly of the final
parts. Through time higher speed machines with higher level of automation were
developed for task ranging from cutting and bending to welding and painting. The
changing over part fabrication tools to make a different part was time consuming so it
was ideal to make batches of each part before changing to run the next part.
40
Figure 2.5: Bicycle Plant layout and Flow…
As batches were made, it lead to the Muda of inventory and problems also rose on
how to keep inventory of all the part and to make sure that the right parts were sent to
the right operations at the right time. In the early days inventory was hand written,
and then by 1970s came out a computerised Material Requirements Planning (MRP).
A good MRP was said to be 99 percent accurate in keeping track of the inventory,
order taking and sending instruction to each department. But eventually MRP had a
number of problems. Even a single wrong entry into the system led to Muda of
waiting and Muda of over production.
The concept of Just in Time (JIT) pioneered by Toyota in the year 1950 was applied
in the bicycle industry. But this too failed as it ignored the need to reduce the set up
times and smooth the schedule. Instead it concentrated that the suppliers delivered the
material at the right place but just in time to meet the production schedule.
41
But to get manufactured goods to flow in a lean enterprise, it takes the critical concept
of JIT and level scheduling and carries them all the way to their logical conclusion by
putting products into continuous flow wherever possible. In the case of the bicycle
plant, flow thinking calls for the creation of production areas by product family which
includes every fabrication and assembly step.
Another lean methodology by addressing the noise problem, the lean group, the
product manager, the part buyer, the engineer all in close contact with the product and
the tool engineer in the plant dedicated to the product family. Its very important that
the entire team work together supporting each other to solve production problems and
implement improvement in the process. (Womack et al., 2003)
Also there are other tools of lean which help to perfect the production stage in the
bicycle plant. They are
Total Productive Maintenance

Poka – Yoke
5 S’s
Kaikaku exercise
Kanban
The above tools which permit the successful implementation of lean will be discussed
later in another chapter.
42
Figure 2.6: Lean bicycle plant layout and flow…
Right Location
The other flow technique which needs to be mentioned is the right location both to the
design and physical production. This needs to be appropriate to serve the customers
needs. Generally to make matters worse, both these departments these days are
located in two different parts of the world.
Flow thinking to any activity

It is easy to see flow thinking in the conventional, discrete product manufacturing,
which is where flow techniques were pioneered. But once a person has mastered the
concept, it sure can be introduced into any activity in any industry.
Till now we have seen what happens when a value stream flows smoothly. But this is
not enough, what we need to know is what we are providing is what they actually
want. This is why we need to look into PULL - the next principle in lean thinking.
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2.5.4 Pull
‘PULL’ our way to Profits.
In the real world, every time an item which comes out of the production line, there
will be a customer paying for it and ready to take it off our hands. It is this same
customer who creates a pull across the value stream of the production line. The idea
of Lean is simply to bring the real world as close as possible to that ideal world, and
the concept of Pull in lean thinking is a primary key in becoming “lean.” (Womack et
al., 2003)
Pull - letting our customers “pull” product through your production system as they
need it, rather than “pushing” product through your production pipeline and
accumulating it in inventories against forecast future sales — is such a simple concept
with such obvious benefits, we’d think that every manufacturer on the planet would
be doing it, but they aren’t. Why not? Because designing and implementing a Pull
system can be very complex, both physically and politically, especially if you’re
heavily invested in a more traditional (albeit, more wasteful and costly) Push system.
It’s hard to know where to start, and what to change first. (Hinter, 2004)
Figure2.7: Push Vs Pull system…
Source: http://elsmar.com/Pull_Systems/img010.jpg
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Pull - a system that is adopted when we see that value is not able to flow throughout
the value stream. Under the pull system it ensures that the production/withdrawal of
parts occurs only when the customer requirement are communicated up the value
stream processes. This can be made successful with the use of visual communication
media called Kanban. The traditional practices followed the push system in which
operations are triggered by material and labour availability rather than customer
demand. Variability and unreliability of processed with in the production system leads
to bottle necks and Muda of overproduction.
Some Characteristics of Success
In companies that have successfully implemented pull systems, there are certain
characteristics beyond the traditionally obvious ones. The following are based on a
composite of those companies. (Krupp, 1999)
Although many companies have specific continuous improvement programs,

the most successful use a matrix approach to continuous improvement
activities.
A permanent structure is in place, sometimes based on “5S” teams. The scope

of these teams goes far beyond the scope of housekeeping that “5S” normally
implies, however, and actually covers virtually all continuous improvement
activities involving the shop floor.
Preventive and predictive maintenance programs are in place to ensure that,

where feasible, major overhauls of equipment are performed on a scheduled
and proactive basis. The program is supplemented by a productive
maintenance program, in which the operators are charged with more frequent
simple monitoring and maintenance of equipment.
A “last piece inspection system” is in place—tooling is inspected at the end of

a production run.
45
All production lines use SPC (statistical process control), and most have also
initiated SMED (single-minute exchange of die, a generic term used for
programs that minimize equipment changeover/setup times).
Quality circles are used extensively. They are often a natural outgrowth of the
5S process.
As all other principles in lean thinking, the concept of pull also can be applied in any
industry where lean is being applied. And as mentioned, one of the essential
components to becoming lean and creating the smooth flow of value throughout the
value stream is pull.
As mentioned earlier pull in its simplest terms means, that no one upstream should
produce a good or service until the customer downstream asks for it. In reality it’s a
little difficult to practice it. So let’s see how the concept of pull has benefited certain
companies in the real world.
This case is taken from the book Lean thinking by Womack and Jones.
Awful production days
The pull sequence at that time was started by a client of Sloane Toyota in Glenside
who had to get a new bumper installed. It was at the same time that Toyota was taking
a major step in synchronising its suppliers, distribution centres, and dealers so that
customers could pull the flow of value all the way through a highly complex
production system. (Womack et al., 2003)
The same bumper which the client of Sloane damaged was manufactured in Bumper
Works. But at that time in 1970, the company worked under the principle of batch and
queue. They made chromed and painted steel bumpers in variety of styles which were
made in large batches, say for a month before shifting to the next model after which
they sold it to the dealers. Since large batches were normal, it took nearly sixteen
hours to changeover. All the companies upstream and downstream of Bumper works
like the chroming Company and the steel company worked under the same principle
of batch and queue. Mr Khan in 1985 signed a contract with Toyota for a small
volume of supplies.
46
There was one major problem, the production system in both the companies were
varied. Mr Khan never knew how to implement this system but Toyota and its
supplier firms promoted the concept of lean thinking in the American world.
Lean Production for Pull

The few things that Toyota noted at bumper works were:
- massive inventories and batches
- lack of flow
The solution to this was to reduce the changeover times and shrink the batch sizes.
Toyota applied their standard formula that a machine should be available for
production 90 percent of the time and down for changeovers about 10 percent of the
time. Some of the other lean principles applied were:
- Plant being physically reorganised so the flat sheets flowed directly from the
receiving dock and the blanking machines.
- Shipping of the sheets was done at frequent intervals to the chroming operations.
- A system was adopted were an operation started only when it was pulled by the
next operation.
- Takt time and shipping schedule became the pace maker of the entire operation.
- Level scheduling was used to make a forecast of the future sales.
- Kanban or signal card were used.
Though these concepts were implemented in Bumper works, there was another
problem. The Chromer Company still operated under the principle of large batches.
But Toyota and Mr Khan approached Chrome Craft to change their system helping
them to apply the same concept of pull into their system.
All these techniques together made Bumper works learn how to pull value through its
system with lesser inventories, better quality, and lesser batches and over all a better
system.
Awful distribution days

It was a time when the Toyota production system was being implemented in the
Toyota supplier’s plant in the Toyota city. None of the official did think about
implementing the concept in the American warehouse of Toyota. The parts
distribution centres (PDC) of Toyota were laid out in the same way as that of the
47
warehouses of America – vast bins stacked to a high ceiling, thousand of them, one
for each part. These bins were lined in long rows to create endless aisles in a massive
square of building. The distribution system then created a lot of Muda of time and
inventory.
The PDC received containers in large batches in weekly intervals. When received, it
was opened and then given to the stocker who then used walk up and down the aisle
placing the part in the correct bin.
It required 15 days back in Japan to assemble an order, another 38days for ocean
shipping, 5 days to bin the parts at the PDC, so overall, the Toyota PDC required an
average of 60 days to order for un interrupted supplies to the Toyota dealer. Then a
dealer like Sloane Toyota would order parts weekly from the PDC based on the
demand seen from the previous week.
If a particular part ordered by a customer was not there with the dealer like that of the
same customer who wanted to change his bumper. A system would tell which PDC
closest to the dealer had the part, and then they would take the order to the appropriate
warehouse and get it shipped. These systems enable the part to be delivered the very
next day.
Such a system did not feel sufficient and efficient enough for the Toyota PDC’s that
they decided to introduce the same practices of lean which was applied back in the
Toyota city.
Lean distribution for Pull – theory into practice

The actual logic of introducing the pull system in the warehousing that responds
faithfully to the customer demand was introduced by the Toyota’s American
executives. Getting this system in place took it couple of years though Toyota was a
lean organisation.
Some of the steps taken by the organisation to implement the pull system of lean in
1989 were:
- The first step along this path was to reducing the bin sizes.
- Relocation of the pasts by size
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Stocking the spark plug or a truck fender on the same run was causing lost parts. As
this was done, those parts which were demanded more frequently were moved to the
start of the sorting and picking runs and the length of the aisle was reduced markedly.
- Additional stocks were stored in reserves

- When require they were moved to the active bins
Figure 2.8: Toyota PDC before Lean Thinking…
The next step was at the end of 1990:
- It involved the introduction of the concept of standard work and visual control.
- Dividing the workday into 12 minutes cycle, this length was found to be the best
compromise between walking distance and cart size in making rounds to load or
unload a cart.
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The next step took place in 1992:
- The introduction of the kaizen activities – building work carts using scrap
material and parts from the local building supply store.
In 1995:
- The transition from weekly to daily orders from its dealer to do without the need
of an additional head count.
This problem was sorted by rethinking the relation with the dealers by asking dealers
to order daily instead of ordering large batches weekly. Daily mean just the amount
sold to the customer that day.
The dealers of Toyota did object to this, they did agree only if Toyota was willing to
pay the freight charges if the trucks. For Toyota this costs could be offset by a
simplification picking process.
By applying all these concepts with in the parts distribution centre, they managed to
convert it into a lean organisation applying lean principles.
With these principles we can see the full magnitude of what is happening by ‘pulling’
together all the processes in the value stream. When this system is in place, we see
how a customer who approaches Sloane for a bumper can create a pull sequence
where this sequence goes all the way back upstream. This is illustrated in the form of
a diagram shown below: (Please turn over)
50
Figure 2.9: Toyota PDC after Lean Thinking…
Till now we see how precisely we need to specify value and then identity the value
stream for specific products, then introduce a system of flow after which let the
customer pull value from its source. However most of the essence of lean is lost if the
final principle; perfection is not applied. (Womack et al., 2003)
2.5.5 Perfection
‘The lean enterprise should not pursue competitors, but perfection’
Although there is no perfect definition for the concept of Perfection in lean thinking,
it can be summarised into the following: (Womack et al., 2003)
Eliminating wasted steps and defects
Speeding flow
Reducing inventories and volatility
Cutting management time
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Lean thinking becomes complete only with the final approach of perfection. It is
about continuous improvement in the systems of value stream, flow and pull. When
explaining the concept of lean, it explains about eliminating waste and continuous
improvement in the system. Now eliminating waste is done by the first four principles
and continuous improvement is by perfection of the system which again is related to
the first four principles because it involves the reduction of Muda.
Perfecting the system
Kaizen is a Japanese approach which has been and is being adapted by many
companies as a means of survival in an increasingly competitive world. The Kaizen
approach concentrates on continuous minor changes which are to improve the
efficiency of the organization as well as eliminating wastes. It is believed that through
these minor changes significant outcomes will be evident. The Kaizen philosophy led
to the development of the Kaizen Events, which are based on the approach of
investing minimum and achieving significant outcomes. The level of success is highly
dependant on the level of collaboration between the management and the worker. The
level of commitment should be high on both sides. It is vital to overcome
organizational sluggishness; eliminating cultural barriers to change and make it clear
that the transformation must be enterprise wide. Everyone must be committed to
change. (Lee et al., 2000)
According to Womack and Jones, there are two approaches to pursue perfection.
- the incremental path

- the radical path
The incremental path involved the lean enterprise improving performance gradually
from time to time. This is continuous improvement through time where the there is a
continuous opportunity for the reduction of Muda.
The alternative, which is the radical path to perfection, a total value stream Kaikaku
involving all the firms from start to finish across the supply chain converting them
52
into a lean enterprise where the all the firms work under the same principle. So that
perfection can be pursued by all firms across the supply chain
In fact, all enterprises need both the approaches and at least a combination of both to
pursue perfection. But what is more important is that if a company is spending
significant capitals to improve a specific activity, they are pursuing perfection in the
wrong way. Perfection can be pursued only by taking the entire value stream activities
as a whole and putting the right mechanism in place.
Two important lean techniques which are needed.
Value manager need to apply the first four principles as it is important to gauge the
gap from current reality to perfection.
Then they need to decide which forms of Muda to attack first, by mean of policy
deployment. Policy deployment will be discussed in detail in the chapter Techniques
of Lean thinking.
Also companies can pursue perfection in the following way:
Perfection - Kaizen Blitz or Accelerated Improvement Workshops: This

technique of accelerating improvements in the workplace over the course of several
days to a week through a series of such events has become an increasingly popular
tool both in manufacturing and in service industries.
Perfection - Lean Masters: Lean Masters are individual contributors from various
disciplines who are process focused, results driven, and implementation oriented.
Their role is to develop and lead improvement initiatives within either their own
company or in those of their suppliers.
Perfection - Continuous Improvement with Suppliers: Some key practices that can
be used to work collaboratively with suppliers to try to achieve perfection in the
extended enterprise are collaborative value engineering, supplier councils, supplier
associations, and value stream mapping between customers and suppliers.
53
Given below is a table showing continuous improvement in the company FNGP of

Plymouth, Michigan.
Table 2.2: Continuous Improvement of FNGP
FEB APR MAY NOV JAN JAN AUG

1992 1992 1992 1992 1993 1994 1995
Number
of 21 18 15 12 6 3 3
Associates
Pieces
made per 55 86 112 140 225 450 600
associate
Space
utilised 2300 2000 1850 1662 1360 1200 1200
Joe day the president says that no matter how many times his employees improved a
given activity to make it leaner; they always found more ways to remove Muda by
eliminating effort, time, space and errors. (Womack et al., 2003)
Paradoxically, no picture of perfection can be perfect. Perfection is like infinity.
Trying to envision it is actually impossible, but the effort to do so provides
inspirations and directions essential to making progress along the path. So it’s very
important to make the practice of perfection by continuous improvement successful.
2.6 Summary
The second chapter discusses in detail the five main principles of lean along with
examples. Value, value stream, flow, pull and perfection are the backbone of the lean
thinking principle. From the examples, the different kinds of Muda were identified
with in the process. This chapter focuses on value creation from a customer point of
view by the elimination of MUDA. Any lame person need to first understand these
principles to get deeper into the concepts of lean thinking.
54
Lean Thinking in Supply Chain
CHAPTER THREE
LEAN THINKING IN SUPPLY CHAIN
3.1 Introduction
A car takes only around 20 hours to assemble and may be another couple of days to
ship it to the customer via the dealer. But in reality why does a car take more than a
month or two to reach its customer? Also, why are products not there on the shelf of
the super market when it’s wanted by a customer? These questions go right into the
heart of supply chain and supply chain management. Today, a massive amount of the
company funds are being invested into their supply chain to make it more effective
and efficient, why? Because supply chains are slow, costly and do not deliver the
product and good value to the end customer. (Harrison et al., 2005)
We should realise that a supply chain exist for every industry, every company and
every product or service even if it is just a once off or a repetitious activity. This
shows how important the supply chains are to the success of the industry, company,
product or service. The activities in the supply chain are motivated by the ideal end
customer and it is facilitated by the latest technologies and communications which
permit the flow of material and information upstream and downstream. However in
different industries there are different complexities that arise in the supply chain.
Before we go any further, it is important to define the difference between the terms
‘supply chain’ and ‘supply chain management’. A Supply chain is a group of partners
who collectively convert a basic commodity (upstream) into a finished product
(downstream) that is valued by the end customer, and who manages returns at each
stage, (Harrison el al., 2005). Every partner in the supply chain is responsible directly
for a process that adds value to a product. Under the supply chain, it is very important
to understand the term ‘process’. A process is transforming inputs in the form of
material and information into outputs in the form of goods and services. Supply chain
management involves planning and controlling all the process that link the partners in
a supply chain together in order to serve needs to the end customer. (Harrison el al.,
2005)
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Serving the needs of the end customer is the primary objective of the supply chain
but it has different context. In a non profit organisation, serving implies continuously
improving, better than other regions/ countries and in a commercial sector, serving
implies better than competitors, better value form money and so on. In both ways, the
focus of managing the supply chains as a whole is on integrating the process of supply
chain partners, of which the end customer is the key one. As Gattorna (1998), puts it.
The degree to which the end customer is satisfied with the finished product depends
on the management of the material and information across the supply chain.
The globalisation of supply chain has forced companies to look for more effective
ways to coordinate the flow of material into and out of the company. (Mentzer, 2001)
What are required are better managerial techniques to manage the supply chain.
Though the concept of lean is rooted in the manufacturing industry, the principle of
lean thinking is universal and can be applied successfully in a wide range of
industries- not just in traditional production environment but also in service industries,
software development, construction, complete supply chain. This principle as
mentioned in chapter two focuses on improving value to the customer by eliminating
waste. But the lean supply chain concept is built on a broader goal of providing value
to the customer by optimising the performance of the supply chain as a system.
With this, the supply chain can be made effective and efficient enhancing better
results and growth to the industry, company, product or service.
3.2 Overview of the concept: Supply chain Management
A well-managed supply chain offers a range of benefits, from simplification and risk
reduction to significant cost savings. Traditional forms of procurement have relied on
choosing from among a large number of suppliers, with the aim of maintaining
supplier competition and driving down costs.
Supply-chain management takes a radical approach to procurement, with the aim of
setting up long-term relationships with suppliers, so that leaner, value-adding and
more efficient ways of working can be developed.
Suppliers are encouraged to adopt similar “managed” relationships with their
suppliers, and so on—ideally—down the tiers of supply. The practice of supply-chain
56
management (SCM) was pioneered by Toyota in Japan, driven by the demand for
faster times to market, quicker fulfilment of orders and lower costs. It was enabled by
the rapid development of IT and globalization. For supply chain management,
workers with in the Supply chain must strive to stay on top of new technology and
develop knowledge on how they can improve not only their company but their
partners too (Muzumdar et al., 2001). Other manufacturing industries adopted the
same route. By then SCM had spread to the oil and gas industries, where collaborative
relationships were fostered during continuing programmes. SCM in these sectors,
often in the form of partnerships and alliances, blazed a trail for the wider
construction and engineering industries. (Johnson et al. 1999)
Factors favouring the adoption of SCM (MPA, 2002)
SCM flourishes in particular circumstances:
Where the balance of power lies with the buyer

Where business activity involves repeat processes—in practice this favours
manufacturing (with its high-volume, standardized demand).
In a collectivist culture like Japan—an opportunist culture works against
successful SCM.
SCM in a steady-state environment

As its origins and evolution suggest, SCM works:
Where demand and supply can be successfully aligned in a long term context
Where numerous assemblies (as in aerospace), each with its own supply chain,
offer opportunities to eliminate waste
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SCM in a project environment

Major projects are not an ideal environment, but SCM can work in certain
circumstances:
In continuing construction programmes, where construction clients (like BP’s

petrol stations forecourts and McDonald’s restaurants), can, as “serial
procurers”, develop SCM practices with their suppliers
By any contractor who uses the same suppliers but has not yet standardized
supplier relationships
Through mechanisms such as partnerships, alliances and incentives
contracting.
3.3 Structuring and Tiering
As mentioned on top, supply chain management is about managing the business

relationship with the various partners and reducing complexity of the supply chain.
This approach described here goes well beyond the limited concept of just supply
chain management and would be better describes as ‘supply chain development’.
(Harrison et al., 2005)
Given below is the structure of a supply chain: (Please turn over)
58
Figure 3.1: Conceptual Framework of a Supply Chain…
Source: Developing Lean supply chain- A guide book by Phelps et al., (2003)
The various shapes in the diagram show the different partners in the supply chain.
Let’s consider them to be supplier companies, which would deliver different class of
product such as complex assemblies, machine parts, metals, plastic parts, painting,
and various other raw materials. The above diagram is the supply chain show in
simplification. (Phelps et al., 2003)
When taken real supply chains in Toto, are not really chains but very complex
networks with all tier violating connections between them, as show in the diagram
below
59
Figure 3.2: Complex supply chain network…
Source: Developing Lean supply chain- A guide book by Phelps et al., (2003)
If we take the structure of the supply chain, most people think that they are triangular
in shape, one or few customers at the top and the lower tier suppliers containing more
suppliers one above it. This is true when taking only the first and the second tier. But,
as the chain reaches down to the raw material suppliers, the number of suppliers tend
to reduce dramatically. Thus when looking at the supply chain now, it will be shaped
more like a diamond i.e. narrow at the top and bottom and wide in the middle. This
put forwards an interesting point when working with a supply chain; it shows the
limited influence of the customer may have in the raw material suppliers.
It is not necessary that a supply chain must start with the end customer at the top
neither it needs to be a prime contractor at the top of the supply chain. Sometimes the
top level of the supply chain can be a supplier of the major gas turbine engine or
aircraft engine. It is up to us to decide where the end points should be based on a
60
specific situation. To show an example of how it works the prime contractor will be
selected at the top of the supply chain. (Phelps et al., 2003)
Given below is the diagram to show Tiering and the supply chain systems.
Figure 3.3: Supply chain System + tiering…
Source: Harrison, A. et al. (2005), Logistics Management and Strategy, 2nd

edition, Pearson Education Ltd, England
Generally for commercial products, the left most box of the diagram will be an
original equipment manufacturer (OEM), it can also be a first tier supplier working
with its own supply chains. But what is important in the diagram is that the supply
chain needs to be seen as a number of processes that extend across the organisational
boundaries. The different firms must coordinate with others that are part of the same
chain. We also notice the flow of material from right to left and the flow of
information from left to right. The supply chain is tiered in that supply side and
demand side can be organised into groups of organisations. (Phelps et al., 2003)
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Also the concept of addressing it as a system is appropriate in any of these cases,

especially since business processes are as much a part of the system as the
manufacturing process. Thus this gives the opportunity to consider the supply chain as
a process similar to that of the manufacturing process which will enable the
applications of lean to be introduced into the system.
3.4 Characteristics that Make Supply Chain different
According to Phelps et al. (2003) there are two primary things which make working in
a supply chain different from other individual companies.
The first is obvious and it is greater complexity. This is simply because there is much
more to consider when looking at several companies at once rather than just one of
them. Analysts are of the impression that they can carry out the whole analysis at a
high level to find the supply chain issues. But that turns out not to be the case. They
have to look at all the companies at the same level of detail which they use when
looking at them individually. Therefore there are far more process steps to look into
than within an individual company. The complexity involved in a single process of a
supply chain is itself so numerous. Fortunately the detailed work is done in single
company chunks. Still, the need of information from the prime contractor or the end
customer and the respective tier suppliers are significant resources which are required
by the analyst.
The second major difference is the independence of the companies in the supply
chain. Every firm in the supply chain or as mentioned previously in the, the partners
of the supply chain operate under their own management and are independent profit
and loss centres. Whether a customer or a supplier; there is no visibility into its
trading partner’s activities. Thought the customer or supplier meets on a regular basis,
they do not look at each others business. Contracts between the firms in the supply
chain are generally between the purchase and sales agents of the respective
companies, neither of it involve the top personnel’s of the company. Due to lack of
visibility by all the partners of the supply chain, each firm’s goal is maximise its own
profit and protect its special interest both of which encourage building a wall among
62
each other rather than cooperation. For those companies in a supply chain that are not
direct trading partners, there is rarely any contact between them at all.
Another complication when related to the independence of companies is that the

relationships between the firms are not exclusive. That is, each firm has different
customers and suppliers apart form the once in a particular supply chain. So the
influence exercise by a firm on another is very important in the supply chain.
Also the inter firm supply relationship exhibit different natures on contrasting
products with in one sector. This increases the complexity in the supply chain
analysis. (Lamming, 1996)
These are the two characteristics which make the supply chain different from the
other industries.
3.5 Supply chain performance
According to Phelps et al. (2003) the primary goal of the Supply chain value stream
management (SCVSM) is to optimise the supply chain performance as a whole. As
mentioned earlier the supply chain focuses on the smooth system of converting raw
materials into final products.
Now the supply chain can be optimised with the help of intelligent application of the
lean principles across the supply chain. The ideal lean effort can be seen only when
applied practically which is primarily involved in waste reduction.
In general, anything which is classified as waste within a company will also be waste
from the supply chain point of view. A classic example is work in progress (WIP);
partially completed work sitting around waiting for its next processing step. WIP is
waste when you look at it from a single company or a supply chain point of view.
However from a supply chain view finished goods and inventories at suppliers is
really WIP. Hence it is important for the suppliers in the supply chain work together
to improve their scheduling, shipping and processes, allowing them to hold only the
amount of strategically located inventory necessary to guard against flow
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interruptions. This may seem obvious, but because it requires coordinated effort
across different companies. It is very difficult to achieve it.
Some kinds of waste are visible and can be addressed only when the different
companies work together with in a supply chain. Work being done in one company
then again redone in the other company is a very good example. Some of the other
examples are redundant systems, incomplete information, duplicate inspections and
approvals and minimum quantity transportation.
The supply chain performance can be calculated using two different measures:
- Cost
- A combination of cost and customer responsiveness
The cost will include the inventory cost and the operating cost. The customer
responsiveness measures include lead times, stock out probability and fill rate.
(Beamon, 1999)
In fact, building lean supply chain, like building lean thinking in companies, is
conceptually largely driven by common sense, one people change they way they look
at their work and their trading partners. The difficulty off course is in getting people
to get the mental change to work towards common goal instead of individual and
sometimes conflicting, goals. Although a difficulty, it has been done.
Therefore building a lean supply chain will help the suppliers with their other
customers, if they adopt the internal changes as required by the lean thinking
company.
3.6 The Unique Misconception of People
Phelps et al. (2003) believe there are plenty of cases documented which prove huge
profitability companies have earned by adopting the lean concept. Unfortunately,
people of a company are generally of a notion that their companies’ policies and
techniques are the best and do not need any change. They believe that the methods in
which success is earned by the other companies will not apply to them. In reality, it is
completely opposite. Regardless of what people in a different company think,
companies of the same general type differ very little from one another in the kinds of
64
problem they have and the solution to those problems. So this misconception of what
companies are doing is right should be erased if the concept of lean need to applied
into supply chain. This change can take place not only at the top level but it should be
take place in the entire company.
Why Be Lean?
As more and more companies adopt a “horizontally integrated” business model, they
are seeking to perform only their core functions, while outsourcing the non core
activities. It also means sourcing from another part of the globe and relying on third-
party providers for the necessary logistics support. This contrasts sharply with the old-
world “vertically integrated” approach in which everything from basic raw materials
to end customer sales might be under the control of a single global enterprise.
(Vitasek et al., 2005)
This move toward horizontal integration has made the supply chain more complex.
And with this heightened complexity comes a new set of challenges such as: (Please
turn over)
How do you manage a global supply chain while retaining speed and
flexibility?
How can you eliminate waste across the supply chain—not just at one point in
the channel?
How can firms collaborate in a way that is mutually rewarding?
How do you meet the needs of a global customer without excessive work in
process or inventories? And, most importantly,
How do you accomplish all of this in the face of shrinking margins?
Some industry leaders and experts are finding the answers in a business approach with
roots deep in manufacturing: lean. Specifically, they are applying the lean production
principles to the management of their global supply chains.
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3.7 The Lean Supply Chain
As the authorities point out; the objectives of lean are to eliminate waste in both
materials and processes and to create value. Importantly, value is defined from the
perspective of the customer. If an activity or process does not add customer value,
then it is considered waste.
While individual firms can become lean by themselves, a lean supply chain requires
multiple entities to work together. It’s important to understand up front that lean
supply chain management is not an exercise in shifting inventories or costs to a
supplier. Instead, it’s a coordinated effort among partners to eliminate waste across
the supply chain. This can only be done by collaborating across common processes.
(Phelps et al., 2003; Vitasek et al., 2005)
3.8 Why Lean?
Why work to develop the lean supply chain attributes in the first place? To help
answer these questions, we shall consider the results of the survey conducted by Kate
Vitasek, Karl B. Manrodt, and Jeff Abbott.
The most striking comparisons of the survey were done between the adopters and the
non adopters of the concept of lean in their supply chain.
• Lean adopters see exchange of data as a tactical advantage and are more
likely to work with partners on data standards to enhance information
integration (40 percent vs. 11 percent of non adopters).
• Lean adopters see employees as a valued asset and emphasize employee
development (77 percent). Non adopters are less likely (47 percent) to provide
support for development programs and, in general, view employees as more
expendable.
• Lean adopters are more likely to have continuous improvement programs (80
percent). Of the non adopters, 43 percent indicated that they have no such
programs.
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• Lean adopters are more likely to collaborate with supply chain partners on
process standards. Non adopters are significantly less likely to do so.
• Lean adopters are more likely to enforce company product standards (63
percent). Fully half of the non adopters indicated weak enforcement of
company standards or had no standards at all.
• Lean adopters participate in standards bodies and work with partners on
standards (48 percent). Non adopters were less likely to do so; 34 percent
either use no industry standards or attempt to enforce their own standards on
the group.
• Three-fourths of the non adopters either don’t share data with key partners
because they consider it to be proprietary or, if they do make data available,
offer no conversion assistance.
The research also revealed sharp differences in how the two groups performed on the
key logistics metrics of inventory turns and the number of days of sales in inventory.
As shown in Exhibit 1, lean adopters had statistically significantly higher inventory
turns as well as lower days’ sales in inventory on hand. And because the leaders are
not carrying excessive levels of inventory, their cost of goods sold is lower and they
are better able to respond to changes in the supply chain. In short, they are enjoying
two of the key benefits of lean supply chain management. Given below is the
diagrammatic representation of the benefits. (Please turn over)
67
Figure 3.4: Benefits of Lean Supply Chain…
Source: Vitasek, K et al. (2005), “What makes a lean supply chain”, Supply chain
management review
Research suggests that the lean adopters communicate and collaborate more
successfully with their supply chain partners. They have a higher use of standards in
processes and materials. The lean adopters also enjoy reduced Stock Keeping Unit
(SKU) counts and inventory levels and report a general reduction in cost of goods
sold when compared to the non adopters. Notably, all of these factors contribute to the
bottom line. (Vitasek et al., 2005)
3.9 Lean Supply Chain Process
When applying the concept of lean thinking into the ‘supply chain’, it is very
important to understand the functions and practices of the companies involved in the
supply chain to which lean techniques are going to be applied. As mentioned earlier,
companies need to realise why they are changing. For them to sustain the benefits of
lean, it needs to be addressed, understood and communicated to create and
environment of change transformation. They need to look beyond the current crisis
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and see whether such a transformation can handle the future challenges the companies
supply chain might encounter. (Phelps et al., 2003)
The fame work to develop a lean supply chain should be defined through a series of
measurable performance goals that are identified in the value stream and at each level
and for each participant in the chain.
According to Phelps et al. (2003) the Process to develop a ‘lean supply chain’
Select the target supply chain
a. Identify the system/ product and associated performance goals that create the
highest level context for optimization.
b. Determine a list of likely first- tier candidates.
c. Select the first- tier supplier and target assembly.
d. Define the performance goal that creates the specific context for optimising
the performance of the selected supply chains.
e. Map the rest of the supply chain.
f. Select the set of sub- tier suppliers that afford the greatest opportunity to
achieve the performance goals.
Assess the current state of the supply chain
a. Assess the first- tier suppliers, including performance baselines.

b. Assess the prime contractor, including performance baselines.
c. Bring the supply chain companies together to explain the process and gain
buy- in from sub- tier suppliers.
d. Train the sub- tier suppliers.
e. Assess the sub- tier suppliers, including performance baselines.
f. Develop the macro view of the supply chain.
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The explanation of the process here is the principles of lean

thinking which begins by specifying value as that of the customer,
then identifying the value stream, after which creating smooth flow
between the systems which is created by the customers’ pull. The
principle of perfection can be achieved with continuous
improvement.
These principles are explained in detail in Chapter 2.
Determine how best to move forward
a. Draft the future state.

b. Develop a list of opportunities for improvement.
c. Evaluate opportunities in relation to performance goals.
d. Bring supply chain together to present assembler results and determine what
improvement projects must be done.
Implement change
a. Plan the improvement project.

b. Execute the project.
c. Measure and document improvement; compare to performance goals
d. Bring supply chain companies together to celebrate success, present
improvement result and define road map for continuing work.
Share result with current and potential customers as well as other suppliers in
the same and other supply chains
It is noticeable that for the successful development of a lean supply chain process, it is
very important that all the firms that belong to the supply chain work together to make
the supply chain lean. (Phelps et al., 2003)
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3.10 Lean Practices
The main aim of the lean supply chain is to collaborate strategically with the suppliers
so that new products can be developed and manufactured without delay. It helps in
coordinating the components and subassemblies on time and without delays.
According to the Lean strategies group LLC to achieve lean in the supply chain, given
below are some of the practices that a company should adopt, so that lean thinking is
promoted into the supply chain. From these practices we can see how a lean company
differs from a traditional company and the benefit the lean company get by adopting
the concept of lean thinking into its supply chain.
--Reduce the Supply Base
Lean companies
The main aim is to reduce the number of suppliers for each commodity of
purchases to a minimum and often only one
Traditional companies
They deal with many suppliers, that it is not possible to fully understand the
capabilities of any one of them (quality, capacity, cost structure, or technical
capabilities)
Divide the volume among many suppliers to the extent that their company's
purchasing bargaining power and influence is low at all of them
Focus primarily on price in making buying decisions
Benefits of Lean
The development speed and the fulfilment of operations increases because of

fewer and more dependable suppliers making fewer mistakes and causing
lesser disruptions
It enables companies to spend more time with supplier to maintain a close
strategic relationship.
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Makes you a major customer of your important suppliers which allows you to
influence quality, price, delivery schedules, and capacity decisions
--Develop Strategic Long term Partners
Lean companies
Develop supplier partners, especially in the commodities key to their

company's growth and future success
For a successful relationship and open corporate culture ensure that there is a
close match in technology and growth plans.
Plan and execute for a long-term relationship where the outcome will benefit
both the companies in the long run.
Exchange much more data than traditional relationships
They have short term relations and change to another supplier at the first
disagreement on price or delivery.
Do not discuss strategic issues like technology roadmaps, capacity planning,
plant locations, major quality initiatives, redesigning for cost reduction.
Do not try to understand the motivations and aspirations of the supplier nor its
needs to make a profit to grow and continue as a viable supplier.
Benefits of Lean
Discussion at all levels which permits either party to understand the technical,
cost, and quality issues of the product.
Allows discussion of growth and capacity planning.
Allows discussion of quality and reliability improvement plans and exchange
of very detailed product failure data.
Allows technology discussions detailed enough to produce a better solution for
both companies.
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--Manage Suppliers with Commodity Teams
Lean companies
The strategic issues with key suppliers are very important to several functional
areas for lean companies.
Realize that total cost is more important than the price in making purchasing
decisions.
Use a commodity team to make strategic decisions concerning suppliers.
Staff this team with members from the differential functional areas, which
might be purchasing, engineering, manufacturing, and quality.
Allow purchasing department to make all strategic decisions regarding

suppliers.
Make purchasing decisions almost entirely on price and no cost.
Benefits of Lean
Provides a forum for engineering, manufacturing, quality and reliability, etc.

to influence the criteria for selecting and managing strategic suppliers
Directs the work of quantifying the intangible costs of a commodity to be used
with the pricing in making strategic decisions
--Certify Suppliers
Lean companies
Use cross-functional teams to certify suppliers.

A certification process is used to challenges suppliers and makes them proud
to be certified
Ensure that the certification process contains exactly those criteria that are
important to the company.
Recognize certified suppliers publicly so that suppliers get noticed.
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Do not certify or use any system of that sort.

Even if certification process is followed, the companies have too many
suppliers to do certifications or do them properly.
Benefits of Lean
Lets the supplier know your standards.

It makes the supplier proud.
It makes the supplier strive to achieve company standards.
Produces better suppliers, cutting mistakes and confusion to create leaner
operations.
--Connect to Suppliers with Internet technologies
Lean companies
Use Internet technology to connect to their suppliers.

Find that the Internet technology makes it much easier to establish and follow
consistent business processes with suppliers.
Exchange not only transaction data, but also a wide variety of other
information.
Can easily get information immediately to everyone involved in both
companies.
Publish technology roadmaps, capacity planning, engineering data, and quality
programs.
Have communication difficulties caused by foreign languages and distant time

zones.
Have difficulty telling the supplier where to find the official source and
location of important pieces of information regarding schedules, quality
deviations, engineering changes, etc.
Waste immense amounts of time and manpower exchanging information.
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Benefits of Lean
Reduces confusion, making your company leaner.

Provides an official place for publishing many types of information and data.
Reduces headcount at both companies.
Brings your key suppliers closer, improving the partnership.
Gives engineering, manufacturing, and quality & reliability people instant
access to information formerly filtered through purchasing.
3.11 Attributes of a Lean Supply Chain
According to Vitasek et al. (2005) there are six attributes that have been identified
which companies should strive to develop in order to apply the lean supply chain
concept.
Demand Management Capability
A significant rule to of the lean philosophy is that the product should not be pushed to
the market and should be pulled by the actual customer. Ideally, point-of-sale (POS)
data is gathered in real-time, or near real- time (daily), and transmitted upstream to all
the supply chain members. This doesn’t mean just the tier one suppliers but all the
suppliers as well who are involved in the supply chain. Thus, suppliers at each level
of the process would receive the customer’s demand signal and convert it into
something usable (such as part number and quantity) for their upstream partners. In
this way, we can understand the total volume being sold. Through time, forecasting
the need should minimize, since the supply chain is responding to actual demand.
The consequences of not managing the demand signal have been well documented.
The biggest problem is often referred to as the “bullwhip effect,” whereby additional
units are added to the original demand signal as it moves further upstream, which
result in excessive inventory being held by all of the channel partners, which makes it
much difficult to respond effectively to change. (Leishman et al., 2005)
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Waste and Cost Reduction
The next important aspect to be a lean supply chain is by focusing on the ground rule
of elimination of waste which is the prime focus of lean thinking. In the broadest
sense, waste can be taken as time, inventory, process redundancy, or even digital
waste. Digital waste is especially detrimental to the supply chain. It refers to
redundant or unnecessary data that is collected, managed, and stored for no tactical or
strategic reason. The amount of digital waste within an organization is typically great.
Note that the emphasis here is on reducing waste, and not cost. There’s not always a
direct correlation between eliminating waste and cutting costs. Yet waste reduction
almost always results in lower costs. A focus on waste, and not cost, will imply a
motive of lean thinking between the suppliers and customers. If the goal is to reduce
waste, most parties are more willing to discuss their processes with one another.
With a joint goal of reducing waste, supply chain partners can work together to
modify those policies, procedures, and data-collection practices that produce or
encourage waste.
Process and Product Standardization
Process and product standardization is the third attribute of a lean supply chain. It’s
important to develop standardization across both processes and products for the
reasons elaborated below.
♦ Process standardization enables continuous flow—that is, the
uninterrupted movement of a product or service through the
company’s system and to the customer. Major inhibitors of flow
include work in queue, batch processing, and transportation issues.
These roadblocks slow the time from product or service initiation to
delivery.
♦ Continuous flow needs to be accomplished with a “value stream”
perspective, which means viewing processes in terms of how they add
value to the customer. This perspective demands a shift from vertical to
horizontal thinking.
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♦ This effort is facilitated by having processes that are standardized

across the supply chain to reduce complexity. In other words, the
organization first determines the best way to manage a process and
then standardizes this process across the organization, taking into
account regional or cultural differences.
There should be common communication platform for interconnection between the

partners for achieving process and product standardization (Cassivi et al., 2000).
Companies can benefit from standardizing products used in the manufacture or
assembly of goods. In this way, fewer unique components are needed, thereby
reducing manufacturing, warehousing, and development costs.
Industry Standards Adoption
Standardization also needs to extend beyond a company’s particular supply chain to

the industry overall. Industry product standards benefit the companies by reducing the
complexity of product variations. The consumer electronics industry provides a
perfect example of effective use of cross-industry standards—from the pin
arrangement for various electronic components, to the size of a hard disk drive used in
a computer, to the dimensions of the racks for mounting telephone switching
equipment. Even the aerospace industry looks from an enterprise perspective so that
there are industry standards. Murman et al., 2002)
In the supply chain, companies can benefit from standardizing products by sharing
subcomponents across product lines. In this way, fewer unique components are
needed.
Cultural Change Competency
There is one recurring obstacle to successfully applying lean supply chain concepts—
resistance of change from the people who will be asked to embrace and implement the
change. The same people who have been doing things the old way for a long time.
Cultural change is one of the biggest challenges in getting lean accepted in the
organization. But this can be overcome by the usage of ergonomics and lean thinking
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which will make employees pursue lean. (Wadler et al., 2007) Successful cultural
change requires a clear roadmap. During times of change or uncertainty, employees
want to know where things are headed. It can clearly communicate the objectives and
benefits of going lean. The lean roadmap must have the unconditional support of top
management. The company’s view of its people within the organization also is crucial
to successful cultural change.
Cross-enterprise Collaboration
The final attribute of the lean supply chain is cross-enterprise collaboration. The first
step is to first understand how the customer defines value. Added services are of true
value only if the customers understand and desire them.
Cross-enterprise teams are a major enabler of supply chain collaboration. In a lean

supply chain, these teams are not functionally oriented or internally focused. Rather,
they are oriented toward the whole supply chain and work toward solutions that
benefit all of the members. The most effective teams comprise members from all of the
end-to-end supply chain partner companies. The team members should represent all
of the principal supply chain functions of plan, source, make, and deliver as well as
the enabling functions of finance and technology.
Proper flow of information and material is detrimental for the supply chain
effectiveness. (Franciss, 1999)
Where to start?
In terms of the lean supply chain, all six attributes have to be developed at the same
pace and to the same degree.
If focus can be on only one lean attribute—and only one improvement—in the supply
chain, it should be the demand management capability. Effectively managing the
demand signal across your organization and then communicating that signal to the
suppliers will reduce waste, cut costs, and ultimately lead to higher supply chain
performance. (Vitasek et al., 2005)
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3.12 Components of the Lean Supply Chain
According to (Tompkins, 2001), the components of the lean supply chain are:
Lean Suppliers
The major component of the lean supply chain is the lean suppliers who are able to
respond to changes. Their prices are generally lower due to the efficiencies of lean
processes, and their quality has improved to the point that incoming inspection at the
next link is not needed. Lean suppliers deliver on time and their culture is one of
continuous improvement.
Lean Procurement
The lean procurement processes are e-procurement and automated procurement. E-

procurement conducts transactions, strategic sourcing, bidding, and reverses auctions
using Web-based applications. Automated procurement uses software that removes
the human element from multiple procurement functions and integrates with
financials.
The key to lean procurement is visibility. Suppliers must be able to "see" into their
customers' operations and customers must be able to "see" into their suppliers'
operations. Organizations should map the current value stream, and together create a
future value stream in the procurement process. They should create a flow of
information while establishing a pull of information and products.
Lean Manufacturing
Lean manufacturing systems produce what the customer wants, in the quantity the
customer wants, when the customer wants it, and with minimum resources. Lean
efforts typically start in manufacturing because they free up resources for continuous
improvement in other areas, and create a pull on the rest of the organization.
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Lean Warehousing
Lean warehousing means eliminating non-value added steps and waste in product
storage processes. Typical warehousing functions are:
Receiving
Put-away/storing
Replenishment
Picking
Packing
Shipping
Warehousing waste can be found throughout the storage process including:
Defective products which create returns

Overproduction or over shipment of products
Excess inventories which require additional space and reduce warehousing
efficiency
Excess motion and handling
Inefficiencies and unnecessary processing steps
Transportation steps and distances
Waiting for parts, materials and information
Information processes
Each step in the warehousing process should be examined critically to see where
unnecessary, repetitive, and non-value-added activities might be so that they may be
eliminated.
Lean Transportation
Lean concepts in transportation include:
Core carrier programs

Improved transportation administrative processes and automated functions
Optimized mode selection and pooling orders
Combined multi-stop truckloads
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Cross docking
Right sizing equipment
Import/export transportation processes
Inbound transportation and backhauls
The keys to accomplishing the concepts above include mapping the value stream,
creating flow, reducing waste in processes, eliminating non-value-added activities and
using pull processes, this is done so that customer expectations are fully understood
and value is delivered to the customer. (Taylor et al., 2006)
Lean Customer
Lean customers understand their business needs and therefore can specify meaningful
requirements. They value speed and flexibility and expect high levels of delivery
performance and quality. Lean customers are interested in establishing effective
partnerships—they are always seeking methods of continuous improvement in the
total supply chain to reduce costs. Lean customers expect value from the products
they purchase and provide value to the consumers who they interact with.
So when look at the various components of the lean supply chain given above. Each
of them in their own way have applied the principle of lean which are value, value
stream, flow, pull and perfection. From this we can draw a conclusion that for an
efficient lean system, its not just one firm which needs to be applying lean but all the
firms across the supply chain.
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3.13 --7 deadly Supply chain wastes
In the production system, Toyota calls it ‘Muda’ and in English it is called ‘Waste’.
Given below are the seven most deadly wastes in terms of the supply chain which
have been identified by the lean thinking principle. (Sutherland et al., 2008)
The seven supply chain sins – the waste that keeps the supply chain for attaining full
business potential are:
Figure 3.5: Seven Wastes of Lean Thinking…
Source: Vitasek, K et al. (2005), “What makes a lean supply chain”, Supply chain
management review
Over production: Built first, wait for orders later. An example to this is delivering
products which are not needed. What is more serious is demand information
overproduction which Toyota calls ‘created demand’. Created demand is caused by
requesting a quantity greater than needed for end use or requesting it earlier than
needed. Created demand typically adds 40 percent to supply chain volume which
makes the supply chain less efficient.
For example, Toyota had identified and eliminated created demand to slash its
inventory. Initially the company and the automotive industry as a whole started using
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weekly stock replenishment orders which then combined with traditional sales
policies to caused large volume fluctuations.
To fix the problem, Toyota transitioned to daily stock order replenishment. Using a
“sell one, buy one” method, Toyota scheduled separate order cutoff times by delivery
route. Immediately after the cutoff time, orders were processed, picked, packed and
shipped. With daily stock order replenishment and Toyota's industry-leading fill rate,
4 critical orders dropped to 1-3 percent of volume from over 30 percent. With this
there was better flow created and smooth flow of information and material across the
supply chain. The lack of waste caused the better flow in the value stream of the
supply chain. (Agel et al., 2004)
Delay/Waiting: This will include delay between the end of one activity and the start
of the next activity, such as the time between the arrival of a truck for a pick-up and
the loading of the trailer, and the delay between receiving the customer's order
information and beginning to work on fulfilling the order. Such gap between two
activities is Muda. Because of the separation of most of the activities each of these
functions is often unaware of the schedule for the subsequent process and this result in
the operation of cut off times.
For example, FedEx and UPS have cutoff time at the end of the workday so that
shipments can clear their hubs and be loaded on night flights to destination hubs;
railroads have cutoff times for railcars to reach their switching yards for train makeup;
ocean carriers have cutoff times for containers to arrive at their terminals to be loaded
on specific vessels.
Transportation/Conveyance: It is any kind of unnecessary transport. Out-of-route

stops, excessive backhaul, locating fast-moving inventory to the back of the
warehouse and other transport wastes cause unnecessary material handling distances
to be incurred.
Transplace, a North American third party logistics service provider (3PL), also
managed to solve a transportation problem it faced. Initially the company managed
dozens of major shippers' transportation needs independent of each other. The
network followed by the 3PL had wasted routes of the shippers’ networks. Working
collaboratively they systematically combined multiple shipper networks into a single
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network and identified regular backhaul lanes for one shipper that were regular head
haul lanes for another shipper.
Then, by negotiating “dedicated” lane agreements with select truckload carriers, they
were able to offer dedicated services within specific lanes that dramatically reduced
deadhead miles. This also provided a reduction in transportation costs and, due to
more dependable service reliability, overall inventory reductions. (Sutherland et al.,
2008)
Motion: It includes any kind of unnecessary movement made by people, such as

walking, reaching and stretching. Motion waste also includes extra travel or reaching
due to poor storage arrangement or poor ergonomic design of packaging work areas.
Storage arrangement can influence the labour productivity and space/ equipment
utilization in a significant way. Toyota's U.S. service parts warehouse network and
inventory control system were originally set up in the 1960s and managed in the
traditional fashion (Womack et al., 2000). Rapid sales growth put a lot of strain on the
facilities. By the 1980’s, Toyota had successfully implemented the TPS to their
service parts distribution operations.
Lean Storage --designing storage locations precisely sized to the parts to be stored
in each location and locating parts based on frequency of demand and
picking/stock keeping efficiency.
Small Batch Processing --applying the concepts of Standardized Work to

warehouse operations.
Kaizen --engaging employees in continuous improvement.
During a 13-year period when sales grew by 126 percent and stocked part numbers
grew 72 percent, warehouse space was increased by only 14 percent, thereby reducing
capital investment.
Inventory: Any logistics activity which results in more inventories being positioned
than what is actually needed or in a location other than where it is needed. Examples
include early deliveries, receipt of order for a quantity greater than needed, and
inventory in the wrong distribution center
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“Sell One, Buy One, Make One” is the cornerstone of Toyota's industry-leading Just-
In-Time Logistics supply chain performance. Inventory and operational efficiency is
achieved through a constant focus on reducing lead time and variation in demand and
lead time. All dealers order daily what they have sold daily. Heijunka (leveling
volume and variety) is applied to the operations of the entire supply chain, with
excellent synchronization among supply chain partners. More than 80 percent of the
volume is ordered daily from suppliers and shipped daily 96 percent on time in
standard lead time.
Space: Muda is when the use of space that is less than optimal, such as less than
full/optimal trailer loads, cartons that are not filled to capacity, inefficient use of
warehouse space, and even loads in excess of capacity.
Due to the rapid congestion in Toyota’s North American parts centre, a proposal of
capital investment to construct additional docks was submitted. But
- Practicing genchi genbutsu, the company discovered that there was some unused
space in many outgoing trucks (estimated at 6 percent additional capacity).
- A kaizen activity involving the loaders effectively utilized this additional space,
eliminating the need for additional dock doors and cutting transportation costs
by 6 percent.
- Further genchi genbutsu revealed the cartons used by some North American
suppliers had more empty space than like parts previously sourced from
Japanese suppliers.
- Kaizen activities by the responsible personnel further improved the density of
shipments allowing more sales and saving ten percent in transportation cost.
Errors: Those activities that cause rework, unnecessary adjustments or returns, such
billing errors, inventory discrepancies, and adjustments and damage/ defective/
wrong/ mislabeled product are all errors or so called Muda.
In Toyota's service parts packaging operations, mislabeled cartons were the number
one cause of errors. In a kaizen, Toyota implemented a very inexpensive and effective
countermeasure.
For example, a packer had five cartons of a part number to pack; he/she was given
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seven labels. The first label was stuck on a form with a row of circles below the label
for each digit in the part number. The packer would write the part number from the
parts to be packed in the circles and compare it with the part number on the label.
After packing the five cartons, the packer repeated the process with the 7th label and
last part. Labeling errors dropped dramatically. (Womack et al., 2000)
3.14 Benefits of Lean Systems in Supply chain
According to Tompkins (2001), the Benefits of the lean supply chain are:
Speed and Responsiveness to Customers
The lean supply chain makes the system mot only efficient, but faster. As the culture
of lean occupies the company, all links increase in speed. A culture of rapid response
and faster decisions becomes the expectation and the norm. This does not mean that
decisions are made without careful thought. It simply means that a "bias for better
responsive action" becomes the new corporate culture. Slow response or no response
becomes the exception, rather than the rule.
Reduced Inventories
In the lean paradigm, any sort of inventory is considered waste. The point is that even
manufacturing can take place efficiently with little or no raw material, work in
process (WIP), or finished goods inventory.
Many companies today maintain no finished goods inventory. The inspections are
performed in advance during the process and not once the production is complete.
And in such a scenario, as soon as the trailer is full, it is shipped to the next link in the
supply chain. The system is designed in such a manner not to tolerate and excessive
goods.
Applying one-piece flow and pull systems can reduce WIP dramatically. Although the
ultimate goal is to eliminate WIP, minimal WIP is normally the result. The
elimination of bottlenecks is one goal of a lean supply chain, but a bottleneck will
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always exist to some degree. As a result, WIP must always exist in front of a
bottleneck or the bottleneck operation will be starved and will stop.
Improved Customer Satisfaction
Lean focuses on minimising the time and expense for a new product development.
This helps the product to market faster, easier to incorporate current requirements in
to the product. With the usage of less capital intensive machine, tools and fixtures, it
makes the product more flexible and less initial cost to cover. As a result, product life
cycles may be shorter. Profitability does not suffer and brand loyalty is increased, as
customers prefer to buy products and services from a perceived innovator.
Supply Chain as a Competitive Weapon
A lean supply chain enables the firms or partners in the supply chain to align
themselves with each other and to coordinate their continuous improvement efforts.
This synthesis enables even small firms to participate in the results of lean efforts.
Competitive advantage and leadership in the global marketplace can only be gained
by applying lean principles to the supply chain. Thought, commitment, planning,
collaboration, and a path forward are required.
3. 15 Path Forward in the lean supply chain
Companies are investing in software, hiring consultants, and reconfiguring their

physical supply chains in order to capture the promised returns from lean supply chain
management. Yet the returns from these investments can be elusive. What these
companies may not realize is that it’s not about expense reduction or profit
enhancement—it’s about creating capacity for growth.
Lean is a cooperative process for survival and for success. Supply chains that want to
grow and continue to improve must adopt lean. Lean concepts require an attitude of
continuous improvement with a bias for action. The concepts of lean apply to all
elements of the supply chain, including support departments such as product
development, quality, human resources, marketing, finance, purchasing, and
distribution. Leaning "other" areas presents a larger challenge than it does in
manufacturing. Supervisors and factory workers embrace change that results in
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making their lives less complicated and more successful. In the hierarchy of support
areas, it is more challenging for the people to understand how lean can benefit them.
The answer is simple: What benefits the organization as a whole benefits the supply
chain. (Bruce Tompkins, 2003)Because the Internet provides us with unprecedented
opportunities for sharing information and conducting transactions across the supply
chain, companies should have a sense of urgency about adopting lean concepts. But
all chain partners have to be on the same playing field, and the lean concept is
intended to let everyone reach new levels of efficiency and effectiveness. Supply
chain leaders should not delay—it's urgent to act now to implement lean concepts in
the supply chain.
3.16 Summary
The third chapter discusses the concept of Supply chain and Supply chain
management. It shows how no product, company or industry can survive without it.
Due to globalisations, companies and industries are working from different part of the
world; an ordinary supply chain management won’t do to sustain competition which
is why lean thinking concepts need to be applied along with supply chain
management. This chapter also shows how the efficiency of the supply chain
increases with the lean principles applied to it.
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Lean Elements and Techniques
CHAPTER 4
LEAN ELEMENTS AND TECHNIQUES
4.1 Introduction
Lean as a concept is used and is being used as a performance based process in

organisations to increase their competitive advantage. The basic objective of the lean
activity is continuous improvement which is done by the elimination of waste or non
value added steps with in an organisation. The most important challenge faced by the
management is to create a culture of transformation and sustain commitment from the
top management through out the entire workforce. (Knuj, 2000)
But the question always arises, what is exactly lean? Is it just a concept on its own?
Or is it a concept which requires other techniques or elements for the successful
implementation? Or is it just an action? Or a combination of all these; now though
lean is a concept with a long history, its practices are being recognised after much
years in the other industries. The interest towards lean is growing. Many organisations
in different industries are using the concept of lean thinking as competitive tool.
Therefore implementing lean gives them the competitive edge over the other
organisations.
People attend conferences or lean training sessions, so the missing links of lean can be
studied. People need to be aware that lean is a thought process or a belief system and
not just a set of tools or procedures or logical steps.
It is clearly understood that the 5 principles of lean alone is not enough for the proper
implementation of the concept in the organisation. There are a set of techniques and
elements that are adopted by the lean management which will help them in the
implementation of lean.
Creating a lean culture provides a rationale and practical guide to implementing the
missing link that is needed to sustain the lean principle implementation. (Mann, 2005)
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The lean principles form a base to the implementation but these techniques are very
essential to make the lean implementation efficient and successful.
Therefore in this chapter we shall look into the techniques which will help in
implementing lean. We will also look into every technique to see how the technique
influences lean and the organisation when adopting it.
4.2 Why Lean Techniques? The importance
It is considered that an organisation, management or office is made efficient by

implementing lean, but the path to reach there is not smooth and quick but a bumpy
ride. As Stan Barry from Shropshire-based manufacturer CS Contract Furniture
warns: "It’s an incredible area... [But] it's a minefield when you walk into lean."
The implementation does take time but just like every process, it has a series of
techniques and elements which help in making the implementation a lot simpler.
These techniques and elements help in making the transformation process a success.
(Rowlands, 2006)
These principles and techniques have its roots back in the Japanese manufacturing
industry where it’s been applied in many other industries and proven successful.
During the explanation of the techniques and elements of lean, it will be clearly
noticeable that all these techniques are either activities, philosophies or concepts
which are interrelated with each other and that these techniques and elements are
necessary for the critical and successful implementation of the basic lean principles.
(Feld, 2001)
These techniques are both dependent and independent of each other. All the
techniques need not be applied when implementing lean. Given below is the diagram
and explanation of some of the concepts. (Please turn over)
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Figure 4.1: Elements & Techniques of Lean…
アンドン,
アンドンあんどん,
4.3 Andon (アンドンあんどん行灯)
行灯
The Andon system is one of the principal elements of Jidoka which was pioneered by
Toyota. Andon is a visual control device used to notify the management,
maintenance, and other workers of any sort of quality or process problem which
occurs in the factory floor. The centre piece of the Andon is actually sign board which
has signal lights to indicate that the work station has a problem. This alert of the
Andon is activated either manually by a worker using a pull cord or automatically by
the equipment itself. At times, the Andon system may include a means to stop the
entire manufacturing process or any particular factory process so that the problems
can be corrected first. As of recently the system of Andon is been adopted as a lean
technique which helps the lean adopters to identify mistakes in their processes
immediately with the help of the Andon signal board. It gives the worker the ability to
stop the process at any time when a defect is found and call for assistance
immediately, so that process can get back to its normal working procedure instantly.
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Work is stopped until a solution has been found. The alerts may be logged to a
database so that they can be studied as part of a continuous-improvement program.
(Mike, 2002)
Figure 4.2: Traditional Andon Board…
Source: http://en.wikipedia.org/wiki/Andon
The system typically indicates where the alert was generated, and may also provide a
description of the trouble. Modern Andon systems can include text, graphics, or audio
elements. Audio alerts may be done with coded tones, music with different tunes
corresponding to the various alerts, or pre-recorded verbal messages.
The traditional Andon had a lot of disadvantages when compared to the modern
Andon scoreboards. The traditional once have been very basic and quite expensive to
install in the production process. It displayed very basic information in the signal
board, the data displayed is generally fixed, with restricted headings, and they limit to
a snap shot view of what happening on the factory floor. Another disadvantage is that
when the display changes the data is lost. But now when Andon used in lean
methodology and with the help of Gemba solutions has addressed all the issues and
provides a fully flexible and user configurable LCD display with whole host of
additional features. (Gemba Solutions, 2007)
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Figure 4.3: Modern Andon Board…
Source: Gemba Solutions (2007), “Andon Scoreboard”, Issue. 3, available at:

www.oeeimpact.co.uk
What are the benefits?
Flexible LCD Display...
You can program the display to show what ever data you like
You can change how the display looks whenever you like
Off-the-shelf delivery means no long waits for equipment to arrive
It’s more than a snapshot...
All the data is available for review and analysis on a historical basis on your
PC desktop.
Rapidly identify any problem areas in your process and take corrective action.
Provide management reporting quickly and easily and when there’s a problem.
Display messages and alerts on the Scoreboard.
Automatically escalate problems to senior staff via email, text, pager etc.
Automatically trigger alerts based on any aspect of your production process.
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Go wireless...
Put button boxes anywhere without worrying about all the wires.
Move button boxes around as much as you like.
Supervisors can move around the shop floor and take a button box with them.
No need to wait ages for an electrician to come and install things.
Minimal cabling means minimal cost to install. (Gemba Solutions, 2007)
平準化)
平準化
4.4 Heijunka (平準化
Heijunka is again a Japanese terminology which refers to system of production, which

helps in a more even and consistent flow of work. Heijunka as a concept or technique
is very closely related to lean thinking in production and just in time manufacturing.
Figure 4.4: Ohno’s teachings…
Source: http://membres.lycos.fr/hconline/lean/heijunka_us.htm
In Ohno's teaching, there is the tale of "the slower but consistent tortoise causes less
waste and is much more desirable than the speedy hare that races ahead and then
stops occasionally to doze”.
The above is the illustration of the leveling principle in which the workload is leveled
for continuity which is the consistency of the tortoise which better creates flow
regardless to the orders variation which is the dashing of the hare. (Hohmann, 2006)
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Principle
According to Hohmann (2006) production levelling is based on orders analysis

(products and volumes mix) in a given time span (one month, for example) in order to
find out a pattern fitting in a smaller time span (daily, for example). This pattern is to
be repeated until the whole demand (of the month) is satisfied.
Heijunka – the key concepts
Heijunka is defined as “The distribution of production volume and mix evenly over
time” (Reyner et al., 2004)
Heijunka converts uneven customer pull in to even and predictable
manufacturing process
Heijunka is generally used in combination with other key Lean principles to
stabilize value flow
Heijunka is a core concept that helps bring stability to a manufacturing process
Need For Heijunka
Heijunka means two different, but related, things. One is the leveling of production by
volume. The other is leveling production by product type or mix.
There are number of reason for implementing this technique
- Product leveling
Larger batches of the same product may reduce set up times and change over, but
usually results in
Long lead times

Swelling inventories
Greater opportunities for defects
Excessive idle time and/ or over time
Even a mix of products is critical to avoid these impacts.
Most value streams produce a mix of products and therefore face a choice of
production mix and sequence. It is here that the discussions on economic order
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quantities take place and have been dominated by changeover times and the inventory
this requires. Toyota's approach resulted in a different discussion where it reduced the
time and cost of changeovers so that smaller and smaller batches were not prohibitive
and lost production time and quality costs were not significant. This meant that the
demand for components could be leveled for the upstream sub-processes and
therefore the lead time and total inventories reduced along the entire value stream. In
order to simplify leveling of products with different demand levels a related visual
scheduling board known as a Heijunka box is often used in achieving these Heijunka
style efficiencies. Other Production leveling techniques based on this thinking have
also been developed. (Jones, 2006)
Figure 4.5: Heijunka Box…
Source: Jones, D.T. (2006), “The Heijunka box- a simple tool for levelling
production”, manufacturing engineering magazine, August 2006
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Challenges for Heijunka
According to Reyner et al. (2004), the challenges are (Please turn over)
Technical Factors
Tools needed for large scale leveling are lacking.

With Heijunka, there is a need for larger finished good inventory. This is as
antithetical to the lean mission
Obsolescence of finished parts.
Predicting demand is not proper, bad data can ruin process
Social Factors
Heijunka depends on direct customer contact and accurate information about

projected future events.
Reduces operator’s flexibility which can draw resistance.
Requires discipline and much more planning.
4.5 Jidoka (自働化) - Autonomation (自働化)
The word "autonomation" is a loan word from the Japanese language, it is a

portmanteau from and a pun on the word "automation", which is written using three
kanji characters: 自 "self", "動" "movement", and 化 "-ization". In the Lean system
and the TPS, the second character is replaced with 働 "work", which is a character
derived by adding a radical representing "human" to the original 動.
Jidoka, another Japanese management terminology and an important technique in the

lean implementation system can be described “intelligent automation” or “automation
with a human touch”. With the help of Jidoka, it prevents the production of defective
products, eliminates over production and focuses on solving the problem so that it
never occurs. Jidoka helps in guiding the process control practice in number of
industries. This practice speeds up the root cause investigation and prevents problems
from being pushed down the line into a final product. But according to Bengt Stom
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(2007) there is still a wide spread confusion over how to define Jidoka. (Shanley,
2007)
Principle
Jidoka is a quality control process which applies the following four principles:
Detect the abnormality

Stop
Fix or correct the immediate problem
Investigate the root cause and install a countermeasure
Purpose of Implementation
The purpose is to free equipment from the necessity of constant human attention,
separate people from machines and allow workers to staff multiple operations.
Also Jidoka is to makes possible the rapid or immediate address identification and
correction of mistakes that occur in a process. Autonomation or Jidoka relieves the
worker of the need to continuously judge the operation of the machine; their efforts
are now only engaged when there is a problem alerted by the machine. The first
example of this at Toyota was the auto-activated loom of Sakichi Toyoda that
automatically and immediately stopped the loom if the vertical or lateral threads broke
or ran out.
Jidoka – Line stoppage
When applying Jidoka into a process, it is very essential to stop the process line when
there is a problem. At Toyota, every worker has the authority and responsibility to
stop an entire line when the problem arises. The purpose is to bring the attention of
the problem to the concerned authorities regardless of how small it is, and focus
efforts to find a permanent solution. (Harriman, 2000)
This brings about a long term solution to the process of the company.
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Relationship with JIT
Taiichi Ohno and Sakichi Toyoda, originators of the TPS which has become the lean
system considered JIT & Autonomation or Jidoka the pillars upon which TPS is built.
Jeffrey Liker (2004) and David Meier (2004) indicate that Jidoka or "the decision to
stop and fix problems as they occur rather than pushing them down the line to be
resolved later" is a large part of the difference between the effectiveness of Toyota
and other companies who have tried to adopt the lean system. Jidoka therefore can be
said to be a key element in successful Lean thinking implementations.
For "just-in-time" (JIT) systems, it is absolutely vital to produce with zero defects, or
else these defects can disrupt the production process - or the orderly flow of work.
JIT and Lean are always searching for targets for continuous improvement in its quest
for quality improvements, finding and eliminating the causes of problems so they do
not continually crop up and this can be achieved by the implementation of Jidoka.
Confusion over Jidoka
Taiichi Ohno considered Jidoka one of the two pillars of the Toyota Production
System (TPS). Yet this aspect of TPS is mostly ignored in the West. When it is
discussed, there is a lot of confusion and misunderstanding. There are several reasons,
among them:
Japanese language (at least in everyday usage) seems less precise

than English and the several meanings of Jidoka do not translate
well.
For historical reasons, the autonomation concept seems less relevant

today and more like ordinary good sense and practice.
The line-stoppage version of Jidoka requires a strong stomach and

purity of mind that few managers (Japanese or American) possess.
Later, the idea of stopping everything when something went wrong was transferred to
manual assembly and the "Jidoka" term transferred as well. (Harriman, 2000)
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4.6 Kaizen (改善)
Introduction to Kaizen
Again the term Kaizen is a Japanese philosophy which focuses on continuous

improvement throughout all aspects. When applied in workplace, Kaizen activities
continually improve all functions of a business, from manufacturing to management
and from the CEO to the assembly line workers. It involves setting organizational
standards and then continually improving those standards.
Kaizen is a daily activity, the purpose of which goes beyond simple productivity
improvement. It is also a process that, when done correctly, humanizes the workplace,
eliminates overly hard work ("Muri"), and teaches people how to perform
experiments on their work using the scientific method and how to learn to spot and
eliminate waste in business processes. (Imai, 1986)
Kaizen & Management
Management has two major components in Kaizen. They are maintenance and
improvement.
Maintenance involves activities of maintaining current standards of technology,
management and operation.
Improvement involves improving these standards.
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Figure 4.7: Japanese perceptions of job functions…
Top Management
Improvement
Middle Management
Supervisors Maintenance
Workers
Source: “Kaizen – The key to Japan’s competitive success”, Imai, M (1986)
Figure 4.8: Improvement broken down into innovation and KAIZEN…

Top Management
Innovation
Middle Management KAIZEN
Maintenance
Supervisors
Workers
Source: “Gemba Kaizen”, Imai, M (1997)
Maintenance component: Management establishes policies rules and directions for

major operations and assigns tasks for all in the company to follow a set of Standard
Operating Procedures (SOP). It needs to apply discipline if these are not carried out
according to norm and provide training or review the policy if people are unable to
follow it.
Improvement component: Improvement involves raising existing standards to higher
levels. Once done, management needs to consider those as standard and modify
policies accordingly.
Improvement can be broken down into two sub-sections which are Kaizen and
innovation. Kaizen denotes making continuous small improvements and innovation
involves a drastic improvement in new technology and/or equipment. (Imai, 1986)
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The process of Kaizen
The following steps need to be completed in order to complete the KAIZEN process:
(i) Select the theme of the problem.
(ii) Understand the current status and objectives of selecting the

theme.
(iii) Analyzing the data thus collected to identify root causes of the
problem.
(iv) Establish counter-measures based on the data analysis.
(v) Implement counter-measures.
(vi) Confirming the effects of the counter-measures.
(vii) Establish or revise the standards to prevent recurrence.
(viii) Review the above processes and work on subsequent steps.
Gemba Kaizen.
Meaning of Gemba
Gemba is Japanese means “real place” or the place where the real action occurs. For
example in a Manufacturing Management context, it refers to the shop-floor work
place. The main value adding activities which allow the company to earn profits and
satisfy the customer: developing, producing and selling mainly take place in the shop-
floor, which is Gemba.
Kaizen should begin and develop in Gemba. Gemba needs to be involved with two
major activities, namely maintenance and Kaizen, wherein managers must engage in
one or the other of these two activities.
The process of Gemba Kaizen involves continuously identifying unwanted or

unnecessary wastes or processes and eliminating them (at least reduce them). The
procedure for attaining Kaizen in Gemba is first to go to the Gemba and check for
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non-value adding processes or wastes. This process is called “Gembutsu”. Measures

need to be taken at the same place to find the root cause of the problem and attempt to
finish it. The last step is to standardize the process to prevent the recurrence of the
problem. (Imai, 1997)
4.7 Muda (無駄), Mura 斑, Muri 無理
Ever heard of Muda, Mura and Muri? These three terms may seem completely
unfamiliar, but they are very important elements which contribute to the sustainability
of the organisation or process and when eliminated, it increases the competitiveness.
These terms are traditionally Japanese and were originated in Toyota for the Toyota
Production System. Years ago two senior managers, Taiichi Ohno and Shigeo Shingo,
were examining the waste in their factory when they gave it the umbrella term of
"Muda" meaning activity that is wasteful and doesn't add value. This led to the
definition of seven kinds of "Muda", the two other wastes such as "Mura", meaning
"unevenness" and "Muri" meaning "overburdening". Given below is the diagram of
the 3 Mu’s. (Please turn over)
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Figure 4.8: Muda+ Mura+ Muri…
Source: (McBride, 2003; Pichler, 2008)
These three terms are central to lean thinking, and though they were developed in the
context of a busy car plant, they apply increasingly to the housing and construction
sectors where, of course, waste should be minimised, if not eliminated.
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4.7.1 Muda (無駄)
Muda is a traditional Japanese term for an activity which doesn’t create any value or
is unproductive in practice. Waste reduction is an effective way to increase
profitability. Lean is called for the very fact that it uses less of everything required to
produce a product of better quality. (Naylon et al., 1999)
Muda has been given much greater attention these days. Each of these classes of
Muda involves a whole family of blunders, which range from activities like having to
inspect a product to see if it has the quality it should have had in the first place (an
unneeded process step).
The seven wastes

The seven wastes identified by Taiichi Ohno are: (McBride, 2003)
The primary step in the lean thinking process is the identification of which steps in the
process add value and which do not. Once the classification of these two categories is
done, it is then possible to implement the action by improving the former and
eliminating the latter. The following are the seven deadly waste which has been
identified by Ohno and are integral to the concept of lean thinking.
Defects
Quality defects prevent the customers from accepting the defected product. The effort
to create these defects is wasted. New waste management processes must be added in
an effort to reclaim some value for the otherwise scrap product.
If recording all of the non-value added activities carried out in a typical

manufacturing company, do not be surprised to find out that 99% of all activities
carried out are non-value adding, even the best manufacturers manage 96%.
Overproduction
Often caused by quality problems, a company know that it will lose a number of units
along the production process so produces extra to make sure that the customer order is
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satisfied. These kind of issue can be tackled using mistake proofing methods
(Pokayoke) and by understanding the machine process capabilities of the production
equipment.
Conveyance
Factory layouts can often be the fundamental cause of excess transportation. When
appropriate, re-laying out the machines within a factory from a functional to a cellular
layout has been found by many companies to help not just reduce transportation waste
but also reduce Work in Progress (WIP) and waiting.
Waiting
Products waiting around in factories either as finished goods or work in progress

(WIP) another major cause of waste; WIP is commonly caused by producing large
batch sizes where again SMED techniques can help.
Inventory
Many companies order over and above what is required to fulfil the order, this may be
due to quality problems along the production process or the often mistaken belief that
is saves money by ordering larger quantities.
Motion
This waste is related to ergonomics and is seen in all instances of bending, stretching,
walking, lifting, and reaching. These are also health and safety issues, which in
today’s litigious society are becoming more of a problem for organizations. Jobs with
excessive motion should be analyzed and redesigned for improvement with the
involvement of plant personnel.
Over processing
Rework is a typical example of over processing as discussed earlier reducing the root
cause of the quality problem is solution eliminating rework. Techniques such as 5
whys, SPC and mistake proofing (Pokayoke) are available to help identify and
eliminate causes of quality defects.
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Other wastes
There are others who have proposed various other wastes which have to be considered
when applying lean. Such waste will apply more to the people who proposed it
According to Estrem (2006), the other wastes are:
Latent Skill
Organizations employ their staff for specific skills that they may have. These
employees have other skills too; it is wasteful to not take advantage of these skills as
well. "It is only by capitalizing on employees' creativity that organizations can
eliminate the other seven wastes and continuously improve their performance."
Danger
Unsafe work areas creates lost work hours and expenses.
Poor Information
Age of electronic information and enterprise resource planning systems requires

current / correct master data details.
Breakdown
Due to poor maintenance, equipment used to produce may breakdown. This can cause
delays in production regularly. This is why we implement a TPM program (Total
Productive Maintenance) is a method used to achieve maximum equipment
effectiveness through employee involvement.
4.7.2 Mura 斑
This is another word part of Muda which means unevenness, inconsistency in

physical matter or human spiritual condition. Mura is avoided through Just in Time
systems which are based on little or no inventory, by supplying the production process
with the right part, at the right time, in the right amount, and first-in, first out
component flow. Just in Time systems create a “pull system” in which each sub-
process withdraws its needs from the preceding sub-processes, and ultimately from an
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outside supplier. When a preceding process does not receive a request or withdrawal it
does not make more parts. This type of system is designed to maximize productivity
by minimizing storage overhead which reduces the Mura and increase efficiency.
(Pichler, 2008)
4.7.3 Muri 無理
This is a Japanese term for overburden or unreasonableness which have become

popularised in the west because it is used as a key concept in TPS. (Pichler, 2008)
Muri can be avoided through standardized work.
Standardized work encourages the close examination of
1. Ergonomic and Safety questions

2. Quality issues
3. Productivity, and
4. Cost benefits
When everyone knows the standard condition, and the standardized work sequences,
the results observed are:
• Employee morale is heightened,

• Higher quality is achieved,
• Productivity is improved, and
• Costs are reduced.
The Muda, Mura and Muri are the three Mus’ of the lean thinking principle. As
mentioned earlier, these elements of lean are very important and must be identified. It
is noticed that with the identification and implementation of these elements of lean,
many other techniques will be initiated like JIT, standardised work etc. Therefore the
lean adopters have to make this an integral part of the lean implementation system.
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4.8 Poka-yoke (ポカヨケ)
Every one makes mistakes; traditionally managers thought it was because of the
carelessness of the worker. But the lean thinking system understands that such
mistakes are not made by the worker but the system itself. Therefore a technique is
required which is mistake proof in nature. This is called as Poka Yoke.
Shigeo Shingo, a Japanese manufacturing engineer is the one who developed the
concept of Poka Yoke. This revolutionised the quality profession in Japan. This
concept was originally called ‘fool proofing’ and later changed to ‘mistake proofing’
or ‘error proofing’ to avoid offending the employees. Poka Yoke is a result in an
operation that waste less energy, time and resources doing things wrong in the future.
The simple the Poka-yoke, the better and more efficient it would be in the
organisation. (Dvorak, 2008)
Purpose
The main aim and purpose of this technique is to reduce the defects from mistakes
using the simplest and the lowest cost technique possible. Poka yoke is implemented
by using simple objects like fixtures, jigs, gadgets, warning devices or paper systems
to prevent people from making mistakes—even if they try to. These objects, known as
Poka yoke devices, are usually used to stop the manufacturing process and alert the
operator if something is about to go wrong. (Crickey et al., 2007)
Characteristics of Poka Yoke devices
According to Crickey et al. (2007), the characteristics of the Poka-yoke devices are:
Simple and inexpensive

Useable by any operator
Placed close to where the mistakes occur, providing quick feedback to the
operator so that the mistakes can be corrected
Part of the process
It is a very simple principle and can be applied by any one at any time and this can
lead to the massive saving of both time and money
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Poka Yoke in Practice
Poka yoke is at its best when it prevents mistakes, not when it merely catches them.
Since human errors usually stem from people who get distracted, tired or confused, a
good Poka yoke solution is one that requires no attention from the operator. Such a
Poka yoke device will prevent the occurrence of mistake even if the operator loses
focus. (Crickey et al., 2007)
Poke yoke is a critical component of the Lean system. Simplifying processes,

reducing errors, associated waste and costs brings value to operations. In turn,
customers who benefit from such operation view value-added suppliers as “partners”
rather than just interchangeable vendors.
Poka yoke systems similarly will keep innovating, their method which will reduce the
cost of failure dramatically. No defective part will be passed to the next process. So at
the end of the process you can trust that you have a good quality parts on your hand.
Poka yoke is one of the critical steps in the lean journey.
4.9 Kanban (看板)
Kanban, a technique for work and inventory release, is a major component of the
Lean thinking philosophy. It was originally developed at Toyota in the 1950s as a way
of managing material flow on the assembly line. Over the past three decades the
Kanban process, a highly effective factory production system, has developed into an
optimum industry environment leading to global competitiveness. (Fujitsu Company)
Kanban stands for Kan- card, Ban- signal. The essence of the Kanban concept is that a
supplier, the warehouse or manufacturing or supply chain should only deliver
components as and when they are needed, so that there is no excess Inventory. Within
this system, workstations located along production lines only produce/deliver desired
components when they receive a card and an empty container, indicating that more
parts will be needed in production. In case of line interruptions, each workstation will
only produce enough components to fill the container and then stop. (Olson, 1996)
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In addition, Kanban limits the amount of inventory in the process by acting as an

authorization to produce more Inventories. Since Kanban is a chain process in which
orders flow from one process to another, the production or delivery of components are
pulled to the production line, in contrast to the traditional forecast oriented method
where parts are pushed to the line.
Figure 4.9: Kanban System…
Source: http://en.wikipedia.org/wiki/Kanban
Kanban System
The system employs cards or signals to link processes that are used to replenish
stocks usually within a pull system. This provides a scheduling signal, which
disciplines output replenishment based upon customer usage.
A typical application is a “Two Bin System”, where the reorder card is placed at the
bottom of the first bin. When this bin is empty, a third party supplier or previous
workstations use the reorder card to replenish the bin, whilst these parts are being
sourced the second bin is employed, such that when the first bin is replenished, the
second is ready for replenishment. It is worthwhile noting that without the reorder
card, no replenishment will take place ensuring that over stocking doesn’t arise.
This type of system would be typically managed by visual means, which enables these
systems to be set up relatively quickly. (Agility centre, 2002)
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Where appropriate
A Kanban system is best suited to products with high volume sales of which have a
high stock turn and products of low complexity. (Russel et al., 1998)
Risks
The stocking quantities and re-order levels need to be calculated accurately otherwise
you run the risk of over stocking or even running out of stock. However, due to the
nature of the “Two Bin System” it does mean that large amounts of floor space are
required to store this inventory.
For managing these stocks, visual management system training is paramount. Staff
should know that as soon as a bin becomes empty it should be replenished. If a
computer-based system is chosen, then the data on the system must be accurate and
up to date. Strict procedures must be followed on receiving and issuing stock and
these needs to be done on a regular basis.
Benefits
When proper implementation of accurate stocking quantities and re-order levels, it

means that you are greatly reducing the risks of over stocking or even running out of
stock; the benefits of employing a visual management system are that it is quick to
implement. If a computer-based system is chosen then the benefits are that a central
data source is generated and reports can be run to calculate what to order and when.
This enables companies to easily manage complex products. The data helps in the
collection of accurate performance measurement and other issues.
Therefore Kanban plays a very important in the lean system in managing the inventory in an
efficient way.
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4.10 Takt Time
The concept of lean thinking is a system which works on a continuous systematic

rhythm. In fact the whole organisation works on the rhythm provided by the customer
who demands for the final product. This rhythm is known as the TAKT time of the
system. This is the ultimate pull scheduling system anyone can think about.
Takt time is the fundamental concept to do with the regular, uniform rate of
progression of products through all stages from raw material to customer.
It should also be a consideration along a complete supply chain. "Sell daily? Make
daily!" is the underlying idea. Takt time is the drumbeat cycle of the rate of flow of
products. It is the "metronome" (from the German origins of the word).
Understanding takt time is fundamental to analysis and mapping of Lean Operations.
(www.strategosinc.com)
Takt time is most simply the average rate at which customers buy products and hence
the rate at which products should be manufactured. It is expressed in time units: one
every so many minutes or so many minutes between completions.
The TAKT Time can be calculated using simple formula given below. (wikipedia.org)
Takt Time is defined as:
Where:
• Ta = Net Available Time to Work e.g. [minutes of work / day]

• Td = Total demand (Customer Demand) e.g. [units produced / day]
• T = TAKT Time e.g. [minutes of work / unit produced]
History of Takt Time
Takt is a German word which refers to the beat of music. It can also mean cycle,
rhythm or repetition time.
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During the 1930's, Germany and Japan were part of the Axis and German engineers
helped organize the Japanese aircraft industry. They used the analogy of setting
rhythm for the entire orchestra. After the war, Toyota picked up the word and concept
for its Just In Time, Toyota Production System or Lean Thinking system.
Benefits of Takt time
The simplicity of the concept belies its extraordinary effects. Among these are:
(www.strategosinc.com)
Production Stability- by limiting overproduction, it stabilizes the system and prevents

build ups of inventory and the subsequent.
Work cell Design- Takt time helps cell designers. In an ideal work cell, all tasks are
balanced, they all require the same time to execute and that time equals the Takt time.
Psychological- immediate feedback of performance is a powerful motivator. When a

work cell team tracks takt time, they have a heightened awareness of output rates and
potential problems. They attempt to achieve the Takt time on each cycle and
immediately make necessary corrections.
When Charles Sorensen conceived and built the Willow Run Bomber plant, he
designed it for "A bomber an hour". He did not say "nineteen ships per day" or "120
per week." Sorensen understood the value of steady, repetitive output.
Limitations of Takt time
Takt time is useful for simple cells. These are typical of the work cells at Toyota and
what most people think of when they picture a cell. Such cells have:
Minimal Setups
A Single Routing
Identical Work Times for All Products
Problems can result from an unjustified preoccupation with Takt time. Designers who
think only of Takt time may conclude that certain products cannot use Cellular
Manufacturing and their companies lose the many benefits.
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In other situations, an obsession with Takt time, One Piece flow and linear cells leads
to unsuitable designs.
Takt time is a powerful and valuable concept. Like all intellectual constructs, it has
limits but is very beneficial technique of lean.
4.11 5S
Introduction
What is 5S?
5S is a procedure that organizes individual workstations or departments. The objective

of 5S is to increase efficiency at the micro-level by keeping the workplace neat,
orderly and accessible. The results are visually dramatic and also increase pride and
morale.
There are many variations of 5S, mostly of minor importance-- for example, different
translations of the original Japanese. The extent of the organization effort also varies.
Some versions are little more than a cleanup while others involve time and motion
studies or layout. Safety is often included as a step to eliminate unsafe conditions and
enhances awareness.
The key targets of 5S are workplace morale and efficiency. The assertion of 5S is, by
assigning everything a location, time is not wasted by looking for things.
Additionally, it is quickly obvious when something is missing from its designated
location. Advocates of 5S believe the benefits of this methodology come from
deciding what should be kept, where it should be kept, and how it should be stored.
This decision making process usually comes from a dialog about standardization
which builds a clear understanding, between employees, of how work should be done.
It also instills ownership of the process in each employee.
What Does 5S Accomplish?
5S improves efficiency at the micro-level. It can eliminate searching for tools, for
example. It may eliminate wasted steps or long reaches that are ergonomically
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hazardous. Since workers themselves analyze and rearrange their own workplace, it
forces each worker to think about their activities. It develops the "Kaizen Mind."
5S is a philosophy and a way of organizing and managing the workspace and work
flow with the intent to improve efficiency by eliminating waste, improving flow and
reducing process unreasonableness
The Elements of 5S
The table below summarizes the five elements. Most elements are straightforward and
self explanatory. The five words are a convenient mnemonic device. They derive from
equivalent Japanese words which also started with an S. Each, however, involves
much more than the word alone implies.
Table 4.1: 5S
Sort through and sort out junk, seldom-used items and

1 Sort
necessary items.
2 Shine Clean and paint and clean regularly.
Set locations; use boundaries & addresses to assure
3 Set
recoil.
Define and standardize work processes, 5S activities and
4 Standardize
tasks.
Make 5S a way of life, institutionalized in the
5 Sustain
organization.
Source: http://www.strategosinc.com/5S.htm
5S is a reference to a list of five Japanese words which, transliterated and translated

into English, start with the letter S and are the name of a methodology
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The 5S's are:
Phase 1 - Seiri (整理) Sorting: Going through all the tools, materials, etc., in the plant
and work area and keeping only essential items. Everything else is stored or
discarded.
Phase 2 - Seiton (整頓) Straighten or Set in Order: Focuses on efficiency. When we
translate this to "Straighten or Set in Order", it sounds like more sorting or sweeping,
but the intent is to arrange the tools, equipment and parts in a manner that promotes
work flow. For example, tools and equipment should be kept where they will be used
(i.e. straighten the flow path), and the process should be set in an order that
maximizes efficiency.
Phase 3 - Seiso (清掃) Sweeping: Systematic Cleaning or the need to keep the
workplace clean as well as neat. At the end of each shift, the work area is cleaned up
and everything is restored to its place. This makes it easy to know what goes where
and have confidence that everything is where it should be. The key point is that
maintaining cleanliness should be part of the daily work - not an occasional activity
initiated when things get too messy.
Phase 4 - Seiketsu (清潔) Standardizing: Standardized work practices or operating in
a consistent and standardized fashion. Everyone knows exactly what his or her
responsibilities are to keep above 3S's.
Phase 5 - Shitsuke (躾) Sustaining: Refers to maintaining and reviewing standards.
Once the previous 4S's have been established they become the new way to operate.
Maintain the focus on this new way of operating, and do not allow a gradual decline
back to the old ways of operating. However, when an issue arises such as a suggested
improvement, a new way of working, a new tool, or a new output requirement then a
review of the first 4S's is appropriate.
A sixth phase "Safety" is sometimes added. Purists, however, argue that adding it is
unnecessary since following 5S correctly will result in a safe work environment.
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When to Implement 5S
This is a point for debate. Many firms start their Lean Journey with 5S. Setting
implementation priorities involves many factors. It may be best to start with an
element having faster and more verifiable savings.
The other side argues that, initially, 5S can be relatively easy to implement and has
direct benefits. Moreover, it establishes a standard of discipline that begins the
cultural change necessary for other elements of Lean Manufacturing.
Ultimately, there are many paths to Lean and it is probably more important to just
start then it is to find the "correct" path.
4.12 Shojinka:
Shojinka (flexible workforce) is a framework for efficient utilisation of human

resources. It aims at preventing idle time and boredom by employing the twin
strategies of:
(i) Multi process holding

(ii) Multi skilled worker
4.13 Ugoki:
It involves in reduction in man-hour movements to eliminate wasted motions and

transforming them into work. This is sub related to Muda of motion.
4.14 Ninben no tsuita jidohka:

This human-centred approach to automation benefits from autonomous machines,
machines that stop when they make an error. Toyota team members call production on
such machines “automation with a human touch” (ninben no tsuita jidohka) or
autonomation.
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4.15 Kaizen Teian:
Kaizen Teian is a system for generating and implementing employee ideas. Japanese
suggestion schemes have helped companies to improve quality and productivity, and
reduced prices to increase market share. They concentrate on participation and the
rate of implementation, rather than on the quality or value of the suggestions. The
emphasis is on encouraging everyone to make improvements. (Wikipedia.org)
There lean thinking concept has a lot more elements and techniques such as Just in
Time, SMED etc; which could not be covered in the dissertation because of world
limit restrictions. .
4.16 Summary
In the second chapter, the principles are explained in detail. But when the lean
thinking is implemented in an industry, it is very important to understand that the
execution of lean thinking is possible only with a combination of both the principle
and the element and techniques of lean; which is why the fourth chapter explains
some of the important elements and techniques of lean. These elements and
techniques are really important and play a major role in the lean thinking concept.
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Comparative Study of Lean Principles in the Construction & Aerospace Industry
Chapter 5
Comparative Study of Lean Principles in the Construction &

Aerospace Industry
5.1 Introduction
The concept of lean has proved to be successful in the manufacturing industry. The
industry has seen dramatic improvements in productivity and quality, while reducing
cost and lead times with lean. Now, though, lean has its roots in the manufacturing
industry, its principles have been adopted by other industries such as construction,
aerospace, service, supply chain etc. In this chapter, a comparative study of the
principles of lean in the construction and aerospace industry will be done to
understand the wide scope of the lean thinking practices across these industries.
Managerial practices are rarely universally applicable irrespective of their context.

With the implementation of the same managerial concept to different sectors, not only
the processes of diffusion of such practices differ, but also their ultimate
manifestation. Also when such managerial practices are being implemented, it must
be further understood that no industry is ever static; industry sectors are constantly in
a state of flux as they respond to external pressures. (Green et al., 2004)
The aerospace and the construction sectors were not chosen because they are similar,
but they were chosen because they are so different to each other. The construction
industry is highly fragmented and the aerospace sector being highly consolidated.
Both the sectors differ highly in terms of their structure and technological intensity.
Aerospace is perhaps the ultimate of globalised industries. In construction the
majority of the project remains rooted in a local context
But comparing the construction and aerospace, highlights the unique characteristics of
both the industries and how the lean practices help both the industries in separate
ways. (Green et al., 2004)
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However both of these industries involve the management of complex operations and
strive to deliver a quality product in the shortest feasible time. More over the main
aim of these industries is to save money and stay competitive in the market. So giving
these similarities, it is possible to apply the lean thinking principles of manufacturing
into aerospace and construction and see if the similar benefits and results are obtained.
So the primary question. Do lean practices hold potential for improving the aerospace
and construction industry?
5.2 Nature of Construction Industry
According to a study conducted in Denmark by Erhvervsfremme Styrelsen (1993), the

construction industry is divided into two parts. One is the construction part and the
other the Industry part. The study also recognised that the development of the
construction industry productivity as a whole would be difficult as it would call for
different means. If the industry part had to improve, it had to take place only through
market mechanism and for the productivity of the industry to improve further; the
construction part had to have an efficient final product. Now this development of the
construction part would involve a number of public initiatives and applications of
high end managerial concepts such as lean management, value management, and
cooperation and learning as the basis of a new kind of construction management.
Therefore it shows the need of such practices to make the construction industry
productive and efficient. (Berteslen, 2004)
5.3 Lean Construction: Brief History
As known, to a great extent the concept of lean construction is an adaptation and

implementation of the Japanese manufacturing principles with in the construction
practices, so with this in mind, lean construction assumes construction to be like a
production process –a special one. (Berteslen, 2004)
Though the actual principles of lean construction were not formulated after ten years
of work by Koskela (2000) and later by Ballard et al (2001), one may think that
originally they were: creating value for the customer through reducing waste.
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Koskela (1992 and 2000) during the initial stages of lean construction proposed the
Transformation – Flow – Value (TFV) understanding of construction. Koskela and
Howell (2002) emphasised on the flow aspects of construction during the
transformation stage of the industry.
According to Berteslen (2004), Ballard’s (1993, 1994, 1997 and 2000) came out later
with the last planner system which showed an efficient way in understanding the
construction process specially managing the flow aspect of the construction process.
The last planner was considered a synonym to lean construction although it was never
true.
This concept of flow was taken to a new level after the introducing methodologies
proposed by Womack and further by Lean enterprise institute (LEI) (Womack and
Jones 1996). With help from the LEI, a better understanding of the lean thinking
system was established.
After which Ballard et al (2002) then gave a useful understanding of the room for
improvement within the ordered part of the construction process mainly the industry
part, but also in the use of buffers and in the interplay between the ordered world of
components manufacturing and the complex world of the construction process.
Around that time, the TFV theory which was proposed by Koskela (2002) faced
criticism and voices were raised that the construction process is even more complex
and that it should be understood in an entirely new perspective.
After which Koskela and Howell (2002) suggested construction management as one
of the several understanding and that it is understood as a scientific experiment. By
this it accepted the unpredictable nature of the construction project. But the
acceptance of the industry as a dynamic and complex had a much deeper implication
for the future development of lean construction as it challenges the production theory,
which is inspired by the ordered and foreseeable world only. This could be improved
only by the use of buffers, well defined process and procedures. According to Howell
(2003 and 2004), the chaotic system should be managed based on cooperation
conversation and learning.
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The concept of creating value has been dealt and focussed by value engineering to
ensure that the value specified will be delivered to the client while the cost is as low
as possible, a principal which in its nature deals with minimising the waste.
By looking back on the years to make the lean construction a successful process, it is
seen that maximum focus was given on the reduction of waste, then a little on the
project management principle and the least on the focus of adding value to the
customer. (Berteslen, 2004)
5.4 Nature of Aerospace industry
The aerospace mantra has always been ‘Higher, Faster, Farther’. (Murman et al.,
2004) This industry has been driven by and has thrived on the technical challenges of
air and space flight. The national and international prestige of the industry is the need
for military superiority which has driven huge investments into the aerospace industry
making it a profitable industry. In most countries, the aerospace industry is a
cooperation of public and private industries. Some countries have space programs like
NASA, ESA which are under the command of the government. The aerospace
industry is similar to the manufacturing industry where the ultimate aim is to deliver a
final product with value to the customer. The core challenge of the industry in the
modern era is the identification and delivery of value to all its stake holders and
clients. How is the challenge going to be accomplished? Meeting such challenges
requires the prime focus of highly efficient management practices. It requires lean
capability at the enterprise level for meeting such challenges. The enterprise level is
necessary as it is possible to apply lean to the entire ‘value stream’ as well as inter
connected levels of activity that reach across national and international boundaries.
(Murman et al., 2004)
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5.5 Key Drivers of lean in Aerospace
The question can be asked, what are the contextual factors that have caused the
implementation of lean in lean production into the aerospace industry?
There are three relevant factors which has cause the introduction of lean thinking with
in the aerospace industry:
According to Crute et al., (2003), the key drivers of lean are:
First, after the end of the cold war, it prompted a drastic reduction in defence
procurement budgets resulting in the reduction of military markets. The demand and
supply of the military market was instable causing huge supply and little demand. The
defence industry could no longer justify the mentality of the cost plus contracts that
characterised the cold war era. There was also difficulty in seeking new markets after
the cold war due to political tension.
Second, following the gulf war, the passenger demand cut down drastically causing
airlines to cancel or postpone civil aircraft orders. After this period of low demand,
the demand for civil aircraft soared at a sweeping rate. The inability of the industry to
respond to such market dynamism was reflected in long lead times.
Third, in common with other industries, globalisation has become a central feature.
The rise of globalisation has clearly necessitated a complete rethink for some firms in
terms of how they can organise and reconfigure themselves. Globalisation has led to
the formation of a number of global players. After the $13.3 billion merger of Boeing
and McDonnell Douglas in the year 1997, Philip Condit the CEO of the combined
group made a statement.
‘We are moving, I think, inexorably towards a global economy’ (Source: Finance
times, 1997, Sept 19th)
These events in time signalled a radical change for the global aerospace industry.
There was an over capacity in the market and the profits were declining (Cosentino,
1999). The industry had to make a change soon by pursuing innovative management
practices such as the lean thinking system itself. In fact Boeing itself is pursuing these
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practices to cut down cost structure, move up the value chain, improvement of
manufacturing facility by 90%.
5.6 Transferring lean into aerospace – The challenges
The applicability of lean in other industries has always being questioned. (James
Moore and Gibbon, 1997), yes the lean concept has its root in the automotive industry
and the high contrast between the high volume setting and low volume environment
of the aerospace industry is enormous. Though both the industries are of
manufacturing environments, there are sector differences between both the industries.
According to Hill, the difference between the two manufacturing environment run
beyond production and transformation characteristics and it is with the competitive
priorities.
To use Hill (1995) terminology, there are major differences between order qualifying
and order winning which mark the differentiation of the high and low volume. The
transfer of practices across sectors can cause problems but this is not peculiar to lean
practices alone but to other practices too. Indeed (Womack and Jones, 1996) provided
a detailed explanation of the introduction of lean practices into Pratt & Whitney, one
of the leading aero engine manufacturers. The aerospace sector is actually at an
advantage over the automotive sector in terms of applying lean principle. The lower
volumes in aerospace shows that they are closer to the lean ideal of single piece flow.
The next concern is that aerospace is ten years behind the automotive sector in regard
to the implementation of lean practices and although this may provide opportunities
for learning, but it is an important issue. According to Kochan et al (1999) the lean
system seems to be diffusing through out the world with many firms sticking to the
traditional methods of management. But the aerospace has 80% of its cost in the
design stage. Therefore the ten year gap may not be much of a disadvantage as it
appears. But the biggest difficulty faced by any industry to implement lean will be to
overcome the traditional ways of thinking and practices. (Crute et al., 2003)
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5.7 Why Aerospace and Construction? – The differences
5.7.1 Introduction
The managerial practices differ across the aerospace and the construction industry and
are shaped by contextual differences. The different pressure and market dynamism
faced by both the industries have shaped the different development paths. (Green et
al., 2004) This chapter aims at comparing the principle of lean thinking which is value
to perfection in the aerospace and construction sectors.
It is very important to understand the historical developments that have shaped the
path of different sectors for it is central to understand the dynamics of change. Such
an understanding is mandatory if the practitioners need to apply innovative
managerial concepts to adapt future changes.
According Green et al. (2004), the key difference are:
5.7.2 Structural Difference (date limited to UK industries)
Annual turnover: The construction industry is significantly larger than aerospace in

terms of annual turnover. The annual turnover for the construction industry is 83.59
billion pounds Source: (DTI, 2003a) and the turnover for the aerospace sector is 16.14
billion pounds Source: (SBAC, 2003).
Employee numbers: The number of employees in both the sectors also differs in
accordance with the ways in which the sector boundaries are defined. The provisional
adjustment employment figure for the construction industry is 1,599,000 Source:
(DTI, 2003a) and that of aerospace is 117,256 Source: (SBAC, 2003).
Structure: Both the sectors differ in terms of structure in the market. The construction
sector, although it is larger than the aerospace, it is said to be more fragmented with
greater concentration of smaller firms. It comprises of 122,220 Small and medium
enterprises (SME). In conjunction with sole proprietor, it accounts for 82.6% of the
work force Source: (DTI, 2003b). The aerospace sector though small when compared
to the construction sector is much more consolidated in the market. It comprises of
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only 380 SME in the aerospace sector. These 380 SME employ only 9.6% of the work
force and the remaining is employed by the large firms Source: (DTI, 2003b).
Suppliers: The suppliers in the aerospace is said to be more specialised than that of
the construction, with a higher technological expertise. The technological expertise is
spread throughout the supply chain of the aerospace than the construction sector. In
the construction sector, suppliers tend to compete on cost efficiency rather than
technical expertise.
Entry Barriers: The high technology and significant inter dependency with complex
network presents a barrier to potential new entrants in the aerospace. Where as the
construction have had very low barriers into entry
Client Base: The client base of the construction industry is big; every commercial
property owner is associated with the construction industry in some way or the other.
But in the aerospace industry which is consolidated, the client base is very small and
is limited to certain sophisticated clients who maintain long term relations with the
aerospace sector.
5.7.3 Relations with Governments
The aerospace industry as such has had a unique history with the aerospace and
defence sector enjoying privileged relationship with government due to its strategic
importance (Hayward, 1989). The government in the past has attempted to shelter the
aerospace industry because of huge investments made by them to improve the defence
sector during the time of war. In recent years the government policy toward aerospace
sector has tended to give primacy to value for money rather than strategic supports.
But the recent decline in the government bagging contracts highlight the importance
of exporting contracts in sustaining a countries aerospace expertise. The new climate
of globalised nature is brought about new practices with in the industry with lean
being one of them.
When compared to the aerospace, the construction sector is way below the
government’s broader policy objective. It is extremely sensitive to government policy.
Though for the past 25 years there has been a decline in the construction industry, the
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investments into the sector has been driven by public funds. In the construction
industry, the interest rates play an influential role either directly or indirectly. The
interest rate controls the economy having consequences on the output of the industry.
Both the industries have had major intervention by the government depending on the
market sentiments. The government has played a positive role in shaping the both the
industries to what they are today. But the factor of competitive advantage lies beyond
the hands of the government and should be obtained by the sectors itself. This is why
new approaches like lean and six sigma have been adopted to make both these
industries a better working environment.
The above, it shows the contrasting difference between both the industries which is
why these two industries have been selected.
5.8 Comparison of Lean Thinking Principles across Construction and Aerospace
The lean thinking system was born in the manufacturing industry with its principles
being applied to different sectors at different levels. But applying these principles of
lean is not very simple as the natures of industries differ with the manufacturing
environment. For example take the design, production and sales of a manufacturing
company are often managed inside one corporation and in the construction industry
the value stream involves several companies. In aerospace, the eight- year lean
initiative study at MIT has provided a living experiment for the creation of a value
enterprise and formulation of lean principles with in the industry (Murman et al.,
2002), and in the construction industry, the principles were taken from the lean
thinking system and amended after years of research to suit the construction
environment. Further down, the comparison of the lean principle in the construction
and aerospace will be done. The purpose of this comparison is to see the widened
scope of lean and how the principles of lean apply differently to the two different
sectors. The principles of lean will be based on the manufacturing lean principles
proposed by (Womack and Jones, 1996) which are value, value stream, flow, pull,
perfection. This is done in order to show that the principles of lean are applicable to
other industries and can bring about an influential change in a positive manner.
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Figure 5.1: Comparison of Lean Principles…
Source: Lean Aerospace Initiative by Murman et al., (2002); Picchi, (2000)
5.8.1 Value
The ultimate source of survival for any industry in the market is customers. Without
which any market or industry will fail. It is very important that proper value is defined
for these customers so that the customers know that their final product has Value for
money. When looking at the manufacturing industry, the principle is about
understanding the customer’s value. The value in this industry must be externally
focussed on the final product. The customer and the producer have to work together to
define the ultimate value of the product. (IFS, 2004)
Even in the construction industry value is the first principle but here, it is very
important to understand that the direct client and the final client are different for
specifying and enhancing value. The construction industry is divided into two when it
comes to the customer. It has the final client who is the ultimate user and the direct
client who develops the construction project. In general, there is an institutional owner
(shown in Figure - Institutional Market), that identifies needs for new buildings, plans
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Figure 5.2: Institutional Market…
Source: Lean principle and construction main flows, Picchi, (2000)
and contracts its design and construction. Examples of institutional owners are: a
Hotel Chain that needs a new hotel, a Government Ministry that needs a new school, a
Company that needs a new office building, etc. In the development market (Figure –
Development market) the user buys a building or a unit in a building. For example, a
Figure 5.3: Development Market…
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company that buys a new office or a family that buys an apartment. The user is the
client of the developer; the developer is the client of the general contractor, and so on.
Therefore when defining value in the construction industry, it is very important that
the contractor, direct client and final client work together to define the final value for
the construction project. (Picchi, 2000)
According to Murman et al. (2002), the principle of value in the aerospace industry is
to create lean value by doing the job right and by doing the right job.
How does the industry respond to this? Many firms in the aerospace industry reflect
on a maturity dynamic which involves cost cutting and efficiency gains. Firms also try
to explore ways of operating in a semi virtual business as ways to improve
efficiencies. However replacing ‘faster is better’ with ‘cheaper is better’ doesn’t fully
engage the deeper value issues associated with doing the right job.
So to embrace the first principle in lean aerospace which is value creation, there
should be an open flow of information around the strategic business decisions aimed
at doing the right job, as well as information on continuous improvement efforts
aimed at doing the job right, each of these enable the other to create and define value.
Similarly, there should be a shared vision centred on both aspects and clear ways for
all the employees to contribute with in the industry, (Murman. E et al 2002). The
simple model for creating value in lean aerospace is divided into three phases.
a. identify the required value
b. construct a value proposition
c. Deliver the value.
5.8.2 Value stream
The value stream is the next principle in the lean thinking system. The value stream is
combination of all the processes required to make a final product. It is in this stage
that waste can be identified and eliminated. In the manufacturing industry, once the
value of the customer is understood, an analysis of all the steps in the business
processes is done to determine which process actually adds value. If an action does
not add value, it should changed or removed from the process. (IFS, 2004)
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The construction industry being highly fragmented and dependent on various partners
has several participants who can influence over the projects. Some of them are:
- users
- owners
- developers
- contractors
- real estate developers
- designers
- equipment suppliers etc
Depending on the country and the market in a particular country, the participants to a
particular construction project vary. For example, in Brazil several companies are a
combination of a developer and general contractor. In the construction industry in any
case it is very essential to identify all the partners for the proper identification of the
value stream in the construction project. Also proper cooperation is required among
the participants of the value stream which helps in the mapping of the value stream
and in the identification and the elimination of waste, and this will help in improving
the way construction are planned, contracted, designed, constructed, delivered and
sold, etc. (Picchi, 2000)
Table 5.1: Construction and its Clients…
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In the aerospace industry, the lean principles are applied with the objective of
transferring the enterprise into a lean organisation. The second principle focuses on
delivering value only after identifying stakeholder’s value and constructing robust
value proposition. For this principle, there is a precedence order to be followed. For
the successful deliverance of value, it is very important to first have a structured value
proposition, and similarly for a good structured value proposition, important to
identify good value for the stakeholders as the value proposition cannot be structured
around poorly identified value. Value proposition is a business or marketing strategy
that summarises why a consumer should buy a product or use a service. This
statement should convince a potential consumer that one particular product or service
will add more value. As mentioned in the second principle, the value identification
should be done once all the stakeholders of the project are identified. (Murman et al.,
2002)
5.8.3 Flow
Flow is defined as the process of producing a product from raw material to final
completion with out any interruptions. The main aim of flow in the lean thinking
system is to achieve a single piece flow. According to lean manufacturing, the
principle aims at moving the product from one work centre to the other in a
continuous system of flow rather than large batches. The production process should
flow continuously from raw material to finished goods in dedicated production cells.
(IFS, 2004)
Where as in the construction industry, unlike in the manufacturing where the flow can
be characterised inside one plant or corporation, each flow meaning is interpreted
depending on the participant role in the value stream. The flow in the construction
industry is divided into three. In the value stream ‘from order to cash’ has a strong
interface with the cycle from ‘concept to launch’. This particular flow is called
Business flow and it includes the design flow as a sub flow. The next flow is ‘from
raw material to customer’ is the supply flow and the ‘job site flow’, which is both led
by the general contractor. The business flow is mainly an information flow that deals
with contracts, specifications, plans, controls, etc., with a specific relationship among
participants. The job site flow is an information, products and services flow, in an
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environment quite different than manufacturing. The supply flow involves industrial
and not-industrial products, and is similar to the supply chain in any other sector.
Given below is a diagram depicting the flow movement in the construction industry.
(Picchi, 2000)
Figure 5.4: Flows in Construction…
In the aerospace industry, the third principle of lean is to fully realise lean value only
by adopting an enterprise perspective. It is very important that when applying lean in
any manufacturing or purchasing operation, the overall net gain of lean will be
limited, which is why when applying in aerospace, it is very important to apply from
an enterprise perspective and not just the manufacturing or supply chain operations. It
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is important that lean is integrated part of the overall enterprise strategy. Under this
system, it is very important for the industry leaders to assert the interdependence of
various stakeholders, and make clear that they are part of a common enterprise. The
only problem here is make clear the meaning of enterprise such as the members
involved, the partners etc so that lean can be adopted as a whole. (Murman et al.,
2002)
5.8.4 Pull
The idea of Lean is simply to bring the real world as close as possible to that ideal
world, and the concept of Pull in lean thinking is a primary key in becoming “lean.”
Pull - letting our customers “pull” product through your production system as they
need it, rather than “pushing” product through your production pipeline. Rather than
building goods to stock, customer demand pulls finished goods through the system in
the lean manufacturing process. Work is not performed unless the part is required
downstream. (IFS, 2004)
According to Picchi (2000), in the construction industry, the contracting policy is an
important issue that requires detailed analyzes. Some private and governmental
owners have a permanent demand, but in general they demand constructions in an
erratic rhythm, with great losses in the value chain. Housing, for example, has a
permanent demand, but generally contracting shows peaks and valleys, due to
discontinuity of Governmental housing Agencies policies, macroeconomic conditions,
and other market sentimental issues.
In theory, the Business Flow "pulls" the Job Site Flow that "pulls" the Supply Flow
like shown in the above diagram
In the past, the general contractor purchase policy generally pushes large batches into
the job site, trying to avoid delays and lack of material but the lack of coordination in
the three flows results in frequent work discontinuity.
The "push culture" is also present in development. The Developer identifies market
needs, plans and contracts the construction. After some months (or years) the product
is "pushed" into the real estate market, which results sometimes in a long time to have
the product sold. An effort of owners and all value chain participants towards demand
stabilization is very important for the Lean transformation. A smooth pulling at the
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end and a pull culture, in cascade, would avoid a lot o waste along the chain. (Picchi,
2000)
The fourth principle in the aerospace industry is very different from that of the
construction and manufacturing. It is to address the interdependencies across
enterprise levels to increase lean value. When applying this principle of lean, the lean
adopters focus on identifying the interdependencies in the organisation.
Interdependencies are of dynamic in nature and are mutually responsible to and
sharing a common set of principle with others. From this context, it is the mutual
understanding between the different partners or suppliers of the project. When the
program enterprise as a whole gets the lean dynamic value going, it gives them a
better foundation toward developing lean. Lean capability at the multi program level
can, in turn, be more responsive in providing the enabling infrastructure at the
program level. The same is true between the multi program level and the national
level and the international enterprise. When addressing the interdependencies,
institutions can either accelerate or undercut these lean enterprise value dynamics,
depending on the degree to which they are aligned or misaligned. The infrastructure
of an organisation is very important as it can be an essential enable, and can minimise
dependencies on charismatic leaders. This principle focuses on increasing and
enhancing value. (Murman et al., 2002)
5.8.5 Perfection
Lean thinking becomes complete with the final approach of perfection. It is about
continuous improvement in the systems of value stream, flow and pull. When
explaining the concept of lean, it explains about eliminating waste and continuous
improvement in the system which is achieving perfection. In the manufacturing
industry, as elimination of waste from your processes is done, the flow of products is
continuous according to the demands of the customers, this leads to a never ending
reduction of time, cost, space, mistakes, and effort. One of the techniques applied to
attain perfection is called Kaizen. (IFS, 2004)
Seeking for perfection is a Lean principle understood as permanent incremental
(kaizen) or radical (Kaikaku) improvements, eliminating waste and improving value
for the client.
136
To achieve perfection, one of the most important elements is standardization of work

(Ohno, 1988), (Monden, 1998). Work shall be highly specified as content, sequence,
timing, and outcome (Spear and Bowen, 1999). Other important concepts are
autonomation and Poka-yoke, assuring quality of every piece that is delivered to the
next process. Manufacturing companies that are starting the Lean transformation
have as a basis decades of process sheets, work instructions, work analysis, quality
management, and quality control techniques, etc.
However, in most construction companies, few methods are written, productivity data
are rare and almost no formal process quality control used. These subjects must be
developed, as a pre-requirement for the Lean transformation. Companies that
developed quality systems have a minimum basis to start, with work instructions and
quality control checklists. (Picchi, 2000) In the last years, the number of construction
companies with ISO 9000 systems is increasing, in most countries, but they neither
are nor a majority.
Therefore, it is strongly recommended that the development of work instructions and
quality control should be one of the first steps, in the action plan, towards the future
state (Picchi, 2000).
In the aerospace industry, the last principle in lean is that people, not just process,
effectuate lean value. The entire implementation of lean is constrained, if people are
not appreciated for the knowledge that uniquely resides in their roles and experience.
For the elimination of waste in the aerospace industry, it is knowledge of the people
which is required from all the three levels of the organisation. The same helps in the
creation of value. Many organisation state the fact that people are their greatest
resources, but when it comes to practice, there is no company willing to invest in their
human resources which creates a downturn in the organisation. It is very important
that people need to be given significant importance and credit for their work during
the implementation of lean in the aerospace industry. Actually it is not only in the
aerospace but in all the industries. (Murman et al. 2002)
137
5.9 Summary
This chapter focuses on the principles of lean; but in two very different industries.
The construction and aerospace industries were selected mainly because of its huge
differences. The main aim in this chapter is to prove that lean thinking is a universal
concept which can be applied in any industry. From this chapter it is under stood that
lean brings about positive results in any industry if implemented correctly.
138
Moving On – Beyond Lean Thinking
CHAPTER 6
MOVING ON – BEYOND LEAN THINKING
6.1 The lean lifestyle
The lean thinking initiative, much like a diet, is designed to trim fat and make you
fitter, faster and more competitive, in short a high performer in the market. The
overall goal of the concept is to improve the company profitability that underpins high
performance. This performance is achieved by fighting flab of all sorts, from excess
inventory to over extended set up times. But the benefits of applying the lean thinking
principle can be very dramatic.
Building flexibility into the various processes, facilities, and integrating and
coordinating the overall supply chain network simplifies and speeds up product flow
and facilitates just-in-time delivery. A slimmer supply chain optimizes the alignment
of product capabilities with what customers actually want; which is the very concept
of being lean in the organisation.
6.2 Winding up
From the literature in the dissertation, the lean thinking model can be summarised into
five principles: value, value stream, flow, pull and perfection. The main aim of these
principles proposed by Womack and Jones (2000) are to create value by eliminating
Muda. Lean is however not a process to be followed, but a way of thinking in the
organisation, so anything or any operation which creates value to the final customer
by eliminating waste in the process of the organisation is lean. But why lean thinking
and not any other concept, this is because lean has derived itself to be successful and
universal. Universal in the context that it can be applied in any industry, organisation,
department and still create positive results. Lean is successful as it is one of the most
innovative management concepts of the century which has brought about a revolution
in many companies across the globe e.g. Toyota, Dell etc.
But how is the implementation of lean thinking done? Lean implementation is
possible by adopting and implementing a combination of the lean thinking principles
139
and the techniques of lean such as Kaizen, kanban etc. The lean elements and
techniques do play an essential role in the successful implementation of the lean
thinking principles. The nature of the organisations or companies differs from
industry to industry and so does the implementation of lean thinking. Depending on
the industry in which lean thinking is applied, the lean elements and techniques are
chosen to suit the industry. Under taking lean thinking is a way of life and it requires
100 percent commitment and involvement of everyone in the company from top
management to the shop floor, in changing the companies’ culture along lean lines.
Although companies are successfully implementing lean thinking principles into their
organisations, they still find it difficult to convince employees to give up the
traditional system of work. To overcome such issues, Lean management integrates the
principles of lean thinking with the science of ergonomics trying to design the job,
equipment and work place to fit the worker. This helps employees of organisations
realise the actual worth of lean thinking and how it benefits them and the
organisation.
This is an era where acceleration is just about everything (Gleick, 1999). The
terminology ‘industry clockspeed’ coined by (Fine 1998, 2000) has a powerful impact
on the way organisations are structured and managed in the twenty first century. The
supply chain is very important as it connect the upstream suppliers and the down
stream customers. All the activities, right from raw material up to the final product
pass through the supply chain. Therefore, it is very important that there is smooth
flow of material and information across the supply chain. The shorter the supply chain
and the lifecycle of the product, the more competitive advantage the company are in
the market over its competitors. Since the supply chain plays an integral role in the
success of companies. It is very essential that innovative management concepts are
applied to the supply chain to make it more effective. The principle of value, value
stream, flow, pull and perfection when applied bring about efficient results to the
supply chain. Lean thinking helps the supply chain in creating value to the customer,
and then it identifies the value stream where all the Muda are eliminated which helps
in creating only value adding activities. When there is no Muda in the supply chain, it
allows the smooth flow of information and material especially when the customer
pulls the product. The fifth principle is perfection, since perfection cannot be
140
measured; it involves the continuous improvement and innovation of supply chain

system and process.
Even from the study conducted by (Vitasek. K et al, 2002), it clearly shows how
different are the perception of the lean adopters and the non adopters. It also proves
that the lean adopters enjoy reduced Stock Keeping Units (SKU) counts and inventory
levels and report higher returns in terms of revenue and profitability when compared
to the non adopters. Notably, all of these factors contribute to the bottom line of an
efficient supply chain. From this it can be said that the supply chain is efficient with
the implementation of the lean principles.
To illustrate that the concept of lean thinking is universal, the dissertation compared
the principles of lean in two massive but very different industries; the construction
and aerospace industry. The concept of lean construction has been derived from the
principles of manufacturing. It uses the same principle of value, value stream, flow,
pull and perfection but is applied in a manner which suits the construction
environment. Aerospace on the other hand came out with lean principle which is
entirely different but following the same underlying concept of lean thinking. Unlike
manufacturing and construction that focuses on implementing lean at an operation
level, the aerospace focus on implementing lean at an enterprise level by getting all
the partners of the business involved. But if we look deep into the principles of both
the industries, there is an overlap of concepts.
For the aerospace, it is lean at an enterprise level, but to achieve this it is important to
implement value, value stream, flow, pull and perfection which are the same as lean
manufacturing and lean construction. And for lean construction, though lean is
applied only at an operational level, the ultimate aim is to make the entire
construction enterprise lean.
Both the industries have successfully implemented lean and this has permitted them to
produce efficient results even in times bad market sentiments. Though both the
industries do have their own methodology of implementing lean, their greatest
challenge faced is revolutionising the traditional system.
Now most industries have benefited a lot from the concept of lean thinking; they have
produced better results in terms of sales, revenue, profitability and products. Lean
141
thinking is more than just a managerial process; it is being implemented as

competitive weapon in order to have a competitive edge in the market. It has been
noticed that companies who apply lean thinking is a step ahead of others in terms of
continuous growth and innovation. Therefore lean thinking has proved to be
successful and universal.
6.3 Beyond Lean Thinking
The concept of lean thinking has come a long way; it all started back in Japan and
now is one of the most required concepts by all companies and industries in the West.
The concept of lean has travelled all across the globe having different names and
terminologies but applying the same principle of creating value by eliminating Muda.
Today's competitive environment leaves no room for error. Companies must delight
customers and relentlessly look for new ways to exceed their expectations which is
why lean thinking has gone beyond the current principles and practices. Companies
are merging the concept of lean along with other managerial concepts such as six
sigma. Lean six sigma is the latest of the managerial practices where it helps in
creating value by eliminating Muda from the process which is the function of lean and
then removing the causes of defects and errors from the process which is the function
of six sigma. The companies take the advantages of both to have a competitive edge
in the market. At the end of it both the concept’s ultimate aim is to create value and
increase profitability to the company. This is just one example of how the concept of
lean has innovated. Lean has been applied jointly with many other concepts to bring
about positive results to companies. What is the future of lean thinking is a question
which can be answered only through time. The factor of time has been a major threat
to most businesses; they have found it difficult to either cope up or overcome the
challenges. But for now as long as the lean thinking principles are applied into the
company; it can produce far more promising results than ever. Therefore lean thinking
is the ultimate competitive tool in the market.
Lean Thinking – Not a process; but a way of life…
142
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Appendix
Appendix
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Table of Contents

CHAPTER1: INTRODUCTION AND STRUCTURE OF DISSERTATION

CHAPTER2: LEAN THINKING VS MUDA

CHAPTER3: LEAN THINKING IN SUPPLY CHAIN

3.3 Structuring and Tiering…………………………………………………………58

CHAPTER 4: LEAN ELEMENTS AND TECHNIQUES

CHAPTER 5: COMPARATIVE STUDY OF LEAN PRINCIPLES IN THE

CHAPTER 6: MOVING ON- BEYOND LEAN THINKING

Figure 1.1: Lean Thinking Principles…………………………………………........19

Table 2.1: Value Stream Details of Cola Carton……………………………………35

Lean thinking, an innovative concept which has revolutionised industries in the

An attempt is made to disclose this topic by critically examining the existing

I am grateful to my supervisor, Mr Callum Kid, whose guidance, advice, critiques,

Introduction and Structure of Dissertation

In the words of Peter Drucker “the industries of industries”, the automobile

The concept of lean thinking works with a combination of 5 principles:

1.2 Aim & Objectives

The dissertation does this by pursuing the following objectives:

To provide an overview of the concept of supply chain and supply chain

To study the different elements and techniques of lean.

To show the future of lean management.

The dissertation methodology was organised into four major parts:

Once the topic of my dissertation; Information requirement of the Lean thinking

None of this would have been possible without my dissertation supervisor. A

The dissertation was influenced by the following limitations.

B. The dissertation was characterised by low budget. This prevented the

1.5 Structure of the dissertation

LEAN THINKING VS MUDA

Fortunately, there is a powerful antidote to Muda: lean thinking. Lean thinking

Lean thinking - a way to convert Muda into value.

2.2 The Concept in Detail

The Lean Principle:

Figure 2.1: Lean Thinking Principles…

2.3 History and Evolution of Lean Thinking

What happened between processes?

By the 1980's some American manufacturers, such as Omark Industries, General

manufacturing combined with a study of Japanese, American, and European

2.4 Perspectives on Lean

There are at least three different perspectives on Lean.

The first was Shigeo Shingo ’s industrial engineering perspective:

how far Shingo’s theory is just an explanation of Toyota’s developing practice is

The second perspective is Professor Fujimoto’s Evolutionary Learning perspective:

This third perspective has seen it interpreted as ‘Respect for People’:

2.5 Principle of Lean Thinking

Start by challenging the Traditional definition of ‘Value’

Value definition in terms of the whole product

2.5.2 Value Stream

Product Family Matrix

Figure 2.1: Product Family Matrix…

Value Stream Maps

Figure 2.2: Value Stream Maps…

Source: (National Research Council, 2004)

The value stream map, developed at Toyota, is a tool that:

allows you to diagram your current value stream;

Value Stream for a Cola Carton

Figure 2.3: Value Stream for Cola Cans…

Table 2.1: The Value Stream details of Carton of Cola…

Incoming Processing Finished Process Cum Cum

1 Mine 0 20 min 2 weeks 1000 t/hr 319 0

3 Smelter 3 months 2 hrs 2 weeks 277 2

7 Bottler 4 days 1 min 5 weeks 1500/min 47 24

♦ Cumulative scrap is the percentage of the original aluminium scrapped.