Sunday, February 2, 2014

The race to perfection

The article on Toyota’s production system (TPS) highlights four fundamental rules, if mastered, allows the adopter to benefit from increased efficiency due to removal of wastages during and in between the stages of production. The system is setup to follow a strict set of steps according to a prescribed method, perfected through rigorous testing. Yet the system is highly flexible and adaptive.

The approach seems counter intuitive at first since a “strict set of steps” is not usually defined as flexible. However, if observed closely, these steps evolve through experimentation. The art of hypothesis testing is applied by factory workers (the scientists) who ascertain a set of goals and try to achieve them through various methods, choosing the most efficient one at the end. The end result is a clearly defined, methodical map for the smallest task imaginable.

To me, the lean manufacturing process resembles a scene at the pit stop. As soon as the driver signals a request, the crew organizes itself and the required tools in designated areas such that when the car stops they are already in place. This reduces valuable seconds that would have been wasted in movement or rummaging for tools. Therefore, repair work on the car is done in a matter of seconds, through predefined teams and roles, where each role is again broken down into a systematic checklist.



The concept pioneered by Toyota is today applied by a multitude of industries to achieve astounding efficiency such as the article on Dell discusses the advantage Dell has over competitors while comparing inventory turnovers (yielding in low production costs) and more surprisingly Starbucks. It is intriguing to find out that proper equipment organization and labeling can help shave off seconds between orders and brew phases. 

The phenomenon can even be experienced working its magic at our local Starbucks on Craig which always happens to be bustling but hardly delaying orders. In sharp contrast the café at Gates takes ages when under load. An order can take as long as 25-30 minutes which would have taken 5 minutes under normal circumstances.

It makes me wonder whether there are specific conditions that catalyze the adoption of techniques like Lean Manufacturing or are companies always on the pursuit of process improvement?

I personally believe that under perfect monopolistic conditions, companies would not be motivated to invest in process improvement given that they are making a profit. However, competition or drastic change in customer demand such as during a recession might create an incentive, to survive!

Lean manufacturing therefore, does not have a specified size, nature or type of industry defined for successful implementation. Its flexibility makes it a powerful tool more managers to implement. It is interesting to know that the 9 most successful companies (apart from Toyota) who have successfully adopted Lean manufacturing techniques range from; Nike to Kimberley-Clark Corporation, Caterpillar Inc., Intel, Illinois Tool Works, Textron, Parker Hannifin, John Deere and Ford[1]

Lean manufacturing then might appear to be the only framework that helps organizations streamline their processes to increase overall efficiency. However, Dave Nave in his article sheds light on two other frameworks also widely known as “Six Sigma” and “Theory of Constraints”. These also focus on process improvement. Though the end goal is the same, each framework uses a unique method to achieve this goal. Therefore, in the end choosing the most suitable framework boils down to the type and nature of an organization. Talking in broad terms Six Sigma, Lean thinking and Theory of Constraints (TOC) aim to reduce variation to achieve a uniform process output; remove waste to reduce flow time; and manage constraints to improve throughput, respectively.

Six Sigma
Reduce Variation
Remove Waste
Manage Constraints
Uniform process output
Reduce flow time
Fast throughput[2]

However all these approaches for me are interlinked and can be written in an equation form (Little’s Law).

I = RT

Little’s law states that “The long-term average number of customers (Work in Process) in a stable system is equal to the long-term average effective arrival rate (Throughput) multiplied by the average time a customer spends in the system (Cycle Time).”[3] The equation is a representation of factors that contribute to the overall contribution time of a process.

All the three methods as discussed in the reading, are geared towards process improvement and it is not surprising that each method specializes in addressing/improving one variable in the equation which contributes to the overall improvement of the system.

Going back to our very own Gates café example;

Which Framework do you think would be the most conducive for the café to improve cycle time? Should they follow the Starbuck’s lean manufacturing approach or focus in managing constraints or minimizing variation?

[2] How to compare Six Sigma, Lean and the Theory of Constraints; Dave Nave. Pg 77

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