Tuesday, February 4, 2014

Why Lean Manufacturing Fails, and How Companies Can Do Better

There is a floating statistic out there in the world of the failure rate of the implementation of lean manufacturing- I have found three sources that put the statistic at some point between 85 and 99 percent failure rates. Why is this popular and vetted method having such problems being recreated across industries? Toyota has been very willing to share their techniques, and there are many consulting firms in the world who specialize in implementation. How are we still failing?

After poring over many articles, I’ve aggregated the problems that many experts agree are the root cause.

1. Companies have not defined the ROI for their customers and stakeholders

The biggest reason across articles that I have found is that companies are not fully analyzing how Lean Manufacturing might change their margins, benefit the company structure, or help their brand. Granted, analyzing what lean manufacturing may do for your business is speculative—every organization is different and will have very different implementation. Yet, many companies have made the switch to lean manufacturing, and there is data out there on the cost of implementation versus the cost of the change. These figures need to be developed so that the company has a solid base to start a movement.

2. Creating buy-in at all levels of the company

CEO’s and Executives- Many times, the executives within a company have no financial incentive to see through the change. Across many opinions, this seemed to be one of the major failings. Executives will always take the short-term gain of other improvements versus the long-term gain of lean manufacturing implementation because they’re in no separate contractual clause that incentivizes them to do so. Build a new contract and tie in lean manufacturing metrics.

Middle Managers- Middle managers bear a large brunt of the implementation of lean manufacturing, and this increased scrutiny is not an exciting prospect. How will this actually benefit the manager?  As Richard Kallage put it, “The real answer, though, is the company will be more competitive, and your job will be much more satisfying.” Repeating and impressing this story on middle managers is vital to the success of implementation.

Everyday Employees- Lean manufacturing can be seen by many laborers as an excuse to cut their jobs. Focusing on the employee being a part of productive change, and creating a sense of pride and ownership over that change is essential. The people management aspect is all to often ignored, and workers spite the new mindset.

courtesy of  http://www.acceleratingthejourney.com/?p=1644

3. Seeing Lean Manufacturing as a project instead of a change in the system

The company has to put its full skin in the game. The stats are iffy on failure rates because so many companies are not actually putting on the full mantle of Lean Manufacturing; they are simply toying with a concept. For full on implementation to work, companies need to make a public statement about the change. Saving face and outwardly showing success can be a powerful motivator for individuals.

4. Desiring Instant Improvements Instead of Long-term Gain

Lean manufacturing will take time to see it’s full effect. It is essential that a company set up its internal policies and incentive structures to look toward the long-term improvements.  Companies need to give employees a reason to be successful more than just “it’s the right thing to do”. It also has to be the beneficial thing to do from the employee’s perspective.

For myself, these thoughts beg a few questions:
Is Lean manufacturing built so that people innovate themselves out of a job?
What other issues have you seen that cause lean manufacturing implementation to fail?
Are there manufacturing industries that will never be able to apply the principles of Lean Manufacturing?



  1. so glad to see a post on this topic.
    All the points are very informative and easy to undersatnd.
    ERP system often fails to achieve its promise because people who are supposed to be the main users of the systems reluctant to change their attitudes. This can led to program modifications & unnucessary manual tasks which neutralize the benefits of the software.
    Thanks for such a nice blog on Erp failure.


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