INVENTORY MANAGEMENT HISTORY PART SIX

Written by Anton Dolinsky for Almyta Systems. When author's and Almyta Systems names are mentioned, the reproduction is freely allowed.

Lean Manufacturing (minimizing waste with TPS and its descendants)

No supply chain management methodology has ever broken upon the world with the stunning surprise of the Toyota Production System, a.k.a. Just-in-Time Manufacturing, a.k.a. Lean Manufacturing. It is worthwhile to take a look at it, keeping in mind that what makes it special is not the originality of its component concepts, but their integration.

The Toyota Production System is all about eliminating Muda, waste. "Just find and eliminate waste", say Lean Manufacturing gurus. By finding and eliminating waste one pursues Kaizen, continuous improvement. What is meant by waste? Here is a partial list that includes psychological, material and organizational kinds of waste:

Bad design. Bad design is tied with mismanagement as the most disastrous and wasteful kind of mistake, as it comes at the beginning of the manufacturing process and affects everything down the line until it is caught. Design refers to, not simply the design of parts and tools, but also to the design of the manufacturing process itself. Fixing poor design is costly.

Defects. A defect along any stage of manufacturing ripples down the line and typically causes losses that grow exponentially as the defect goes down the line. The further down the line the defect is caught, the greater the losses. Furthermore, if a defect goes a long way down the line before being caught it acquires the magic of having been invested in, and the further on down the line the defect proceeds the greater resistance there is to reversing it. This explains why large companies regularly stage enormous recalls of faulty products the faults of which by all rights should have been caught early on. Therefore it is of paramount importance to have a quality control system that emphasizes catching defects early on.

Shame and fear over mistakes. Shame among workers of having made a mistake, and fears of being punished for the mistake, are great blocks to righting the mistakes and improving the quality of work. By worker we mean of course not just line workers, but also management. In an environment in which the employee who has made a mistake is punished for it, enormous preventable losses will accrue simply because many defects in products, planning, and organization will not be reported, and instead will be allowed to ripple down through the manufacturing process. An environment in which quick pointing out of mistakes, especially by the employee who has made the mistake, is encouraged and rewarded instead of punished, is an efficient manufacturing environment.

Waste of talent. Enormous emphasis is put on employee training by users of the Toyota Production System and its descendants. It must be recognized that employees are not blank slates, and that there is almost always a post that a given employee is the best employee to fill. Mistakes falling into the category of waste of talent are akin to the mistake one would make in using a hammer to tighten screws while using a screwdriver to pound in nails. Another kind of waste of talent mistake is failure to listen to the voices of employees. Just as the center of gravity in TPS inventory management consists of consumer demand, the center of gravity in actual TPS manufacturing technique is employee feedback.

Irrational traditionalism. Human beings are prone to sticking with inefficient but comfortable methods in the face of more efficient methods that have a learning curve. This irrational traditionalism is a waste. Management has to take the psychological fact of irrational traditionalism into account all the time in TPS manufacturing because TPS manufacturing involves kaizen, continuous improvement. Continuous improvement means change, and successful change depends on paying attention to the reality of employee emotions as well as to the ideal of "kaizen in itself".

Mismanagement. To take management mistakes less seriously than worker mistakes leads to much waste. Management mistakes are significantly more influential and deleterious than worker mistakes, and should in fact be given more attention than worker mistakes, despite the thorny issues of office politics that may result.

Transportation. Employing too many shipping companies, or internal shipping subdivisions, or failing to pick or create the highest quality ones, wastes resources such as time and capital. In the hustle and bustle of large manufacturing it is easy to give second priority to shipping. In a way it makes sense to give shipping lower priority than manufacturing, as mistakes made in shipping have less of an impact than mistakes made, for example, in product design. Nonetheless, serious losses can ensue from shipping mistakes, and shipping cannot be taken lightly.

Motion. The production floor should be laid out in such a way that the motion of workers and assemblies about it is minimized.

Waiting. Efficiency is increased when each worker, though perhaps specializing in a particular task, is also proficient in a number of other tasks so that there is no waste of time when his or her primary skill is not needed. There should also be plans for what to do when demand is low: for example, holding manufacturing team meetings and making improvements to the plant in the off-time between production peaks.

Inventory. Inventory should be minimized, and to this end the center of gravity for material resources planning in the Toyota Production System is consumer demand. Inventory is "pulled" forward through the manufacturing chain rather than "pushed" from behind. That is, at each step of the manufacturing process, manufacture is triggered not by the presence of components coming in from behind, but by the lack of assemblies ahead. A transmission is put together, for example, not because there are finished transmission parts on site, but because the team that inserts transmissions into car bodies needs a transmission. This way of manufacturing removes unused inventory, and it is even more effective for perishable inventory than for relatively sturdy inventory like car parts. Overproduction, a major source of waste, is minimized.

Multiple suppliers. Multiple suppliers entail an increase in paperwork and decision making time. It is better to build good relationships with just a few trusted, reliable, and efficient suppliers - the minimum necessary.

Overprocessing. Too much work expended on a manufacturing process equals waste. Therefore, standardized work itself should be designed for efficiency - products are not the only thing in manufacturing that have to be designed. Good, forward-looking design of the manufacturing process as a whole also minimizes the expense of changeovers.

Undersharing, or overspecialization. It is often possible to design manufacturing tools in a way that makes them usable for several different tasks. Likewise, it is often possible to train employees to be competent at more than one task.

In the next article, we will deal with the history and further nature of Lean Manufacturing.


You can find more inventory related articles here:

Inventory accounting, memory, and the birth of writing
Amateurs think strategy, Generals think logistics
Ahead of their time
Barcodes, sales and inventory control
Push, pull and production
Lean Manufacturing (minimizing waste with TPS and its descendants)
History of Lean Manufacturing
Engineering bill of materials by Jon Clancy