lean thinking

Lean ThinkingLean ThinkingBanish Waste & Create Banish Waste & Create

Wealth in Your CorporationWealth in Your Corporation

By: James P. Womack & Daniel By: James P. Womack & Daniel JonesJones

Book Report By: Billy WigginsBook Report By: Billy Wiggins

Why Was This Book Why Was This Book Written?Written?

A follow up to A follow up to The Machine That The Machine That Changed the World.Changed the World.

Written to Enlighten Management on Written to Enlighten Management on the Transformation to a Lean the Transformation to a Lean System.System.

Contents of BookContents of Book

I.I. Lean PrinciplesLean Principles

II.II. From Thinking to ActionFrom Thinking to Action

III.III. Lean EnterpriseLean Enterprise

IV.IV. EpilogueEpilogue

I. Lean PrinciplesI. Lean Principles

1.1. ValueValue

2.2. The Value StreamThe Value Stream

3.3. FlowFlow

4.4. PullPull

5.5. PerfectionPerfection

1. Value1. Value

Anything which does not provide Anything which does not provide value is MUDA or waste.value is MUDA or waste.

Antidote to Muda is Lean Thinking.Antidote to Muda is Lean Thinking. Value is Specified by the Customer.Value is Specified by the Customer.

An Example of Defining Value An Example of Defining Value (and Muda)(and Muda)

The Authors mapped the process of The Authors mapped the process of traveling.traveling.

The itinerary included air travel and The itinerary included air travel and Ground Travel from Herefordshire to Ground Travel from Herefordshire to Crete.Crete.

The Result: 13 hrs of travel time; 7 The Result: 13 hrs of travel time; 7 hours actually spent going hours actually spent going somewhere and a total of 23 process somewhere and a total of 23 process steps.steps.

2. The Value Stream2. The Value Stream

To determine the value stream, map To determine the value stream, map the steps required to produce the the steps required to produce the product and classify into 3 categoriesproduct and classify into 3 categories– Actions which create valueActions which create value– Actions that create no value but are Actions that create no value but are

requiredrequired– Actions that create no value and are not Actions that create no value and are not

needed.needed.

Example of Mapped Value Example of Mapped Value StreamStream

There are months There are months spent in shipping.spent in shipping.

Every step in the Every step in the process entails process entails excess inventory.excess inventory.

The estimated The estimated cycle time is 319 cycle time is 319 days from mine to days from mine to Home!!Home!!

3. Flow3. Flow

3 steps must be taken together to 3 steps must be taken together to achieve flowachieve flow– Focus on the product.Focus on the product.– Ignore traditional boundaries (flow is Ignore traditional boundaries (flow is

counterintuitive).counterintuitive).– Rethink specific work practices Rethink specific work practices

(Kaizens).(Kaizens).

Example of Two Plant Example of Two Plant LayoutsLayouts

Example ContinuedExample Continued

The Lean Layout utilizes:The Lean Layout utilizes:– JIT (Just-in-Time) which prevents inventory JIT (Just-in-Time) which prevents inventory

build up before or after each process step.build up before or after each process step.– Small batches.Small batches.– Quick machine changeovers.Quick machine changeovers.– Cells for complete products vs. Mass Cells for complete products vs. Mass

Production.Production.– Takt (production time/customer demand).Takt (production time/customer demand).

This equates into flow and level This equates into flow and level scheduling.scheduling.

4. Pull4. Pull

Definition – A system of cascading Definition – A system of cascading production & delivery activities in production & delivery activities in which nothing is produced by the which nothing is produced by the upstream supplier until the upstream supplier until the downstream customer signals a downstream customer signals a need.need.

A Kanban is a visual signal which A Kanban is a visual signal which signals the need for parts by a signals the need for parts by a downstream customer.downstream customer.

4. Pull Continued4. Pull Continued

By utilizing a Pull By utilizing a Pull system Sloane system Sloane Toyota cut Toyota cut inventory from inventory from $580k to $290k$580k to $290k

Warehouse space Warehouse space was cut in half.was cut in half.

Increased customer Increased customer satisfaction by satisfaction by providing same-day providing same-day service.service.

5. Perfection5. Perfection

Complete elimination Complete elimination of Muda is of Muda is impossible.impossible.

Repeat Kaizens is the Repeat Kaizens is the path to approaching path to approaching perfection.perfection.

FNGP made dramatic FNGP made dramatic improvements improvements through repeat through repeat kaizens.kaizens.

II. From Thinking to ActionII. From Thinking to Action

1.1. The Simple Case – LantechThe Simple Case – Lantech

2.2. A Harder Case – Wiremold Co.A Harder Case – Wiremold Co.

3.3. The Acid Test - Pratt & WhitneyThe Acid Test - Pratt & Whitney

4.4. Lean Thinking vs. German Technik – Lean Thinking vs. German Technik – PorshePorshe

5.5. Mighty Toyota; Tiny ShowaMighty Toyota; Tiny Showa

6.6. An Action PlanAn Action Plan

1. Lantech1. Lantech

Lantech manufactures Lantech manufactures stretch wrappers.stretch wrappers.

Pat Lancaster started Pat Lancaster started his company in 1972 as his company in 1972 as a lean manufacturer.a lean manufacturer.

Patents kept Patents kept competition at bay.competition at bay.

Lantech grew and Pat Lantech grew and Pat hired an operation’s hired an operation’s manager.manager.

1. Lantech Continued1. Lantech Continued The operation’s The operation’s

manager manager departmentalized the departmentalized the company. Lantech company. Lantech became batch-and- became batch-and- queue.queue.

Communication between Communication between departments was bad.departments was bad.

Business remained good Business remained good until the Patent gave until the Patent gave way and low-cost clones way and low-cost clones became available in became available in 1989.1989.

1. Lantech Continued1. Lantech Continued Pat realized drastic Pat realized drastic

changes needed to be changes needed to be made if the company made if the company were to survive.were to survive.

Turned Lean vs. the Turned Lean vs. the current trend of cost current trend of cost cutting & cutting & retrenchment.retrenchment.

Ron Hicks became Ron Hicks became Operation’s manager in Operation’s manager in 1992.1992.

Ron introduced Lantech Ron introduced Lantech to “single-piece-flow”.to “single-piece-flow”.

Kaizen Teams were set Kaizen Teams were set up to rethink processes.up to rethink processes.

1. Lantech’s Results of Lean 1. Lantech’s Results of Lean ImplementationImplementation

2. Wiremold Co.2. Wiremold Co.

Located in Located in Hartford,ConnecticHartford,Connecticut.ut.

24 nationalities of 24 nationalities of workers.workers.

Product line of wire Product line of wire management management systems.systems.

Low-tech Low-tech manufacturing.manufacturing.

2. Wiremold Continued2. Wiremold Continued

Family owned and operated since 1900.Family owned and operated since 1900. In 1970 hired professional management. In 1970 hired professional management.

Business Market seemed to have no Business Market seemed to have no growth potential.growth potential.

The company embraced TQM. TQM was The company embraced TQM. TQM was critically short on implementation details.critically short on implementation details.

In 1991 the company was in crisis after In 1991 the company was in crisis after implementing JIT in the wrong way. Pull implementing JIT in the wrong way. Pull and flow was not implemented because no and flow was not implemented because no one knew how.one knew how.

2. Wiremold Continued2. Wiremold Continued

In 1991 Art Byrne was hired as the In 1991 Art Byrne was hired as the “Change Agent”.“Change Agent”.

Art had successfully implemented in 8 Art had successfully implemented in 8 companies of which he was in charge.companies of which he was in charge.

Art decreased the workforce by offering Art decreased the workforce by offering early retirement and released 10% of early retirement and released 10% of management that didn’t embrace lean management that didn’t embrace lean management (anchor draggers).management (anchor draggers).

Transformed the organizational from Transformed the organizational from highly hierarchical to several product highly hierarchical to several product teams. teams.

2. Wiremold Continued2. Wiremold Continued Art trained the employees in lean Art trained the employees in lean

principles followed by kaizen exercises. principles followed by kaizen exercises. Buy in from the employees was critical.Buy in from the employees was critical.

Managers were instructed by Art to Managers were instructed by Art to convert every process into pull and convert every process into pull and continuous flow.continuous flow.

Art had 100’s of kaizen activities going Art had 100’s of kaizen activities going simultaneously.simultaneously.

Art had “scoreboards” posted of simple Art had “scoreboards” posted of simple quantitative performance indicators.quantitative performance indicators.

He also guaranteed that jobs would not be He also guaranteed that jobs would not be lost due to lean implementation.lost due to lean implementation.

2.Wiremold’s Results From 2.Wiremold’s Results From Lean ImplementationLean Implementation

3. Pratt & Whitney3. Pratt & Whitney

The Acid Test !!The Acid Test !! Makers of Military and Commercial Makers of Military and Commercial

Jet Engines.Jet Engines. 51,000 employees (1990).51,000 employees (1990). 11 million shop hours of work 11 million shop hours of work

annually. annually.

3. Pratt & Whitney 3. Pratt & Whitney ContinuedContinued

Global Rivals include GE and Rolls-RoyceGlobal Rivals include GE and Rolls-Royce 4 year product development cycle4 year product development cycle 18 month lead time to produce 1 motor.18 month lead time to produce 1 motor. Record profits in 1990 and first part of Record profits in 1990 and first part of

1991. Then the crisis set in…… a $283m 1991. Then the crisis set in…… a $283m loss in 1992.loss in 1992.

Shortly before the crisis several of UTC’s Shortly before the crisis several of UTC’s upper management had become familiar upper management had become familiar with lean principles (mainly from being in with lean principles (mainly from being in the same town as Art Byrne).the same town as Art Byrne).


Mark Coran resolved to implement Mark Coran resolved to implement lean thinking at Pratt.lean thinking at Pratt.

Coran hired Bob D’Amore who had Coran hired Bob D’Amore who had learned lean principles at Harley-learned lean principles at Harley-Davidson during their turn around Davidson during their turn around period in the 80’s.period in the 80’s.

D’Amore charged with going through D’Amore charged with going through every production activity at Pratt and every production activity at Pratt and transforming it into a continuous flow. transforming it into a continuous flow. (Kaikaiku). (Kaikaiku).


George David, a lean thinker, became George David, a lean thinker, became president of UTC. This gave needed president of UTC. This gave needed support to Coran & D’Amore.support to Coran & D’Amore.

Sensei’s Iwata and Nakao were contracted Sensei’s Iwata and Nakao were contracted from under GE (another lucky break).from under GE (another lucky break).

George David hired Karl Krapek as Pratt’s George David hired Karl Krapek as Pratt’s president. Krapek was also a lean thinker.president. Krapek was also a lean thinker.

Krapek had to downsize to a substainable Krapek had to downsize to a substainable number of employees for the long haul.number of employees for the long haul.


Ed Northern (lean Ed Northern (lean thinker hired from GE) thinker hired from GE) removed the monument removed the monument Brohm machine and Brohm machine and replaced with a lean replaced with a lean system.system.

The Brohm was a The Brohm was a massive automated massive automated Blade grinding system. Blade grinding system. In a 1000x1000 sf room.In a 1000x1000 sf room.

The room contained The room contained 1350 workers.1350 workers.


Results of the removal Results of the removal are shown to the right.are shown to the right.

One last problem One last problem remained….. Quality.remained….. Quality.

George David enlisted George David enlisted the help of Yuzuru Ito the help of Yuzuru Ito and Pratt adobted the and Pratt adobted the Ito Quality Philosophy.Ito Quality Philosophy.

The result was nearly The result was nearly 100% of the engines 100% of the engines made it completely made it completely through production through production with no back flow.with no back flow.


Karl Krapek further reduced the Karl Krapek further reduced the organizational chart to product organizational chart to product development component centers and development component centers and operation module centers.operation module centers.

Pratt & Whitney is still today on its lean Pratt & Whitney is still today on its lean journey.journey.

February 15February 15thth 2006, Wall Street Journal 2006, Wall Street Journal story notes that Pratt and Whitney may story notes that Pratt and Whitney may begin to produce replacement parts for begin to produce replacement parts for GE’s Jet Engines.GE’s Jet Engines.

4. Porsche4. Porsche The Porsche The Porsche

Company was Company was founded in 1930 by founded in 1930 by Ferdinand Porsche Ferdinand Porsche an Austrian Engineer.an Austrian Engineer.

Porsche was well Porsche was well known for high end known for high end engineering early on engineering early on and contracted for and contracted for several large several large automotive automotive companies.companies.

4. Porsche Continued4. Porsche Continued

Porsche was a classic German firm. Porsche was a classic German firm. Held in family hands until 1972.Held in family hands until 1972.

Porsche had an intense focus on its Porsche had an intense focus on its product.product.

The organization was hierarchical in The organization was hierarchical in German form consisting of gruppen German form consisting of gruppen meisters, meisters, and ober meister.meisters, meisters, and ober meister.

One of Porsche’s striking features One of Porsche’s striking features was its craftsmanship.was its craftsmanship.


The shop floor was not involved in the The shop floor was not involved in the design; therefore, products were high design; therefore, products were high on performance but low on on performance but low on manufacturability and serviceability.manufacturability and serviceability.

Porsche accepted the fact that suppliers Porsche accepted the fact that suppliers would ship products late and defective.would ship products late and defective.

Errors in the finished product were Errors in the finished product were corrected by highly skilled craftsman corrected by highly skilled craftsman after the automobile rolled off of the after the automobile rolled off of the line.line.

4. Porsche Continued4. Porsche ContinuedThe CrisisThe Crisis

In 1987 Porsche’s sales dropped from In 1987 Porsche’s sales dropped from a peak of 50,000 cars to 14,000 cars.a peak of 50,000 cars to 14,000 cars.

Porsche blamed the sales drop on the Porsche blamed the sales drop on the market not realizing something within market not realizing something within the company was wrong.the company was wrong.

By 1989 sales declined further. By 1989 sales declined further. Porsche decided to pursue only high Porsche decided to pursue only high end cars and leave affordable cars to end cars and leave affordable cars to the Japanese.the Japanese.


Prices had to be dropped by 30% to address Prices had to be dropped by 30% to address currency realignment. Wendelin Wiedeking was currency realignment. Wendelin Wiedeking was brought in for the job.brought in for the job.

Profits had slid in 90-91 from $10m to a loss of Profits had slid in 90-91 from $10m to a loss of $40m.$40m.

Porsche’s fundamental problem was cost.Porsche’s fundamental problem was cost. Wiedeking had managers read and study Wiedeking had managers read and study The The

Machine That Changed The World Machine That Changed The World and planned and planned study trips to Japan. study trips to Japan.

No one in Japan considered Porsche as serious No one in Japan considered Porsche as serious competition so they were very free about showing competition so they were very free about showing the Germans everything.the Germans everything.


Wiedeking decided bold Wiedeking decided bold steps needed to be steps needed to be taken to reorganize the taken to reorganize the Company. He reduced 6 Company. He reduced 6 layers of managers to 4.layers of managers to 4.

Wiedeking showed the Wiedeking showed the work force the true cost work force the true cost of quality errors. of quality errors. Ranging from 10 to Ranging from 10 to 1000 times the cost of 1000 times the cost of fixing errors on the spot. fixing errors on the spot.

4. Porsche Continued4. Porsche ContinuedChihiro NakaoChihiro Nakao

In desperation Wiedeking was able to In desperation Wiedeking was able to negotiate with Chihiro Nakao to negotiate with Chihiro Nakao to implement lean thinking at Porsche.implement lean thinking at Porsche.

Nakao’s first objective was to turn a Nakao’s first objective was to turn a “warehouse” into a factory by “warehouse” into a factory by reducing a mountain of inventory.reducing a mountain of inventory.

He cut shelf heights from 2.5 meters He cut shelf heights from 2.5 meters to 1.3 meters. “Everyone could see to 1.3 meters. “Everyone could see everyone else” with the shelves cut everyone else” with the shelves cut down.down.

4. Porsche Continued4. Porsche Continued Nakao had Wiedeking cut the shelves as a Nakao had Wiedeking cut the shelves as a

defining moment. Historically, senior defining moment. Historically, senior German managers did not touch anything in German managers did not touch anything in the plant.the plant.

The head count of employees was The head count of employees was decreased 30% over 3 years through decreased 30% over 3 years through attrition. (We have seen this in all cases so attrition. (We have seen this in all cases so far.)far.)

Nakao had Wiedeking reduce the number of Nakao had Wiedeking reduce the number of suppliers from over 950 to 300 and label 60 suppliers from over 950 to 300 and label 60 as critical.as critical.

Porsche was also required to work with Porsche was also required to work with suppliers in implementing lean principles.suppliers in implementing lean principles.


Since Porsche is a small company any Since Porsche is a small company any product change is a “bet the product change is a “bet the company” decision.company” decision.

Wiedeking decided that Porsche Wiedeking decided that Porsche should stick to the niche it created should stick to the niche it created and produced a mid-priced and an and produced a mid-priced and an upscale 2 seat automobile (Boxster).upscale 2 seat automobile (Boxster).

Wiedeking redefined what a Porschje Wiedeking redefined what a Porschje is.is.

4. Porsche’s Results Due to 4. Porsche’s Results Due to Lean ThinkingLean Thinking

5. Showa Manufacturing5. Showa Manufacturing

Showa Manufacturing is over 100 years Showa Manufacturing is over 100 years old.old.

Showa manufactures radiators and boilers.Showa manufactures radiators and boilers. In 1979 with the second oil shock demand In 1979 with the second oil shock demand

for industrial products slumped and for industrial products slumped and expansions were put on hold.expansions were put on hold.

Showa’s president Tetsu Yamamato Showa’s president Tetsu Yamamato contacted Taiichi Ohno for guidance. Ohno contacted Taiichi Ohno for guidance. Ohno had transformed Toyota into a Lean had transformed Toyota into a Lean enterprise.enterprise.

5. Showa Manufacturing5. Showa Manufacturing

Ohno transformed Ohno transformed the batch operation the batch operation of coil making into of coil making into a single piece flow a single piece flow by creating a cell.by creating a cell.

This transformation This transformation continued from continued from activity to activity.activity to activity.

Each activity was Each activity was kaizened at least kaizened at least 10 times.10 times.

5. Showa Manufacturing5. Showa ManufacturingResults of TransformationResults of Transformation

An Action PlanAn Action Plan

Getting Started.Getting Started.– Change Agent – Find someone (it may be Change Agent – Find someone (it may be

you!) with the lean knowledge, energy, you!) with the lean knowledge, energy, and courage to see the change and courage to see the change implemented.implemented.

– Get lean knowledge Get lean knowledge – Find a lever – seize an opportunity to Find a lever – seize an opportunity to

implement lean principlesimplement lean principles– Map value streams – Look for ways to Map value streams – Look for ways to

eliminate muda and implement flow eliminate muda and implement flow

Action PlanAction Plan

Getting started continued.Getting started continued.– Begin Kaikaiku – look for radical Begin Kaikaiku – look for radical

improvements and then kaizen and re-improvements and then kaizen and re-kaizen.kaizen.

– Expand your scope – move quickly from Expand your scope – move quickly from one activity to the nextone activity to the next

Action PlanAction Plan

Create a new organizationCreate a new organization– Reorganize by product familyReorganize by product family– Create a lean functionCreate a lean function– Devise a policy for excess peopleDevise a policy for excess people– Devise a growth strategyDevise a growth strategy– Remove anchor draggersRemove anchor draggers– Instill “Perfection”Instill “Perfection”

Install lean business systems.Install lean business systems. Complete the transformation.Complete the transformation.

III. Lean EnterpriseIII. Lean Enterprise

A Channel for the Stream; A Valley A Channel for the Stream; A Valley for the Channelfor the Channel

Dreaming About PerfectionDreaming About Perfection

A Channel for the Stream; A A Channel for the Stream; A Valley for the ChannelValley for the Channel

““We are putting the entire value We are putting the entire value stream for specific products stream for specific products relentlessly in the foreground and relentlessly in the foreground and rethinking every aspect of rethinking every aspect of jobs,careers,functions, and firms in jobs,careers,functions, and firms in order to correctly specify value and order to correctly specify value and make it flow continuously along the make it flow continuously along the whole length of the stream as pulled by whole length of the stream as pulled by the customer in pursuit of perfection”.the customer in pursuit of perfection”.

Dreaming About PerfectionDreaming About Perfection

There are hardly any lean enterprises There are hardly any lean enterprises in the authors sense of the term in the authors sense of the term “where value creation is smoothly “where value creation is smoothly linked from concept to launch, order linked from concept to launch, order to delivery, and raw material into the to delivery, and raw material into the arms of the consumerand on through arms of the consumerand on through the life cycle of the good or service”.the life cycle of the good or service”.

Perfection is not a destination but a Perfection is not a destination but a journey.journey.

The End.The End.

lean thinking

Business

lean principles value

lean system

lean layout

lean manufacturer

value stream flow

value actions

lantech lantech manufactures

example of mapped value