From Mass Production to Lean Manufacturing and Services

In the early 19th century, a revolution took place that changed the methods of industrial production. The shift was made from handcraft to industrial mass production, thanks to the innovative genius of Henry Ford.

The concepts introduced by Ford involved primarily the division of labour into standard single tasks in order to reduce the need for employee training, production lines to reduce the time used to transport semi-finished components, and machines that performed only one type of task:

The primary objective was to reduce the dependency of unskilled workers as far as possible. In this way, financial benefits were materialised and the cost per unit for automobiles fell considerably.

At the same time, a new class of workers was formed who carried out simple and repeated work tasks. These tasks required minimal levels of knowledge and were correspondingly not very challenging for the workforce. The result was that automobile companies came to regard labor as a variable cost.

The labor component could easily be increased or reduced on very short notice, and one was then able to fit the use of labor according to changes in demand. This required access to a large pool of unskilled labor, something that the USA had in abundance up until the time of the Great Depression in the 1930s.

This would prove to be a formidable challenge for Henry Ford.

However, this new trend in industrial operation, although a revolution compared to previous methods, was not entirely a benefit.

One challenge was the fact that the work methods were largely inflexible since a machine could only be used for one task.

This led to a situation where the customers’ freedom of choice and their wishes regarding the end product were not given any special consideration - something best described in the well-known quotation by Henry Ford, “Any customer can have a car painted any colour that he wants so long as it is black.”.

Henry Ford was obliged to produce a limited amount of automobile types in great numbers in order to keep his unit costs low. This meant that it was not possible to adapt automobiles to a market that, at an increasing pace, wanted automobiles that met a variety of different needs.

Last but not least, mass production had a huge problem with quality.

In all the stages in production, products were manufactured in large batches to ensure maximum utilisation of manufacturing equipment. The downside was that if a defect occurred, it usually was not discovered until after a large number of components with exactly that same error had already been produced.

In addition, there was a risk that the defective product could be sent further down the line and built into assembled consumer products. The mass production solution to this problem was to have workers mobilised at the end of the production line who did only one thing: Repair brand new cars.

A considerable amount of time was spent in fixing defects that should not have occurred in the first place — a situation that was wasteful and very costly.

These were the problems that Toyota captured and learned from visiting Ford plants in the USA.

Toyota’s automobile production picked up speed in Japan after World War II. At this time, the domestic market was small and fragmented, workers resisted being regarded as only a variable cost as there was enough employment for everybody, and there was a complete lack of capital to purchase Western technology.

Something had to be done in a different way. This mindset characterised Toyota’s development and production in many areas, and the result was what we know today as the ”Toyota Production System”.

The tremendous forward movement, with focus on quality, efficiency, and elimination of waste, got noticed in the United States, specifically among the major automobile manufacturers in the mid-1980s.

The automobile industry in the west realised it was beaten in all disciplines of industrial operations. Hence, a major academic and practical study was initiated with MIT as a partner. It aimed at learning from the Japanese automobile industry, and especially from Toyota.

Toyota is nowadays known worldwide for its culture and improvement culture, referred to as the “Toyota Production System”. It is often referred to as the “by the book” way of operating in the ”lean” way. Books normally get outdated as new knowledge is discovered. The Toyota Production System never gets outdated, as it is an integral part of its nature to evolve over time. – The continuous striving for perfection and new levels of performance.

The concept of Lean, quite simply originated in the major study published in 1990 in which production formats, operational philosophies, efficiency, etc. were characterised as being carried out in a streamlined way - “the production is so lean”, was referred to by one of the participants - and the lean concept term was coined.

Without mentioning tools, we can tell you that the philosophy may be explained as follows:

A triangle having empowerment of people at the centre, that is firmly supported on a foundation, built on what we believe in, and with two sides in balance between how we lead and manage — and the tools we make use of.

The fact that empowerment of co-workers stands at the centre illustrates how far we have moved from the traditional view of ”people as a variable cost”.

Lean is propelled by a genuine belief that the people within an organisation form the most important element, and that these people are the driving force behind any improvement.

The foundation for the triangle is, “what we believe in”. This comprises policies, code of conduct, principles of behaviour, and the like. These elements must be lived every day and by each and every one — they cannot be mere fluff.

The right arm of the triangle represents how we lead and manage. In a company working on transforming to ”lean”, major changes away from a traditional leadership style are often required. Traditionally managers expressed a ”You shall” way of addressing their employees. In a Lean organisation, we would rather say, ”How do you feel about it?” and “How can I help you solve the problems that exist?”

If we were to summarise the “Lean style of leadership” in three bullet points, they would be:

·      Go see (observe and understand)

·      Ask why (rather than telling what is right and wrong)

·      Show respect (to release the creative power in people)

The left arm of the triangle is what you do — or the tools we utilise.

It is a common misunderstanding to expect Lean to happen by listing one or more tools that are used or that one plans to use. This is a naïve approach. Lean is not a collection of tools, but an integrated philosophy aimed at delivering flawless products and services through producing value for the customer and making them as efficiently as possible. And in this way, we must strive for perfection and balance throughout the triangle.

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