Wednesday, June 25, 2003

How to describe Lean

I struggle at times to explain just what Lean is to those unfamiliar with it. I find that stories tend to connect better than long lists of bullet points. So, I was very pleased to hear from Claude Emond today with the following summary from the European management school, INSEAD. This is a great summary of Lean. Enjoy.
Organic Production Systems

What can cell behavior teach us about manufacturing processes? According to Lieven Demeester, Assistant Professor of Operations Management, Christoph Loch, Professor of Operations Management, and Luk Van Wassenhove, The Henry Ford Chaired Professor of Manufacturing, all from INSEAD, the cell is not such a far stretch as a manufacturing model. It mirrors a number of production control principles already in use in modern factories. In cells, for example, production occurs only when triggered by a downstream shortage of end products, thus avoiding the accumulation of inventories. Additionally, cells use sophisticated quality control techniques such as 100% inspection, quality assurance, and fool proofing (i.e., using molecules with geometric shapes such that only the correct reactions are possible).

Beyond these similarities, the cell has advanced to create systems that are radically different, and significantly more efficient, than those found in today's manufacturing models. Cells constantly experiment in order to be prepared for change. The cell has multiple "backup" plans, and continuously experiments with new plans through mutation and genetic recombination. In addition, building materials circulate in closed recycling loops. No material is ever completely wasted, what is one organism's waste gets reprocessed by another organism. Finally, cells use a small set of common building blocks to create "products."

These features are the point of interest for the authors, who have developed a new vision for manufacturing, which they call an "organic production system."

Such a system would differ from traditional mass-production systems on a number of levels. Instead of large, centralized plants, an organic system would have numerous small-scale production sites closer to the customer, allowing the sites to be more responsive to the local market. Organic systems would use fewer and more basic production materials that could combine to serve many purposes and allow for a higher level of material reuse.

Some manufacturers are already moving in this direction. Norway's Hydro Norsk is building a geographically distributed network of aluminum re-melting plants, close to customer sites and with local collection of scrap aluminum. Similarly, Regale, a California company that produces molded fiber packaging made entirely from post-consumer waste paper, is following a "one packaging plant per township" vision, allowing the company to quickly respond to packaging needs of local manufacturers. These companies also illustrate the move toward fewer, more basic "modular" materials.

Looking ahead, it is clear that some industrial processes are more likely to transform to organic production systems than others, say the authors. Companies that can most benefit from this shift include those where:

Customers need to replace the product rather frequently, either because it wears out or because it becomes dated.

Transportation costs are high compared to the production cost of the product and where small-scale production methods are feasible.

The product comes in a variety of sizes and forms and fit is an important value component for customers.

Multiple, face-to-face interactions with the customer during the life of the product are required or beneficial.

I hope this is both organic for you, as well as helpful. Feel free to forward to a friend. Email me

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