IT 510: Industrial Planning and ControlSpring Semester 1997

Dr. E. Maydock

Critical Essay:

How Management Changed An Industry

by

Frei Messow

1. INTRODUCTION.............................................................................................................................. 2

2. THE ORIGINS OF LEAN PRODUCTION.......................................................................................3

2.1 THE RISE AND FALL OF MASS PRODUCTION.........................................................................................3

2.2 THE RISE OF LEAN PRODUCTION......................................................................................................... 7

3. THE ELEMENTS OF LEAN PRODUCTION..................................................................................9

3.1 RUNNING THE FACTORY...................................................................................................................... 9

3.2 DESIGNING THE CAR.......................................................................................................................... 12

3.3 COORDINATING THE SUPPLY CHAIN...................................................................................................14

3.4 DEALING WITH CUSTOMERS............................................................................................................... 16

3.5 MANAGING THE LEAN ENTERPRISE....................................................................................................18

4. HOW MASS PRODUCER LEARNED FROM LEAN PRODUCER.............................................20

5. CONCLUSION................................................................................................................................. 20

6. REFERENCES................................................................................................................................. 23

7. APPENDIX....................................................................................................................................... 23

7.1 FIGURE 1............................................................................................................................................. 17.2 FIGURE 2............................................................................................................................................. 17.3 FIGURE 3............................................................................................................................................. 27.4 FIGURE 4............................................................................................................................................. 27.5 FIGURE 5............................................................................................................................................. 37.6 FIGURE 6............................................................................................................................................. 37.7 FIGURE 7............................................................................................................................................. 47.8 FIGURE 8............................................................................................................................................. 5

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INTRODUCTION

This essay is basically a summary of the book “The Machine that Changed the World” by James P. Womack, Daniel T. Jones and Daniel Roos.

In 1989 the Massachusetts Institute of Technology (MIT) shocked the world with their 5-year 5-million dollar study “International Motor Vehicle Program” (IMVP). It was the first time when the word “Lean production” was used. It is called “lean production” because it uses less human effort, manufacturing space, investment in tools and time to develop a new product than mass production. The main statement is that Japanese car manufactures are not better, because of cheap labor costs but better management ideas.

“The Machine that Changed the World” is a book based on the MIT study. It especially shows in detail the difference between the mass production of car manufactures in North America and Europe and the lean production of the Japanese car manufactures. Members of the study were specialists from all over the world with academic backgrounds. During the study they visited factories for weeks or months to gather detailed information. Ninety auto assembly plants in fifteen countries were surveyed. The $5 million were contributed by thirty-six organizations. Each contribution was limited to 5 percent, which guaranteed independence.

The idea for the study was born after the publication of the book “The Future of the Automobile” (Altshuler 1984). The authors concluded that the auto industries of North America and Europe were using techniques strongly related to the techniques from Henry Ford’s mass-production system. But these techniques seem to be not competitive anymore to the new ideas from the Japanese companies. Instead of learning from the Japanese the Western companies were focusing on erecting trade barriers and other competitive hindrances. But this would only delay the downturn of Western companies and not solve their competitive weakness.

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2. The Origins of Lean Production

2.1 The Rise and Fall of Mass Production

Before mass production paved its way, hand-made cars were the usual manufacturing

technique. Hand-made cars had the advantage that exact specifications by the customer

were no problem. For today’s mass-producer modifications require years and millions of

dollars to engineer. In 1989 American companies still offered no right-side-drive option

on cars, because they believed the cost of engineering would be too high.

Craft production had the following characteristics:

- Highly skilled work force, often self-employed contractors to an assembler firm.

- Extremely decentralized organization coordinated by an owner/entrepreneur.

- Use of general-purpose machine tools.

- Very low production volume.

Some craft-production firms are still existing. For example Aston Martin produced fewer

than 10,000 cars in sixty-five years. But these companies are only competitive in the

upper, luxury end of the market with prices around $500,000 per car. In the 1980s,

technological advances in areas like emission controls and crash safety made it necessary

for firms like Aston Martin, to ally with big companies like Ford. The authors think that

in the 1990s another threat will emerged these craft firms. Lean production could pursue

their market niches, because they can cut down design and manufacturing costs and

produce very individual cars for low costs. But I think that the past years showed that

cars made by luxury firms still have a market. The authors do not see the psychology

behind buying an expensive car. People do not buy a Ferrari, because it is a good car,

they buy it because it shows a special level of life standard. The image for expensive cars

is much more important than the quality. The drawbacks of craft production are that the

production costs did not drop with volume, consistent and reliability was elusive, lack of

systematic testing and no systematic research were usually the case.

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“The key to mass production ... was the complete and consistent

interchangeability of parts and the simplicity of attaching them to each other.” (Womack

1990, p. 27) In 1908 Ford achieved perfect part interchangeability. Then he decided that

the assembler would better have only one task and move around from vehicle to vehicle

around the assembly hall. In 1913 the task cycle for the average Ford assembler had been

reduced from 514 to 2.3 minutes. In the spring of 1913 Ford introduced the moving

assembly line, which cut down the cycle time from 2.3 minutes to 1.19 minutes. His new

technology reduced capital requirements and the amount of human effort needed to

assemble a car.

Craft Production versus Mass Production in the Assembly Hall:1913 versus 1914

Minutes of Effort to Assemble

Late Craft Production, Fall 1913

Mass Production, Spring 1914

Percent Reduction in Effort

Engine 594 226 62

Magneto 20 5 75

Axle 150 27 83

Major Components into a Complete Vehicle

750 93 88

Note: “Late craft production” already contained many of the elements of mass production, in particular consistently interchangeable parts and a minute division of labor. The big change from 1913 to 1914 was the transition from stationary to moving assembly.

Source: Calculated by the authors from data given in David A. Hounshell, From the American System to Mass Production, 1800-1932, Baltimore: Johns Hopkins University Press, 1984, pp. 248, 254, 255, and 256. Hounshell’s data are based on the observations of the journalists Horace Arnold and Fay Faurote as reported in their volume Ford Methods and the Ford Shops, New York: Engineering Magazine, 1915.

With this new technology Ford was able to sell the automobiles to much lower prices

than the competitors and buyers were able to repair the car on their own. But the quality

was usually lower than for hand-made cars. Ford had no end-control for the Model T, but

later end-control was necessary to guarantee the right quality, which was quite expensive.

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The new mass production also did not make it necessary to employ highly skilled

workers. The job tasks were so easy that everybody could do it. Many assembly workers

at Ford did not speak English. The only people who had to be skilled were the fitter who

were responsible for gathering necessary parts, obtain tools, repairing machines and

quality checking, and the industrial engineers that were responsible for the whole

planning process.

Henry Ford also changed the organization. He started to produce every part in his

factory. Reason for it was not only the advantage of mass-production, his suppliers did

not have, but also Ford’s distrust against everyone but himself. However the most

important reason was the necessity of parts with closer tolerances and tighter delivery

schedules than ever before.

Mass-production also requires different tools. Ford dramatically reduced set-up

time by making machines that could do only one task at a time. Because set-up times

were reduced to seconds, Ford could get much higher volume from the same number of

machines. The only problem was the inflexibility in changing to a new task. Therefore

machines often had to be replaced with a new model.

Ford believed that he would have great success if everything was mass-produced

by himself. In the end Ford mass-produced everything from food to tractors to airplanes

in a standardized form and high volume. He financed all his projects internally to

maintain total control of his company. But he was not able to organize a global business

except by centralizing all decision-making in his hand. This concept was unworkable and

nearly drove the company under when his mental powers declined in the 1930s.

Alfred Sloan, president of General Motors in the 1920s, found a solution how to

manage a mass production organization. He decentralized divisions and oversaw each

with a separate profit center. In the 1930s unions became an important part of mass-

production companies. They started to control job assignments and work tasks that

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reduced the efficiency of Ford’s mass-production factory. Key determinant of who would

go and who would stay became seniority and not competence.

In the 1950s many new and existing car manufacture in Europe started to use

mass-production ideas as used in the US already for more than thirty years. Europeans

had success with exporting cars in the 1950s into the 1970s, because they produced cars

not offered by the US companies. Most European cars were smaller and lighter and

therefore more economically. They also used some new technologies like front-wheel

drive and fuel injection. But in the 1970s production costs rose due to higher wages and

lower weekly hours of work.

Mass production in the US and Europe might have continued indefinitely if a new

motor industry had not emerged in Japan. “The Japanese were developing an entirely

new way of making things, which we call lean production.” (Womack 1990, p.47).

2.2 The Rise of Lean Production

In the spring of 1950 Eiji Toyoda, engineer at Toyota and member of the founding

family, visited Ford’s Rouge plant in Detroit. Rouge was at this time the largest and most

efficient manufacturing facility in the world. But Eiji thought that “there were some

possibilities to improve the production system” (Toyota 1967) and that mass production

could never work in Japan.

Toyota faced some problems the Western counterparts did not have. Problems

who became later advantages:

- Domestic market was tiny, but requested a wide range of small, economically cars.

- The labor force was strongly organized and Japan had no immigrants who would work

for less money.

- Capital lack.

- High foreign competition.

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Taiichi Ohno, responsible for the production of Toyota, invented a new technique

reducing the time required to change dies from a day to three minutes. In Western

companies the dies weighed many tons, therefore specialist had to align them with

absolute precision. But Toyota made small batches of stampings and they discovered that

actually the cost of making small batches is less per part than for huge batches. The two

reasons are that inventories of finished parts are lower and stamping mistakes were

shown immediately. But to make this system workable Toyota needed skilled and highly

motivated worker, who anticipates problems before they occur. Ohno formed teams and

gave them the responsibility for assembling, housekeeping, minor tool repair, and

quality-checking. Each member of the team was able to do the job of the other one. He

also allowed each worker to stop the line, if a problem occurs. When a problem was to

fix, everyone from the team came to fix it and searched for the reason. At the beginning

the line stopped all the time, but nowadays Toyota’s lines never stop and rework at the

end of the line is not necessary to guarantee high quality. Toyotas middle class

automobiles had the lowest number of defects in the last years, even less than BMW or

Mercedes.

Toyota also worked together with suppliers different from mass producer. Mass

producer like Ford gave their suppliers exact specifications of the part with given number

of parts of given quality. But Toyota just specified the performance specifications and

not how to design them.

A manufacturing manager in Detroit believed that the secret of Japanese success

is: “They are making identical tin cans; if I did that I could have high quality and low

cost, too.” But actually Japanese firms offer almost as many models as all of the Western

firms combined. And Toyota needs half the time and effort as a mass-producer to design

a new car. In 1989 the product life of a Japanese car was only four years compared to ten

years of Western cars. Therefore Japanese make an average of only 500,000 copies per

model while Westerns make 2 million copies.

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Toyota’s connections to dealers were quite different to Western companies. The

dealer became part of the production system. When demand began to drop the sales staff

went to the households who likely want the type of car the factory wants to built more of.

The sales persons were supported by a data base of Toyota with every household ever

showing interest in a Toyota product.

Not all Japanese companies are as lean as Toyota and several of the old mass-

producer are becoming lean as well.

3. The Elements of Lean Production

3.1 Running the Factory

The authors started the survey with comparing a classical mass production plant at GM’s

Framingham, Massachusetts, and Toyota’s assembly plant at Takaoka. A typical mass

production plant has the following symptoms:

many indirect workers -- machine repairers, housekeepers, inventory runners -- which

are adding no value

next to each work station piles of inventory

unevenly distributed work

correcting poorly fitting parts

area full of finished cars riddled with defects

large buffers of finished bodies waiting for the next production step

massive stores of parts

only senior managers can stop the line

dispirited work force frightened to get layed off

A typical lean production plant is as followed:

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no indirect workers (hardly anyone in the aisles); practically every worker is adding

value to the car

as little space as possible (no room for inventory; better communication)

less inventory next to each worker

every worker works at about the same pace

defective parts send direct to the quality-control area

anyone can stop the line, but it almost never stops

almost no rework area

practically no buffers

no parts warehouses

full commitment to work by lifetime employed workers

The initial plant survey form asked how many days of inventory were in the plant. “A

Toyota manager politely asked whether there was an error in translation. Surely we

meant minutes of inventory.” (Womack 1990, p.80).General Motors Framingham versus Toyota Takaoka versus NUMMI Fremont, 1987

GM Framingham Toyota Takaoka NUMMI FremontAssembly hours per car 31 16 19

Assembly Defects per 100 cars

135 45 45

Assembly space per car 8.1 4.8 7.0

Inventories of parts (average)

2 weeks 2 hours 2 days

Note: “Adjusted assembly hours per car” incorporates the adjustments in standard activities and product attributes described by John Krafcik in “A Methodology for Assembly Plant Performance Determination,” IMVP Working Paper, October 1988

Defects per car were estimated from the J.D. Power Initial Quality Survey for 1987.

Assembly space car is square feet per vehicle per year, corrected for vehicle size.

Inventories are a rough average for major parts.

Source: IMVP World Assembly Plant Survey

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The IMVP research team then compared these two plants with the New United

Motor Manufacturing Inc. (NUMMI) plant in Fremont, California, a joint venture

between GM and Toyota. They found that NUMMI matched Takaoka’s quality and

nearly matched its productivity. It showed that lean production can be successfully

transplanted into a different environment and will replace mass production since

Framingham was closed for good in summer of 1989.

After this initial survey the team visited plants all over the world. They compared

the assembly plant quality and productivity. For detailed results see Figure 1 and 2 in the

Appendix. In general they found that the best-performing companies in Japan run the

best-performing transplants in North America. Indicator that the most of the variation is

due to differences in management. Automation accounts only for about one-third of the

total differences. Lean organization must come before high-tech process automation. In

average the best plants are found in Japan, but the best assembly-plant quality in the

entire volume plant sample was found at Ford in Hermosillo, Mexico. This shows that

lean production can be introduced anywhere in the world by anybody.

IMVP made a special study of luxury car assembly plants. The results were very

similar (see Figure 3 and 4). “Japanese plant greatly exceeds the quality level of all plants

except one in Europe -- and this European plant requires four times the effort of the

Japanese plant to assemble a comparable product.” (Womack 1990, p.89). A third of the

total effort in this German plant was involved in the rework and rectification area.

Reason for this waste is the failure to design easy-to-assemble part and failure to track

down defects as soon as they are discovered so that they never recur.

The authors conclude that a perfect lean-production plant should have:

teamwork

share of information

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skilled, proactive workforce

Teamwork in this sense does not mean rotation of the job every hour but every couple

days. It is very important for lean production that the worker is at the job with his mind,

because no safety net exists which could replace many workers not coming to work. If

management fails to lead, lean production will revert to mass production.

3.2 Designing the Car

GM needed seven years to launch its new model, called GM-10, in 1988. It lost 700,000

units and its most profitable area, because it came out with the new model much later

than the competitors. Honda needed only four years. The main difference was that the

leading product developer had more power. The team working for him in a Japanese

company is clearly under his control. Each team member has the knowledge of the total

production. At Honda for example every entry-level engineer spends his first three

months on the assembly line and the next months in several engineering departments.

Even the advanced engineers have to spend a month of each year in a different functional

area. “While visiting the Honda plant in Marysville, Ohio, we asked to meet with the

external affairs director. He was unavailable, we were told as, He had just joined the

company and was busy assembling cars.” (Womack 1990, p. 199). On average Japanese

firms needed only 485 team members while Western companies had 900, and up to

1,421. One reason for this is better communication reduces the needs of many people

which also reduces the time of product development. In Japanese firms product

development starts at the same time as body design. This is called simultaneous

development or engineering. Therefore product development in Japanese companies

needs only half the time needed in mass-production companies. Another big problem for

American companies is to return to normal productivity after launching a new model. In

the mid-1980s Japanese producer needed 4 months, while Americans needed 5 months

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(Womack 1990, p. 119). In 1994 the difference was even greater. GM needed 11 months

for its new Chevrolet Lumina. Chrysler had a lack of productivity for 6 months when

they changed the Neon, but Honda needed only 6 weeks for their change of the new

Accord (Treece 1994).

On average Japanese companies needed 46 months, US and European companies

60 months from first design to customer deliveries (Womack 1990, p. 111). Even in 1996

Western companies needed an average of 4 years while Toyota was able to reduce the

development time to 18 months (Taylor 1996). The result was an increase of new models

launched by the Japanese companies (see Figure 5). Japanese models were usually four

years on the market while Americans were ten years. This results in even fewer copies

per Japanese model than for specialty cars, which have a lower production rate per year.

In the future lean production will probably offer vehicles suited to the needs of each

customer (Figure 6). Some people say one reason for Japanese success is that they copy

or buy patents. But since 1983 the Japanese motor vehicle industry is patenting more

innovations than the Western companies (see Figure 7).

3.3 Coordinating the Supply Chain

Suppliers and assemblers of mass production companies mainly discuss the price,

therefore the lowest bid is usually accepted. The supplier knows this and therefore will

give a low prize, even below costs, but they will come back later when they get the

contract and ask for price adjustments. The only information the supplier and assembler

are sharing is the bid price per part. Another problem is that many mass producers

produce their own parts, therefore many companies prefer to make contracts with in-

house suppliers to use the economies of scale. But this lead to the phenomena that GM

had the world’s highest production volume and the world’s highest costs.

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If the production did not reach the planned volume another problem occurs. The

assembler may well look for suppliers with lower prices, but this leads to the belief of the

supplier that information must be guarded from the assembler. Mass producers also may

cancel orders due to fluctuating demand. Suppliers therefore tend to have very large

stocks and build overstock contingencies into their bids.

As we saw, suppliers are under intense cost pressure from a buyer who does not

understand their problems. Therefore implausible bids win contracts, followed by

adjustments, which may make the cost per part higher than those of realistic but losing

bidders. No one really communicates with anyone else.

Lean producers usually have suppliers for a whole component while mass-

producers often assemble all parts of the component in the plant. Therefore leading

Japanese lean producers have fewer than 300 suppliers in each project compared to 1,000

to 2,500 at Western mass-producers. Suppliers of lean producers assign staff members to

the development team of the assembler shortly after the planning process starts. The

technical details are the problem of the supplier, and the assembler usually does not make

drawings. During the early 1980s Japanese lean producers on average did detail-

engineering on only 30 percent of the parts while American mass producer did it for 81

percents of their parts. Toyota added only 27 percent of the value with 37,000 employees

to produce 4 million vehicles. GM however needed 850,000 employees to add 70 percent

of the value to 8 million vehicles. Parts of lean producer are obviously more often

produced by suppliers than at mass producers. But in 1987 GM had 6,000 people

employed for purchasing parts while Toyota had only 337.

Suppliers of lean producers are not selected on the basis of bids, but rather on the

basis of past relationships and performance. Assemblers usually divide their parts' order

between two or more suppliers. When a supplier falls short on quality or reliability the

assembler shifts a fraction of the business to a different supplier as a penalty. This

punishment is highly effective, because it effects the profitability, but it keeps the long-

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term contact. Suppliers and assemblers in the lean production system establish a target

price and then figure out how the vehicle can be made for this price while allowing a

reasonable profit for both. To achieve the target cost they use value engineering, value

analysis and in the long run kaizen. Assembler and supplier go over every detail of the

supplier’s production process to improve quality and cut costs. In return the assembler

must allow the supplier to ask for a reasonable profit. This system also allows the

assembler to omit the proofment of incoming parts, because the assembler already

proofed the quality of the supplier’s production process. When a problem occurs the

assembler will visit the supplier and together find a solution. Therefore suppliers do not

need a large inventory and can deliver directly to the assembly line. In 1982 52 percent

of Japanese suppliers were delivering daily and a further 31 percent hourly. In the US,

only 10 percent of suppliers were delivering daily or hourly combined by 1988.

In the 1980s mass producers tried to copy the Japanese supplying system. But

most assembler companies made three mistakes. They thought outsourcing was cheaper,

because the wages in supplier companies are lower; they thought single-sourcing is the

key to success and believed just-in-time means shifting the inventory from the assembler

to the supplier. However Japanese suppliers are cheaper because they produce lean as the

assemblers do, and Japanese long-term relationships do not depend on single-sourcing

but on a contract framework that encourages cooperation. Japanese suppliers do not have

inventories, because the assembler tells them in advance how many parts are needed

(usually with kanban). The mass producers failed to establish a new set of ground rules

with the suppliers for joint cost analysis, price determination, and profit sharing.

3.4 Dealing with Customers

Mass production companies' are geared to the needs of the manufacturing and design

process so that the customer comes last. The sales division’s key activity is to juggle

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incentives for both consumers and dealers so all the cars are sold. But the dealers of mass

producers have almost no links with the sales and marketing divisions. Therefore the

sales and marketing division do not really know what the customer wants. It is again a

lack of communication and information. Even in-house of the mass producer are often no

links between the product-development team and the sales and marketing department.

Often the company produces different cars than the marketing department agreed to,

because of adjustments for easier manufacturing. The problem is that this car does not fit

to the consumer appeal. Mass producers also think that a high level of service is too

expensive for average cars. Especially in the US sales personnel often lack knowledge of

the product.

Car dealers of lean producers get their staff trained and a full range of services by

the car company. Many sales persons are college graduates and the training provides

them with a wide range of skills. Japanese companies work with fewer dealers than

Americans, therefore the average sales per dealer are higher. In Japan selling cars door-

to-door is common. The sales person draws up a profile on every household within the

area around the dealership. Periodically they visit every household and update the

household profile. Therefore they can offer cars very accurate fitting to the needs of the

household. A vast majority of cars in Japan are customer ordered. The vehicle order also

includes financing package, trade-in on the old car and insurance. When the car is ready

the sales representative personally delivers it to the new owner’s house.

The car assembler in Japan gets much faster feedback from the customer than a

mass producer. The elaborate data collection on owner preferences for new vehicles is

fed systematically to development teams for new products. This is an additional reason to

lean production and why lean producers can deliver a customer-ordered car in under two

weeks while mass producers need six weeks and up to one year as Mercedes-Benz

needed for their new model 600. Dealers in Japan have a stock of finished cars in average

of twenty-one days while in the US the average is 60 to 70 days. Of course this system

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needs a lot of sales personnel. In average a US sales representative sells ten cars per

month while the average Japanese sales representative sells only four cars per month. But

the selling system of a lean producer is seen as the first step of the production. The

periodic surveys of practically all consumers in the Japanese market, is the first step in

the product-development system. It avoids the need for the time-consuming, expensive,

and frequently inaccurate market assessment surveys of the Western mass-producers.

In the future information technology could even improve this selling system.

Each Corolla owner in Japan already has a membership card. When he enters the

dealership he puts his card in a machine and gets all information about him on the display

and can change them. The system then makes a suggestion about the models most

appropriate to the household’s needs, including current prices. In the future the

information will be available at every owner’s home on a computer or television screen.

When the lean production system has improved in the next few years it seems to be also

possible that a customer creates his own car with standardized components at home on

his computer and in one week he receives his individualistic car. The best is that it will

be not more expensive than a standardized car.

3.5 Managing the Lean Enterprise

Multinational companies in the future need to produce in the three most important

regions of the world which are North America, Europe and East Asia. Lean producers

must be close to the customer and need supplier near to the assembling line. Lean

production is based on doing as much manufacturing as possible at the point of final

assembly. Consumers in the three regions continue to demand different types of products.

Tariff barriers and currency fluctuations make it necessary to produce in all three areas.

Most Japanese companies already went this way and Volkswagen also produces in all

three regions. The authors think that Ford is a more global company than Volkswagen,

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but Volkswagen is producing cars in Mexico and China, while Ford is producing only in

England and Germany. On the other hand the authors are right when they say

Volkswagen is not a lean producer. People working at Volkswagen in Germany still tell

the joke that, when archaeologists will find the plant in one thousand years they will

think it was a paper factory with a big car fleet, because Volkswagen is so

bureaucratically. It will be important for each car company to be strongly present in the

home market of the other car companies. Because the home market is usually the market

where the car companies have the highest profits, therefore to be competitive worldwide

they have to weaken the other company in their strongest market.

The key features of a multinational company will be in the future:

1. An integrated, global personnel system with personnel from all over the world

without consideration of the nationality. Managers must be fluent in several

languages and willing to work for much of their career outside their home country.

2. A way to create a global flow of knowledge between departments and regions.

Information technology will be able to support this.

3. A mechanism for coordinating the development of new products in each region and

cross shipment of products wherever demand warrants.

4. How Mass Producer Learned from Lean Producer

One popular explanation in the 1970s of the Japanese success was that Japanese wages

are lower. A second explanation is the government’s protection of the domestic market

and its financial support for Japanese car companies. However when Ford and GM

started joint-ventures in the 1980s with Japanese companies they discovered the true

reasons for Japanese success. Ford found that Mazda could build its 323 model with only

60 percent the effort Ford needed to manufacture its Escort selling in the same market

segment and even had less manufacturing errors. In 1983, senior GM executives spent a

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lot of time at Toyota City to establish the NUMMI Joint-venture. Jack Smith, GM’s vice

chair, noted: “The data [on productivity] was just unbelievable.” (cited p.238 in Womack

1990). But transferring these new ideas into GM’s organization made fundamental

problems, because lean production changes the job of every worker and every manager.

It must be said again that lean does not equal Japanese. Some Japanese companies

are less lean than for example Ford. But the lean Japanese companies have an advantage

in experiences. As a senior executive from a Japanese company said: “We believe that

our production system can be learned by anyone...but it takes ten years of practice under

expert guidance.” (cited p.243 in Womack 1990)

5. Conclusion

Lean production combines the best features of both craft and mass production -- the

ability to reduce costs per unit and dramatically improve quality while at the same time

providing an even wider range of products and more challenging work.

Something Japanese companies are often missing even nowadays is a lack of

thinking globally. This could be an advantage for Western companies. “I can hope to get

to the top at GM, but I can never hope to rise above the middle level of one of the

Japanese foreign subsidiaries, no matter how superior my performance.”, as one manager

as GM remarked (cited p.273 in Womack 1990).

One of the greatest changes from mass to lean production is the challenge of the

worker. Somebody working in a lean production plant has to think during work and does

not do monotonous tasks. Therefore skilled workers that can communicate will be

necessarily. On the other hand, workers will get more security with nearly life-long

employment. Labor force in lean production is seen as the most valuable asset that has to

be well cared-for and protected. Every employee is a part of the whole knowledge of the

company.

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Another great difference between mass and lean production is information and

communication. In lean production companies' communication is very important

throughout the whole process from the supplier to the customer. It is also important that

nobody hides information. Especially suppliers and assemblers in Japan understand that it

is more profitable for both when they work together instead of competing. Companies in

the West still have to learn what most politicians gladly already understand. You do not

have to love other countries but it is better for your own country if you work together in

organizations like Nato and UN to prevent war. And it is the same between supplier and

assembler. Assemblers do not have to like the supplier, but it is better for both to work

together and change information instead of working against each other.

In 1997 it seems to be that many American car-manufactures already produce

lean since the quality seems to be better. Whether US cars are already as reliable as

Japanese cars will be seen in the next years, when the now produced cars are getting

older. But even if the quality is now better American companies lost a lot of market share

and image, because of the poor quality in the 1980s. Most Americans prefer Japanese

cars, especially Honda, since the reputation is much better and the resale price for used

cars are much higher.

The authors are convinced that the principles of lean production can be applied in

every industry in the world and that lean production will have a profound effect on

human society and change the world. But to succeed, money must be available, a highly

trained and motivated staff must be in place, and activities around the world must be

coordinated. I agree that the production line must be changed in many companies, not

only at car manufacturers. I worked in three different chemistry plants on the production

line and most of the work was very unchallenging. The workers did not communicate

with each other and suggestions from the workers were not welcomed by the supervisor.

The whole process often stopped, because materials were missing or the machine worked

faster than the worker was able to. I assume that these experiences occur in many

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companies. Therefore it would be interesting to know if Japanese companies work

differently and what effect it would have if the whole lean production system was

implemented. I also think that the idea of lean production only works if you implement

the whole system and do not pick out only the parts you like or understand.

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6. ReferencesAltshuler, Alan, Anderson, Martin, Jones, Daniel, Roos, Daniel, Womack, James, The Future of the Automobile, Cambridge: MIT Press, 1984

Taylor, Alex III, “Toyota’s boss stands out in a crowd,” Fortune, Nov. 25, 1996, 116-122

Toyota: The First 30 Years, Tokyo: Toyota Motor Company, 1967, pp.327-328

Treece, James B., “Motown’s struggle to shift on the fly,” Business Week, July 11, 1994, 111-112

Womack, James P., Jones, Daniel T., Roos, Daniel, The Machine that Changed the World, New York: Macmillan, 1990

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7. Appendix

7.1 Figure 1

1

7.2 Figure 2

2

7.3 Figure 3

3

7.4 Figure 4

4

7.5 Figure 5

5

7.6 Figure 6

7.7 Figure 7

6

7