Lean Thinking Joel Cutcher-Gershenfeld Senior Research Scientist, MIT Sloan School of Management and Executive Director, MIT Engineering Systems Learning Center Presentation for: 16.682 Aerospace Industry Seminar March 9, 2004 Overview ? Learning Objectives ? Session Design (60-90 ? Awareness of the contrast min.) between “mass” and “lean” ? Two mindsets (7-10 min.) mindsets ? Appreciation of the historical context for lean thinking ? Ability to engage in lean thinking with respect to application examples (5S’s, 7 ? Historical context (10-15 min.) ? Applications (20-30 min.) ? Implementation debate (20-30 min.) Wastes, and others) ? Concluding comments (3-5 ? Appreciation for the dilemmas min.) and challenges in lean implementation A visual record of where we are at in this module: Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 2 Two mindsets “Mass Production” Mindset “Lean Enterprise” Mindset ? Producer “push” ? Customer “pull” ? Movement of materials ? Flow of value ? High volume ? Flexible response ? Inspection ? Prevention ? Expert-driven ? Knowledge-driven ? Decomposition ? Integration ? Periodic ? Continuous adjustment improvement Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 3 Where to begin? ? An Exercise in Lean Thinking: ? Small groups of 2-3 people – each assigned a number ? Even numbered groups: ?Describe a home workbench or a student dorm room used by someone engaged in “mass” thinking ? Odd numbered groups: ?Describe a home workbench or a student dorm room used by someone engaged in “lean” thinking Note: An option for this exercise would be to draw a picture on a transparency to illustrate you description Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 4 Notes From Student Responses Mass ? Dorm ? Basic furniture – bed, desk, shelf, chair ? All rooms the same ? Square, long halls and every floor the same ? Cheapest, reliable chairs ? Basic cleaning ? Wireless internet – basic ? Workbench ? Excess materials, stock ? Lots of equipment ? Storage room ? Products stored in a room ? More than one bench ? Joel Cutcher-Gershenfeld, MIT Lean ? Dorm ? Efficient use of space – loft bed and under bed storage ? Combined desk ? Aesthetic and everything within reach ? Modular and reconfigurable furniture ? Large double pane windows ? New, “good for you” lights ? Wireless internet ? Workbench ? If not used, rent equipment ? Materials ordered based on projected use ? Quality materials and equipment ? Versatile and well organized ? Ability to design ourselves ? Ability to repair our own parts ? Outsource to others if they would be better to do it 3/5/04 -- 5 Historical context: The changing nature of work 1800 and earlier 1900 2000 and beyond Craft Production Socio: Mastery of Craft Tech: Custom Manufacture Specialized Tools Mass Production Socio: Vertical Hierarchies Scientific Management Tech: Assembly Line Interchangeable Parts Knowledge-Driven Work Socio: Network Alliances Team-Based Work Systems Tech: Information Systems Applications Implementation ion Decentralized Enterprises Flexible Specialization Mindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT Adapted from: “Knowledge-Driven Work: Unexpected Lessons from Japanese and United States Work Practices” (Oxford University Press, 1998) 3/5/04 -- 6 Historical context: Transformation initiatives 1950s 1960s 1970s 1980s 1990s 2000s Associated Socio-Technical Work Systems (STS) Employee Involvement (EI) / Quality of Work Life (QWL) Management (TQM) Re-Engineering Lean Production / Lean Enterprise Systems ) Work Redesign Total Quality Six Sigma Statistical Process Control (SPC Human Relations Movement Team Structure Human group (on line/off line) Semi-autonomous teams (on-Line) EI/QWL groups (off-line) Quality circles (off-line) Work-out events (off-line) Black belt led project teams (off-line) Lean production teams / Integrated Product & Process teams (on-line) Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT Source: Auto Industry System Study by Joel Cutcher-Gershenfeld and Thomas Kochan, 2000 3/5/04 -- 7 Historical context: Emergence of lean Selected Elements of Toyota Production System Discussion Question: Implemented over Three Decades: ? “Pull” vision ? It took close to 30 years for Toyota to develop all ? Kanban (card) system of the aspects of the ? Production leveling Toyota Production ? Reduced set-up time (Shingo) System, including the lean thinking that goes ? Jidoka (people giving wisdom to machines) with that system. How ? Statistical Process Control (SPC) long do you think it ? Quality Circles might take a large aerospace company ? Kaizen (continuous improvement based on such as Boeing or knowledge) Lockheed Martin or ? Poka-yoke (error proofing) Pratt and Whitney to ? Adnon (visual display) build the same capability -- 30 years, 20 years, 10 years, 5 Case Example – Kanban: years? 1950s First kanban experiments 1960s Kanban introduced company-wide 1970s Kanban distributed across suppliers Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 8 Auto industry data: A lean story? (data from The Machine That Changed the World) Auto Production (millions) 20 15 10 5 Japanese Production US Production GMFord Chrysler Market Capitalization 1998-2001 Lean” “Bulimic Lean” “Lean” Toy o t a “Anorexic 1947 1954 1961 1968 1975 1982 1989 Year Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT Source: Ted Piepenbrock 2003, Engineering Systems Division Doctoral Seminar, Massachusetts Institute of Technology 3/5/04 -- 9 1. Data from Womack, Jones and Roos, The Machine that Changed the World, The Free Press, 1990. Airline industry data: A lean story? (source: IATA & Southwest Airlines) Total Airline Profits ) $0 b $20 b $10 b $5 b -$5 b $15 b -$20 b -$10 b -$15 b “Better, Faster, Cheaper” “Higher, Faster, Farther” Delta Market Capitalization 2002 (1970-2002 Low-Fare Carriers Point-to-Point Networks Narrow Body Planes Network Carriers Hub & Spoke Networks Wide Body Planes All Other s Ameri c an Southwe st 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT Source: Ted Piepenbrock 2003, Engineering Systems Division Doctoral Seminar, Massachusetts Institute of Technology 3/5/04 -- 10 1. Data from the IATA. Airline industry data: Another look at the picture Airline Profitability $25b $20b $15b $10b $5b $0b -$5b -$10b -$15b -$20b Deregulation 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Year Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT Source: Presentation on “Enterprise Design for Dynamic Complexity: Enterprise Product Strategy” by Ted Piepenbrock at the Lean Aerospace Initiative Product Development Community Meeting, (October, 2003) 3/5/04 -- 11 Lean thinking: A mental model Womak and Jones: ? Specify value ? Identify the value stream ? Make value flow continuously ? Let customers pull value ? Pursue perfection ? Joel Cutcher-Gershenfeld, MIT Source: James P. Womak and Daniel T. Jones, Lean Thking, New York: Simon and Schuster, 1996. 3/5/04 -- 12 Exercise: The Seven Wastes and the Five S’s The Seven Wastes The Five S’s ? Over Production ? Simplify or Sort ? Waiting ? Straighten or Simplify ? Transportation ? Scrub or Shine ? Inventory ? Stabilize or Standardize ? Processing ? Sustain or Self-Discipline ? Motion ? Defects What changes are needed in technical/physical systems to address the Seven Wastes? What changes are needed in social systems – including what new ways of thinking? Do the same analysis with respect to the Five S’s Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 13 Analysis - Student Responses Seven Wastes ? Technical ? Moving assembly line to reduce waiting ? Smaller racks to hold inventory ? Sensors when you use parts 5S’s ? Technical ? Different functional areas with support across all programs – sort and standardize ? Bar codes to track parts ? Social – signaling to material ? Incentives handlers ? Building architecture to ? Get the word out – posters, training, memos support teamwork ? Encourage communications ? Social directly between groups ? Build quality into each job – ? Individual responsibility so you don’t need the inspector ? Incentives – to reduce waiting time – reward and recognition ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 14 MG What lean thinking goes into work cell redesign? Incoming Inspection, and Shipping Heat Treat M G G L D M M G G LD D D MC MC G L D M G G L D MG GL D M G G L D MG G L D M M G G LD D D Work Flow Incoming Inspection, and Shipping Heat Treat MM MMG GGG G G L L L L L L DD D D D MC MC D 1 4 2 3 5 10 7 6 8 9 12 13 11 Current State ( separate Desired State ( handling) Applications Implementation ion Receiving, Injection Molding Center Final Assembly Center Receiving, Injection Molding Center Component Subassembly Inspection and Test Center Machining Center Specialized tasks, inspection and material handling) Integrated tasks, inspection and material Mindsets History Conclus 3/5/04 -- 15 ? Joel Cutcher-Gershenfeld, MIT Source: Lean Aerospace Initiative Fieldbook Lean implementation strategies Top-Down “Re-engineering” Bottom-up “Kaizen” ? Many meanings: ? Range from a pretext for restructuring and downsizing to a systematic review of operations with comprehensive process mapping ? Key quote: ? “if it’s not broke, break it” ? Many meanings: ? Range from suggestion systems (kaizen-teian) to an underlying philosophy and a way of life ? Key quote: ? “many small improvements build long-term transformation capability” ? Roots: ? Roots in private and public sectors, including “re-inventing government” ? First driven by economic crisis in 1980’s, now seen as a process for system change ? Roots: ? Post WWII Japan, beginning with quality circles (QC), statistical process control (SPC), and just-in- time (JIT) delivery practices ? Increasingly seen from a systems perspective -- Total Quality Management (TQM), Six Sigma, Lean Enterprise ? Archetypical Example: ? GE “workout” process ? Archetypical Example: ? Toyota Production System (TPS) “Kaizen event” – A contradiction in terms? Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 16 It’s a debate! Lean implementation ? Kaizen versus re-engineering ? Pro: In general, for large-scale lean implementation initiatives, the incremental, bottom-up kaizen approach will be the most effective ? Con: In general, for large-scale lean implementation initiatives, the revolutionary, top-down re-engineering approach will be the most effective ? Debate format: ? Opening Statements (1 min.) ? Within team consultation (1 minute) ? Rebuttal (2 min.) ? Within team consultation (1 minutes) ? Closing Statements (1 min.) Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 17 Lean Implementation Notes from Student Responses Re-Engineering Kaizen ? Top-down sets a strong foundation so ? Elimination of typical top-down you can make faster change communications problems ? A clearer focus, unlike bottom-up time ? Quicker because directly involves the on minor details worker ? Top-down will get change done ? Increased self-esteem ? Address all at once, so faster ? Spiral development with feedback Rebuttal Rebuttal ? Harder to integrate lower level – that is ? You said it was stronger foundation, but why you need top management not true – keep destroying the foundation ? Doing the job right or doing the right job ? One system with constant improvement ? Not just the easy changes first ? A better focus ? Don’t get overall benefits ? Employees are the ones driving this ? Just islands of success ? What if you go fast and mess up? ? May not be enough time ? Top management is needed for integration ? If isn’t not broken, keep on improving ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 18 Conclusion ? Contrast between “mass” and “lean” mindsets ? Historical context ? “Lean” as a form of knowledge-driven work ? Lean as an emergent phenomena ? Applications ? Lean thinking required for the Seven Wastes, the 5S’s, work cell design, Value Stream Mapping, and other applications ? Implementation ? Kaizen vs Re-engineering ? Learning to see “waste” and “value” Applications Implementation ionMindsets History Conclus ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 19 Appendix: Systems Change Initiatives ? Work-Process Centered Systems Change Initiatives ? Taylorisim, Industrial Engineering and Work Redesign ? Socio-Technical Systems Redesign ? Worker Participation and the Human Relations Movement ? Team-Based Work Systems ? Relationship-Centered Systems Change Initiatives ? Strategic Alliances ? Joint Ventures ? Labor-Management Partnerships ? Customer-Supplier Partnerships ? Outcome-Centered Systems Change Initiatives ? Quality Initiatives (Total Quality Management, Six Sigma, etc.) ? Lean Initiatives (Lean Manufacturing, Lean Enterprise, etc.) ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 20 Appendix: Systems Change Initiatives (cont.) ? Business Process-Based Initiatives ? Process Re-engineering ? Activity-Based Costing (ABC) ? Enterprise Resource Planning Systems (ERP) ? e-business Initiatives ? Structural, Policy and Market-Driven Systems Change Initiatives ? Organizational Restructuring ? Mergers and Acquisitions ? Privatization ? Regulation and De-Regulation of Markets ? Technology-Driven Systems Change Initiatives ? New Technology Implementation ? Material and Method-Driven Transformations ? Research and Development Commercialization ? Joel Cutcher-Gershenfeld, MIT 3/5/04 -- 21