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Over the past decade, the concept of lean manufacturing production has gone through a dramatic evolution from an obscure and isolated practice to a mainstream, extensively publicized methodology that is well known throughout the manufacturing and supply chain industry. However, this does not mean it is entirely understood as a business practice, nor does it mean that it has been implemented to any large extent. According to an ARC Advisory Group's strategy report, "36 percent of manufacturers are using lean as their primary improvement methodology". Those numbers are likely to be representative of how many companies are applying lean principles in even a limited way and in at least one specific area of the company rather than actually using lean principles throughout the organization.
The challenge with the concept of lean is that it can mean different things to different people. When the word lean is used, many people think that the scope of lean is confined to the production side of the business. The production floor is of course where lean was first introduced. First in concept by Ford Motor Company with the assembly line and later refined in Japan by the Toyota Motor Company beginning in the 1950's. Called the Toyota Production System (TPS), it was defined as: "A philosophical approach to business that is based on satisfying the customer (whether internal or external) by producing quality products that are just what they need, when they need them, in the quantity required, using the minimum of materials, equipment, space, labor and time."
A common question that comes up in most discussions about lean is whether it is the tools and processes, or the people that make lean work. In reality it is both. Applying lean tools, new technology, and new business processes to a traditional silo-oriented culture will not work. Lean, at its core, is a cultural and people-oriented initiative. Key to making the transition to a Lean organization is the fundamental change in the corporate culture that must be made. Central to this change is the need for the cultural change to be driven from the CEO level of the company. There must be commitment from the top to establish a clear vision for all employees to understand the benefits to them personally as well as to the organization as a whole. In addition, the mindset of measuring performance must shift from measuring each individual department or discrete task to measuring performance across departmental boundaries, and measuring the end-to-end delivery of services and products across the organization. Although the movement must be driven from the top, the new culture should also focus on listening and learning from individual employees at all levels of the organization, and soliciting input and suggestions for improvement from those that are closest to each process within the company. To make this happen, there must be policies that encourage and reward employees to contribute to the continuous improvement of processes, including those that may not be directly under their control, but perhaps upstream or downstream from the work they are doing. The result should be a culture that fosters cross-departmental teamwork and communication up and down the organization.
Another common question that often arises is whether or not lean is only about the plant floor. While the manufacturing and production floor aspect of a business offers the most tangible and significant opportunity to leverage lean methodologies, the same principles and philosophies can be applied across every aspect of the business. Lean principles can in fact benefit every department and business process, including engineering and design, project management, finance, human resources, purchasing and supplier management, customer service and customer relationship management, sales and marketing, quality assurance, and of course, inventory control, distribution and manufacturing. Today, more than ever, businesses recognize that business excellence and success extends beyond a single department or the boundaries of the internal organization. Every business is impacted by the influences of processes and demands outside of their own department or organization, whether in the form of suppliers, contractors, partners or customers. Market leaders recognize this fact and work to control and manage the effectiveness of their total supply chain.
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