It’s a real treat to find that someone is actually reading what I write, and cares enoughpro or conto respond! After criticizing lean manufacturing in my October column, I was deluged with responses. I planned to reply individually, but that quickly became unmanageable and responses continue to arrive. So I thank each of you who responded, pro or con. I appreciate all your ideas and opinions, and although I gained insight on lean manufacturing from your responses, I confess my opinion hasn’t changed a lot.
The distribution of responses was particularly interesting. About 70 percent were positive, ranging from mildly to quite firmly supportive. Almost to a person, these positive responses came from people involved with manufacturing, in positions from shop floor manufacturing engineer to vice president of manufacturing. Generally, most agree that the focus of lean manufacturing is on the shop floor, whether it should be or not. Most are also aware that although manufacturing labor is only a minor element of overall cost, factory payroll is a significant component of overhead cost.
On the other hand, the 30 percent or so who are confident lean manufacturing is beneficial point to its impact across the entire firm, and challenge my statement that it is mostly a bottom-up methodology. Several point to quite dramatic gains in reducing inventory levels and improving responsiveness. And on both sides, several questioned whether my career is (or should be) in consulting!
Let me clarify my view of lean manufacturing. Clearly, to be successful, or even to survive, a firm must make every effort to achieve greatest efficiency throughout the entire process of doing business, not only manufacturing. It also means the firm must continuously rethink and redesign itself. The characteristics of a successful firm in the 1980s were different from those in the 1990s, and will be dramatically different in the years to come. Using lean methodology is one way to do that rethinking; so is using good business sense, coupled with a sound process of sorting out good from bad.
My concern with lean methodology is that it is the province of consulting firms, some good, some bad, and lots neither, but all persuasive that they can bring your firm to leanness. If you need help doing the rethinking, by all means get the help, but do the rethinking yourself; don’t just buy a "package of lean."
Let me offer these axioms to close:
You can’t reduce cost by fractions of people; you can only reduce cost by reducing an integer number of people. If you begin your investigation by asking people, "How do you spend your day?" you’ll end up trying to reduce fractions, and fractions just don’t go away. Look at how you should be organized to do business, and you may turn up some real benefits.
The real cost reduction opportunities are usually in the overhead accounts, and they are generally overlooked because overhead is regarded as just a number to be distributed across payrolls. Get into the details, again considering how you ought to be doing business, and you’ll find some real meat.
Minimizing inventory, especially in-process inventory, is usually a mistake. That doesn’t imply producing goods whether demand justifies it or not. It does mean getting the right balance between fixed capital (equipment and other resources) and working capital (inventories at all levels). Minimizing inventory always leads to under-use of fixed capital. Always.
Let’s talk more about these issues! I appreciate your interest and enthusiasm!
Don Ewaldz welcomes your comments. Contact him via the Bourton Group's Web site: www.bourtongroup.com and click on Contact Us.