Taiichi Ohno is the father of Toyota Production System. Lean Manufacturing is based on Toyota Production System. The term “Lean” was coined by John Krafcik in his MIT Sloan 1988 Fall paper “Triumph of the Lean Production System”. His terminology was “Lean Production” or simply “Lean”. He noted that;
“Plants operating with a “lean” production policy are able to manufacture a wide range of models, yet maintain high levels of quality and productivity”.
There have been many discussions about whether “Lean” is the correct terminology or not. Lean is supposed to have a negative connotation with it. There is a tendency to assume that Lean indicates reduction – reduction in inventory, reduction in cycle time, reduction in costs etc.
I was pleasantly surprised when I came across Taiichi Ohno’s thoughts on “Lean” Management. As indicated in my last post, Ohno started a consultancy group soon after leaving Toyota. This group was called the New Production System Research Association. Isao Shinohara wrote a book on this called “New Production System – JIT Crossing Industry Boundaries”, in 1985. The main theme of this book is that the TPS ideas are applicable across multiple industries. This book also had a section with an interview with Taiichi Ohno.
Limited, Not Leaner, Management:
In Ohno’s words;
“The idea is to produce only what can be sold and no more. The idea is to limit, not necessarily to reduce, the quantity. The important thing is to keep production costs low whle limiting the production level. It is meaningless to say that producing 15,000 units will reduce production costs when you can only sell 10,000 units.”
“The essence of limited management (genryo keiei) and limited production (genryo seisan) is to produce what can be sold at the lowest possible cost.”
My favorite section of the interview was when Ohno was asked about reducing or eliminating inventory.
“Shinohara – Many people think that Toyota Production System is a method for reducing inventory or eliminating inventory altogether.
Ohno – That is not right. I’ve said this so many times, but people don’t seem to understand. The Toyota production system is a philosophy of changing the production and management flows.”
Analogy of a Boxer:
Taiichi Ohno compares limited production to the regimen of a boxer in his book “Workplace Management”. The boxer has to be in a specific weight classification. If he misses a few training sessions and he puts on weight, he can no longer compete in his class. He would then have to diet to slim down and maintain his weight. This is akin to a company trying to reduce inventory. If he loses more than his intended weight, he will run out of energy and lose the fight. This sort of slimming down is undesirable. Ohno advises against going on a diet for a company without thorough understanding. He calls it a dangerous idea to trim down so much that the essential meat of the company is cut into.
Always keep on learning…
In case you missed it, my last post was “Don’t Strive for Perfection – 60% is good enough”.