2. Literature Review
2.1 Lean
The origination of Lean can be traced back to the late 1980s when John Krafcik, a research assistant at the Massachusetts Institute of Technology with the International Motor Vehicle Program, coined the term Lean Production (Marchwinski, 2004). The concepts and practices of Lean Production was pioneered by Toyota Motors after World War II with the emphasis on making products in wider variety at lower volumes with fewer defects. Initially, the publication of the book, The Machine that
Change the World: the Story of Lean Production (Womack et al., 1990) started the
diffusion of some Lean production practices developed by the most competitive auto manufacturers in the world (Sanchez and Perez, 2001). Thereafter, Lean production was studied in other industries (Moore and Gibbons, 1997). Some scholars have even suggested that rapid change industries have adopted lean production versus mass production as a growth paradigm (Duguay et al., 1997).The objective of Lean Production is to eliminate all forms of waste (Womack et al., 1996) including:
y Overproduction
y Waiting for machines or operators y Transportation waste
y Process waste resulting from inefficient, poorly designed processes y Excessive inventory
y Wasted motions through operators leaving workstations to fetch required suppliers or through continuous reaching, searching, or carrying goods
y Waste of rework through producing defects
Similarly to those waste in the manufacturing environment, typically, there are many waste in the service processes such that services are usually delivered at a slow pace. When all the waste are eliminated, the service order cycle time (time from receipt of order to receipt of payment) is compressed. The result is short cycle and delivery times, higher quality, and lower costs.
Some points of view on Lean including the pros and cons can be found in literature. They were summarized as follows.
y Lean thinking provides a way to make work more satisfying by providing immediate feedback on efforts to convert muda into value. And, in striking contrast with the recent craze for process reengineering, it provides a way to create new work rather than simply destroying jobs in the name of efficiency (Womack, 2004).
y The overarching benefit of Lean is the ability to see cost and lead time reduction opportunities where you never saw them before. Through application of the Lean concepts and tools, the process steps once thought essential are unnecessary, and their costs and delays removable after Lean tools have been applied (George, 2003).
y Lean initiatives are great for boosting productivity, changing a culture and cleaning up factories. Lean brings action and intuition to the table and quickly attacks low hanging fruit with kaizen events (Sanchez et al., 2001).
y Since Lean was essentially defined empirically based on the practices in use at Toyota, it provides more principles than specific tools or methods (Hoerl, 2004).
y Lean does not explicitly prescribe the culture and infrastructure needed to achieve and sustain results (George, 2003).
y Lean does not value statistical analysis to reduce variation and bring a process under statistical control (Nave, 2002).
The Lean methodology consists of a five-step thought process which is developed by Womack and Jones (1996) to guide managers through a lean transformation. These steps are:
Step 1: Value
Define value from the perspective of the final customer. Express value in terms of a specific product or service which meets the customer’s needs at a definite price and at an explicit point in time.
Step 2: Map
Identify the value stream, the set of all specific actions required to bring a specific product through the three critical management tasks of any business including the problem-solving task, the information management task, and the physical transformation task. Create a map of the current state and the future state of the value stream. Identify and categorize waste in the current state, and eliminate it.
Step 3: Flow
Incorporate the remaining steps to streamline the value stream. Eliminate functional barriers, reduce interruptions, and develop a process-focused organization that dramatically improves lead time.
Step 4: Pull
When flow is introduced, the ability to design, schedule, and make exactly what the customer wants just when the customer wants it, is established. In other words, let the customer pull products on an as needed basis rather than push products, often unwanted, onto the customer.
Step 5: Perfection
There is no end to the process of reducing effort, time, space, cost, or mistakes.
Return to the first step and begin the next lean transformation process, offering a product or service which is closer to what the customer really wants.
Many companies were benefited by the implementations of Lean projects. Some successful examples were given as follows.
y Porsche implemented a Lean system in 1993. In the finally assembly area, the space for inventories were reduced from 40 percent to zero, the amount of parts on hand was reduced from 28 days to essentially zero, and parts were held to in the assembly area for about twenty minutes before the completed engine was sent to the final assembly area (Womack and Jones, 1996).
y At Credence Systems, a leading global supplier of automatic test equipment, a work team doubled the output through a bottleneck circuit-card testing work center within six weeks using Lean techniques (Devane, 2004).
y At Pratt’s North Haven, Connecticut, turbine airfoil facility, a Lean program caused overdue parts to fall from $80 million to zero, inventory was cut in half, the manufacturing cost of many parts was cut in half, and labor productivity nearly doubled (Womack and Jones, 1996).