1. Introduction
1.4. Methodology
Many other people have studied Toyota very closely, but few have studied
implementations of Lean in Swedish companies. And I have not found anyone who studied how Lean Production has been interpreted in Swedish companies, with also having the workers14 opinions in focused mind15. I have done my research mainly with help from the following sources:
• Literature
• Lean management books (such as The Toyota Way, Lean thinking, Learn to see, LN GRWTH, etc.)
• Technology and business oriented newspapers (such as Ny Teknik, Computer Sweden, Dagens Industri, etc.
• Please see chapter 3 for complete list of literature.
• Visit on manufacturing sites:
• MIM Construction AB
• Parker Hannifin AB
13 The value flow is the flow of real value, and will be further described later in this report
14 In this case, “workers” is referring to Blue Collar workers. One paper discusses another aspect of this issue: Lean Production and White-Collar Work: The Case of Sweden, Tommy Nilsson, Economic and Industrial Democracy 1996; 17; 447 12].
15 However, I found one report that investigated the usefulness of using Value Stream Mapping for mapping and analyzing product development, and used examples from two Swedish manufacturing companies (Kongsberg Automotive, and Saab Training Systems). That report is written by Johan Brattlöw & Adam Forsberg at the University of Linköping, February 17, 2005. ISRN: LiTH-EKI-EX--05/025--SE [13]
• The future Lean Management education center in Trollhättan, Sweden
• Interviews:
• At MIM Construction AB; Management, co-workers etc.
• At Parker Hannifin AB; The Lean responsible
• Lean consultants
• Other people, such as the head of Volvo in Taiwan
• Radio interviews
1.5. Definitions
“Lean” is the short term for as well Lean Thinking, Lean Management and Lean Production. And since as well thinking, management and production are heavily integrated into each other, they are often used seamlessly.
When working with Lean, there are several words that are quite specific. They are mostly Japanese words, and in this report they are explained in the footnotes, as they are used.
1.6. Criticism of method and sources
Before I started this work, I was not very familiar with Lean production. It is of course good to have the opportunity to look at the subject with an outside perspective, but having a little knowledge from within before start is probably more aimable.
Even though the thesis work does only include several visits to different sites
(factories etc.) where Lean Production is on its way, or already has been implemented, there is only one big case – MIM – which has been followed more closely, and where value stream mapping have been performed.
The data from the survey and interviews with coworkers at MIM will later be used by the company management, which might cause conflict of interests etc.
One big issue is that to know what could be described as Lean and what is just “good things” was not initially easy to understand.
Finally, the time issue is also noticeable. I started the thesis work in 2005, but did not present it until 2008. Even though most things are noticed and written down, there is always a risk of forgetting something when time goes by.
2. Lean Production
2.1. Lean for efficiency
This chapter explains is briefly explaining what Lean is. That is done because it is crucial to have this background when reading further in this report.
Formally, the word lean means in general slimmed, thin or meager. The best explanation in economic terms is probably cost efficient16.
The term Lean production is the most used in this thesis work. That is also the common name used in Swedish industry when talking in general about making someone’s production more efficient.
Lean production was initially used17 by researchers within the research project IMVP, to name the new époque of the industrial development after Mass production and Craft production.
Mass production means to produce many identical copies of the same product. Big product volumes was synonym with big profit; “The more, the cheaper”. That was the common way of look at it.
2.2. Thinking Lean
Without the way of thinking of Lean production, maximized volume means less profit.
The new focus is instead to produce the right product, at the right volumes and the right time. Lean production companies are:
“a new generation companies which are fast, resource stint, and flexible, when they – with the customer in focus – create constantly improvements for processes and products with superior quality and lower costs”
18
16 Such as explains is the English-Swedish dictionary “Norstedts stora ordbok”, ISBN: 9172271779 [14]
17 Source: International Motor Vehicle Program, the largest international research group for automobile industry. See http://web.mit.edu/ctpid/www/imvp.html [15] for more information.
18 From a PowerPoint file about Value Stream Analysis from the consultant company JMAC [16]
Simply, Lean production it is a production system with value stream as the
fundamental factor used to eliminate wastes. This is used through traditional methods such as Just-in-time19, TPM20, 5S21 etc.
In the Toyota Production System, TPS22, there are seven different wastes which are important to eliminate. Those wastes are:
Overproduction
Table 1) List over the seven wastes, as defined by Toyota Production System
Sometimes an 8th waste is listed, and that is the waste of co-worker’s unused
creativity. This means to not taking benefits from peoples ideas. It is clearly a waste, but instead of being a well-defined waste that can be isolated, it is rather a waste that affects all the other wastes23.
19 Just-in-time is a method of minimizing inventories by ordering materials as close as possible to the actual time of need. This technique is said to initially have been used by the Ford Motor Company, even though it was adopted and further developed by Toyota.
20 TPM stands for Total Productive Maintenance, even though many people refer to TPM as “Total Productive Manufacturing” or “Total Process Management”.
21 5S is a reference to five Japanese words that describe standardized cleanup and how to keep things and material in standardized order. The five words are: Seiri (整理), Seiton (整頓), Seiso (清掃), Seiketsu (清潔), Shitsuke (躾)
22 TPS is the framework and philosophy organizing the manufacturing facilities at Toyota and the interaction of these facilities with the suppliers and customers. The main goal of the TPS is to eliminate waste.
23 For more example about the 8th waste:
http://www.gembapantarei.com/2005/07/what_about_the_8th_waste.html [17]
A deeper explanation of the seven official wastes is given here24:
a) Overproduction
This is the most serious waste. Overproduction is to manufacture an item before it is actually required. This waste is costly because it prohibits the smooth flow of materials and degrades both quality and productivity. To identity this waste is important, since it will reveal the problems that the overproduction is hiding. A smarter way is to start using pull25 systems with Kanban26 etc.
b) Waiting
Waiting is when goods are not moving or being processed. It is very common that almost all of a product's life in traditional batch-and-queue manufacture will be spent on waiting to be processed. Much of a product’s lead time is tied up in waiting for the next operation; this is usually because material flow is poor, production runs are too long, and distances between work centers are too great. To get a flow by linking processes together, so they can feed directly into each other is the key point.
c) Inventory
Waiting and overproduction causes unnecessary inventory. And inventory itself increase lead times, take up floor space, and delays identification of problems.
d) Motion
This waste is also ergonomics related and includes not only bending, stretching, and walking, but also lifting and reaching, etc. Besides the health issues, safety is another concern. Workplaces with too much motion should be improved with the involvement of the personnel on the actual site.
24 This list has got most inputs from information given by the Californian based management consultant firm EMS Consulting Group [18] .
25 Pull is the opposite to push. The traditional manufacturing philosophy is "push", in which inventories are allowed to pile up. For "pull", it is always the next step in the production process which demands actions for the previous step.
26 Kanban is a signaling system, used for "pull". It uses mostly cards to signal the need for an item.
Other devices such as plastic markers or balls can also be used to trigger the movement, production, or supply of a unit in a factory.
e) Defects
The biggest impact if defects are of economic nature. Quality defects resulting in rework or scrap are a tremendous cost to organizations. Other related costs include, for example, re-inspecting, rescheduling, and capacity loss. The defect costs can often be a significant percentage of total manufacturing cost. With good employee
involvement, many defects could be reduced.
f) Overprocessing
Sometimes expensive high precision equipment is used when simpler tools would be sufficient. Overprocessing will occur when using a more expensive or otherwise valuable resource than needed or adding features that the customer not really needs.
Small and flexible equipment is useful to reduce this waste.
g) Transporting
Just transporting product between processes typically adds no value to the product.
Movement and handling cause damage and are an opportunity for quality to decrease.
Material handlers must be used to transport the materials, resulting in another organizational cost that adds no real value. Transportation can be difficult to reduce due to the perceived costs of moving equipment and processes closer together.
Furthermore, it is often hard to determine which processes should be next to each other. Mapping the product flow can make this easier to visualize.
2.3. Value stream mapping
When talking about Lean production, there are some other important conceptions that need to be described. One important concept is the concept of value stream. Some of the key elements about how to do a lean value stream27 are:
Specify what does, and what does not create value from the customer’s
perspective, rather than from the perspective of individual firms, functions
and departments
27 As listed in table 1.1 in the book Value Stream Management, by Peter Hines et al, Prentice Hall, 1st edition, March 2000, ISBN: 0273642022 [19] .
Use a toolkit named value stream mapping, for analysis, diagnosis and implementation of change
Focus on key processes, not just separate business departments
Strive for perfection by continually removing successive layers of waste, as they are uncovered
Address whole industries over long term, rather than on short-term improvements of individual firms
To do value stream mapping28 is a powerful way to describe, and to make a “map” of how a certain business is performed29. And to gain maximum effect from this type of mapping, attention needs to be directed at key processes in the value stream.
There are different directions for Value Stream Mapping tools, but one which more or less is involved in all the seven wastes is Process Activity Mapping30. That tool is used in this thesis work, as will be seen in chapter 5.4.
2.4. Supply value chain vs. value stream
The concept of value chain or supply value chain is maybe more familiar to the reader, so just to explain; The supply value chain means complete activities of all companies
28 The book LN GRWTH by Sven Ohde, Bookhouse Publishing 2007, ISBN: 978-91-89388-26-0 [20] , has a good definition of Value Stream Mapping: “Creating a visual picture of how material and information currently flows from suppliers though manufacturing and to the customer. Total lead-time, process cycle times and value-added times are measured. The Future State Map is created, based on goals desired which in turn are based on market conditions and strategic planning for the business.
This method is also applicable on service processes”.
29 There are also some limitations with this way, for example that it is time-consuming, and that it is inable to detail dynamic behaviour of production processes and to encompass their complexity, as described in Analysing the effects of Lean manufacturing using a value stream mapping-based simulation generator, by Lian Y.-H. and Van Landeghem H., International Journal of Production Research, 2007-13, ISSN: 00207543 [21].
30 An extension to this is described in A novel approach to lean control for Taiwan-funded enterprises in mainland China, by Huang C-C; Liu S-H, in International Journal of Production Research, 2005-12, ISSN: 00207543 [22] The authors develop a generalized label-correcting algorithm in order to
determine the desired stages of lean manufacturing. The authors shows that the stages are difficult to visualize in a Value Stream Map, and that the methodology is suitable for a repetitive manufacturing environment of mixed type.
involved, while value stream focus on more specific parts of the firms. Those parts are such which actually adds value to the product or service under consideration.
2.5. Takt
Another key word in Lean production is the takt time. Takt is a German word and means to do something in a synchronized way; with something that keeps the right pace of the activity. In the world of music, a metronome is a typical pacemaker, which makes sure all the musicians in an orchestra perform their musical activities at the right time in a synchronized way with the other musicians. In the world of production, the theory is the same but the “metronome” is more often identified as a whole
process, which will be given the name pacemaker process31.
In the very optimal case, a product – such as a car – is starting to be built immediately after the customer has placed an order. In reality, the one piece flow is not always working. But takt time can be defined as working time divided by customer demand.
Figure 1) Definition of takt
31 This is described more in detail for example in the paper Design rules for implementing the Toyota Production System, JT Black, International Journal of Production Research, 2007-16 [23] .
3. Literature review
3.1. Overview of useful sources
This chapter is about what some of the literature says about Lean Production, other than mentioned in chapter 2. There are some books which are about the subject, and to be able to understand and implement it is important to take part of precursor’s
experiences. Most books are however from USA and Japan. For Sweden’s part, there are not really many books at all. That indicates an opportunity for anyone who would like to become a Lean Production guru; Just write a good book about it and it will for sure become read.
For Sweden’s case most of the Lean Production literature is therefore found in newspaper and magazine articles. Some of the most important of those are:
a) Ny Teknik (weekly magazine about technology and IT)
b) Dagens Industri (daily newspaper about industry and business) c) Computer Sweden (newspaper about IT, published 3 times/week)
There are no really Swedish books, mostly only translated ones. One of them is however complemented with data from Swedish companies. That is:
d) Lära sig se – Att kartlägga och förbättra värdeflöden för att skapa mervärden
och eliminera slöseri, Lean Enterprise Institute Sweden, March 2002, ISBN:
9-974136-1-5 [24]. Original title: Learning to See – Value Stream Mapping to
Add Value and Eliminate Muda, published by The Lean Enterprise Institute,
Inc., Brookline, USAAmong international publications, there is one book which is outstanding in terms of quotations and recognition etc. That book is:
e) The Machine that Changed the World, written by James P. Womack, Daniel T.
Jones and Daniel Roos. Scribner, October 1990. ISBN: 0-89256-350-8 [25]
Other very important books are:
f) The Toyota Way - 14 Management Principles From The World's Greatest
Manufacturer
32. Written by Jeffrey Liker. Published by McGraw-Hill, December, 2003. ISBN: 0071392319 [26].g) Lean Thinking: Banish Waste and Create Wealth in Your Corporation.
Written by James P. Womack and Daniel T. Jones. Published by Free Press, June, 2003. ISBN: 0743249275 [27]
h) Toyota Production System: Beyond Large-Scale Production. Written by Taiichi Ohno. Published by Productivity Press, February 1988. ISBN:
0915299143 [28] .
Finally, there are several white papers33 and articles available. They are all listed in the References chapter at the end of this report.
3.2. Literature with a negative approach to Lean production
The Swedish newspapers mostly have an approach of success with Lean Production;
Problems and negative things are not often34 mentioned in the connection with Lean Production. Negative things mentioned are mostly have some kind of human aspect.
One good example is an article in Dagens Nyheter, March 10, 2006:
“Industry workers who has a monotone work at the production line which they can not control, does feel any commitment for the work, and have a tendency to not contribute with ideas for improvements”
35.
32 This book was actually on Amazon.com’s top 500 list of best sellers, in May 2006.
33 For example: Adaptation of Lean Production in China: The Impact of the Japanese Management Practice. Written by Chen, Jin (Tianjin Commerce University), Chunli Lee (Aichi University) and Takahiro Fujimoto (Faculty of Economics, University of Tokyo). Published at University of Tokyo, August 1997 [29] .
Another one is The Successful Imitation of the Japanese Lean Production System by American Firms:
Impact on American Economic Growth. Written by Elias Sanidas. Published at University of Wollongong, 2001 [30] .
34 In fact, I did not find any negative Swedish article about outcome of the actual production, but only from a more human perspective, such as jobs moved abroad etc.
35 Article in Dagens Nyheter, March 10, 2006: “Trivs man på jobbet klarar man förändringar – det gynnar både en själv och företaget” [31]. Freely translated from Swedish into English, by this report’s author.
This was said by P-O Börnfelt, who, at that time was a PhD student. He studied the working conditions at three different industries in western part of Sweden, and found out that Lean Production companies had more monotonous working tasks, and that the workers who had monotonous work tended to be more passive36.
In Lean Production, it is important to have closeness between management and
workers, between development and production. Electrolux, a Swedish company which probably is most famous for its vacuum cleaners and other kitchen equipment, faced problems. It looked like the problem was that some Asian white goods producers took market shares from Electrolux, but with a deeper insight, the CEO Hans Stråberg realized that the problems were bigger than that37:
“The engineers were driving the projects. Our market people woke up just before launch, and it was like a lottery if our products would be a hit or not.
/../ If we don’t make things working better, it will end with a catastrophe. /../
You should not mix production and product development.”
In the same article, it was reported that half of Electrolux’ production factories were going to be moved abroad to low-cost countries, but that they were going to increase the number of developers in the western world.
Since then, not much has happened with Electrolux. This big outsourcing program, which was initiated in 2004 and is planned to last until 2010, will cost 10 billion SEK38 (=around than 1,5 billion USD), and is then planned to reduce the annual costs with 3 billion SEK (=around 0,5 billion USD). But still, no one knows if this will succeed or not.
36 Source: PhD thesis ”Förändringskompetens på industrigolvet”, by P-O Börnfelt at Arbetslivsinstitutet and Institutionen för arbetsvetenskap, in Gothenburg, Sweden [32] .
37 As reported in the article in Ny Teknik, Feb 1, 2006, page 10-11: ”Dammsugarboss som gör rent hus” [33]
38 According to the article ”Lux får bakläxa på börsen”, published in Dagens Industri, September 7, 2009, page 29 [34] .
3.3. Literature with a positive approach to Lean production
In May 2007, it was reported39 that the outsourcing trend was ebbing away, here explained by Ove Leichsenring from the company ABB Automation Technologies:“The companies have found that they can save more by being more efficient on their home ground. /../We have found out that many Swedish companies realise that outsourcing doesn’t work as they thought. Quality, as well as productivity, is hard to maintain. It use to come up costs that they never thought of before”
A few years ago, the company Stiga, who produces lawn movers and small snow ploughs, was threatened with closure. But since 2005, the company is on its way up on track again. The reasons: all people were educated in 5S, Stiga introduced Lean Production and they “reintroduced” some other methods, here described by Troels Nielsen40:
“The productivity increased more than 60%, the delivery precision increased several hundred percent and the user complaints almost disappeared/../Those improvements are much because of that we brushed up our knowledge in classic traditional Swedish production technology from 1970’s, and that we apply ‘common sense’ in an uncompromising way”
One interesting topic is how the workers are handling the change. One example, that appears to be quite typical, is from the rubber company Gotland Gummifabrik, with 35 employees. In 2005, when Olof Smedberg started as production manager, the staff was educated in Lean production41:
“The workers were really enthusiastic during the education, but changes are hard work, which led to unwillingness to the change among some of the workers. But the unwillingness disappeared when the new routines were falling into place and the advantages started to be seen”
The company doubled the profitability in one year, the delivery precision increased and the lead time for a standard product in the line decreased with one week.
39 In an article in Ny Teknik, May 9, 2007: ”Robotar stoppar flytt utomlands” [35]
40 Source: Ny Teknik, number 19-2007: ”Troels Nielsen förvandlade Stiga med Toyotametoden” [36]
40 Source: Ny Teknik, number 19-2007: ”Troels Nielsen förvandlade Stiga med Toyotametoden” [36]