Lean Production. John Black
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the journey to world class
Shortly after I joined Boeing, I became a student of Drs. Juran and Deming, and I helped introduce their principles around the company. W. Edwards Deming advised our senior managers that they must know exactly what to do, and they must involve the workers to get that knowledge. A Deming quote that Boeing managers also took to heart was, “The timid and the fainthearted, and people who expect quick results, are doomed to disappointment.” Deming’s famous 14 key principles of management began to gain traction.
In the spring of 1985, Boeing Aerospace Company President Henry “Bud” Hebeler invited Dr. Joseph M. Juran to conduct his seminar, “Upper Management and Quality,” for executives of his division. In that pivotal session, Juran stressed that the key to management innovation is the pursuit of total quality.
Later, at a private dinner, Juran was asked to estimate the cost of poor quality at Boeing. Without hesitating, he responded, “Thirty percent of sales.” This huge number prompted contemplative silence as the meal continued. Such teachings of Juran and Deming, along with contributions from others, laid the groundwork for Boeing’s journey.
By the end of that same year, Jim Blue had been named vice president of Quality Assurance for Boeing’s Commercial Airplanes Group. The division’s executives were receiving angry letters from airline customers complaining about poor quality. A letter from the CEO of American Airlines said, “We thought you could only buy Monday-morning cars, but now you’re delivering Monday-morning airplanes.” Clearly, organizations across Boeing were ripe for improvement.
Waste you can see
One of the first executives to implement the ideas of Juran and Deming at Boeing was Bill Selby, then director of operations for Defense and Space and later to become vice president and general manager of the 737 and 757 programs for the Commercial Airplanes Group. In 1987, he dumped $15 million in waste, collected over a 90-day period, onto the factory floor of Boeing’s Everett, WA, plant. Then he talked about that waste with an audience of more than 4,000 employees. People still reminisce about that speech, in which Selby observed, “It is the system that management has put into place that created this waste, not the people doing the work.” Not only was he right, but his attitude helped to engage the people doing the work in helping to correct the problem.
In a subsequent interview for a Boeing publication, Selby said, “We’ve tended to put [quality improvement] under productivity, with the connotation that you have to work faster or something like that. There is so much to be gained by eliminating waste — not making as many mistakes as we do. We have to continue to come up with better processes and methods to do our jobs. We have to strive to make fewer errors. There’s no question: If you can do something once instead of three times, you’ve improved your productivity.”
Before you can start to put a lean, world-class production system in place, you must identify concrete examples of material waste. Then, get started on waste reduction. These efforts will lead to effective cost-cutting and solid process improvements. Ultimately, both your company’s survival and its success depend on these improvements.
Waste that is hard to see
In most companies, however, the biggest waste is not material such as Selby had strewn on the Boeing factory floor. Instead, it is waste that is harder to see: the failure to leverage resources of all kinds. Taiichi Ohno identified seven types of waste:
1.Waste of overproduction
2.Waste of time
3.Waste of transportation
4.Waste of processing itself
5.Waste of inventory
6.Waste of motion
7.Waste of making defective products
Manufacturing industries tend to rely on advancing technology for productivity and profitability improvements. American companies typically build new factories (and close old ones), add new equipment, and search high and low for costly, high-tech solutions or improvements. Yet history shows us again and again that the biggest resource available to companies is not technology, but people. The failure to leverage the power of people is the greatest single source of waste. I’ll say it again in different words: Focusing on people instead of technology, empowering them to use their potential, is the key to world-class competitiveness. Technology can reduce waste, but not as well, in the long run, as thoughtful people can. A strong team of dedicated people — machinists, analysts, engineers, vice presidents, middle managers, assistants, designers, etc. — can get rid of the wastes that you can’t easily see, as well as the wastes that you can.
The beauty of simplicity
People are your best route to eliminating waste. As simple as that may sound, it’s one of the hardest lessons for many companies to learn. Why? Precisely because it is a simple solution, and we tend to think that solutions, especially the solutions to big problems, should be complicated. Moreover, just because it’s a simple truth does not mean it’s an easy one to act on.
A company that makes the most of its people, however, can become increasingly leaner and pursue stretch goals and strategies. Taking a stretch approach to business literally means “lean everything” — not just lean production but lean marketing, lean administration, lean development and, not least, lean management. A company can’t begin to achieve “lean everything” without developing and focusing the potential of its people.
Compliance is not commitment
Along with the challenge of empowering people to reduce waste, another lesson many companies learn with great pain is the difference between compliance and commitment.
In the 1980s and 1990s, North American companies spent years complying with quality principles without being quite committed to them. They didn’t really begin to change the way they did business until they actually put the education, the theorizing, the philosophizing, and the campaigning into real-life work situations. Compliance is nice, but it tends to mostly reflect lip service or managers who want to keep in step with chic business psychology. Compliance is going through the appropriate motions, but commitment results from the appropriate emotions.
This distinction explains why some companies succeed in turning things around and other companies do not. Having a clearly defined mission statement without the supporting change in structure doesn’t get the job done. Such statements are rhetoric, plain and simple. On the other hand, commitment is rooted in deep passions and beliefs and driven by a sense of urgency to motivate and inspire people to action. Commitment also requires a conviction that there really is no other way. Only commitment succeeds.
The new frontier: people
We need to strike the right balance between people and technology. Technology alone doesn’t win competitive wars. The right technology, applied by people at the organization’s lowest level, who are empowered to design and decide its application, can win those wars.
The “new frontier” for competitive advantage is people, not technology. The most successful companies, not only in manufacturing arenas such as aerospace but also in service-oriented businesses, are those companies that best cultivate and focus human potential. I truly believe it’s that simple.
Out-sourcing is currently in vogue, particularly with North American companies looking for lower labor costs. This trend is misguided, and here’s why: You cannot effectively cultivate and focus the potential of human beings on the far side of the world, or anywhere outside your own organization, over whom your only influence is economic.
Shingijutsu’s Yoshiki Iwata, in his visits to Boeing, took this attitude a step farther. He used to ask us, “Why don’t you do everything inhouse? You think it is cheaper to have a supplier do it, but your people are smart. Your brains can improve these processes, and you can’t improve them if the processes aren’t here for you to observe and adjust. If you think using a supplier would save you 20 percent, decide instead to improve the process by 20 percent.” The smaller the proportion of the work that your company actually does itself, the less chance you have of being better than competitors. They can use the same