Lean in Services

Topics: Manufacturing, Lean manufacturing, Toyota Production System Pages: 5 (1807 words) Published: December 15, 2012
The need to survive and excel on markets facing increasing competition and highly demanding customers represents the catalyst for the attempt of many companies to improve their business processes and find new ways of becoming more efficient. Lean production principles, pioneered by Toyota in the last half of the 20th century (Womack et al, 1990), proved consistent results for the manufacturing companies that understood mass production strategy had become obsolete, after almost a century of dominance. Applicable successfully to the manufacturing industries, the lean philosophy will be analysed in the present synopsis through the perspective of services industry, usually dealing with intangibles.

Lean Manufacturing
In their research on the Toyota manufacturing system, The Machine that Changed the World (1990), Womack, Jones and Roos formulate the theoretical framework of lean manufacturing. Lean production combines the advantages of craft and mass production, while avoiding the high cost of craft and the rigidity of mass (Womack et al, 1990). Its aims to keep lower inventory, eliminate waste and reduce costs, which are common supply chain ambitions, and additionally it allows increasing the variety of products and employees’ motivation. According to the same authors, the elements of lean production relate to all main areas of activity of a company: operations, supply chain, product development, customer relations, human resources management, distribution, etc (Womack et al, 1990). The core lean principle, governing mainly manufacturing operations, is eliminating waste. Waste means “any activity that does not add value” (Slack, 2010:435). In the Toyota plant, the Machine authors observed clean isles, few indirect workers, no room for storing inventories, almost no rework at the end of the production line, short time set-up changes and inventory brought by neighbouring suppliers (Womack et al, 1990). The first step in eliminating waste is decreasing inventory, which represents a source of important costs with storage, increases the pressure on the workers and adds no value to the product. More so, it prevents workers from identifying potential defects and solving them on time (Karlsson, Åhlström, 1996). The Machine authors observed several other ways of eliminating waste practiced by the Toyota plant: decreasing the batch size which decreases the production cost, diminishing the transportation of parts, outsourcing the production of certain parts to more cost-efficient suppliers, etc. In terms of managing the defectives, Toyota is applying the “5 why’s” strategy, through which it goes to the bottom of a problem and fixes it from there, ensuring thus no other reoccurrence of the same issue. The moment a flaw is discovered, the production line is stopped and the whole team gets together and works on solving the issue (Womack et al, 1990). This way, the company decreases the time and work needed for fixing an issue discovered at the end of the production line, when the whole product needs to be disassembled and reassembled. “Quality assurance is the responsibility of everyone” (Karlsson, Åhlström, 1996), there are no teams dedicated to quality control, as this would add no additional value to the product. The elimination of waste is most visible in the manufacturing activity of lean companies but it also sets the guidelines for other processes, such as procurement. According to the lean production model conceptualised by professors Karlsson and Åhlström, lean procurement distinguishes itself through “supplier hierarchies” and “Larger subsystems from fewer suppliers” (Karlsson, Åhlström, 1996). Unlike mass production companies which work with an important number of suppliers, outsourcing every single part to different producers, Toyota works with 3 tiers of suppliers, outsourcing whole functionalities. Therefore they work directly with only the first tier, and thus, by reducing the number of suppliers, Toyota...

References: 1. Heracleous, Loizos and Wirtz, Jochen (2010) Singapore Airlines ' Balancing Act. Harvard Business Review, Vol.88 (August). p. 145-149
2. Staats, B. and Upton, D. (2007) Lean principles and software production: evidence from Indian software services, Harvard working Paper, Harvard Business School.
3. Womack, J.P., Jones, D.T. and Roos, D. (1990) The Machine that Changed the World, Rawson Associates, New York
4. Slack, N, Chambers, S, Johnson, R: Operations Management, Prentice Hall, 6th ed., 2010
5. Karlsson, Christer & Åhlström, Pär: Assessing Changes Towards Lean Production. International Journal of Operations and Production Management, Vol. 16, No. 2, 1996
6. Liker J. and Morgan J. The Toyota Way in Services: The Case of Lean Product Development (2006) Academy of Management Perspectives Vol. 20 Issue 2, p5
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