The impact of lean production on a company’s bottom line depends on employee engagement, from entry-level workers to senior executives.
Though its roots can be traced back to Henry Ford, lean production or lean manufacturing – often simply “lean” – is generally ascribed to Toyota and the development in the 1940s of the Toyota Production System, known as the TPS. The aim is to streamline production processes and increase productivity. In practice, it advocates “an organizational culture of highly engaged people solving problems or innovating to drive performance,” said Jamie Bonini, vice president at Toyota Engineering and Manufacturing North America.
Manufacturers in the U.S., such as General Electric, started adapting the approach in the 1980s. The 1991 publication of The Machine That Changed the World by researchers at MIT, led by James Womack, precipitated its widespread adoption. This is also when it gained the “lean production” moniker. “When we came up with the name lean production, what we meant was the complete system,” Womack said. “What the world heard was factories. But the frontier has been outside of the factory world for the last 20 years.”
Womack is a founder and chairman of the non-profit Lean Enterprise Institute. Its approach, which differs somewhat from TPS, focuses on “eliminating waste, rethinking work flow and improving productivity,” the New York Times explains, with an emphasis on involvement at all levels of the organization. Terminology aside, the goal is to improve the production process, said Rachna Shah of the Carlson School of Management at the University of Minnesota. Without working on streamlining continuously “in a disciplined way over the long term, you cannot have the same levels of improvement in productivity,” she added.
The challenge of this sustained, company-wide engagement is one reason the success of lean production has been inconsistent. Jim Lancaster, CEO of Kentucky-based equipment manufacturer Lantech and author of The Work of Management, said that at his company, the lean approach only worked for so long “because of the natural deterioration that can occur. People change, tools get dull and an engineer may change the design without preparing others on the line.” Profits from newer products improved, but the company’s base business suffered, leading it to refocus on its original lines.
Those who adopt a lean approach say that they want to reduce waste, but not their workforce. Rightly so, given that human capital is likely the make-or-break element. In fact, employee engagement at all levels of the organization is crucial to making lean work. If employees are motivated to look for waste, in time or materials, and find ways to adjust their processes, even in seemingly miniscule ways, the sum of their lean efforts can have a substantial impact on the company’s bottom line.