From Common Sense to Systemic thinking

Most of the basic goals of systemic thinking are common sense and documented examples can be seen back to at least Benjamin Franklin. Poor Richard’s Almanack says of wasted time, “He that idly loses 5s. [shillings] worth of time, loses 5s., and might as prudently throw 5s. into the river.” He added that avoiding unnecessary costs could be more profitable than increasing sales: “A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have.”

Again Franklin’s The Way to Wealth says the following about carrying unnecessary inventory. “You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, ‘Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.’ In another place he says, ‘Many have been ruined by buying good penny worths’.” Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.

The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to get a 5 pound (2.3 kg) brick but this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.

Birth of Scientific Management

Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment: “And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment” (Principles of Scientific Management, 1911).

Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: “…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer’s side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it.” This is now a foundation of lean manufacturing, because it is obvious that workers will not drive improvements they think will put them out of work. Shigeo Shingo, the best-known exponent of single-minute exchange of die (SMED) and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration (Andrew Dillon, translator, 1987. The Sayings of Shigeo Shingo: Key Strategies for Plant Improvement).

American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and explicitly stated the goal of what is now called lean manufacturing as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor’s Shop Management (1911), “We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes.”

Ford inspires new thinking

As hard as it is to believe,(since most people think of Toyota when then think of innovation in the auto industry today) it was Dertroit auto maker Ford that inspired a whole new way of thinking about processes. Largely, credited for popularizing the ‘assembly line’, Henry Ford continued this focus on waste while developing his mass assembly manufacturing system. “Ford’s success has startled the country, almost the world, financially, industrially, mechanically. It exhibits in higher degree than most persons would have thought possible the seemingly contradictory requirements of true efficiency, which are: constant increase of quality, great increase of pay to the workers, repeated reduction in cost to the consumer. And with these appears, as at once cause and effect, an absolutely incredible enlargement of output reaching something like one hundredfold in less than ten years, and an enormous profit to the manufacturer”.

Ford (1922, My Life and Work) provided a single-paragraph description that encompasses the entire concept of waste. “I believe that the average farmer puts to a really useful purpose only about 5%. of the energy he expends. … Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. … It is waste motion— waste effort— that makes farm prices high and profits low.” Poor arrangement of the workplace– a major focus of the modern kaizen– and doing a job inefficiently out of habit– are major forms of waste even in modern workplaces.

Ford also pointed out how easy it was to overlook material waste. As described by Harry Bennett, “One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. ‘You know,’ Mr. Ford said to me, ‘there’s iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.’” In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.

Design for Manufacture (DFM) also is a Ford concept. Per My Life and Work, “Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything— a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. …But also it is to be remembered that all the parts are designed so that they can be most easily made.” The same reference describes Just in time manufacturing very explicitly.

While Ford is renowned for his production line it is often not recognized how much effort he put into removing the ‘fitters’ work in order to make the production line possible. Until Ford a car’s components always had to be ‘fitted’ or reshaped by a skilled engineer at the point of use so that they would connect properly. By enforcing very strict specification and quality criteria on component manufacture he eliminated this work almost entirely, this reduced manufacturing effort by between 60-90%. However Ford’s mass production system failed to incorporate the notion of “Pull” and thus often suffered from over production.

The rise of the ‘Toyota way’ of thinking

Toyota’s development of ideas that later became Lean may have started at the turn of the 20th century with Sakichi Toyoda in their textile business with looms that stopped themselves when a thread broke, this became the seed of “Autonomation” and “Jidoka“. Toyota’s journey with JIT may have started back in 1934 when it moved from textiles to produce its first car. Kiichiro Toyoda, founder of Toyota Motor Corp., directed the engine casting work and discovered many problems in their manufacture. He decided he must stop the repairing of poor quality by intense study of each stage of the process. In 1936 Toyota won its first truck contract with the Japanese government his processes hit new problems and developed the “Kaizen” improvement teams.

Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale therefore had little application. Having visited and seen supermarkets in the US Taiichi Ohno recognised the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period over-production was not an option and thus the notion of Pull (build to order rather than target driven Push) came to underpin production scheduling.

It was with Taiichi Ohno at Toyota that these themes came together. He built on the already existing internal schools of thought and spread its breadth and use into what has now become the Toyota Production System (TPS). It is principally from the TPS, but now including many other sources, that Lean production is developing. Norman Bodek wrote the following in his foreword to a reprint of Ford’s (1926) Today and Tomorrow: “I was first introduced to the concepts of just-in-time (JIT) and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system’s creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford’s book.” It is the scale, rigour and continuous learning aspects of the TPS which have made it a core of Lean