AbstractIntroductionMain Line of ArgumentPerspectiveESD.83 - Book Review #2 November 13, 2001Lean ThinkingBanish Waste and Create Wealth in Your OrganizationBy James P. Womack and Daniel T. Jones (Simon and Schuster, 1996)AbstractThe idea of a "Lean" production system is reviewed in "Lean Thinking" with theintention of providing managers with a guide for transitioning from mass-productionbatch and queue production systems to Just-in-Time value-based systems that allow theproduct to flow when pulled by the customer. Cases are presented to show howcompanies become "Lean" and the results they achieve with the trasnformation.IntroductionThe authors of this Book, James P. Womack and Daniel T. Jones have spent numerousyears in academia and were first associated with the term "Lean" in the book "TheMachine that Changed the World" (1990). The "Machine" book was a product of MIT'sInternational Manned Vehicle Program (IMVP) 5-yeart study of the future of theautomobile. John Crafcik from the IMVP is credited with introducing the term "Lean" asa means of describing the Toyota Production System (TPS), a production system that istouted with the ability to produce greater varieties of cars, in fewer numbers, with fewerpeople, fewer defects, and with reduced cost as opposed to the mass production, batchand queue methodology of U.S. automobile makers. In essence, it appeared that Toyotawas "doing more with less" than its American counterparts in the automobile industry.However, it is evident that the term is a misnomer, as it describes the end result ofapplying the methodologies of the Toyota Production System, and is not the system itself,however that subtlety is a topic of discussion for another venue.While the "Machine" book tackled the world-wide automotive industry, "Lean Thinking"is an attempt to create a user's guide for transforming a mass-production company into aCory R.A. Hallam Page 1ESD.83 - Book Review #2 November 13, 2001"Lean" company using the tenets of the TPS. "Lean Thinking" uses case study examplesof the application of TPS principles to a variety of American companies as a means toconvince the reader of the beneficial power of their methodology for creating a leancompany. Since this book, Dr. Womack has gone on to establish the Lean EnterpriseInstitute (www.LEI.org), a non-profit organization aimed at helping U.S. industry adaptthe tools and methodologies associated with the TPS. Dr. Jones is currently the director ofthe Lean Enterprise Research Center at the Cardiff Business School (University ofCardiff) and also a member of the LEI founding committee. Main Line of ArgumentThe main proposition of "Lean Thinking" is that any company involved in producing aproduct can gain short-term first-mover advantage by following Womack and Jones'approach to organizing and operating their production system in a TPS manner. Thereason it is a short-term advantage is that the ideas themselves are not secret and can beadopted by any competitor. However, the first-mover advantage can lead to long-termadvantage by allowing the first-mover to capture a larger market share from itscompetitors, and permit the growth of the company into new markets with the greateravailability of resources and thus permit heterogeneous market profitability.The five main organizing principles for creating a lean production system are (1) specifyvalue by product, (2) identify the value stream for each product, (3) make value flowwithout interruptions, (4) let the customer pull value from the producer, and (5) pursueperfection. In layman's terms, this methodology forces companies to produce only what isneeded when it is needed, with no defects, which reduces inventory and work in progress,and frees up capital resources and employees. To be successful with this methodologyrequires the application of many tools, such as Kaizens1, Poka-Yoke2, and Kanban3 toname a few. These tools are aimed at reducing waste4 in the production system and1 Kaizen - A continuous, incremental improvement activity.2 Poka-Yoke - A mistake proofing device or procedure.3 Kanban - A signaling system using cards to initiate upstream parts production due to downstream customer demand.4 Taichi Ohno enumerates seven wastes seven wastes in production: overproduction, waiting, transport, overprocessing, inventories, unnecessary movement, producing defects.Cory R.A. Hallam Page 2ESD.83 - Book Review #2 November 13, 2001produce products with essentially zero defects. While these tools lend themselves toachieving success at becoming lean, their misapplication can also lead to tremendousfailure. The benefits of this lean transformation are measured by metrics such asimproved productivity (increases of 2 to 4 times), reduced inventories and work inprogress (by as much as 99%), and lead times for products that drop from weeks ormonths to minutes or days. All of these metrics point to an operating/management systemthat is considered beneficial to a company, and especially to its bottom line profitability.The road to becoming lean requires training and employee empowerment, such that eachdecision is made as close as possible to the product. Many of the tools of lean productionare actually the results of prior work in systems management, optimization, and control.For example, Taylorism is at the heart of every process improvement in the TPS, wherebyemployees must formally establish an experiment to test an improvement hypothesisprior to the improvement being formally accepted as the new standard. Likewise, thepursuit of quality actually stems from Edward Demming's work with the Japanese afterWWII to establish processes for ensuring quality in the creation and assembly of productsvia complex systems of machines and people in a production system (later to becomeTotal Quality Management). With respect to the study of systems there are many interesting issues hidden in this book.First, the authors tackle the issue of production systems, and even companies from thepoint of view of serving the customer first, an issue that emerged in systems engineeringand in the later years created a whole field of study on requirements management. Theyargue that