International Journal of Operations & Production Management

Emerald Article: Is lean manufacture universally relevant? An investigative methodology S.M. James-Moore, A. Gibbons

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To cite this document: S.M. James-Moore, A. Gibbons, (1997),"Is lean manufacture universally relevant? An investigative methodology", International Journal of Operations & Production Management, Vol. 17 Iss: 9 pp. 899 - 911 Permanent link to this document: http://dx.doi.org/10.1108/01443579710171244 Downloaded on: 26-05-2012 References: This document contains references to 21 other documents Citations: This document has been cited by 8 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 3597 times.

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Is lean manufacture universally relevant? An investigative methodology

S.M. James-Moore and A. Gibbons
Warwick Manufacturing Group, University of Warwick, Coventry, UK
Aims and background The concept and acceptance of lean manufacture as a set of principles is now fairly rooted in the literature[1-3]. The principles behind lean production are not in themselves new; many of them can be traced back to the work of pioneers such as Deming[4], Taylor[5], Skinner[6] and more recently in the UK such investigators as Hill[7], Voss[8], and Lamming[9] . However, although the concept of lean production as now understood could have modelled from this literature, it was not until the Japanese auto industry was studied[1], that the total concept became clear. While there are some voices of discontent[10,11] to the adoption and ultimate effectiveness of lean production, nonetheless many case examples exist to demonstrate how companies are changing their production methods and management practices to become leaner and fitter. Indeed lean manufacture has been extended to encompass the whole spectrum of activities in the business such that world-class companies are seeking to become lean enterprises[9,12,13]. However, both the original work and subsequent offerings have tended to restrict their field of analysis to similar industrial sectors, namely, high-volume or mass producers, in particular the automotive and electronic sectors. Little published work[14,15] seems to have explicitly addressed the issue of whether lean methods are suitable and applicable in industrial sectors which are characterized by highly differentiated, low-volume production of low repeatability. For want of a better term, we shall refer to such products as super value goods(SVG), since one of their defining characteristics[16] is the high value added through the total supply chain and hence the market price of the product. Examples of such products would include: power generation, aerospace airframe and engine manufacturers and the like. In order to fill this gap, researchers at Warwick Manufacturing Group (WMG)[17], embarked on a case study based investigation to compare and contrast the methods and practices currently being adopted in a potential SVG sector (civil aerospace) with a typical lean manufacture sector (automotive). This paper describes the in-company methodology developed and some of the main findings of the research.

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International Journal of Operations & Production Management, Vol. 17 No. 9, 1997, pp. 899-911. MCB University Press, 0144-3577

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Lean manufacture While much has been written on the subject of lean manufacture, the models which exist to collect all the information available on operational practices and performance which constitute lean manufacture and place them into a unifying framework, are somewhat complex. Hence the first stage of the research was to develop a model which could then act as the template from which to guide the data collection and assess the status of an SVG company. To begin, a definition of lean manufacture needed to be established. In simple terms lean manufacture was defined by Womack et al.[1], as follows: integrated, single piece production flow, small batches, just-in-time giving low inventory; defect prevention not fault rectification; production pull not push with smoothed demand; flexible, team-based work organization with multi-skilled workforce and few indirects; active involvement in root cause problem solving to maximize added value; close integration from raw material to customer through partnership. We added what we believed to be one further ingredient based on the work of Clarke and Fujimoto[18]: greatly reduced overhead burden by the use of matrix teams, simplifying information flow and processing, enabling flatter organization structures. These attributes represent, at a high level, what could be described as the best practice principles that you would expect to see in a high-volume lean manufacturing company. Context and structure However, such principles are in fact the outcome of recognizing the external business context and drivers facing the individual sector. Consequently, the framework shown in Figure 1 was used to structure the development of the detailed research methodology. The key aspect of this framework is the reinforcement of the linkages between drivers in the business environment and the strategic responses to these. Hence the core business processes, practices adopted and finally the appropriate key measurement attributes, used either as a control or as a means of comparing performance, are consequent on the environment drivers. Thus we are adopting the view that lean manufacture practices and measures are the response by best in class companies to their changing environment. Having established the guiding top-level structure, more detail was placed on each of the key areas of interest in Figure 1. Porters Five Forces model was used

Organization Business vision and mission Business practices (B) Core business processes (A)

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Measurement attributes

Strategic objectives and critical success factors

Figure 1. Environment drivers

and adapted to direct and summarize the collection of publicly available information on the industry environment and drivers. This was ascertained for both the aerospace and automotive sectors. In the case of the applied work, the information was later cross-checked with the views with key senior managers in the civil aerospace industry. This information was important, as it set the context into which the intended strategic and operational responses in the sector were handled. In addition , a structured interview process was developed to ascertain how the case study companies had developed their strategic direction and if, as a result, they had evolved any critical success factors or equivalent for their companies. For the civil aerospace companies visited five core drivers (CSFs) were identified, namely: (1) We must be more responsive to customer needs. (2) We must reduce our costs. (3) We must meet customer quality expectations. (4) We must ensure we use our people more effectively. (5) We must improve our partnership management. These drivers were confirmed during the research from a survey by Ingersoll Engineers[19] into civil aerospace. Both our research and that by Ingersoll indicated that the drivers in civil aerospace had changed and become much more closely aligned to those well-recognized by the automotive volume producers. Internal company characteristics From here the researchers concentrated their attention on the area contained inside the box in Figure 1, in other words, the important internal company characteristics.

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A simple process model of an automotive company model was defined as having six core processes in addition to the strategy formulation aspects already described above. These processes were: (1) new product introduction; (2) manufacturing; (3) logistics (including purchasing); (4) sales and marketing; (5) product support; (6) people management. Of course, this process specification is rather arbitrary and indeed companies may adapt many different organizational structures and processes to deliver their core business activity. We also recognized that currently many companies are actively re-engineering their business and deciding on the most appropriate process. However, for our purposes, we simply needed some classification structure to guide the data collection. The next step was to capture the characteristics likely to be found in a typical lean automotive company based on the literature and the authors industrial experience. It is true that the model developed does not represent any one specific automotive company but a hypothetical company operating at full compliance with the perceived best practice measures. These measures being determined from the theoretical and empirical literature and case studies such as Womack et al .[1] and the Andersen Consulting Lean Enterprise Reports[20]. This resulted in an initial non-quantified vision of a lean company showing characteristics in five areas, namely: (1) flexibility; (2) waste elimination; (3) optimization; (4) process control; (5) people utilization. These characteristics enabled a direct link to be made with the previously stated definition of lean principles. These five areas were expanded on, such that Figure 2 captures the specific characteristics which would contribute towards the achievement of leanness in a best-in-class company. These characteristics would be observable to an informed visitor to such a company and, as such, enable an assessment of the extent of leanness in different processes within a company. We were then in a position to draw all this information together and produce a set of research methodology documents, which formed the hypothetical typical lean automotive producer. This became the bench against which the SVG case study companies could be compared. The final result was a set of pro

Product mix neutral Effective energy use Short product development time Low warranty Quick setup times Low time through system Supplier flexibility Build to customer order Focused marketing No overproduction Low distance travelled Multiskilled workers Low system inventory Flexible facilities Waste High yield High supplier quality Real teamwork elimination Flexibility Constancy of purpose Employee contribution Empowerment SPC used widely Customer People Housekeeping Control of 6Ms Process Leadership control Controlled production servicing Respect for humanity Total productive maintenance Stable employment Optimization Design for lean manufacture People management Schedule adherence Effective IT Integration Learning Effective R&D Supplier partnership Poka Yoke Dealer partnership Controlled complexity Neutral cash flow Financial optimization True costs known Outward looking

High productivity

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Figure 2. Lean automotive vision model

forma documents for each key process. An example, based on part of the new product introduction process, is given in the Appendix. It is at this level that common adoption of practices and measures were compared against a lean model. This format was used to structure questions for employees in the companies visited. First, respondents were asked to rate the key drivers identified on a scale of 1 to 3 in terms of their relevance to their organization, where 3 equals high relevance. Second, the respondents were asked to describe the practices they used to respond to those drivers, ensuring that the specific practices identified on the pro forma were established as being used or not. While respondents did not always respond with a simple yes or no, for analysis purposes it was necessary to record either a positive or negative answer. This approach also ensured that practices not covered in the pro forma were captured and the reasons associated documented. The third part of the process related to whether any formal measurement of the effectiveness of the practice described took place and, if so, what were the units of measurement. Again, for analysis, a simple yes or no answer was required. The advantages of this approach to the development of the documents is that it provided a logically and strategically coherent picture and showed the key practices being adopted by such organizations to respond to their drivers, coupled with specific metrics where known, at the second level of influence. For example, taking a high-level driver such as the need to improve responsiveness

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to customer needs, this results in lower-level operational-focused drivers, such as reducing the time of introducing new product and thus the adoption of practices such as shelf engineering to ensure this is achieved. Hence in the extract shown (see Appendix) for the process under investigation, namely new product introduction, time to market is one external driver and the company response being investigated. If this proves to be a highly relevant driver in the specific industry, then the researcher would expect to find a number of supporting practices, such as the use of shelf engineering and presumably a number of measures to support and monitor this practice, e.g. the time from initial idea, etc. Adopting this procedure resulted in a generic model of a company responding to 38 drivers, using 76 key practices and 68 performance metrics. These performance metrics were developed from published data[1], updated by research done in Rover and more recent benchmarking metric reports[20]. It did not represent any specific company and indeed no one company would agree that all the issues applied to them in the same way. Nevertheless, any company operating within the parameters included would be classified as lean by our definition. In company investigation This model formed the company-based investigation tool kit for retrieving the information. At any one time, a team of two researchers spent five days on average in each of the companies. Interviews were conducted with over 100 senior and middle-ranking executives in the companies across each of the individual business processes identified in the model. In addition, unstructured discussions were held with many employees at the operational level, to add richness and context to the data collected. To validate the responses required the research team to observe an example practice or measure, even though it may be newly implemented or of limited application. This was normally achieved by a combination of observing incompany paper work or by observing the practice or measure during visits to the working areas, both in office and manufacturing environments, where discussions with operating personnel were held. The information given was confirmed before analysis by sending, within 15 working days, each participating company a verbatim copy of the case study visit findings for their comment, clarification or correction. Results From the responses, a scoring system was put in place to establish the average score within a company and between companies. For usage of the practices and measures, a yes or no answer was expected. A yes response was given a score of 1, a no response was given a score of 0. As expected, often a practice or measure was not fully used within a company. Alternatively, more than one respondent would answer the question. A maximum of three respondents in any one company per question, was encountered. The total scores were divided

by the total respondents to ascertain the average level of alignment across the companies for each practice or measure and grouped into high, moderate or low categories. This enabled an analysis of company views between companies to be undertaken and differences considered. Prior to the company visits, based on our analysis of the likely similarity of civil aerospace drivers compared to those of volume automotive producers[21] and the wide availability of literature on lean manufacture, we expected a priori that a substantial percentage of lean practices would have been adopted and we arbitrarily chose 50 per cent as a cut off. In the light of the actual results this proved to be too simple a split. An arbitrary scoring system was therefore used to provide a basis for analysis, grouping the average scores into high, medium or low correlation to the lean model. The aim of this somewhat simple and arbitrary evaluation procedure was to provide a method of analysis which enabled comparison with the model and between companies without ambiguity. The aim was to identify major differences in approach which could form the basis for more detailed research and to assess the areas where there was little doubt of the benefits. A score greater than 0.65 indicating high agreement with the attribute under investigation. A score greater than 0.45 indicating medium agreement with the attribute under investigation. A score less than 0.45 indicating low or no agreement with the attribute under investigation. These results were then expressed as charts, and differences and similarities between companies considered and discussed, using the notes taken at the structured interviews. Taking the adoption of practices as an example, Figure 3 shows data applied to the new product introduction process only. Figure 4 shows a summary chart of the use of lean model practices across all the processes investigated in the industry. This enabled analysis to be carried out both at the macro and micro levels. Figure 3 also shows that of the 16 practices likely to be found in a typical lean volume automotive company in the
Score (per cent) 100 90 80 70 60 50 40 30 20 10 0 1 2 4 Practice 3 5 6 7 8 9 10 11 12 13 14 15 16
Low High

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Medium

Figure 3. Adoption of lean practices in new product introduction average

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new product introduction process, 11 of them (i.e. 69 per cent) had a high level of adoption in the civil aerospace companies investigated. Similarly 13 per cent had a medium level of adoption and only 18 per cent had a low adoption level.
Score (per cent) 100 80 60 40 20
High adoption Low adoption

906

Figure 4. Analysis example all processes

0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67

Practice

Figure 4 shows the aggregate situation for practices across all processes. It can be seen that of the 68 practices which a typical lean automotive manufacture is likely to be using, some 41 per cent of the total were assessed as having a high level of adoption (scoring > 0.65) and a further 15 per cent a medium level of adoption, leaving 44 per cent of practices at a low level of adoption. Of course, it is possible that the level of implementation of various practices and measures could vary not only between companies, but also within any one company over time. The latter would occur due to the dynamic nature of the diffusion of innovation. In terms of company transferability of lean practices and measures, it is important to know: where the company stands today. where it intends to go in the future. Given that the data were collected for the case study companies within a relatively short time horizon and were based only on what was actually happening as opposed to capturing their wish list, then the results will only capture the static (1) rather than the dynamic (2) aspect. Hence the results for either medium or low adoption categories could merely be picking up lags in the diffusion process. This is interesting in itself as whether one practice had assumed a higher importance than another to adopt, or whether some practices were more difficult to apply. Some further investigations surrounding, in particular, those practices with low adoption were carried out to provide some light on this, as will be discussed later on. Summary results from the methodology Finally, the total results for drivers, practices and measures for the aerospace companies surveyed can be assessed as shown in Table I.

This indicates that over 90 per cent of the drivers impacting on a typical lean automotive industry are seen to have some relevance to the civil aerospace sector as measured by the strong and moderate categories. Yet the use of practices and measures in response to these drivers is only 48 per cent and 54 per cent respectively in the aerospace companies investigated. There is clearly a substantial gap and from the initial investigations within the UK aerospace companies, it became apparent that the two customer interface processes, namely sales and marketing and service and product improvement, were very different from lean automotive experience.( For example, excluding executive jets, it was stated that the number of people with the authority to buy civil aircraft numbered between 300 and 500 worldwide. Thus the whole sales process was much longer, involved more people per sale, had a greater technical content, involved detailed lifetime cost analysis over periods up to 15 years, etc. significantly different from the way most people buy cars, other than possibly the UK fleet buyer). So by excluding these two processes, the revised results become as shown in Table II. This changes the figures to 97 per cent of the drivers are relevant and yet only 57 per cent of the practices and 56 per cent of the measures respectively are being used to a significant level in the companies. While there is some intensification in driver relevance and the practices and measures considered useful to adopt, the impact is not substantial. This may reflect the fact that either the civil aerospace companies have not yet completed their lean journey and/or that the practices and measures are not thought applicable. In support of the latter conclusion, key differences emerged surrounding the issues of: new product refinement for manufacture; sales and marketing;

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Driver relevance % High Medium Low 62.0 31.0 7.0

Practice use % 30.0 18.0 52.5

Measure use % 26.5 27.5 46.0

Table I. All process results

Driver relevance % High Medium Low 68.5 28.5 3.0

Practice use % 41.0 16.0 43.0

Measure use % 24.0 32.0 44.0

Table II. Process results excluding sales, marketing, service and product improvement

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ability to predict and control costs; operations management. In these areas the adoption of lean practices and measures was not as widely used. Consequently the average of the results was lower. Further investigation showed that key differences emerged in these low adoption areas: (1) New product refinement for manufacture: difficulty in refining the manufacturing process prior to initial sale; greater importance of solid modelling and digital definition; and difficulty in fully shelf engineering feature prior to product sale. (2) Customer interface importance of external finance to sales; and long product life and the many years of product support demanded. (3) Ability to control costs limited use of full target costing, which may be due to the perceived complexity of the product; uncertainty of the use of full open book purchasing; greater global sourcing of large subassemblies and parts, rather than systems creating complex logistical chains; time span of control on much work is long; and manufacturing not key owners of in-field quality. (4) Operations management lower importance given to manufacturing complexity (e.g. the cost impact of handling large numbers of part at one location is considered critical to lean auto producers less so with the aerospace companies visited); MRP under question, balanced production not possible; impact of late changes to specification( airframers only); more prescriptive method of defining quality partly regulatory; higher technical support required for support of manufacturing cells; and structurally not possible to provide labour stability due to cyclicity and non-integrated supply chains. Thus it is likely that the product derived unique characteristics of SVG companies producing low-volume highly differentiated products with low repeatability may help to explain the low level of practice adoption in these four key areas rather than as a result of lags in the diffusion process. This conclusion

should be treated with caution since it is based on the aerospace sector at a point in time and ideally more SVG products need investigating before a generic statement can be made. Also, the move in many of the companies visited to reduce the uniqueness of the engineering of their products, while still providing custom product for their customers, may speed up adoption in the future. Again, the relevance of this approach to other SVG goods would need investigation. Conclusion These results, while tentative, have helped to focus on areas of research where differences exist and have confirmed to participating companies key areas to maintain the implementation of lean approaches and those in which a certain amount of modification will be required or even a fundamentally different approach needed. The methodology itself proved a useful method for establishing the relative importance of operational drivers in the business and comparison of the relevance of practices and their control between companies in two apparently very different industries. The authors consider that the approach could be used to carry out such comparisons over a wide range of industrial operations, identifying areas where significant research is required to identify best practice and highlighting those where the effort should be on implementation. This could add much-needed research to our level of understanding of the suitability and applicability of lean manufacturing approaches to a wide range of supervalue goods producers.
Notes and references 1. Womack, J.P., Jones, D.T. and Roos, D., The Machine that Changed the World, Rawson Associates, 1990. 2. Krafcik, J.F., Triumph of the lean production system, Sloan Management Review, Vol. 30 No. 1, 1988. 3. Monden, Y., Toyota Production System, Norcross, GA, 1983. 4. Deming, W.E. Many of his works, the principles perhaps being best captured in Out of the Crisis, Quality, Productivity and the Competitive Position, Cambridge University Press, Cambridge, 1986. 5. Taylor, The Principles of Scientific Management, Harper Bros, New York, NY. 6. Skinner, W., Manufacturing missing link in corporate strategy, Harvard Business Review, May-June, 1969. 7. Hill, T., Manufacturing Strategy The Strategic Management of the Manufacturing Function, Macmillan, 1993. 8. Management & New Production Systems, International Journal of Operations & Production Management, Vol. 14 No. 3, 1994, Voss and Karlson (Eds), in particular, Voss, C.A., Chiesa, V. and Caughlan, P., Developing and testing benchmarking in selfassessment frameworks for manufacturing. 9. Lamming, R., Beyond Partnership Strategies for Innovation and Lean Supply, PrenticeHall, London, 1993. 10. Gordon, T. The underlying fallacies of lean and mean, The Ironbridge group, USA, BPICS CONTROL, August 1995.

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11. Berggren, Alternatives to Lean Production, ILR Press, Ithaca, NY, 1992. 12. Harrison, A., Just-in-Time Manufacturing in Perspective, Prentice-Hall, London, 1992. 13. Jones, D.T., Managing lean processes and lean logistics, Logistics Technology International, 1994. 14. Jina, J., Bhattacharya, A.K. and Walton, A.D., High product variety and low volumes: a challenge for lean manufacturing, 28th ISATA Conference, Stuttgart, September 1995. 15. McDonnell Douglas Bigger & Better, Flight Magazine, February 1995. 16. Gibbons, A. and Nelson, M. The importance of super value goods to Britains manufacturing sector in the future, internal Warwick paper awaiting publication. The definition of a super value good is fully developed in this article. 17. Gibbons, A., Walton, A., Manton, S. and Bhattacharya, S.K., principal investigators, JamesMoore, S.M.R., Chapman, P. and Nelson, M., researchers, EPSRC ref. GR/J96772. 18. Clarke, K.B. and Fujimoto, T., Product Development Performance Strategy, Organization and Management in the World Auto Industry, Harvard Business School Press, Cambridge, MA, 1991. 19. Stacking up to compete, an international survey of critical success factors in the civil aircraft manufacturing industry survey by Ingersoll Engineers, Rugby, 1994. 20. Andersen Consulting, Cardiff Business School and University of Cambridge, The Second Lean Enterprise Report, 1992, published 1994. 21. Chapman, P. and Gibbons, A., An assessment of civil aerospace drivers using Porter analysis, internal Warwick paper and James-Moore, M., internal Rover paper on Automotive industry drivers based on lean literature and benchmarking visits.

Appendix. Exemplar survey questionnaire for part of one process New product introduction the process of design and development of new products and technologies to meet a defined market need to the point of initial manufacture Used or not ? yes or no Used or not? yes or no

Key drivers Is the time it takes to introduce a new product to the market key? (Fashion/ Legislation)

Relevance 1-3 Practices

Measures

Values/targets BIC: 24 months

Do you develop new technologies before introducing them into new products (i.e. do you always shelf engineer)? In developing new products is responsibility given to a large project leader?

Do you measure the length of time from initial idea to programme approval? Do you measure the ratio of the number of initial concepts to the number finally approved?

BIC: 33%

(Continued )

Key drivers

Relevance 1-3 Practices

Used or not ? yes or no

Measures

Used or not? yes or no

Values/targets BIC: 20 months

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For new projects do you use a multi-functional team? In developing new products do you have supplier guest engineers working in-house with your design group? How relevant to you is the use of computer aided design? Do you use solid computer modelling? Do you use computers for adding parametrics? Do you buy complete systems, not components, when developing new products?

Do you measure the time from programme approval to initial volume production? Do you measure the % of your product designed by suppliers

Do you measure the % of your product designed on a computer?