What to Expect From Corporate Lean Programs

Book description

Corporate “lean” programs, often modeled after the Toyota Production System, can be powerful instruments for improving the performance of manufacturing plants. They help to emphasize parts of the production process that add the most value and eliminate those that don’t. However, misplaced expectations can make implementation difficult and reduce the benefits. The authors argue that if managers better understood the rates at which lean programs produce improvements, then implementations would go more smoothly. Typically, the goal of a production system is to provide a clear and stable structure and a road map for instilling a culture of continuous improvement throughout a company’s production network. But, as the authors point out, every plant is different, and different plants are likely to face different sets of competitive and market conditions. For the growing number of multinational manufacturers that have introduced or are considering lean production systems, the issue is not whether the programs are useful but how to manage their implementation. The authors studied the implementation of the Volvo Group’s production system. (The company, a leading maker of trucks and other heavy vehicles, sold its car-manufacturing unit in 1999.) Volvo Group introduced the Volvo Production System in 2007, and since then, it has been implementing it in its factories around the world. The authors examined the five-year history of the Volvo Production System, visited 44 of Volvo’s 67 plants and interviewed 200 managers. The authors found that there were four distinct stages of change in the rate of performance improvement and that there was a strong relationship between a plant’s maturity in a production system implementation and its performance; progress roughly followed the shape of an S-curve. The pattern implies that a plant’s rate of improvement changes in the shape of a bell curve as the plant becomes more mature in implementing the production system. Performance improves slowly at first, and then at an increasing rate before the improvement rate gradually decreases. To measure the performance of the plants, the authors focused on nonfinancial metrics related to the quality, cost, delivery and safety of the plant’s output. They obtained this data from the company’s documents and during plant visits and interviews. They then used statistical methods to find patterns. Volvo’s assessment process provides a structure and a standard by which local managers can compare their plants with others. It also provides a mechanism for transferring expertise and best practices. The assessments have a strong symbolic impact: They communicate the company’s commitment to the production system. Implementing a production system is a long journey, but the authors conclude that it’s a worthwhile endeavor.