Page 43 - How To Implement Lean Manufacturing

24 Cha pte r T w o

the plant; and in the end the plant is providing several societal needs. Ohno simply took
a huge leap beyond the normal thinking at a plant and in the end really tied his manu-
facturing system to the customer, letting the customer decide how he should redesign
his system. He truly was connected to the customer, and that connection helped pro-
vide what the customer really wanted: value.

Reduction of Lead Times
In his book, The Toyota Production System, Beyond Large-Scale Production, (Productivity
Press, 1988) Ohno commented on what Toyota was doing, writing that:
The point here is that the TPS is clearly a system
whose function is the reduction of lead times. In
“All we are doing is Ohno’s writings, he does not really stress this point
looking at the time line from beyond what has been quoted. Instead, he focuses
the moment the customer on the means to achieve reduced lead times, which
gives us an order to the point are, of course, waste reductions.
when we collect the cash …. The means of reducing lead time is through waste
And we are reducing that time reduction, but the benefits of reduced lead time go
well beyond the obvious savings regarding the waste
line by removing the non-value-
” times can be seen in a variety of activities in the typi-
added wastes. that was eliminated. The beauty of reducing lead
T. Ohno
cal business. Take, for example, when a specification
needs to be changed. This always raises the question
of product obsolescence and the scrapping of those
obsolete units. However, the bigger business ques-
Point of Clarity A key metric tion is, “Who pays for the obsolescence?” As you
in the TPS is lead time; the key reduce lead times, the impact of this obsolescence is
goal is lead time reduction. reduced. This fact is not missed by the typical pro-
duction manager.
However, lead time reduction goes way beyond
that and can be seen in two parameters that all managers want, but few know how to
obtain. A plant with shorter lead times is both more responsive and more flexible. It is
more responsive in terms of being able to change when the customer’s schedule changes.
It does not matter if the change is volume or model mix or both. With reduced lead
times, a plant is better positioned for both types of changes.
There is yet another benefit of reduced lead time that is not discussed at all in
the TPS literature: future business. It is not part of the TPS literature because the
TPS is designed for a business that has a secured customer and some sense of future
commitments—hence, a relatively stable demand. The concept of takt, for example,
states that there is a commitment of product demand by the customer. This is not true
in all businesses. Take a typical job shop in which each job is unique—possibly a cabinet
maker or your standard air conditioner supplier. It is not easy to calculate takt for them,
yet unbeknownst to most of the mass production world, lead time is THE key metric for
them. Having a short lead time not only improves their quality responsiveness and cash
flow, it dramatically increases their possibility of getting future work. If the salesman
can quote short lead times and deliver, he will get a lot of business. He will literally steal
business from long-lead-time suppliers even if he does not have the lowest cost. Inter-
estingly enough, in my experience I have found that those with the shortest lead times
are often also the suppliers with the lowest cost.