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Ten misconceptions about Lean Manufacturing!!

From time to time, you get squeezed on every front – the blog has suffered a bit in that time. But there’s light at the end of the tunnel.

This chap is turning ONE! That’s my son Sahel and he turned 1 on July 29th this year and we’re having a birthday bash this coming weekend. Its a bash alright and even though he might not remember anything about it, he will sure get to see the photos. And videos as well.

Sahel’s picture

Meanwhile, I came across this article titled – 10 Common Misconceptions about Lean Manufacturing which I found to be quite interesting. #8 picks my fancy because it is an important point about balance:

8. Lean is the elimination of waste. Much of Lean is about getting rid of waste (muda). There is also the elimination of variation (mura) and overburden (muri). Variation can result in overburden, resulting in waste. The elimination of waste is good shorthand for getting rid of the root causes, which include overburden (forcing a system to do something it is not designed to) due to variation (in customer demand, people’s ability, material quality,etc.), in order to build a stronger system.


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Free download of Six Sigma guide

Manufacturing Trends is making available a free download of an "experts" guide to Six Sigma . I quickly perused it and it looks fine but as always as far as statistical symbols go, a little due diligence is always a good measure. You have to register in order to obtain the download but I think its worth it.

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Training within Industry and Toyota

A quick note for today. I came across this rather interesting Lean exercise through a Yahoo group. This presentation, by John Shook, is about Training Within Industry (TWI) and how Toyota adapted and developed these methods.I think it fills in some of the blanks of what constitutes some high level overview of how a continuous improvement based system should look like including the famous P-D-C-A (Plan – Do – Check – Act) methodology.

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Toyota plans ultra-inexpensive car

As reported in the news today, Toyota plans ultra-inexpensive car – Wow!

Toyota Motor Corp. plans to build a low-cost car undercutting Renault’s emerging-market Logan through a “radical” rethink in design and production, the president of the fast-growing Japanese automaker said.

What is the Logan from Renault? (More information available at Wikipedia)

The Renault Logan is the latest car to enter the super budget automobiles, and will compete with the best of the world’s cheapest automobiles.


Renault aims to retail the car for Eur 5000 (about $6105) and the competition that its expected to take on are:

Targets for the Renault Logan include Rover’s CityRover, Kia Picanto, Seat Arosa, Daihatsu Cuore, Daewoo Matiz and shortly the Volkswagen Fox.

So what does Toyota plan in order to take on the competition?

“The focus is on low-cost technology,” Toyota president Katsuaki Watanabe told Britain’s Financial Times newspaper in an interview published Monday.
He declined to set a price for a low-cost car but said it would be “at least” less than the Logan.

Like I have said many times before, Toyota may come in above the Logan’s price to begin with in their first iteration but one can’t fault them for knowing what the market would support. And if you’re aiming to compete as the low-cost technology, they will quickly apply their TPS and continuous improvement methodology and push that price lower, lower with every continuing iteration.
Here’s the principal idea outlined by Toyota’s CEO:

Watanabe said that Toyota could slash the price by targetting costs throughout production.
“Everything from design to production methods will be radically changed and we are thinking of a really ultra-low-cost way of designing, using ultra-low-cost materials, even developing new materials if necessary,” he said.

Again, Toyota is focusing on its twin competencies of product design and production rather than advertising and financing to execute their strategy of competing in the low-cost car segment. Also consider their built-up experience in hybrids and whether hybrid power systems will get cheap enough to be put under the hood of a low-cost car.
Needless to say that this announcement will sound a loud boom across the bow of US carmakers.

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Building a lean supply chain

In the article Building a lean supply chain, Adam J Fein takes up the notion of building a lean supply chain and how far down along that path supply chain investments and executives really are. The article is dated Feb 2006 and so is not that far from the current state of affairs.
Adam Fein notes,

There is a widely held, but inaccurate, perception that new technologies have led directly to declines in the inventory-to-sales ratio, an important indicator of “buffer inventory” in the supply chain. In theory, information technology-based supply chain practices such as just-in-time (JIT) inventory management, warehouse automation, and the introduction of bar codes should have allowed companies to improve their management of orders and stockpiles of materials.

And further,

However, the empirical evidence for leaner supply chains is surprisingly weak. Economic research studies continue to find that aggregate manufacturing, wholesale, and retail inventory-to-sales ratios remain within historical ranges. For example, the inventory-to-sales ratio for wholesale distribution was essentially unchanged in the 1990s and has only begun trending down slightly in the past four years.

Adam Fein also refers us to the research paper on which this article is based on. From the article, Adam Fein notes the testimony of an official from the Federal Reserve Bank concerning inventory growth:

In testimony to the United States Senate, Federal Reserve Bank of New York Senior Vice President Charles Steindel stated that “…the inventory-sales ratio in manufacturing has declined almost continuously since the early 1990s, which we think is consistent with improved inventory management techniques.” (Steindel 1999). Vice Chairman of the Federal Reserve Board Ferguson offered additional support by noting that “… investments in information technologies have helped firms to cut back on the volume of inventories that they hold as a precaution against glitches in their supply chain or as a hedge against unexpected increases in aggregate demand” (Ferguson 2001).

Further more, he notes in his research paper,

Finally, at least some private companies invest in supply chain technology based on this belief. A 2003 survey found that 56 percent of supply chain management software buyers name “reducing inventory” as the most important factor fueling their investment in supply chain technology.

However, Adam Fein notes that inventory-sales ratios have not been declining,

Filardo (1995) argues the aggregate manufacturing, wholesale trade, and retail trade inventory-sales ratio have all remained within their historical ranges. Stock and Watson (2002) show that the relative volatility of inventories and sales has not changed as much as previously estimated by using more sensitive statistical tests. Khan (2003) questions the impact of technological innovation on the aggregate inventory-sales ratio by noting that the nominal inventory-sales ratio rose before it fell. Ginter and La Londe (2001), in one of the few studies to use financial statements from public companies instead of government data, conclude that some industries have seen substantial declines, while others have shown no improvement or shown an increase in inventory levels.


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Toyota, Toyota… Part 2

In Toyota, Toyota… Part 1, I looked into a recent challenge outlined by Toyota’s CEO, Katsuaki Watanabe, to his firm about competition in the auto business.
In this post, I want to look at older article from HBS Working Knowledge titled How Toyota Turns Workers Into Problem Solvers. The article is an interview by with Steven Spear from HBS. The other author in the background that is referred to is Professor H. Kent Bowen who teaches at HBS.
The rationale for studying Toyota’s Production System (TPS) long after a deluge of similar such efforts by various researchers and journalists in various quarters is articulated by Steven Spear as follows:

However, despite Toyota’s openness and the genuinely honest efforts by other companies over many years to emulate Toyota, no one had yet matched Toyota in terms of having simultaneously high-quality, low-cost, short lead-time, flexible production over time and broadly based across the system.
It was from observations such as these that Kent and I started to form the impression that despite all the attention that had already been paid to Toyota, something critical was being missed. Therefore, we approached people at Toyota to ask what they did that others might have missed.

And furthermore,

To paraphrase one of our contacts, he said, “It’s not that we don’t want to tell you what TPS is, it’s that we can’t. We don’t have adequate words for it. But, we can show you what TPS is.”
Over about a four-year period, they showed us how work was actually done in practice in dozens of plants. Kent and I went to Toyota plants and those of suppliers here in the U.S. and in Japan and directly watched literally hundreds of people in a wide variety of roles, functional specialties, and hierarchical levels. I personally was in the field for at least 180 working days during that time and even spent one week at a non-Toyota plant doing assembly work and spent another five months as part of a Toyota team that was trying to teach TPS at a first-tier supplier in Kentucky.

Empiricism is defined as a reliance on observations of phenomenon as perceived in experience of the observer. But for empiricism to be a profitable (and this word is used loosely), you need observers who bounce of ideas against each other, fine tuning their perceptiveness as they advance along the road of interpreting their experiences and observations of phenomenon. It is this collective work built on their shared individual observations, responses and ensuing discussion that in the most general sense creates a framework, specialized langugage and the basis of integrating future observations. In short, this is a body of knowledge that is not only true in the light of observations but also serves as a basis for the future.
What I think that the employees at Toyota were doing in their response is illustrating this problem of articulating this collective body of knowledge (of which culture is but a representation) pithily or in some easily transferrable form – or in other words, it is not in the saying, it is in the doing, the shared doing, structuring and integrating the learned lessons back into the doing on a continual basis. In this framework, there is an insistence on work, understanding it, refining it but in the back on one’s mind is a reflective process of adjusting work to reality.

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Toyota, Toyota … Part 1

In a short span of ten minutes, I came across three different articles on Toyota, one more than 5 years old (How Toyota turns workers into problem solvers) and the other two quite recent. The first article is from WSJ (Wall Street Journal) As rivals catch up, Toyota CEO spurs big efficiency drive (Only preview is available except to subscribers).
The central points of the article are summarized below:

  • Katsuaki Watanabe, Toyota’s CEO, thinks Toyota is losing its competitive edge as it expands around the world.
  • He frets that quality, the foundation of its U.S. success, is slipping.
  • He grouses that Toyota’s factories and engineering practices aren’t efficient enough.
  • Within the company, he has even questioned a core tenet of Toyota’s corporate culture — kaizen, the relentless focus on incremental improvement.
  • Mr. Watanabe wants kakushin, or revolutionary change in how Toyota designs cars and factories.
  • He is pushing Toyota to reduce the number of components it uses in a typical vehicle by half — a radical idea that would usher in a new chapter in car design.
  • He also wants to create new fast and flexible plants to assemble these simplified cars.


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About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

@ SCM Clustrmap

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