Lean Thinking Read online

  Also by James P. Womack and Daniel T. Jones

  The Machine That Changed the World

  (with Daniel Roos)

  The Future of the Automobile

  (with Alan Altshuler, Martin Anderson, and Daniel Roos)

  Seeing the Whole: Mapping the Extended Value Stream

  FREE PRESS

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  Copyright © 1996, 2003 by James Womack and Daniel Jones

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  ISBN 0-7432-4927-5

  eISBN-13: 978-1-4391-3595-2

  For Anne

  Both necessary and sufficient;

  my picture of perfection

  J.P.W.

  and

  for Pat

  My patient and wise counselor

  D.T.J.

  Preface to the 2003 Editio n

  Lean Thinking was first published in the fall of 1996, just in time—we thought—for the recession of 1997 and the financial meltdown of 1998. The book’s mission was to explain how to get beyond the financial games of the 1990s to create real, lasting value in any business. Toward this end, it demonstrated how a range of firms in North America, Europe, and Japan took advantage of the recession of 1991 to rethink their strategies and embark on a new path.

  In our presentations to industrial audiences, we often point out that the only sure thing about forecasts is that they are wrong. (Which is why lean thinkers strive to reduce order-to-delivery times to such an extent that most products can be made to order and always try to add or subtract capacity in small increments.) Instead of a recession in 1997, the most ebullient economy of the entire twentieth century charged ahead for five more years, into 2001, extending a remarkable era in which practically anyone could succeed in business.

  Given that the book was published years before our ideas were most needed, it’s surprising how many readers took the advice in Lean Thinking seriously during the best of times. More than 300,000 copies have been sold in English, and it’s been translated into German, French, Italian, Portuguese, Polish, Turkish, Korean, Japanese, and Chinese. We have heard from readers across the world about their successes in applying its principles.

  Once reality caught up with our forecast, and the recession of 2001 gave way to the financial meltdown of 2002, reader interest surged. Indeed, Lean Thinking reappeared on the Business Week business-books bestseller list in 2001—nearly five years after its launch and with no publicity campaign—an unprecedented event, according to our publishers.

  Given clear evidence that readers are now finding Lean Thinking even more relevant in their business lives than when it was first published, we have decided to expand and reissue the book. In Part I we explain some simple, actionable principles for creating lasting value in any business during any business conditions. We then show in Part II how to apply these principles, step by step, in real businesses, from large to small. In Part III , we show how a relentless focus on the value stream for every product—from concept to launch and order to delivery, and from the upstream headwaters of the supply base all the way downstream into the arms of the customer—can create a true lean enterprise that optimizes the value created for the customer while minimizing time, cost, and errors.

  In the two new chapters of Part IV , we bring the story of the continuing advance of lean thinking up-to-date. We track the trend in inventory turns—the lean metric that cannot lie—across all industries, singling out one industry for special praise. We also track the progress of our profiled companies. We discover that as economies have gyrated, stock markets have crashed, and the poster companies of the 1990s hailed in other business books have flown a ballistic trajectory, our lean exemplars—led by Toyota—have defied the fate of most firms featured in successful business books. They have continued their methodical march from success to success and have done it the hard way by creating real and truly sustainable value for their customers, their employees, and their owners.

  Finally, in the concluding chapter, we share what we have ourselves learned since 1996 about lean thinking and its successful application by describing a range of new implementation tools. These begin with the concept of value stream mapping, which we have found to be a remarkable way to raise consciousness about value and its components, leading to action.

  In revising the book we have corrected a few minor errors and omissions in the original text. However, we have been careful not to change the pagination. We know that many organizations use Lean Thinking as a text to guide their change process, distributing copies widely and often including their distributors and suppliers. Thus we wanted to ensure that there will be no difficulty in interchanging the two editions.

  Today, nearly seven years after its publication, we are even more certain that lean thinking, as explained in Lean Thinking, is the single most powerful tool available for creating value while eliminating waste in any organization. We hope that previous readers will use this new edition as an opportunity to renew their commitment to lean principles. And we especially hope that many new readers will discover a whole new world of opportunity.

  Jim Womack and Dan Jones

  Brookline, Massachusetts, and Ross-on-Wye, Herefordshire, U.K.

  February 2003

  Contents

  Preface to the 2003 Edition

  Preface to the First Edition: From Lean Production to Lean Enterprise

  PART I: LEAN PRINCIPLES

  Introduction: Lean Thinking versus Muda

  1. Value Introduction: Lean Thinking versus

  2. The Value Stream

  3. Flow

  4. Pull

  5. Perfection

  PART II: FROM THINKING TO ACTION: THE LEAN LEAP

  6. The Simple Case

  7. A Harder Case

  8. The Acid Test

  9. Lean Thinking versus German Technik

  10. Mighty Toyota; Tiny Showa

  11. An Action Plan

  PART III: LEAN ENTERPRISE

  12. A Channel for the Stream; a Valley for the Channel

  13. Dreaming About Perfection

  PART IV: EPILOGUE

  14. The Steady Advance of Lean Thinking

  15. Institutionalizing the Revolutio n

  Afterword: The Lean Network

  Appendix: Individuals and Organizations Who Helped

  Glossary

  Notes

  Bibliography

  Index

  PREFACE TO THE FIRST EDITION

  From Lean Production to Lean Enterprise

  In the fall of 1990, we set out on a trip around the world to launch our previous book, The Machine That Changed the World. Our objective was to send a wake-up message to organizations, managers, employees, and investors stuck in the old-fashioned world of mass production. Machine presented a wealth of benchmarking data to show that there is a better way to organize and manage customer relations, the supply chain, product development, and production operations, an approach pioneered by the Toyota company after World War II. We labeled this new way lean pro
duction because it does more and more with less and less.

  As we started our travels across North America, then to Japan (where many mass producers still reside) and Korea, and on through Europe, we were greatly concerned that no one would listen. Perhaps the slumber of mass production was too deep to disturb? In fact, The Machine That Changed the World found an overwhelming response. More than 400,000 copies have been sold so far in eleven languages (not counting the pirated Chinese translation). 1 Far from ignoring our findings or resisting our advice, many audiences during that inaugural trip and many readers in subsequent forums told us that they were anxious to give lean production a try. Their question was seemingly a simple one: How do we do it?

  In posing this question, they were not asking about specific techniques—how to organize teams, how to use Quality Function Deployment in product development, or how to poka-yoke (mistake-proof) production processes. After all, there is a plethora of very good books on each of these topics. Rather, they were asking: What are the key principles to guide our actions? and How do we as managers, employees, investors, suppliers, and customers take stuck-in-the-mud mass production organizations and make them lean? A few thoughtful respondents asked an even more difficult question: What comes next? What’s the next leap, once you become a Toyota yourself ?

  The fact was, we didn’t know the answers. We had been busy benchmarking industrial performance across the world for fifteen years, but Machine focused on aggregated processes—product development, sales, production—rather than broad principles, and we had never ourselves tried to convert a mass-production organization into a lean one. What was more, we had been so busy thinking through the initial leap from mass to lean production that we had not had time to think much about next steps for firms like Toyota.

  The idea for this book emerged directly from these questions. First, we realized that we needed to concisely summarize the principles of “lean thinking” to provide a sort of North Star, a dependable guide for action for managers striving to transcend the day-to-day chaos of mass production. This summary was hard for most readers to construct because the Japanese originators of lean techniques worked from the bottom up. They talked and thought mostly about specific methods applied to specific activities in engineering offices, purchasing departments, sales groups, and factories: dedicated product development teams, target pricing, level scheduling, cellular manufacturing. Although they wrote whole books describing specific techniques and a few high-level philosophic reflections as well (such as the memoirs of Taiichi Ohno), 2 the thought process needed to tie all the methods together into a complete system was left largely implicit. As a result, we met many managers who had drowned in techniques as they tried to implement isolated bits of a lean system without understanding the whole.

  After interactions with many audiences and considerable reflection, we concluded that lean thinking can be summarized in five principles: precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let the customer pull value from the producer, and pursue perfection. By clearly understanding these principles, and then tying them all together, managers can make full use of lean techniques and maintain a steady course. These principles and their application are the subject of Part I of this book.

  With regard to the conversion process, we knew of one heroic example—the original lean leap by Toyota immediately after World War II—but only in sketchy outline. What was more, our most striking benchmark examples in Machine were the “greenfield” plants started from scratch by Japanese auto firms in the West in the 1980s. These were critical achievements because they blew away all the claims, so prevalent up to that time, that, to work, lean production somehow depended on Japanese cultural institutions. Greenfields, however—with new bricks and mortar, new employees, and new tools—bore little resemblance to the long-established “brownfields” most managers were struggling to fix. Our readers wanted a detailed plan of march suited to their reality, and one that would apply in any industry.

  We therefore resolved to identify firms in a range of industries in the leading industrial countries that had created or were creating lean organizations from mass-production brownfields. Observing what they had done seemed to be our best hope of discovering the common methods of becoming lean. In doing this, we did not want a survey to discover average practice but rather to concentrate on the outliers—those organizations recently moving far beyond convention to make a true leap into leanness.

  But where to find them? We knew the motor vehicle industry well, but we wanted examples from across the industrial landscape, including service organizations. In addition, we wanted examples of small firms to complement household-name giants, low-volume producers to contrast with high-volume automakers, and “high-tech” firms to compare against those with mature technologies.

  In the end, through a lot of hard digging and some good fortune, we tapped into networks of lean thinking executives in North America, Europe, and Japan, and gained hands-on experience from a personal investment in a small manufacturing company. Over a four-year period, we interacted with more than fifty firms in a wide range of industries and gained a deep understanding of the human exertions needed to convert mass-production organizations to leanness. We describe our findings and prescribe a practical plan of action in Part II of this book.

  To our delight, as we began to find our key examples, this book became an intensive collaboration between a group of like-minded people across the world. They believe passionately in a set of ideas, have made great progress in introducing them, and want to see lean thinking universally embraced. At the end of this volume we list the firms and executives we have worked with and describe ways for you to join them. Here let us simply express our profound appreciation for the hours, days, and even weeks many of them took with us.

  Because we needed to look at the entire firm, indeed at the whole value stream for specific products, running from raw material to finished good, order to delivery, and concept to launch, and because we needed to examine many things which would rightly be considered proprietary, we proposed an unusual way of working together. In return for access to every aspect of the firm, including interviews with suppliers, customers, and unions, we offered to share our drafts with our respondents, asking for criticism and corrections. We stated in advance that any material our example firms could not bear seeing in the public domain would be deleted, but if the need to protect proprietary interests (or self-esteem) required deletion of those details which made the story “true,” we would simply leave the firm in question out of the book. In the end we didn’t lose anyone.

  Our method of working as outsider-insiders, perhaps first used fifty years ago by Peter Drucker for his landmark study of General Motors, The Concept of the Corporation, 3 placed special demands for “transparency” on the authors. There is today a profound and warranted skepticism about “business” books, both because they promise instant cures and because their authors—especially consultants but sometimes academics as well—have financial links to the firms they write about. We therefore need to assure you that we have no financial or consulting relationship of any sort to any of the individuals or firms we write about in these pages. 4 We need to further assure you that we have verified all the performance data presented. Indeed, in most cases we have verified it with our own eyes by walking the production floor and spending extended periods in the engineering, marketing, sales, customer support, and purchasing functions and with product development teams.

  In order to maintain complete independence in our search for leanness, we financed our efforts over four years with an advance from Simon & Schuster and from our personal savings.

  As we began to write up our findings on how to make a lean leap in traditional, mass-production organizations, we began to realize that it is both possible and necessary to go even farther than any firms have done to date. A wholly new way of thinking about the roles of firms, functions, and careers t
o channel the flow of value from concept to launch, order to delivery, and raw material into the arms of the customer is now needed in order to achieve a further “leap.” A new concept—the lean enterprise —can move the whole “value stream” for products dramatically in the direction of perfection. We introduce this concept briefly in Part I and then look carefully at the challenge of lean enterprise in Part III . There we also dream a bit about the next “leap.” No one has made it yet. Perhaps some reader will be the first.

  After four years of exhaustive study of organizations around the world who are actually doing it, we now know how to succeed at leanness. As the examples will show, we know how to apply lean thinking, techniques, and organization to practically any activity, whether a good or a service. What’s more, we now have a glimmering of the next leap beyond today’s best practice. In the pages ahead we’ll explain in detail what to do and why. Your job, therefore, is simple: Just do it!

  PART I

  LEAN PRINCIPLES

  INTRODUCTION

  Lean Thinking versus Muda

  Muda. It’s the one word of Japanese you really must know. It sounds awful as it rolls off your tongue and it should, because muda means “waste,” specifically any human activity which absorbs resources but creates no value: mistakes which require rectification, production of items no one wants so that inventories and remaindered goods pile up, processing steps which aren’t actually needed, movement of employees and transport of goods from one place to another without any purpose, groups of people in a downstream activity standing around waiting because an upstream activity has not delivered on time, and goods and services which don’t meet the needs of the customer.

  Taiichi Ohno (1912–1990), the Toyota executive who was the most ferocious foe of waste human history has produced, identified the first seven types of muda described above and we’ve added the final one. 1 Perhaps there are even more. But however many varieties of muda there may be, it’s hard to dispute—from even the most casual observation of what gets done in an average day in the average organization—that muda is everywhere. What’s more, as you learn to see muda in the pages ahead, you will discover that there is even more around than you ever dreamed.