Introduction to Lean
In this article we will take a look back at the history and some of the key milestones that have led to the development of Lean as it stands today and then provide a look at the state of Lean today in the public and private sector.
We will end with a short discussion about the possible future for Lean in the UK given where the economy may go in the next two years.
The Origins of Lean
Because Lean contains many elements that are intuitive (such as the desire to maximise productivity and ensure that waste is minimised) the history of Lean can be difficult to trace as much of what went before 1996 when the term Lean was coined would have appeared as good practice at the time and not necessarily have been seen as part of the development of a structured approach to transformation. Like much in the history of human development, it is the bringing together of many factors that has led to the development of Lean including the availability of tested methods, expertise to turn those methods into actions and the need for the methods (in the form of improved efficiency) that has driven its development.
Below, I have provided a summary Lean Timeline containing just a few of the many milestones that have led the way to today’s Lean movement. In the process of selecting items to include, I have had to miss out many more than I have put in including the importance of the US supermarket chain Piggly Wiggly in helping Toyota develop the concepts of the Toyota Production System and the work of the 18th Century economist Adam Smith in helping shape an economic environment in which businesses can have the freedom (and funds) to invest in Lean, but the box contains some of the most frequently cited examples of key Lean milestones.
Summary Lean Timeline
- From 1473 – The Venice Arsenal develop a continuous flow process based on mass produced and standardised items that ultimately enables them to produce an entire ship in around 1 day.
- 1776 – Lieutenant General Jean-Baptist de Gribeauval becomes Inspector of Artillery in France and starts to introduce reforms to reduce the diversity of artillery in use and replacing it with a more standardised range of weapons that also used a form of interchangeable parts and manufacture.
- 1799 – Eli Whitney, inventor of the Cotton Gin, takes on the contract to produce 10,000 muskets for the US Army at a low cost of $13.40 each. To enable him to do this he had perfected the process of designing interchangeable parts between the muskets which enabled the process to be divided up and standardised.
- 1894-1912- Frederick W Taylor publishes a series of articles on improving efficiency, with his key work ‘Principles of Scientific Management’ being published in 1911with details of how to eliminate many of the inefficient practices existing in industry at the time and strongly advocating standardised work and the division of labour to improve efficiency. Collectively this approach is later termed ‘Taylorism’
- 1905-1921 – Frank & Lillian Gilbreth (made famous by the film ‘Cheaper by the Dozen’ in 1950 and indirectly the reason for the name of this article) publish a series of articles and books on improving efficiency through Time & Motion Study, culminating in 1921 with their book ‘Time & Motion Study As Fundamental Factors in Planning & Control’.
- 1910 – Henry Ford along with Charles E Sorensen create a comprehensive manufacturing strategy and move to the Highland Park Plant, Michigan, which was the world’s first automobile plant that used an assembly line and in 1914 they create the first moving assembly line reducing production times by a further 75%.
- 1924-1939 – Walter Shewhart advocates statistical control of processes and later his work is adapted by W Edwards Deming to form the ‘Plan-Do-Check-Act’ cycle and to form the basis of Six Sigma although many of the concepts are also adopted within a Lean approach to effectiveness.
- 1943 – Taiichi Ohno joins Toyota Motor Corporation and later (1947 onwards) starts the development of what is now known as the Toyota Production System (TPS) incorporating cellular working, waste reduction, reduction of Work in Process (WIP), in-process inspection by workers and many of the other concepts, including (in 2001) the “respect for people” principle.
- 1983 – Robert Hall publishes ‘Zero Inventories’ which is seen as the first broad description of the Toyota Production System by an American author.
- 1990-1996 Jim Womack & Dan Jones produce ‘The machine that changed the world’ (1990) and ‘Lean Thinking’ (1996), coining the term Lean and defining the five principles of Lean.
Lean’s Place Today
What can be seen by the history of Lean is that it has been a process of adaptation of ideas, incorporation of new thinking and extensive testing and we can only expect this to continue into the future.
In this section we will examine the current state of Lean in three main areas, namely the Public Sector, Service Industries and in its traditional home of Manufacturing. What is clear is that in times of economic uncertainty such as we are currently experiencing Lean has an even bigger role to play in helping drive out wastes in organisations but also that these very same organisations are just as likely not to invest in Lean at this time due to the economic pressures, what can be termed a no win situation.
Lean in the Public Sector Following the publication in 2004 of the Gershon Review (titled ‘Releasing resources to the front line) the public sector has been driven by the need both to demonstrate that the services they are buying and providing can be considered value for money and to demonstrate that they are continuing to improve the effectiveness of the services they provide.
Like many manufacturing companies, a large number of public sector organisations have used Lean to deliver short term improvements in performance to meet their obligations under the efficiency agenda and whilst this has generated some significant gains (such as the reduction in the time taken to process high demand housing adaptations for disabled people in one area from 200 days to 12 days) fewer of them are realising the longer-term organisational benefits that can accrue through the associated cultural change that Lean can bring (most notably in creating an environment that supports continuous improvement) rather than just the short term cash and resource releasing benefits that can be achieved.
The available evidence suggests that at a local level (such as local councils or individual NHS organisations) there are islands of excellence but the uptake of Lean is both patchy and in many organisations has been started and then stopped. Some of the factors that seem to underpin this patchwork approach to Lean are the creation of a reliance on an external consultancy that is not transferred to an internal team (and becomes uneconomic to support), a change of management focus (or even a change of management) or simply that Lean was adopted to tackle a short-term strategic issue and was not seen as a long-term concept for organisation wide change.
However, there are still some very inspiring stories of the use of Lean in the public sector in areas such as HM Revenue & Customs and the NHS, with the latter using Lean to both improve safety and the experience of patients as well as the more traditional use in reducing costs and increasing capacity in places such as theaters and outpatient departments.
With 1 in 5 workers in the UK employed in the public sector there is obviously a great scope for Lean to be used to improve efficiency in vital areas such as health and local services but the reduction in revenues that can be expected due to the current economic conditions will significantly reduce the revenues available to fund the external support that has marked out the growth of Lean in public services and this will place an increasing need on public sector organisations to grow their own Lean capability.
Lean in the Service Industries With far more people employed in the service sector than in the traditional industrial sector (with common estimates stating that there are 4-6 service sector jobs for every manufacturing position) there is obviously a large market for Lean but until recently the uptake of Lean in the service sector has not been a prolific as that seen in the manufacturing sector. Some of this was to do with difficulties in the translation of concepts such as continuous flow and standardised work from an industrial to a service context but it was also the absence of established success stories that initially prevented service companies from investing in Lean.
Like the history of Lean generally, the history of Lean in the Service Sector is mixed up with examples of good practice that go back many years but a good stake in the ground for the start of the efficiency drive in the service sector can be traced to the book ‘Relevance Lost’ by Johnson & Kaplan (1991) which ultimately led to the Lean movement in the accountancy sector.
Attempts to introduce Lean (although it was not called such at the time, being mostly done under the banner of Business Process Re-engineering) into the service sector in the early to mid 1990s tended to fall over because the approaches either did not ‘fit’ (being too industrial in nature), were too disruptive, for example trying to transform the entire organisation simultaneously, or proponents misused the concepts to dehumanize workplaces.
Over the last 10 years, and with the development of Lean since 1996, there has been an increasing number of case studies of Lean being used in such places as call centers to improve capacity, the energy sector to reduce administrative overheads and the financial services sector (although I am sure the adoption of Lean was not at the center of the current banking crisis).
There have even been tentative steps taken by various government agencies to promote Lean in the Service Sector (or Lean Office as it is sometimes also termed to allow it to include the administrative functions of manufacturing companies as well as purely service sector organisations) and there does seem to be a correlation between the availability of case studies, the production of available information and the uptake of Lean in the Service Sector since 2000 with an increase in any one of these three areas driving an increase in the other two, for example more case studies triggers more published materials and this in turn has an impact on the uptake.
From discussions with organisations actively involved in delivering Lean in the Service Sector the message is broadly consistent in that those organisations who have seen the benefits of Lean are continuing to invest in reducing costs and improving effectiveness (albeit a number have scaled back the size of their investment) whilst most of those who were toying with Lean prior to the current economic conditions have parked their investment plans for the current time.
The benefits of Lean in the Service Sector are clear from the many case studies that exist, from reducing the time taken to answer calls to a call centre by 90% through to reducing the costs of processing claims in the insurance sector by 75%, but like the public sector the focus has to be on developing internal capability rather than creating or continuing the dependence on external consultants and there are an increasing number of books and workshops with titles such as ‘Lean in the Office’, ‘Lean Accounting’ and ‘Lean in Service’ that underpin the drive to raise the Lean skills of people in the service sector.
Lean in Manufacturing
Manufacturing is the traditional home of Lean and certainly the one with the greatest number of case studies. In addition, the government has invested heavily in promoting Lean in manufacturing through schemes aimed at raising the number of people with Lean skills (including the promotion of the Lean based Business Improvement Techniques NVQ) and also providing discounted consulting advice to SMEs, but even given the length of time people have had to invest in Lean and get it right there are still a large percentage of manufacturing companies paying lip service to Lean or using it purely as a tactical vehicle for short term improvements.
The real issues that underpin why manufacturers have had a love/hate relationship with Lean have revolved around their ability to both turn great plans into great benefits and then sustaining the change against forces that want to return to the ‘old ways’. Productivity in manufacturing has gone up over the last 15 years although it would be impossible to state how much of this has been due to Lean and how much has been brought about by the changing mix of manufacturing in the UK (away from low cost/low margin producers to higher value add manufacturing) but Lean and similar approaches have certainly played a part in the improvements in many companies.
The application of Lean in manufacturing was initially focused on reducing lead-times and the overall amount of work required to produce each item, but latterly has focused on the whole enterprise including the sales and finance functions, stock management, distribution and service. In essence, the focus of Lean for many manufacturing companies is now taking what Professor Michael Porter describes as a ‘Value Chain’ approach from initial concept through to after-sales service.
The results for those manufacturing companies investing in the cultural as well as the process changes that can be achieved by Lean are seeing a year on year reduction in operating costs, increased flexibility, better customer service and reduced defects, but with the current economic conditions pressing hard on the manufacturing sector generally many organisations who were previously investing in Lean have either scaled back or stopped their investment completely. The long term effects of these decisions will be difficult to estimate but it will certainly introduce an amount of inertia that, when things start to pick up, the organisations will need to overcome again to get their Lean programme back on track.
Lean – Alive & Kicking
What can be seen is that Lean is alive and kicking across most of the UK and even though the current economic conditions has created a ‘slow down’ in the progress to Lean, it still has a role to play. If the economy continues to be depressed throughout 2009 and into 2010/11 then Lean will be an essential tool for enabling organisations to reduce costs and create flexible and responsive processes.
When the economy starts to recover, Lean can help organisations to achieve ‘first mover’ advantage as new opportunities appear and it also plays a role in the development of effective new products and services that will meet the growing demand that will signal the start of the recovery.
When back to full strength, Lean has a role to play in creating a culture of continuous improvement that will prepare your organisation not just for the recovery but for any future ups or downs that your market may experience.
Mark Eaton MSc MBA CEng FIOM FIET FRSA
Formerly the director of a number of publicly funded Lean Programmes in the UK and the author of a number of productivity and innovation related strategies for the UK government, in 2004 Mark was awarded the Viscount Nuffield Medal for his contribution to UK Manufacturing. Mark is a director of Amnis, a consultancy active in the health and local government sector, and he is the author of numerous papers and the books ‘Lean for Practitioners’ and ‘Sustaining Lean Healthcare Programmes’.
Author: Mark Eaton