A few years back I had the privilege of providing translation services for Hiroyuki Hirano when he wrote "JIT Is Flow". (Among my talents is fluency in Janglish – the ability to convert a wretched combination of Japanese and English into a more readable form of English) Hirano is a brilliant guy and the book is, hands down, the best explanation of how the various elements of lean shop floor techniques integrate to provide a cohesive operations process.
In the opening chapters, Hirano offers the economic necessity for lean as the dawning of a 'linear economy'. He wrote back in 2006 that "consumers travel in the lines best suited to their lifestyles. They go from home to their place of work to their place of school and recreation. Consumers expect to obtain all of the goods they need or desire along those lines with a minimum of delay and cost. Internet based retailing and drive through service are examples of the trend toward this linear economy."
The guy was prophetic as, four years later, we read how Walmart's Neighborhood Market stores "already have drive-thru windows where you can pick up pre-ordered merchandise. These online orders are how a mini-Walmart could stay small but still have a wide range of products available."
This is the model British based Tesco has been deploying for some time with outrageous success. Walmart is slowing down its big box store building and pursuing the concept for the very reasons Hirano outlines. He wrote, "The change in economic conditions can be understood by comparing some of the key words that describe the old economy and the new one:
Large versus Small
Concentration versus Dispersion
Batch versus Flow
One Task at a Time versus Simultaneous Tasks
Convenient for Business versus Convenient for Customers
The net affect of this new era of a consumer driven linear economy on business – especially manufacturing – is increased pressure to make small quantities fast. It is the direct opposite of the old economy of scale model. Where manufacturers could once look for profits through scale, or volume, they must now look for profits from flexibility, or the ability to respond to changing customer requirements."
It is easy to look at brilliant guys like Hirano and see them as Nostradamus-like – blessed with the ability to see into the future. There is nothing mystical about it, however. It is a simple matter of logic. Once it has been proven that the cost of the waste inherent in batch production can be eliminated, it is inevitable that it will be eliminated. If a manufacturer does not pursue lean and shake all of that unnecessary cost from their product, a competitor will. It might take a while, but it is bound to happen. Whether I am buying a bar of soap, a box of cereal or a car, sooner or later I will have the choice of buying one product that includes the cost of the waste of batch production, or one without that cost embedded in it. My choice is obvious.
Take that one step further and sooner or later I will have the choice of going to a big box store – in Hirano's words, spending "an entire Saturday driving around in a big car to big stores loading up everything I need for a week and taking it home to a big refrigerator," or I can make a quick drive-through and buy what I need pretty much as I need it. The choice is clear when the cost of the ongoing demand pull approach to life nears the the cost of batch living.
Lean is not an option for any manufacturer. The question is not should you make the transformation to a lean business model, but can you before you join the big box retailers in their inexorable march to extinction.