The concepts and tools of lean manufacturing have been finding their way into many other types of non-manufacturing organizations. Lean healthcare, lean design, lean government, lean enterprise, lean in the military, and even lean in charitable organizations. Although in many cases it is due to lean manufacturing consultants trying to find a new niche in which to make a buck, it can work… especially if the requirement for a culture change is taken into account.
There is some debate as to whether manufacturing excellence must include lean, and whether lean must be modeled after the Toyota Production System. Although I believe that there are only a handful of companies that come even close to Toyota’s lean manufacturing prowess, and that in most cases we haven’t even begun to scratch the surface and therefore there are huge opportunities by simply learning from Toyota, I also believe it is dangerous to delude ourselves into thinking that it’s the Toyota Way or the highway. If we simply try to emulate a company with a culture built on continuous improvement we will always be followers.
Let’s take a walk outside of the realm of the classic manufacturers.
Dell is an amazing supply chain machine, although some may claim its manufacturing is "simply" an aggregation activity of externally-manufactured subassemblies. If so it is an unmatched and extremely well-run and optimized aggregation of complex supply chains that produces very significant profits in one of the thinnest margin businesses around. Is it lean? Not in the traditional sense. But definitely an example of supply chain best practices, and supply chains are a fundamental part of a manufacturing business. Similarly Wal-Mart, which may have abandoned Sam’s requirement to "buy American" and some may claim is a scourge that just happens to provide employment for hundreds of thousands, is an incredibly efficient distribution machine. Is it lean? Again not in the traditional sense. However it is an example of distribution excellence, and distribution has significant application to classic manufacturing.
But let’s go a few steps further and get outside of what my wife calls "our bubble". Let’s forget about lean and Toyota and even Dell and Wal-Mart for a moment. Let’s forget about organizations with even the slightest semblance of manufacturing.
We are pushing lean and manufacturing excellence techniques outward to non-manufacturing organizations. But what about the reverse direction? Are there examples of excellence in areas radically remote from manufacturing? Something that a charity, restaurant, kindergarten, sports team, activist group, law office, or even the government does that we can learn from? Ok ok, government is a stretch, but you get my drift. When you make an ATM withdrawal from a bank in Thailand, how does the transaction cross and reconcile international financial networks with hundreds of potential banking regulations… virtually instantly? How does Greenpeace get a flimsy boat to show up anywhere on the globe on very short notice? How do journalists find the exact anonymous "knowledgeable source" they need to get a scoop? How does "Save the Children" keep track of the millions of growing kids they support worldwide, and get photos of those kids back to the specific donors? Ok, I have my suspicions for some of those, but I won’t get into that.
Who is the Toyota of retailing, banking, activism, media, and charity? How can we find it, and what can we learn?
Let’s not let our focus on lean manufacturing blind us to the other examples and sources of excellence all around us.
John Hunter says
I think the question of what other companies have management practices worth studying is interesting. The answer could be very helpful as others could learn from what those companies do. There are at least two difficulties in identifying the: 1) defining what set of criteria would indicate successful organizations 2) most often even companies that are doing many things well leave much to be desired (so picking organizations worth studying can be difficult and even once that is done deciding which practices to credit for the success is often mostly a matter of opinion).
Many organizations do some things very well: Google, Dell, Amazon, Ritz-Carlton, Grameen Bank, MIT, Gates Foundation global health, Ameritrade, SAS, the Container Store, Home Depot, Apple, Snap-on tools, Wikipedia, McDonald’s. Southwest Airlines does some things very well (shouldn’t they get extra credit for actually being profitable when all around them go bankrupt). Solectron does some things very well, but they have been doing poorly financially for quite some time.
How do we decide what are good organizations? Inventory turns? Profit margin? Growth? Equitable pay for management and workers? Customer satisfaction? An understanding of lean ideas (either with Lean terms or without)? Use of lean tools? Partnering with suppliers? Elimination of waste from processes. Elimination of waste from the entire product cycle? Impact on society? Sales and/or profit per employee? Low employee turnover? Integrity? Providing ever better products and services at ever lower prices?
In some ways looking for organizations using lean ideas (in different situations) and tools seem sensible (how lean ideas are applied in different situations). In others (if you want to find new ideas that might well be adopted by those using lean methods) looking for “excellent” organizations could be helpful.
I think at least two distinct benefits of exploring these ideas. One is finding practices that can be adopted. The second is learning about management practices in organizations and seeing how those practices work within that organizational system.
Most management practices cannot be plugged into any organization and work well. That practice must be applied in a sensible way given the organizational system. Learning how lean ideas (or other good ideas) are applied in varying systems can provide insight into how to integrate ideas for organization that are trying to apply lean practices.
Graham C says
John, i noticed your comment on people doing things well.
As a Solectron employee i’m curious to know what you think they do well. As i’m on the ground here it’s hard for me to see the wood for the trees and i’d be interested to hear your comments.
Former Dell Guy says
I used to work for Dell and, knowing TPS, Dell is not a “lean” company, at least in the Toyota sense. Dell does certain things well — their factories are designed for flow and their cycle times are very short. But, they have simple products, they push all inventory back on suppliers (rather than trying to reduce value chain inventory), and they rank very low in the “respect for people” scale. Their factories were run by ex-military people who loved their hierarchical command and control structure. Quantity of production output was the only important thing, not quality. When volumes spiked at the end of quarter, poorly trained (or untrained) temps were building your PC’s and pushing them out the door to make the quarterly revenue target. Their only method of rewarding and retaining employees was the booming stock and once the stock price leveled out (flat for 7 years), the magic was gone. Sure, they do complete “build to order”, but Dell was hardly a “lean company” by any definition other than low inventory. To their credit, they didn’t copy anyone (including Toyota) and they created a business system model that made the founders and early employees a lot of money.