Friday, November 28, 2003

Lean manufacturing: not a complete solution without information technology

I've been making the point recently that lean manufacturing is not primarily a software initiative (see my posts on Nov. 3 and Nov. 19). However, Bob Gilson, Strativa's practice director for Operational Excellence, has another perspective. Bob worked as a consultant extensively in Japan and Korea and has seen lean manufacturing up close at some of its most successful implementations. I'm going to let Bob speak for himself:
My comments following do not apply to the clearly positive aspects of lean manufacturing, but rather to the zealots who seemingly prefer lean to the exclusion of modern information and planning systems. Having worked on-site at a few of the lean success stories in Asia I can point out several negative outcomes from practicing lean manufacturing without adequate information systems to support it.
  1. The lack of transparency in the financial and inventory systems is well documented and I think under-appreciated here in the USA. The accounting disciplines and integrity of our numbers, in large part forced and enabled by our information systems, cannot be overstated.

  2. The inflexibility, or stated in the positive, the static nature of "lean companies products" (infrequent engineering change) and rates of production, allow for a much less demanding manufacturing environment than most American manufacturers are willing to accept. I can still recall the unsold Lexus automobiles filling up parking lots in Japan to be subsequently dumped in the USA for the cost of interest rates because production rates could not be modified without the system collapsing entirely.

  3. Inventory and many of the quality problems are simply buried in the supplier community.

  4. Finally, and I think most importantly, many lean manufacturing companies in Asia are only marginally profitable. Again, because of the lack of financial transparency it is difficult to ascertain what long term value has been created for those companies.
I completely agree that our systems are made better with an appropriate application of lean techniques. However, I would not trade our total scope of systems in the U.S. for any other in the world.
Clearly then, lean thinking and enterprise systems are complementary elements of a complete solution. As lean thinking is becoming popular in industries beyond manufacturing, such as financial services, its advocates will do well to heed this lesson learned.

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