The Building Blocks of Lean ‘’ Value North ’’
In the following lines we are outlining the basic principles that guide the implementation of lean and underlie the value benefits that derive from it. They also serve as the facilitators for making an organisation live, breathe and mentor Lean in all of its aspects (Elliot, 2001). We use as our reference the work by Womack and Jones (2003) because it provides an elaborate overview and is considered a hallmark in the lean literature. According to the authors, the main propositions, or else called ‘’core principles’’ .
Determine the Product Value
The value of a product or service is defined as the ability offered to the customer at the appropriate time and on the suitable price as defined in each case by the customer. In economic terms it is represented by the price that the customer is willing to pay in order to have the product delivered wherever and whenever requested, at the desired quality level. Focusing on customer value, an enterprise can reduce all activities that do not contribute to its creation (those that the customer is not willing to pay for), and therefore save time and money.
Identifying the Value Chain
The Value Chain comprises the whole set of activities necessary in order to transform raw materials into the final product for the customer, irrespective of the fact whether they add value or not. Value Chain usually extends to other partners such as suppliers and end-assemblers. Therefore, the examination of the ‘’weak/useless’’ activities is realized in cooperation and integration with other parts and this entail multiple benefits for the final result and act as a multiplier on the process of value delivery to the customer. According to the authors, all activities can be included in the following grouping:
– Value Adding Activities: Every action that converts materials or pieces of information into possibility and ability to the customer, at the appropriate time and at the expected quality.
– Necessary but not Value Adding Activities: Those activities that cannot be avoided.
– Non-Value Adding Activities: Any action that consumes resources without adding value and therefore should immediately be limited.
One of the most effective methods to depict and analyze the Value Chain of a process is mapping. This technique is widely known as Value Stream Mapping (VSM) and enables the graphical depiction of the information and material flows between the various activities. It has been proven valuable in the domain of production. In more specific, the mapping techniques presented by Rother and Shook (1999) in their famous book ‘’Learning to See’’ have proved very useful in identifying waste and improving procedures. In sum a total approach is required in order to contribute to making Lean effective instead of just using isolated tools and disconnected practices (Liker, 2004).
Seamless Material and Information Flow
After the determination of the product value and the identification of the Value Chain, the focus is on seamless processing within the various stages of the value creation process. This means that the resulting product of each sub-process should be transmitted smoothly to the next stage. Otherwise semi-finished parts and queues of information compile bottlenecks between the processes. This stock concentration constitutes unwanted waste.
The idea of the intermediate product flow in the production line was adopted by Henry Ford in the early 20th century. It is worth mentioning that Ford was particularly efficient for his era and the methods he used resulted in achieving high speed assembly. Furthermore the unrestricted flow has played a key role in the development of the inventory management system Just-In-Time (JIT) based on the Kanban and having the purpose of small batch production.
In order to make this more evident, we offer in the following lines the words of Henry Ford (1926) by himself: “ One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost ”
Aligning Production with Demand
This principle implies that a stage within the production line cannot be initiated before the next stage asks for its end-product. The system of harmonized production and demand (pull system) is the opposite of the planned production (push system) and each stage is performed in predetermined time and its resulting product waits until being promoted to the next stage. This favours stockpile and is usually the result of large batch production systems. Within a factory environment, promoting a large lot of material into the next step, not only creates stock but can also lead to large amounts of rejection if a flow is located on the quality of these materials. In a perfectly harmonized system, an order placed by the end-customer, is simultaneously placed by the end of the production line, creating what is now called ‘’single-piece-flow’’.
It is common sense that all sources of waste generation cannot be restricted at the same time and the production systems call for considerable time and effort in order to achieve seamless flow. The implementation of Lean is among other things a serious commitment and represents a radical change in the way the company operates. Vertical and rigid structures which have proven effective throughout the years are likely to require reorganizing leading to the development of new functionalities and product groups. Furthermore a fundamental cultural change should be envisaged to the whole company so that all the employees become engaged and show willingness not only to do their own job but also be committed in contributing to the enhancement of the whole system. The importance of the cultural factor for a successful lean adoption is also stressed by Utley et. al. (1997). In this way, lean becomes a part of the way doing business, therefore it is ‘’ a journey that never ends ‘’ (Turfa, 2003). It constitutes a permanent attribute of the company and quality enhancement is forwarded by attaining to the real customer needs and attempting to minimize the production of waste (Lewis 2001, Repenning and Sterman, 2001).
Critical Factors for Successful Implementation of Lean
In continuation of the summarizing points of Bhasin and Burcher (2006), we continue on unveiling in a more elaborate way the necessary conditions that should accompany any Lean initiative and the effort of establishing it into the wider organizational context.
Cultural Alignment and Penetration
The prevalent assumption deriving from the initial implementation of Lean systems in different companies pointed to the need that in order to reap the benefits out of Lean, it should first be adopted as the overarching culture of the organization, which in turn will be embraced by all the hierarchical structure of the company starting from top management and ending to the last employee. Toyota in more specific, before attaining heavily to the TPS, provided a time period in order to make the new philosophy a guiding set of norms and rules inside the company. In order though to achieve such a commitment and organization-wide change when referring to the cultural adoption of the Lean philosophy, a strong and clear commitment from the top management is not only necessary but allow us to say that it is a prerequisite if we want to try to embody the organization with the new culture. A cultural change according to Balogun and Hailey (2004) is a company-wide change initiative and therefore requires the commitment and support from the upper company levels. This is imperative in order to make Lean effective and absorb it in the company’s ways of ‘’doing work’’ instead of treating it merely as another management fashion tool which will soon be rejected by the company’s working force. By the active engagement of top management any necessary changes by introducing Lean will be supported, reviewed and finally institutionalized into the company’s infrastructure, in its formal and informal structure.
Therefore, active management support is a determinant factor for the successful adoption of Lean. It impacts decisively on accommodating it to an intrinsic part of the company’s culture by increasing the change readiness (e.g. Beer and Nohria 2000, Burnes 2004, Todnem 2005). In this line of argumentation, we contend that active management support and top level commitment will also predict and allow those training programmes necessary in order for organizational members to learn the culture of Lean concept. In this way, a process of cultural socialization arises both informally (from existing employees through myths, stories and patterns of acceptable and unacceptable behavior, see for instance Schein 1991, Martin and Powers 1983) and formally through induction training programmes (Wilson, 2001). Training can minimize fear of employees and the uncertainty felt about the eminent change (Vakola and Nikolaou, 2005), making it more easy and shape fertile grounds for the introduction of the Lean concept. Moreover, Schein (1991) argued that the operational manifestation of culture relies on a set of implicit assumptions which cannot change unless brought to the surface and challenged. In order therefore to establish and reinforce Lean, the pending adoption of Lean should, by the identification and corresponding ‘’manipulation’’ of managers, to motivate employees to reexamine and in many cases if necessary alter their own perceptions and way of adhering to reality and their set of values.
Clear Deployment and Communication of Strategy
This is of vital importance if we aspire to transform an organization by adopting the Lean philosophy. The operationalisation of strategy is also known in business language with the term ‘’policy deployment’’. This entails a few critical characteristics that should be prevalent when trying to develop the Lean philosophy inside the firm. Following the strategic dimensions presented by Burke and Logsdon (1996) we make a short reference to each one. It should be made clear what the Lean adoption has to offer on company level and how close and suitable it is for the company’s needs and objectives. It should be clearly stated and consciously on the company’s mission statement as the current values dominating the generative thoughts and actions of all employees. Otherwise, Lean values will only remain the so called ‘’espoused values‘’ which predict what employees will say and preach in different cases but will act differently in situations that these values should take effect (Argyris and Schön, 1978). Furthermore, it should be proactively adopted, meaning that the firm acts in anticipation of possible forthcoming challenges that Lean could be the answer to. At this point we would like to state that even though most companies have adopted Lean after a crisis incident, in our opinion it should be proactively implemented due to the ever-changing and highly complex and dynamic competition where customer needs are volatile and availability of resources constitutes a determinant factor affecting the tactical and operational business activity. The other two elements that we deem necessary are inextricably connected to the notion of stakeholders. There should be a visibility of both the advantages and the needs that the adoption of Lean entails for both the internal stakeholders such as employees and the external stakeholder such as suppliers, customers and societal groups of general interest. This pertains to the communication element of the Lean adoption and is related to making it visible and open to possible amendments where the noteworthy opinions of viable stakeholders are recognized and accepted. Additionally, this could act as a navigator, indicating the current state of affairs and providing a valuable indication with reference to the whole picture. In essence everything is about accountability and transparency where the plan should be comprehensible and accessible to everyone inside the organization (Takeuchi et. al., 2008). The last element that could contribute towards the policy deployment of the Lean concept would be the company specific (internal and external) articulation of expected benefits. Internal stakeholders, such as employees, could be informed about the implications and effects on their work whereas external stakeholders, such as suppliers, could in cooperation develop the necessary dynamic capabilities in order to remain competitive and in accordance with the value proposition logic of the company. Moreover, by communicating the Lean concept, vision will become clearly evident and explicitly articulated. The channeling of feedback among implementers, key decision makers and key users along with social audience can forestall and make constructive use of any possible resistance (Lewis, 2006).
Development of Effective Operational Processes
The prevailing and fundamental treatment on behalf of Toyota concerning the performance, metrics and processes can be summarized under the phrase ‘’ brilliant processes ‘’ which means that the core belief is that the right and improved processes, will lead to the appropriate and expected results (Womack, 2007). The role of continuous improvement on this aspect is of crucial importance since it contributes to efficient and reliable process and routines, based on the principle of seeking for perfection as we have already mentioned in the preceded lines. A proper establishment of performance has to simultaneously focus on three types of controls such as behavioral (1), input (2) and output (3) controls (Wheelen and Hunger, 2008). In the aforementioned case, Toyota gives weight to the behavioral and input dimensions in search of achieving the performance objectives which are measured as outputs. Behavioral controls regulate the actions framework that employees have to cope with in order to accomplish the set targets and are used as a means to achieve the improvement goal (Yu and Ming, 2008). Input controls on the other hand involve the antecedent conditions of performance such as knowledge, abilities and motives of the employees and lastly output controls incorporate objectives and performance measurement targets providing flexibility in achieving desired ends (Snell, 1992).
Table of contents :
Chapter 1 Abstract and General Introduction
Chapter 2 The Concept of Lean
2.1 What is Lean? – Definition
2.2 An Evolution Perspective of Lean
2.3 The Building Blocks of Lean ‘’Value North’’
2.4 Critical Factors for Successful Implementation of Lean
2.5 Current Difficulties in Implementing Lean
2.6 Summary of the Lean Concept’s Value
Chapter 3 Corporate Social Responsibility (CSR)
3.1 What is CSR? – Definition
3.2 Development of the Concept of CSR
3.3 Stakeholder Theory as a Framework for CSR
3.4 CSR and Contemporary Interest
3.5 Development of Opportunity Thinking and a CSR Receptive Climate
3.6 Adoption of Tailored Management System
3.7 Organizational Learning
3.8 Development of a Reliable and a Two-Way Communication Framework
3.9 Summary of the CSR/Sustainability Concept’s Value
Chapter 4 Lean and CSR
4.1 Comparative Results of the Literature Review
5.1 Philosophical Assumptions and Ontological Positioning
5.2 Data Collection Technique
5.3 Ethics of Applied Research
5.5 Case Selection and Participants
5.6 Research Results
220.127.116.11 Opportunity Thinking and Strategic Alignment
18.104.22.168 Process Centered Approach
22.214.171.124 Reliable Communication and High Level Management Support
126.96.36.199 Employee Involvement and Organizational Learning
188.8.131.52 Lack of Supportive Management System
184.108.40.206 Conflicts of Interests
220.127.116.11 Mechanistic Implementation
18.104.22.168 Strategic Disconnection
22.214.171.124 Environmental Savings
126.96.36.199 Reduced Operational Costs and Increased Profits
188.8.131.52 Enhanced Productivity
184.108.40.206 Customer Loyalty and Reputation
220.127.116.11 Process Efficiency and Innovation
18.104.22.168 Skilled and Satisfied Workforce
22.214.171.124 Summary of Competiveness Dimension – A Typology of Value
126.96.36.199 Developing the Theoretical Framework
5.7 Conclusions and Discussion of Results
5.7.1 Theoretical Implications
5.7.2 Managerial Implications
Chapter 6 Limitations and Future Research Implications