Five Principles of Lean Manufacturing from Toyota Production Systems

What is lean manufacturing? There are far too many definitions and descriptions of lean systems for all of us to be speaking the same language. Some believe lean is merely a collection of tools, such as 5S, just-in-time, and so on. Others have described lean as working people harder, working people smarter, kaizen, or Total Quality Management.

Some of these definitions are wrong and some are just inadequate. Many organizations have had great success using lean principles beginning with the proper understanding.

So how can we describe lean systems differently? At a very high level, lean systems gives people at all levels of the organization skills and a shared way of thinking to improve through designing the systems of activities, connections, and flows. Cultivating the skills of a learning organization, and creating an environment of real-time learning nearest to the problem or point of impact, allows all employees an opportunity to contribute to the robust success of the company. This definition of lean broadens the scope and required skill set beyond traditional views.

Lessons from Toyota
Much of what we can learn about lean comes from the Toyota Production System (TPS). Through more than 50 years of learning and experimentation, Toyota has driven deep into the systematic elimination of waste and has created a system that learns and adapts better than any other company. Its reputation for management and manufacturing excellence extends well beyond the automotive industry and truly serves as a benchmark for all operations and manufacturing companies.

Toyota has either invented or led in the development and implementation of many lean tools over several generations. Some of these tools have been applied with rigor by many companies, and some success is often found through the application and adoption of lean tools. Tools are attractive because of their visibility, measurability and immediacy.

Two undesired results are inevitable through a focus on tools, however. First, companies do not reach nearly the level of success desired. This leads people to either abandon their lean efforts or to search aimlessly for new ideas or programs to adopt. Second, companies do not find their lean improvements sustainable. This leads many people to conclude that lean simply doesn’t work in their industry or even conclude that it doesn’t work outside Japan.

Both of these results can be avoided by recognizing lean not as a collection of tools but as a way of thinking across your company. This means that all employees in your company have a shared way of thinking that serves them regardless of the problems that they face. This in turn means that if a problem or opportunity surfaces that is not addressed by the traditional tools of lean, the shared way of thinking can address the problem directly and put in place powerful new solutions.

This is how most of the traditional lean tools were created in the first place. Lean and the Toyota Production System are not tools that were put in place; instead, those tools were responses to the problems and opportunities found. Those responses were so powerful because they were well understood by people using shared thinking and because the shared thinking allowed those solutions to work in concert with previous solutions as well as the solutions and tools to come.

Five Principles
The foundation is defining lean as a way of thinking. Building on that foundation requires defining and clarifying that thinking. The strategic goal is to produce exactly what the customer wants, when they want it, at the price they want, with zero waste, and with everyone safe. The question then is what shared thinking, defined by principles, will be most effective at meeting that strategic goal.

Principles, rules, theory and concepts are all examples of models. Models are by definition simplifications of reality. Because they are simplifications, there is no one model, no one theory that is all-encompassing. Models should not be blindly trusted without an understanding of how to use them.

At the same time, we need them to guide us in action and decision-making. Without models such as principles and rules, life would just be a long series of random experiments without any ability to learn from one day to the next. For that reason, we have articulated a set of five principles—a model—that we think best describes lean systems thinking.

Each principle represents a deeply embedded way of thinking that true lean systems thinkers carry with them. Most of the tools and methods that we associate with lean today are only applications of this thinking. Each principle also carries with it leverage that can yield significant gains in the overall performance of your organization, but when you put them together, the synergy generated can drive your organization to best-in-class or best-in-any-class.

The five principles are:

• Directly observe work as activities, connections and flows
• Systematically eliminate waste
• Establish high agreement of both what and how
• Systematically solve problems
• Create a learning organiztion.

The following sections will look more closely at each principle.

Directly Observe Work
If someone asked you to explain the structure of your organization, you might pull out an organizational chart and describe what each department or function does on a daily basis. This is a valid view of your organization, but it isn’t effective for the purpose of improving its performance.

For that, we need a different way of viewing the current reality of the company. Understanding current reality requires deep observation of activities, connections and flows, and it is crucial in making lean systems transformation different. Current reality does not just mean using measurements; it means direct observation of the activities, connections and flows of the organization. That understanding of the current condition applies to broad company issues such as culture, but also applies to very detailed problems such as why a certain tool isn’t working or how to drive waste out of a process.

Systematic Waste Elimination
In any book, article or class on lean, you will read or hear about waste. Some say the purpose of lean is to eliminate waste, but I don’t believe that’s true. The purpose of lean is to create a successful and robust business. If companies focus on eliminating the waste in their processes, they will differentiate themselves by being able to provide better quality and delivery at less cost. If we adopt the principle of systematic waste elimination, we will begin to see everything our organizations do through that lens.

There are two elements to this principle. The first is, connect to your customer and always add value. Truly understanding what your external, or paying, customer values and seeking to deliver nothing less will help avoid waste. Waste is anything beyond the absolutely minimum amount of resources required to add value to a product or services. For something to be value added, the customer must recognize it as value, it must change the product or service and it must be done right the first time. Being non-value-added does not mean that something isn’t necessary, but if we don’t treat it as non-value-added we will never seek to reduce, eliminate or avoid it.

The second is, relentlessly pursue systematic waste elimination. Most organizations talk about waste elimination, but if I actually test them to see if they have specific mechanisms to eliminate waste on a daily basis, many do not. Waste elimination should be a daily task, not just a switch that is turned on for lean events.

Remember, these principles also apply to design activities. This means whether you are designing your supply chain, production process or products, you must seek to avoid the creation of waste in the first place. In fact, the greatest leverage in the war on waste exists in the up-front design and planning processes.

Establish High Agreement
Many lean efforts start with tools that begin to surface the principle of high agreement, such as 5S or visual management. The underlying principle behind these tools is to establish a high degree of agreement of both the “what” of the organization as well as the “how”. In a word, this principle is about standardization.

The “what” of an organization is its goals and objectives: what markets to pursue, what cost goals to meet, what quality improvement opportunities must be addressed. Without agreement on the what, an organization will work inconsistently and against itself, and getting agreement on the “what” is not easy. But most of our efforts are already on this item.

More often missed, ignored and not understood is the value and challenge of getting high agreement on the “how” of the organization—specifically, how the company produces its results at
the level of activities, connections and flows. Seeking high agreement of the how provides not just dramatic daily performance improvement, but is the key to making those improvements sustainable.

Standardization is the foundation of continuous improvement, and without continuous improvement your company will not be around much longer. Every improvement, every problem solved and every process changed must be standardized. If it isn’t standardized, then you don’t have high agreement on how things work. If you don’t have high agreement about how things work, then you don’t have a strong system for producing predictable results.

Standardization applies to everything from how the senior management team will make decisions to the pattern used to tighten bolts during an assembly process; the principle applies to every how and what of the company. It’s a continuous process of reaching a deeper and more detailed level of refinement.

Systematic Problem Solving
Every day, every person in your organization is solving problems. How they go about that task can make a huge difference in the overall performance and culture of the organization. Does your organization seek out problems and surface them without fear? And do we use a common way of thinking while solving those problems?

It is rare to receive an honest “yes” to these questions, which is why we must reframe how we think about problem-solving. This does not mean we need new tools; the tools work fine. It is the thinking and the context around the tools that makes a difference and why systematic problem solving is a crucial principle in lean systems thinking.

Many people have advanced their careers by covering over problems, solving them without anyone knowing, or by waiting for problems to get so large that they require heroic leadership to lead the task force required to get through the crisis. None of these modes of problem-solving are acceptable if you want to build a world-class organization.

Instead, teach everyone to adopt the attitude that every problem is an opportunity. A problem is not just when bad product gets into the customer’s hands. A problem is any gap between current reality and the ideal state, and there is always a gap. Each problem, if addressed, is an opportunity to improve the company, build the organization, and strengthen the flow-path that delivers value to the customer.

All barriers to adopting this attitude must be eradicated for a company to fully adopt the philosophy that every problem is an opportunity to continuously improve towards the ideal condition. We must redesign the system (or the activities, connections and flows of the firm) for problem detection and correction whether it is on the plant floor, the design office, or the front office.

A Learning Organization
Creating a learning organization at every level and through every activity is the “glue” principle; it holds everything together. Without integrating learning into how your company works, you are sure to be stagnant.

Most organizations limit their learning to training activities, but this should be a very small portion of the learning activity. (Don’t reduce your training to change the ratio, increase the other kinds of learning!) Reflection on how the organization works, thinks and improves should be a daily activity integrated with your operating activities, not something reserved for a three-day off-site senior management retreat or other such one-time events. Reflection should happen at every level of the organization and at different frequencies.

The more points of reflection you create, the faster, deeper and more sustainable your transformation process will be. This can happen spontaneously in the middle of the day. The next time you encounter a problem, ask, “What is it about how we think or work that allowed this problem to occur?” This conversation cannot happen every time you have a problem, but try it, see the result, and learn under what conditions these conversations should happen.

Throughout lean transformation, leaders have new roles. Leaders must be learners, and they must also be teachers. Simply put, if you cannot teach then you cannot lead. This doesn’t just mean classroom teaching; leaders must teach lean systems principles to all involved and demonstrate how they will be used, starting with their own behaviors.

The list of who is considered a leader also changes. Leader is not a title reserved for CEOs and vice presidents. Everyone—from the CEO to line supervisors and workers—is a leader. Facilitators are leaders. Change agents are leaders. Union representatives are leaders. Leadership means understanding current reality very deeply and clearly, having a vision for the ideal state, and having the understanding and ability to close the gap. Focusing on how to close the gap is where the learning of the leader plays a part. Helping others close the gap is where teaching surfaces. Leadership is hard, but worth the effort and is also essential for lean transformation.

Start from Current Reality
How to get a company moving in the short-term while keeping in mind the long-term involves many variables. Here are a few key goals to keep in mind as you begin your lean transformation.

• Start changing the thinking of the people in the organiztion
• Move the current reality of the business closer to the idea state
• Learn by doing how to move the organization forward
• Test the use of the tools against the principles
• Develop a commitment to and understanding of the long-term journey.

These goals are the challenge of any significant company transformation. There is no shortcut to the learning process, and you can’t learn, or win, by mimicking others unless everything about your companies is exactly the same.

Since things are never the same, we have no other choice than to learn and work hard at transforming our organization given our unique current realities. That’s the bad news. The good news is that learning and teaching principles and putting them into practice can get you where you need to go. Pick an approach and get started. We only truly learn by doing (which means you aren’t really learning by reading this article) and through the integration of doing (action) and reflection. Only when we integrate action and reflection can we begin to understand how to start this long journey.