LIMITS OF LEAN MANUFACTURING &

SERVICE PRACTICES

Written by

Hafez Shurrab

I

ABSTRACT

Lean thinking proved its excellence through its techniques and practices. Many

organizations – including first lean introducers and practitioners - couldn‘t get the desired

outcomes due to different external and internal concerns. This article addresses some

relevant limitations and impediments arise when lean practices and techniques are

considered for implementation into manufacturing and service contexts, lean

manufacturing and lean service, respectively. Lean thinking was born in manufacturing

environment but has been brought to the service sector lately, during last two decades.

The objective of this article is to discuss and expose some relevant limitations and

barriers of lean management system for both manufacturing and service contexts.

Methodology: The methodology applied to better understand lean limitations

within different contexts was a systematic review of literature, as described basically by

Cusumano, M. (1994); and Brandão L. and Pidd M. (2011).

Findings: This article has synthesized and categorized the limitations of lean

into different management contexts, in an effort to discuss how significant is to consider

the customization of lean practices and techniques to the adopters. In total, four

limitations for lean manufacturing (automobiles) and eight barriers for lean service

(health care) have been discussed.

Research Limitations: Publications have exposed some examples of

management contexts that may not generalize the limitations and barriers to the other

industries. There may be other special-oriented limitations that either fit the discussed

examples solely or could be found exclusively in other management contexts.

Future Study: It is highly recommended to consider change management when

lean practices and techniques are transformed to other culture and context. Much of

researching effort required to design appropriate lean style suits different cases.

Common Terms: Just-in-time (JIT); continuous improvement (CI); total quality

management (TQM); world class manufacturing; theory of constraints (TOC); and Six

Sigma.

Article Type: Literature review

II

TABLE OF CONTENTS

ABSTRACT ................................................................................................................................ I

TABLE OF CONTENTS ...........................................................................................................II

LIST OF TABLES & FIGURES ............................................................................................. III

1. INTRODUCTION ..........................................................................................................- 1 -

1.1. Historical Review ................................................................................................................ - 1 -

1.2. Terminology ........................................................................................................................ - 2 -

1.2.1. Pull and Push Systems .............................................................................................................. - 2 -

1.2.2. Lean .......................................................................................................................................... - 2 -

1.2.3. JIT ............................................................................................................................................. - 3 -

1.2.4. Continuous Improvement Process ............................................................................................ - 3 -

1.2.5. Blue- & White-collar workers................................................................................................... - 3 -

1.2.6. New Product Development ....................................................................................................... - 4 -

2. LEAN UNDER DIFFERENT MANAGEMENT CONTEXTS .....................................- 4 -

2.1. Lean Manufacturing ............................................................................................................ - 4 -

2.1.1. Urban Congestion ..................................................................................................................... - 4 -

2.1.2. Supplier Management ............................................................................................................... - 5 -

2.1.3. Blue-collar Workers .................................................................................................................. - 6 -

2.1.4. Product Variety ......................................................................................................................... - 6 -

2.2. Lean Service ........................................................................................................................ - 7 -

Lean in Health Care ......................................................................................................................... - 8 -

2.2.1. Perception Barriers ................................................................................................................... - 8 -

2.2.2. Terminology Barriers ................................................................................................................ - 9 -

2.2.3. Personal/ Professional Skills of Health Care Professional Difference Barrier ........................ - 10 -

2.2.4. Organizational Momentum ..................................................................................................... - 10 -

2.2.5. Hierarchy & Management Roles Barrier ................................................................................ - 10 -

2.2.6. Professional & Functional Silos Barrier ................................................................................. - 11 -

2.2.7. Data Collection & Performance Measurement Barrier ........................................................... - 12 -

2.2.8. Resistance Change/Skepticisms Barrier .................................................................................. - 12 -

3. CONCLUSION .............................................................................................................- 13 -

4. REFERENCES .............................................................................................................- 14 -

III

LIST OF TABLES & FIGURES

Table 1: Limitations of Lean: Japan 1990s ............................................................................- 7 -

Figure 1: Top-down versus bottom-up flow of ideas ...........................................................- 11 -

- 1 -

1. INTRODUCTION

After the revolution of lean production and its tool, which had been introduced

first time by Japanese companies in 1970s, most of researches concluded after addressed

the transitional phases of how to apply lean thinking whatever is the context. Lean

approach with its tools could change the waste levels radically for many different

industries inside, as well as, outside Japan. As the lean philosophy is very powerful and

represent the perfection, very few researchers those who were quite courageous to

criticize the philosophy, and not only to support deploying it with new tailor-made

additions that make it more applicable for different conditions and context.

This report addresses the limits of lean approach for different management

contexts, generally for manufacturing and service industries.

1.1. Historical Review

Lean practices came from the Japanese manufacturing area. John Krafcik

introduced lean as it‘s known in 1988. (Holweg et al., 2007) Before doing MBA studies

in MIT, Krafcik worked as a quality engineer for one of Toyota businesses. The

International Motor Vehicle Program has continued Krafcik's research. Jim Womack,

Daniel Roos, and Daniel Jones produced the international book ―The Machine That

Changed the World‖.

For many practitioners, Lean is the group of "tools" that enable identifying and

eliminating wastes (muda). The elimination of wastes facilitates improving the quality

while reducing cost and time of production. Examples of such practices, techniques or

tools are Kanban, six S, Value Stream Mapping, and poka-yoke.

Toyota supported another approach to Lean Manufacturing, in which the focus

is on improving the "flow" of work, herewith constantly eliminating mura ("unevenness")

not on waste to be reduced per se but through the system. Techniques to support flow

involve production leveling, "pull" production and the Heijunka box.

Both TPS and Lean could be seen as an insufficiently connected group of

competing principles that target to reduce the cost by eliminating the wastes. (Taiichi

Ohno, 1988) These principles involve: Perfect first-time quality, Pull processing, Waste

minimization, Flexibility, Continuous improvement, Building and sustaining a long term

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relationship with suppliers, Visual control, Autonomation and Load leveling and

Production flow. Some of these principles have disconnected nature that may affect the

fact that the TPS has grown to be more practically since 1948 as it could respond to the

problems it saw within the production facilities. Therefore what it seen today is the

outcomes of a 'need' tracked learning to develop where each stage has built on previous

ideas and not something depended upon a theoretical formation.

1.2. Terminology

1.2.1. Pull and Push Systems

(Peter & Donnelly, 2002) (Dowling, 2004) A push–pull system describes the

way of information or product movement between two entities. On markets, the supplier

usually pushes the goods or information, while the consumer pulls them according the

need. In supply chains, the stages for both push- and pull-systems are operating normally.

(Harrison et al. 2003) In push production the demand is forecasted, while the actual

demand is based on for pull production. The transitional phase between these stages is

called the decoupling point or push–pull boundary.

1.2.2. Lean

Lean is a set of production practices that focus on the expenditure of resources

don‘t add a value for the consumer or end customer and deployed to eliminate non-value

added activities associated with these resources. According to the customer point of view

that benefits from a service or product, "value" is perceived as any process or activity a

customer is ready to pay for (Womack et al. 1990).

The original seven types of wastes are:

Transport

Inventory

Unnecessary Motion

Waiting

Overproduction

Over Processing

Defects

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The eighth waste was added later by Womack et al. (2003); it was discussed as

the case when the customer demand or specifications aren‘t met by the provided goods or

services. The waste of unused talents has been integrated on the seven types wastes by

many others. These wastes were found to be useful additions in practice, even though

they were not originally a part of the seven catastrophic wastes defined by Taiichi Ohno

in TPS (Bicheno & Holweg, 2009).

1.2.3. JIT

Just in time (JIT) is a production procedures set that struggles to improve a

business return on investment by reducing in-process inventory and associated carrying

costs. The process relies on Kanban between different process points to meet JIT

objectives, which inform production when to make the next component. Kanban are

usually 'tickets or cards' but could be just simple signals, such as the full or empty part on

a shelf. JIT, implemented correctly, when continuous improvement is on focuses and can

improve the return on investment of a manufacturing organization, efficiency, and

quality. To achieve continuous improvement key areas of concern could be quality, flow

and employee involvement (Shingo S. 1989).

1.2.4. Continuous Improvement Process

A continual improvement process is an ongoing effort to improve processes,

services, or products. These efforts can seek "incremental" improvement over time or

"breakthrough" improvement all at once. (ASQ 2012) Delivery (customer valued)

processes are steadily evaluated and improved in terms of their efficiency, effectiveness

and flexibility.

1.2.5. Blue- & White-collar workers

A blue-collar worker is a working class member who practices manual labor.

Blue-collar work may involve manufacturing, skilled or unskilled, technical installation,

mining, mechanical, maintenance, construction and many other sorts of physical work.

Often physical maintenance or building is on board.

On the other hand, the white-collar worker takes the responsibility of office

work, and the work environment includes desk and computer.

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Blue-collar worker is usually paid by different types of payment methods

including hourly wage-labor, project or salaried. The payscales are widely ranged and

work depends upon the experience and field of specialty (Wickman, 2012).

1.2.6. New Product Development

In business and engineering, new product development (NPD) is the complete

process of bringing a new product to market. A product is a set of benefits offered for

exchange and can be tangible (that is, something physical you can touch) or intangible

(like a service, experience, or belief). There are two parallel paths involved in the NPD

process: one involves the idea generation, product design and detail engineering; the

other involves market research and marketing analysis. Companies typically see new

product development as the first stage in generating and commercializing new product

within the overall strategic process of product life cycle management used to maintain or

grow their market share (Ulrich et al. 2004).

2. LEAN UNDER DIFFERENT MANAGEMENT CONTEXTS

2.1. Lean Manufacturing

As the idea of lean came from a production context, it‘s highly important to

consider the obstacles hindered those who wanted to import lean manufacturing as a

holistic approach, which should be stuck to literally.

Cusumano M. (1994) criticized some practices of lean manufacturing and gave

examples of other Japanese companies when tried to adopt Toyota‘s philosophy. He went

further to spot the light on Toyota itself, when it started to export its automobiles across

the world or in different parts of it. The general and most serious impediments the

pioneers of lean confronted were as the following:

2.1.1. Urban Congestion

Most Japanese producers in general and automakers in particular were obsessed

of JIT, which in turn made the physical exchanges of Kanban cards or ―Production

Orders‖ between suppliers, branches, factories, exhibitions, and customers very intensive.

This affected severely the traffic congestion that the Japanese government had organized

media campaigns to recommend the reduction of deliveries frequency. Besides, the levels

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of air pollution increased significantly as well as the wasted time, the most important

factor for lean (Cusumano, 1994).

Outside Japan, it was absolutely impractical to deliver very small lots for long

distance. This is one of the most controversial points to discuss the lean manufacturing as

an effective approach that could suit all cases.

Some of Toyota‘s competitors such as Nissan figured out that their bodies are

more dispersed than Toyota. Nissan believed that it‘s more practical to increase the levels

of inventory to one or a couple of days, but not a couple of hours that Toyota did. The

physical exchanges of Kanban became impractical and obsolete after the revolution of

internet and signal science.

2.1.2. Supplier Management

Lean manufacturing application requires cooperative and reliable suppliers,

which account for about %75 of manufacturing work in automobile industry, and %50 of

product development, measured by costs. (Cusumano, 1994) The Japanese companies

faced much trouble relying on suppliers outside Japan, where culture, mentality, costs,

rules and other were partially or totally different. Non-Japanese suppliers have not

complied literally with Japanese quality and pricing requirements, nor were they trusted

by the Japanese.

As a result of production and market expansion around the world, Japan suffered

from severe shortage of factory labor. The Japanese government allowed foreign workers

to work in Japan or in Japanese companies to cover the shortage. But this introduced

another problem of the training needs to the workforce for those who miss the Japanese

literacy. The companies reported many quality issues and lack of workers flexibility as a

result of using less-skilled foreigners. So the companies have been enforced to reduce the

productivity to provide longer time to the inspection and other quality activities.

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2.1.3. Blue-collar Workers

Ohno Taiichi, the inventor of kanban system and former brilliant manager of

Toyota, relied on well-trained workers instead of the automation. He was convinced that

the automation can be relayed on when it becomes reliable, reprogrammable, easily

adjustable in terms of product variations and volume fluctuations, and inexpensive

compared with human. For being responsive to the developed manufacturing demand,

managers needed skilled workers to be flexible with their working times. There were

more factories than demanded blue-collar workers (women were not permitted to work in

auto assembly factories that time). Moreover, young Japanese tended more to white-

collar work instead. Employee turnover rates reached 30% annually. (Cusumano, 1994)

The problem would have been worsened if Japanese economy covered. Any change in

the strategy could likely reduce the productivity advantage Toyota had been enjoying at

home.

2.1.4. Product Variety

Toyota and other companies had high flexible production systems that let them

produce too many models and features of products and maximize their competitive

customizations. The parts maker and assembly plants had to be responsive with too small

and very rare orders too frequently. The variety requires constant equipment setups,

kanban exchanges, and small lots – just when the total sales are stagnant and workers,

suppliers, and traffic system have reached to sort of practical level (maturity).

Environmental concerns came to mind after the product life cycle started to be narrower.

But the most pressing concern is that the cost of new model development and model

replacement is very high, and money became very expensive while interest rates in Japan

reached international levels. Banks could no longer offer cheap loans, as their portfolios

of stocks and real estate and their customers‘ portfolios had declined. Companies could

no longer raise capitals from stock market because of Japanese investors‘ reluctance to

buy securities in the market that had dropped %50 in value during the several years

before. The operating profits were the only ―free‖ money, which had also declined

dramatically.

Japanese companies changed their scheduling and control systems in the short

term. They reduced products variety to %20 of the products that achieve %80 of overall

profits. (Cusumano, 1994) They relied on electronic forms of moving information, such

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as bar-code readers, rather than exchanging kanban cards physically. Exporting used-

products to other places of world was an effective temporary solution to the

environmental concerns. They considered recycling product‘s materials more effectively.

Japanese have realized that they had to reduce their overall investment in new product

development. They are now reducing unique parts and product variety and increasing

interchangeability by %30 to %50 or more for new models. (Cusumano, 1994) They

determined to reconsider heavyweight manager by limiting their discretion and budgets.

Establishing platform manager and chief engineers to facilitate sharing more key

component and manufacturing facilities (this could ease assembly activities, simplify

supplier relationship, and reduce engineering and manufacturing-preparation costs).

The risk: The total sales could likely decline as the options and variety the

customer used to enjoy is no longer on table. Sales may even decline, although profits

may rise as a percentage of sales if the Japanese learn how to generate more profits from

each product development effort, rather than simply look for expansion of sales and

market share (Cusumano, 1994).

Table 1: Limitations of Lean: Japan 1990s

2.2. Lean Service

During the economic crisis invaded the world in 2000s, many organizations

started to conduct cost-reductive procedures to the most possible extent. Many researches

addressed lean philosophy that succeeded radically in cost reduction for many cases of

industrial contexts. Considering lean techniques in service context came before the

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economic crisis by years. Many researchers studied the transition of lean techniques to

the service context for both private and public sectors within various industries. Due to

that some common barriers and limitations have arisen while applying lean in service

organizations. This report reviews some of those barriers limited the results of lean

application in health care sector as a representative example of service industry.

Lean in Health Care

Many countries consider lean philosophy and techniques in the health care

sector. The cost pressure led the majority to adopt lean techniques to improve their both

efficiency and effectiveness. And another objective is to minimize non-value-added

activity level. As expected, it isn‘t that simple to understand and adapt the unique

characteristics of health care industry to the lean frame. Many impediments and barriers

have shown up. Radnor et al. (2006) suggests the following implementation barriers:

People: mainly referring to skepticism about change programs in general.

Lack of ownership: either of current activities or of proposed processes.

Identity of improvement team members: often made up of those willing to get involved,

rather than those who should do so.

Leadership failure.

Compartmentalization: functional and professional silos.

Weak link between improvement programs and strategy.

Lack of resources.

Poor communication: the over-use of jargon and the lack of a clear message to staff.

Brandão L. and Pidd M, (2011) identified the implementation barriers in health

care. It is always difficult to introduce new things in an organization as employees want

to stick to the old system. The common problem is that everybody knows lean as a

manufacturing system which may only applicable to Japan. It is also true that many

things of lean has improved or developed due to the unique nature of Japanese people and

their working style. There are some common barriers while implementing lean in health

care.

2.2.1. Perception Barriers

Manufacturing myths and lack of understanding of lean principles among health

care professionals is seen as a barrier. Some health care professionals argue that every

patient is different, unlike every manufactured product in a factory. A common

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misbelieve among professionals that a patient might be treated as a ‗piece of metal‘—

humanity would disappear from health care. It is important to emphasis that lean focuses

on reducing non-value-adding activities, which usually means those activities that do not

involve patient contact such as ‗paperwork‘. There is no intention in lean to reduce

human contact between patients and clinicians, there may, instead, be an increase in the

proportion of touch time.

2.2.2. Terminology Barriers

Introduction of new language is a common issue for implementing lean in any

setting. In general, health care professionals responded well to the introduction of new

vocabulary and it helped them to shift from old to new practices. Any organization using

lean thinking as its main improvement philosophy needs to integrate new terminology

into its vocabulary (LEI, 2003). Some regard the introduction of new terminology as an

implementation barrier for lean health care. The idea of eliminating waste is to review all

organizational levels and entities, detect where the non-value added cost to be reduced or

eliminated.

Seven types of wastes are in healthcare:

Transport- movement of patients and equipment

Inventory- unneeded stocks and supplies

Motion- movement of staff and supplies

Waiting- delays in diagnosis and treatment

Over production- unnecessary tests

Over burden- stressed, overworked staff

Defects – e. g. medications errors, infections

It is extremely important, though, to develop a common vocabulary to be used

across the whole organization for lean implementation. Inconsistencies in terminology

between different departments can lead to serious misunderstandings. The important issue

is the idea and not the name, though some terms do need to be adapted. In a patient-

related application for instance, it would be inappropriate to refer to lead time or work-in

progress if terms such as waiting time or waiting lists are already in use.

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2.2.3. Personal/ Professional Skills of Health Care Professional Difference

Barrier

There are intrinsic differences in personal and professional skills between health

and manufacturing professionals, and there differences are seen as a barrier. It becomes

clear that the fire –fighting mentality acts as a practical barrier in the introduction of lean.

Ben-Tovim et al. (2007a) argues that health care managers are generally chosen for their

problem-solving skills, particularly ‗firefighting‘, and usually enjoy the drama

involved—an observation confirmed in the case studies. However, lean practice is not

based on finding quick, temporary solution to problems, but on understanding the root

causes of delays and other hindrances to flow. To shift the focus of health care managers

from a problem-solving and fire-fighting approach to careful analysis, and to change their

decision processes from experience-based to data/evidence-based will always be a

challenge and is a real implementation barrier.

2.2.4. Organizational Momentum

The constant change of strategy for improvement (locally) and governmental

policy (nationally) inhibits the continuity of potentially successful programs. Lean is not

a quick fix, but a continuously evolving program of work. This is not always recognized

in practice (Esain et al., 2008 & Proud et al., 2008). A continuous improvement program

requires substantial effort at the start, including training, piloting and overcoming some

of the barriers described here. The rate of change in a typical lean program may be

initially slow until organizational momentum is acquired. At this point, a culture of

improvement is created and improvement becomes a ‗day job‘ rather than a series of

conceptual events that happen in discrete points of time (Brandão L. & Pidd M, 2011).

2.2.5. Hierarchy & Management Roles Barrier

Cultural issues based on the hierarchy of health care staff and the way

management roles are allocated typically becomes a barrier for any improvement but this

is especially important when lean is introduced.

Ben-Tovim et al. (2007b) discusses another barrier to lean health care caused by

hierarchical and cultural issues: health care managers see their role as having to come up

with a solution once a problem is identified. By contrast, lean thinking implies an

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inverted flow of solutions/ ideas (from top-down to bottom-up, figure 1), recognizing that

front-line staff understand the most about the problems they face each day.

Figure 1: Top-down versus bottom-up flow of ideas

2.2.6. Professional & Functional Silos Barrier

The fragmentation of health care into silos (professional or functional) imposes

a major barrier to the flow of patients, goods and information and consequently to the

implementation of lean techniques in hospitals.

Some of the main barriers to lean health care stem from the current structure of

fragmented care and professional practice, seen in many hospitals as professional and

functional silos. A professional silo occurs when health care practitioners are separated

into professional groups. A typical hospital may have over 100 such that can be classified

into two main groups:

Care providers (for example doctors, nurses and physiotherapists).

Non-care providers (for example managers, secretaries and cleaners).

Functional silos lead to fragmented care (Mann, 2005), which may mean that

pressure to improve performance results in sub optimization (in single silos) that may not

result in overall improvement of care provided to patients. Lean health care principles

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support the improvement of the complete care process, from arrival to discharge, rather

than a series of disconnected steps. The medical records case provides a good example of

three functional silos in the flow of medical files, namely medical records, medical

secretaries and outpatient clinics. Lean was used to improve the flow of medical files,

which led to better care in outpatient clinics.

2.2.7. Data Collection & Performance Measurement Barrier

Lean implementation usually reveals problems in data collection and poor

performance measures in most aspects of patient care. This often amplifies the need for

cultural change in health care settings. Performance measurement is a key component for

successful implementation of lean approaches (Kollberg et al., 2007). Great care is

required if performance measurement is not to lead to undesirable side-effects.

Many years ago, Ridgway (1956) argued that measurement, once introduced, is

often interpreted by staff as defining the important aspects of the job or activity in which

they are engaged. Hence, it is important to understand the motivational and behavioral

consequences of any performance measurement. Smith (1995) extended this argument to

consider the effects of publishing performance data, which can lead to many different

types of dysfunctional behavior if not carefully planned.

2.2.8. Resistance Change/Skepticisms Barrier

Resistance to change is a significant problem in any improvement program in

any organization. It deserves special attention from those attempting to implement lean,

since staff empowerment, which is a key issue in the lean theory, is needed for engaging

health care professionals. Resistance to change is a problem in many, possibly all,

organizations and there is a vast academic literature on this topic. Val D. and Fuentes

(2003) offer a thorough review, pointing to many sources of resistance within a broad

context.

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3. CONCLUSION

Lean was running smoothly at the beginning of its practice when it developed in

Toyota production system (TPS). The growth of Toyota made it difficult to keep the

fundamental principal of lean. The main attraction of lean manufacturing is its capability

of reducing waste and the continuous development of the product/service. When the

system is getting large, it is difficult for lean to perform smoothly, which means its

scalability is insufficient. The main advantage of lean is the reduction of inventory levels,

which emphasizes other relevant benefits of quality issues particularly and other areas of

interest in general. It‘s cost effective in many senses but it‘s very stressful for the

suppliers and employees in the assembly line. For the service sector like health the

practices has developed in a very different way under lean. It‘s not easy for many

countries to adopt the system in health sector because of the hierarchal structures and

management practices that have been developed over years. It is very significant to

understand the consequences follow applying lean system literally - copying the system

to all kind of organization without understanding the philosophical meaning of lean.

Every organizational context has its distinct aspects and considerations. Every field of

concern has its dimensions and constraints that may affect the behavior of system under

lean practices.

It‘s highly important for those willing to import lean for their industries to study

the limitations of lean under which context it‘s intended to operate on. The cultural

differences between the culture lean has been introduced in first time for a certain

industry and the other culture lean would be brought to are very controversial and

significant for future studies. It‘s recommended to go further the integration of change

management to the transitional phases of lean application.

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