Part 1 - Origins of Lean

This is part of a Lecture series for Industrial Engineering students at a

University of Science and Technology in 2018. (Because there are too
many illustrations, this lecture is in two articles.)
This is the first part in the series was an introduction to Industrial
Engineering and the history of Lean. The rest of the lectures were how
many of their classmates had been working as interns to help a local
company improve their productivity. The results over two years of
working with the managers and supervisors were improvements in
productivity over 30% and more than $1,000,000 in savings each year
(as tracked by their financial department, not guesses by the students).
One of the questions that seems to come up regularly; “Is ‘lean’ the
solution for all organizational problems?” That depends upon which
consultant you ask. They might not know enough about manufacturing
or your industry to understand which elements to apply.
Most of the ‘lean’ tools are centred around Toyota’s style of ‘lean’ (the
green square), this is only one segment across a broad range of
possibilities. Chart illustrates the diversity of manufacturing operations
– from job shops to operations with continuous flow (like mining or
chemical processes).
It’s truly impossible to fully learn lean without practice in a
real working environment. Do you remember learning how to swim
or learning how to ride a bicycle? To teach you lean, we will need to go
to where the work is so you can practice.
Industrial engineering is the connection of people to the
production system. All the decisions driving lean choices were
economic ones in the early days at Toyota.
Since so much of ‘lean’ is centered on Toyota, you need to understand that there were many external events that happened at
Toyota which drove the need for Taiichi Ohno to create a robust production system.
There is so much material available, where do you start? How many
books have you read on lean? How many are in your university library?
(My local university has thousands… far more than I could ever read).
Since there are thousands of books to choose from, it’s difficult to know
where do you start?
Best sellers written by academics, marketing, etc.; those with the gift of
words. Engineers are not known for their entertaining writing styles, just
read any assembly instructions or operating instructions for equipment.

Not to complain too much about the writers, the observers have the “Iceberg Effect” in play. Only 1/8th of the iceberg is
visible, the balance is what supports what you see. If you haven’t spent years in a manufacturing environment, it’s difficult to
understand all the interconnections in the system. The observers are left guessing what the rest of the system is, if they are
even aware of it. At best, they might be able to accurately describe what they see.
Since I’m unraveling how ‘lean’ was developed over the years, it is important to understand that the observers are writing
about what they saw, not how or what it takes to get to this point.

What we failed to consider was that observing their mature system could not reveal how that got to this point; how do you
build the system? Most of what people write about is what they can observe today and what they have read that other
‘experts’ have written. They can describe what they see today but have no idea how Ohno and his team built and stabilized
the production system. All they can do is have you look like Toyota and use the tools, maybe it will work…

Just so you won’t think I’m being mean to the book writing community, here’s a reference to a recent article by John Shook.
What was written about Toyota in the 1980’s is not the same as Toyota today and Toyota’s core manufacturing facilities are
different than their smaller satellite facilities. Toyota doesn’t do as good a job sharing internally as you might think. In the
mid 1990’s,Toyota did part simplification after comparing the number of parts in a European light assembly to their
product. This led to an overall design for manufacture and assemble review. And again about 2010 to begin to commonize
similar parts across models to reduce part proliferation.

Kata is Japanese for Pattern. We use TWI to provide the initial PATTERNS. The TWI programs define the initial ACTION
steps. You are told to repeat it until it became a HABIT. The habit becomes an unconscious act and is merged with your
other habits to make up your BEHAVIOR. When most of the leaders in a company develop these behaviors, it becomes their
CULTURE. The KATA's are the mature patterns, which are outcomes of your experience.
There are many versions consultants are selling as systems managers must implement to create a culture that is being
promoted as ‘lean’.
The Toyota Way Fieldbook was first published in 2005. If you want to get an idea of typical expectations that Toyota had for
their employees; team leaders and team managers. Leader standard work is standardizing the core activities; yes, managers
have standard work in their jobs just like the production operator.
Six Sigma was concocted from a series of popular programs in the 1980’s: SPC (Statistical Process Control); Re-
engineering (start designing your production process with a blank piece of paper); QFD(Quality Function Deployment) –
House of Quality… the matrix was actually good at getting people to focus on attributes that mattered to the customer. First
started at Motorola, popularized at GE. To compare the difficulty in getting certifications, SME’s Lean Bronze certificate
requires five projects.
http://www.toyota-global.com/company/vision_philosophy/guiding_principles.html

The Guiding Principles at Toyota reflect the kind of company that Toyota seeks to be. The Toyota Way 2001 clarifies the
values and business methods that all employees should embrace in order to carry out the Guiding Principles at Toyota
throughout the company's global activities. The Toyota Way is supported by two main pillars: 'Continuous
Improvement' and 'Respect for People'.
John Shook mentioned that this was a way for people to better see the flows in a production system. If you need to post it
electronically, you can use eVSM (requires Excel and Visio), it can do all sorts of simulations. This can be useful when you
are working with a big manufacturer with complex manufacturing processes and you need to be able to do ‘what if’
simulations and deliver fancy presentations to impress management.
On the left is a typical process flow chart; the symbols haven’t changed much in the last 50 years. Mostly used for
documentation. On the right, a flow chart done in an office to understand and solve problems.
Simplified mapping development – 1930's. Work Simplification development started – 1932. “Work Simplification”
conferences started – 1937, Mogensen and associates

The first structured method for documenting process flow, the flow process chart, was introduced by Frank Gilbreth to
members of ASME in 1921 as the presentation “Process Charts—First Steps in Finding the One Best Way”. Gilbreth's tools
were quickly integrated into industrial engineering curricula. In the early 1930s, an industrial engineer, Allan H.
Mogensen began training business people by using these tools of industrial engineering at his Work Simplification
Conferences in Lake Placid, New York. A 1944 graduate of Mogensen's class, Art Spinanger, took the tools back to Procter
and Gamble where he developed their work simplification program called the Deliberate Methods Change Program. Another
1944 graduate, Ben S. Graham, Director of Formcraft Engineering at Standard Register Industrial, adapted the flow
process chart to information processing with his development of the multi-flow process chart to display multiple documents
and their relationships. In 1947, ASME adopted a symbol set derived from Gilbreth's original work as the ASME Standard
for Process Charts.
Trainers don’t need to really know anything about lean to sell the training programs for 5S. Companies are usually satisfied
because of the big visual changes that happen. However, there is a 98% failure rate within 3 years of implementation; people
return to the way they did things before.
Looking lean, but with limited results. Where are the productivity and quality results? 
The program can be very useful when it’s not sold as a standalone product, or the starting point for looking like Toyota. It
was just a small part of Job Methods; part of a checklist to help people think of improvements. The third level concentrates
on visual work, making things obvious.
People had difficulty of identifying the disruptions to flow when you just told them about the basic principles, this was
easier. Ohno defined four categories of activities to remove: 

1. Unnecessary activity of overproduction

2. Unnecessary activity of waiting time.
3. Unnecessary activity of transport.
4. Unnecessary activity in processing itself. 
This connects back to Ohno’s ‘profit making IE’. The 7-Wastes list shows up about 1978, not earlier. The 7-Waste
designation made it easy to be somewhat successful without knowing WHY! The focus is to effectively and efficiently deliver
your product. It’s not about working harder or faster.
The graduate student was John Krafcik, he was Toyota’s first American engineer at the NUMMI plant. He went on to become
the CEO of Hyundai Motor America, now he is the CEO of Waymo Inc. – Google’s self-driving car company.
Masaaki Imai published his Kaizen book to help launch the Kaizen Institute Consulting Group. The US State Department
was also funding technology transfer visits to the US for Japanese in the 1950’s.
John Krafcik – now works for Google; John Shook – first American that knew that Toyota’s core program was the TWI
Job Instruction. Plant went from worst in GM system to best in 2 years.
Reducing inventories was just the next ‘if only…’ step Americans were taking to compete with Japan.
By the 1970’s, “Made in Japan” changed meanings in America, in the 1950's and 1960's it had meant cheap, low quality
products. Now it became inexpensive, yet durable and functional products. The Japanese entered market after market and
displaced the industry leaders. We went through a series of experts proposing that “If only…“ we did X, then we could
compete. This included changing management systems from “Theory X” to “Theory Y”, and to the hybrid “Theory Z”. Then
it was inventory reduction (and Just-In-Time). Then quality control (SPC which partly fed the development of 6 Sigma).
Then looking like Toyota…
Ohno published his first book on TPS in 1978, then had to ‘retire’from Toyota (he was a VP). He went on to share his NPS
(New Production System) and help about 40 companies improve their production systems and profitability. The NPS group
performance stalled after his death, but still exists today.
The suppliers contributed to internal Toyota problems – Quality and Delivery. Once Toyota had refined their internal
production system, they realized that they needed to help their primary suppliers, as they were often the root cause of
problems inside Toyota’s factory.

The first group of suppliers selected were assisted by men who had spent years working with Ohno to implement the system
inside Toyota. At the suppliers, they implemented ‘Study Groups’ to improve the quality and delivery issues. The first few
years depended on the coaching provided by the men assigned to assist the suppliers. Within a few years, Ohno allowed
them to assemble the first Toyota Production System (TPS) Manual. 

Knowledge of lean inside Toyota – the reality is, we don’t know what we don’t know. There are subtle differences in Ohno’s
approach and Harada. One of the most knowledgeable people in the next generation of engineers. He oversaw Toyota’s
OMCD group. Even in the very first manual written inside Toyota we can identify knowledge losses (such as the JM question
sequence, even though they use most of the JM skills in their tools). Today’s Toyota experts are 6-8 generations from the
original people that created the system. It is common for people in OMCD or other top management positions to have never
seen the original TPS manual.

By about 1967, Ohno considered his production stable.

The kanban system is a containment step: 1953 - supermarket system in machine shop; 1961 - pallet kanban (ended in
failure); 1962 - kanban adopted company wide (machining, forging, body assembly, etc.); 1965 - kanban adopted for
ordering outside parts, 100% supply system, began teaching Toyota system to affiliates.
As you progress towards enough stability to implement the kanban system and have a few series of activities that flow, the
overall system will still be in the pull phase.
Kanban sizing – general rule of no more than 1/10 of a day’s production. Weight - less than 20 kg on the line for manual
handling. Size – fits line needs and quantity matched to line where possible. Volume is fixed – same quantity per container.
Number of kanbans or containers is fixed – defined WIP.
Ohno’s kanban system was developed to approximate making the whole system operate as if it was a single conveyor system.
The kanban rules required that the segments achieve stability of +-5%, without stability and continuous demand, the system
creates more problems. The other rules include the fixed number of ‘kanbans’ (units of materials moved defined, i.e. 200
pieces per kanban). The size of the kanban could be no more than 10% of the daily demand, avoiding large lot movements.
American auto companies were experimenting with reducing the setup times, mostly for machining operations (including
the tooling changes) as early as about 1910.

1945 – setups, starting to reduce to 2-3 hours (thru 1955)

1962 - main plant setups (15 minutes)

Toyota had die changes down into single digits before Shingo saw the process. Toyota Brazil started in 1958, and were told
that the Japanese could change a press over in less than 10 minutes (it was not quite true at the time). So, the Brazilians
sought to accomplish what they thought the Japanese could do. When the Japanese saw what had been accomplished, they
copied most of this system back in Japan.
Eiji Toyoda’s visit to Ford’s plant drove the realization that they must catch up to the American level of productivity. He set a
target of doing it in three years; it took five. He visited Ford’s River Rouge Plant for 3 months in 1950 – to give you an idea of
the difference in size, Ford was producing nearly 5000 vehicles a day. In just over 2 days, Ford would produce more than
Toyota did in a year. (Ford 4835/day – 1,208,912 year – Toyota 46/day – 11,706 year), Ford was more than 100 times larger
than Toyota in 1950.
We need to recognize the customer focus was an idea brought in by Shotaro Kamiya. He learned it while working for GM of
Japan and GM used it to gain market share from Ford when Ford had more than 50% of the world market.
The expanding demand drove the need for creating a production system. The Job Methods program was not detailed enough
to create standard work.

1955 production – 7,398 vehicles

1965 production – 236,005 ~ an increase of about 32 times!

Toyota's use of Job Methods was not enough to develop standard work. There is no time study training or layout beyond
superficial suggestions. Shingo's P Coursessupplied this need. Shingo was the best alternative available. The first IE
university course in Japan started about 1950. With growth booming in Japan, IE's were in short supply.
Eiji Toyoda spending 3 months at Ford’s River Rouge Plant helped him realize, while Ford produced in a few days what
Toyota did in a year, there was no technology at Ford that Toyota did not have access to. This is a major turning point in
their thinking. They could not attribute the productivity gap to special technology.
Ohno needed the IE training to develop standard work, TWI was not enough. Simplification of the process has led to color
coding the process flow rather than having people memorize the names of tools or programs.
Eiji Toyoda had spent 3 months at Ford’s River Rouge Plant and saw that, while Ford produced in a few days what Toyota
did in a year, there was no technology that Ford had that Toyota did not have access to. This is a major turning point in their
thinking. They could not attribute the productivity gap to special technology.
Understanding the context that Taiichi Ohno was working in may help in understanding the sequence that he used for
application. In 1950, they estimated that it took about 9 Toyota workers to do the same amount of work as one Ford worker. 
With TWI – Ohno began to merge it with what he already knew and had been experimenting with. The TWI programs gave
him the ability to develop the structure needed to get closer to his ideal flow.
At first it was called Ohno’s system as it was debugged, then they renamed it the Toyota Production system. The TWI skills
offer a structured approach to problem solving as well as building the structure necessary to create flow. Ohno took what
he knew and added the TWI skills into an existing production environment. In an interview, Ohno stated that he seriously
started the development of the system in 1951. And it was stable by about 1965-7 (depending upon source quoting Ohno).

Following in Taiichi Ohno’s footsteps will be continued in another article... Origins of Lean - continued
This is part of a Lecture series for Industrial Engineering students at a University of Science and Technology in 2018.
(Because there are too many illustrations, this lecture is in two articles.)

Understand that the role of the leaders will shift as your system matures, it did for Toyota and will for you as well. Takehiko
Harada joined Toyota in 1968, a time when Ohno states that his Production System was stable. Harada’s primary impression
was that his task was to remove disruptions to flow, an objective that has been lost in most current lean implementations.
Toyota’s “Respect for People” started here… teaching the supervisors to treat them like human beings was part of the strike
settlement.
This is an illustration taken for the Job Relations training program. One of the main points that they start with is that all
results a leader gets is done through people.
Ironically, ‘kaizen’ was introduced by the US Army! People mistake ‘kaizen’ for just being the improvement process…
improving includes problem solving at all levels. Script for promotional movie in US National Archives, SCAP records.
The ‘Just-in-Time’ process has a less romantic origin than the generally accepted story. They may have thought about
implementing it long before it was forced on them by the banks. Ford had a ‘just-in-time’ delivery system by about 1915.
The TWI programs were established to allow industry to rapidly ramp up production by training supervisors and managers
on three core skills.
Taiichi Ohno had a long history of learning by doing, starting in 1932 with his joining Toyoda Spinning and Weaving, then
moving to Toyota Motor Manufacturing in 1943, then the reorganization of Toyota about 1951 and the addition of the TWI
programs. By 1970 he considered that he had most of the bugs worked out of the Toyota Production System (TPS).

Early in his career he was tasked with bench-marking a competitor Nichibo to understand their advantages in the market.
While there are recorded examples of factories being reorganized for flow in Japan as early as 1917 (Ueno). Ohno’s first
recorded exposure came in the 1930s. One could consider this his first step in developing awareness of flow. His
observations were basing the differences in approach that the Nichibo factory took in comparison to Toyoda’s methods.
Some of the things he noticed were; product focused layout, small lot production, and doing things right the first time. Ohno
mentions that he was able improve the production of the spinning factory several times. When he moved to the Toyota
Motor Manufacturing in 1943, his first impression was that he could raise production three to five times simply by
introducing the production systems adopted in the spinning plant. It was only in 1949-50 that he made the first steps toward
establishing the flow of production by rearranging the machines. It is important to point out that by this time, Ohno has
nearly 20 years of production experience. Most of the production machines were reorganized for flow by 1955. 

Ohno’s primary objective is to create flow of materials, information, people, products, etc. This is knowing what the end
should be; in general terms. People may not know what it looks like, but they will understand what it will ‘feel’ like.
There are limits to human endurance, there is no limit to our creativity. It’s a trap to start by trying to speed up the process,
although that might be the outcome. Lean construction before Toyota - Empire State Building was completed in 11 months
after the first steel columns were set, 102 floors (1931).
Thinking of the whole factory as a machine to be synchronized as a single machine began to emerge about 1880. (Also
known as “The American System of Manufacture”.) Walter Flanders is recorded as reorganizing Henry Ford’s factory in the
fall of 1906. While he is not the first, it is better documented than earlier factories. Organizing for flow helped, but it was also
difficult to implement as well as maintain. There is no structured approach to organizing for flow; especially problem
solving.
Put Processes in Sequence: From a lean perspective, this is about each process being able to hand off their work to the
next operation rather than sending it to a warehouse or boxing it up to be transported and moved multiple times before the
next value adding activity happens.

If you can’t hand off to the next process, then you will need a containment step to communicate between processes and a
transport function. When the processes are close enough, communication is easy with visual or audible signals. When they
are further away, like another department, building or supplier, this is where the Kanban system is implemented. Kanbans
are an added cost to production. Additional added costs are packing and unpacking, packing containers and materials,
disposal of packing materials, storage and transport of materials, inventory tracking, etc.
The ideal is to have one process hand off to the next. Second choice would be to have the processes within sight of each
other, this enables visual communications. The next choice would be to signal with Kanban - can be cards, bins, carts, even
conveyors, trolleys, or virtual signals. Putting the processes in sequence is a first step in working towards not
packing/unpacking, transporting to a storage area, eliminating many unnecessary activities.

Synchronize Processes: You can think of a metronome (musical beat) as an example for getting the processes
synchronized. Each process has an ideal of producing at the pace of consumption of the following process. If the end
consumer consumption rate is slower than your base cycle time, you could slow down the cycle times by removing people,
increasing the number of tasks they complete in a cycle. Or reduce the working time. This is where the fourth flow principle
is critical; stabilization of the demand pace on the production system. This pace can be adjusted weekly, biweekly, monthly
or even quarterly.
We start by measuring the velocity (capacity) of the processes to understand the variance between sequential processes.
Then we start pairing up processes that have similar velocities, then move on to adding processes as we can. The first barrier
to closely linked processes is there still is some variation in cycle times. The natural limit is about 3-5 processes before you
need some sort of small buffer to stabilize the flow in the next series of processes. We recognize these as cells.

Balance Work Content: Without balancing the work content, it is difficult to synchronize. There are containment steps
that can be taken as you work towards this ideal. It requires that the people be multi-skilled, knowing the processes
preceding and following their operation. Limits are defined on the number you can build ahead. When this limit is reached,
then you help to reduce the bottleneck. (If you have supplied the following process but have no work available you go to the
preceding process to help.)

Balancing the work also connects to morale; no one wants the tough job where you must struggle just to keep up, especially
if your neighbors have idle time to watch you sweat. Balancing the work content is needed to support synchronizing the
processes, it also gets you to look closer at the longer work cycles to see if they can be simplified. Reducing the longer cycle
times increases the system velocity. By ranking the velocity, you have a way to pick out the barriers on a process flow. You
might have several processes that have velocities (cycle times longer than the desired beat - Takt) this just indicates the
number of processes that must be improved before you can begin to meet the flow demand.

Balance Process Demand: At the top level, the marketing/sales/planning have an obligation to level the demand at
the final step in the process flow. There are some businesses that have daily surges in addition to external customer
daily/weekly demand, such as a restaurant. In these situations, we can use the setup reduction guidelines to move much of
the work content to off peak time to limit loading the bottleneck operations.
As the flow experiments continued to improve productivity in the manufacturing operations, the assembly process became
the bottleneck. Ford’s story about being inspired by the meat packing industry is just that… a story. He had his men visit
Westinghouse shops to study their production methods. He also had teams study Sears and Roebuck for their parts
management system – they had thousands of products and filled orders in less than a day.
Walter Flanders not only reorganized the production lines, but also their supplier system and distribution network. He
arrived in the fall of 1906, left in the spring of 1908.
Henry Leland brought in by board after they dismissed Ford. He observed that all they needed was a good engine and
transmission and the car would sell. Leland introduced the idea of interchangeable parts to the auto industry (having applied
it making guns and sewing machines). When the board brought in Walter Flanders the third year of business, it was just like
how he lost control of his previous car company (now Cadillac).
Rationalization started by focusing on individual constraints; breakthroughs or disruptive inventions solved a constraint in
one of these areas. The late 1700’s and early 1800’s saw a spike in creative ideas for machines to reduce manual labor. While
it started in Europe, America caught up and began to lead by the 1850’s. The shortage and high cost of labor (more expensive
in the US than Europe), drove much of the innovation, as entrepreneurs tried to fulfill market demands.
While the person that led the rise of Ford or Toyota is well known and studied, we need to look closer.

They did not work alone. You cannot be a leader without a team. They developed a leadership vision and created
an environment that supported innovation. A company of one has little impact; however, a great leader has many
outstanding lieutenants. While the leader of an organization is responsible for creating an environment that allows people to
flourish, on a larger scale, any city, region, or country does the same to create an environment for business to flourish, or
not.

Results of people learning and building their production system like Taiichi Ohno did.
How they did it...
They have gone through several learning curves to get to this point. It started with applying the TWI skills to remove
disruptions to flow. Then the sequence was refined into 12 Steps. To further simplify the process, we defined four stages in
the loop after we develop awareness.