Lean Production
Based On The Book
“The Machine That Changed The
World”
By
Womack, Jones & Roos
MIT’s 5 Year $5 Million Research
Project On The Automobile Industry
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Manufacturing Differences
 Ford





 Toyota
Model T - 1908
- 1955
Customized parts produced by
computer-aided flexible
machining cells
 Higher skill level for assembly
needed
Skilled interchangeable labor  Life-time guarantees to trained
labor force
force
Low variety and high volume  High variety and low volume
products
products
 Quality “first time”; the 5
After the fact quality control
Why’s
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Standardized
“interchangeable” parts
produced by gauges
Parts “simpler” to attach

Manufacturing Differences (Cont.)
 Ford




 Toyota
Model T - 1908
Division /specialization of
labor
Vertical integration of most
parts
Dedicated machines; long setup time
Management stock price
focused and short-run
oriented




- 1955
Work teams with flexible job
descriptions and multiple
skills
Suppliers as partners in
development
Set-up time from 8 hrs to 3
mins
Management customer
focused and long-run oriented
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
GM v. NUMMI v.Toyota
Single Site Statistics-- 1987
Statistic
GM Farmingham NUMMI Fremont
Toyota Takaoka
Assembly Hours
per Car
31
19
16

Assembly
Defects per 100
Cars
135
45
45

Assembly Space
Sq. Ft per Car per
Yr.
8.1
7.0
4.8


Inventories of
Parts (average)
2 weeks
2 days
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
2 hours
Relations with
Suppliers
 Mass







 Lean
Production
Adversaries
Not part of design process
Contracts awarded on
competitive bidding
Future price increases after
“foot in the door”

Same product over time
Secretive to other suppliers
Short term relationship






Production
Team members
Part of design process
Contracts on ability to meet
target costs
Future cost savings shared
Better product over time
Active supplier associations
Long term relationship
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
People
Differences
 Mass








 Lean
Production
Variable cost
Limited Skill Set
Follow Procedures
Drones
Individual
People Are Expenses
Short Term Relationship
Functional Leader








Production
Fixed Cost
Flexible
Innovate
Problem Solvers
Team Member
People Are Assets
Long Term Relationship
Project Leader
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Career Path Differences
Example - Engineer
 Mass



 Lean
Production
Entry Level:
 Functional Focus Only
Path:
 Drive Train Jr. Engineer
 Drive Train Dept. Manager
 Drive Train Sr. Engineer
 Drive Train Dept. Manager
Short Term Relationship



Production
Entry Level:
 Assby, Mktg., Engineering
Path:
 Drive Train
 Body
 Project Team
 Special Development
Long Term Relationship
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Other Differences
 Mass





 Lean
Production
Retain Shareholders with
Cosmetic Quarterlies
During Downsizing Each
Stakeholder is on their own
Quality Circles Are an
Assigned Extra Duty
JIT - Push Inventory to Others
in the Chain
Process Improvements by
Specialists Brought In





Production
Interlock Ownership, e.g.
Pension Fund Owners
During Downsizing help Find
“Safe Haven”
Quality Circles Are for Team
Problem Solving
JIT - Reduce Inventory
Throughout the Chain
Process Improvements by the
Team Members
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Marketing / Distribution
Automotive Industry
 Mass









 Lean
Production
Independent dealer
Not involved in product
development
No link to factory
Sold from inventory
“Herb Tarlick” salespeople
No formal training
One time sale
Infrequent mktg. survey
Short term relationship









Production
Company owned
Full involvement in product
development
Direct link to factory
Made to custom order
Knowledgeable salespeople
Full product training
Life time loyalty
Constant feedback
Long term relationship
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.
Key Message
Lean Production requires all organizational
elements and relationships to be in harmony
with the production process. Success requires
forging long term “win-win” relationships with all
stakeholders.
Employees
Suppliers
Customers
Shareholders
Dealers
Recyclers
Copyright, Ansari, Bell, Klammer and Lawrence, Management Accounting: A Strategic Focus, Irwin-McGraw-Hill, 1999.