Lean Thinking book review

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I have had Lean Thinking sitting on my to-read list for quite a while, and this winter found me the time to read it. I'm sorry I didn't read it earlier. I have understood Lean at a fairly basic level, often based on discussions that compare Lean and Theory of Constraints and other improvement methodologies. Those comparisons are often neutral to negative. Reading something from the heart of the Lean movement gives me a much better feel for the concept.

The book covers a lot of ground: the basic principles of Lean; cases of Lean implementations (half the book); lessons learned from those implementations; and with the latest edition additional thoughts on making Lean happen.

The basic principles of lean are Value, Value Stream, Flow, Pull and Perfection. Given what I've read before, it's interesting that "waste" isn't one of the key principles listed. However, as soon as you begin reading the book, waste is front and center. Waste is the opposite of value. It is things that either detract from the value (quality or delivery problems) or don't add value at all (needless forms, excess movement, delays). Note that value is determined in the eyes of the customer - the person who actually pays for the product or service on offer, so waste should be thought of from their point of view, not the point of view of the supplier. And this leads to that next step of the value stream: how raw materials get transformed into something that the customer wants. Not only does the value stream account for physical transformations, but also using market information to develop new products or fulfill an order. The concept of the value stream then leads to flow: the stream should flow smoothly and quickly without undue blockage. And not only should there be flow, but work should be pulled through the system, based on the demands of the customers. Customer purchases should signal production, rather than producing to a guess (forecast) or to fill a warehouse. And finally, this is not a once-and-done process. Organizations should seek perfection of ever-smaller batch sizes and ever-faster flow, all with the goal of providing more and more value to the customer. Even the definition of value and the value stream should be reviewed and expanded as the organization improves. Many of the examples in the book talked about this aspect - improvements within one organization can only go so far if the suppliers of materials and information cannot support the new ways of operation.

How do basic Lean principles compare to the Theory of Constraints ideas with which I am more familiar? There is a lot in this book that is very familiar in concept to my work in TOC. At the highest level, both approaches seek to improve the value delivered. Lean has the focus on value, and TOC requires a definition of "the goal" of the organization - how it ultimately measures success. Even here, though, differences appear. Lean talks about value as perceived by the customer, whereas TOC talks about the goal of the company, which is often worded as "make money now and in the future." Depending on how you approach this, these are aspects of the same question, or they are different approaches to improvement. In either case, if no one is buying, there is no company, so the high-level has to be a combination of providing value to the customer at a price that is sustainable for the supplier. The other principles of Lean and TOC are similarly parallel. TOC literature doesn't talk as explicitly about the value stream, flow and pull - these are the result of implementing the TOC. Both approaches create operations that are simpler and which have a focus on improvement. From my other readings, I get the sense that Lean offers more specific tools and techniques for making the transformations happen. TOC offers specific means to transform operations in manufacturing (drum-buffer-rope), project management (critical chain), distribution (replenishment), finance (throughput accounting), and sales & marketing. There are also the TOC Thinking Processes that provide a framework for creating new solutions in areas that don't fit.

What about the intense focus on waste (muda) of Lean? That is often a bone of contention within the TOC community because removing waste from steps that don't link to the bottom line aren't going to help you. Reading this book gives me a better perspective on the topic, particularly the closing chapters where the authors talk about using the value stream map to help focus waste-reduction efforts on those activities which will have the biggest impact. This is exactly what we do in TOC: find the constraint - the one area that is limiting the capability to deliver the goal - and do something about it. (What you do depends on the constraint and the long-term goals.) That said, I read between the lines that it is easy to get stuck on "waste" while ignoring the higher-level value stream. This is why there must be a continuous process of improvement: no end point. Create your POOGI or Lean Transformation or Operational Excellence function. Have a hard-nosed expert available to audit your progress and point out new means to improve. (Interesting that both TOC and Lean have founders who are considered to be prickly characters.)

I've wrote separately about some of the terminology. One piece of terminology that was jarring to me is the difference between Lean (in the book) and Theory of Constraints with the term throughput. In the book, throughput is a measure of time - for example the time it takes to manufacture a product. But in TOC throughput is a monetary measure - how much do you make selling a product? (More specifically, in TOC the throughput is a measure that links directly to your goal. If you are a non-profit, then you measure throughput against the goal of your non-profit.) A major focus in TOC decision making is in actions that improve throughput. In Lean throughput time improvements are a result of the actions taken, not a goal. I have seen negative comments about TOC's emphasis on throughput - that this will just result in increased inventory / waste, where that is not at all what TOC should do.

As I read through the book, one thing I though over and over again was that the TOC community needs a book like this that describes the basic TOC principles and gives straightforward examples of how organizations grow and improve by constant application of the principles. I've seen many articles and business novels and even the all-encompassing TOC Handbook, but nothing seems to condense the ideas into an approachable, single volume.

I found a lot of interesting tidbits throughout the book, and I wasn't sure how to write about them above, so I include them here as smaller thought pieces.

  • Efficiency thinking is not the same as Lean Thinking. Efficiency-focus is a bugaboo in Theory of Constraints as well. Efficicency thinking takes you down the path of making everyone busy all the time. This is not the goal of an organization. The goal is to have everyone focused on doing the right thing: effectiveness. In several places the authors mention the changes necessary to shift from conventional cost accounting to something else, which I've seen described as Lean Accounting. In TOC, this is Throughput Accounting. While there are differences between the two, one of the big elements is that the value of a product is more accurately reflected in the accounting.
  • The focus created in these implementations helps remove the distinction between working with the mind ("management") and working with the hands ("operators") because everyone can see what is important, and all ideas toward improvement are valid. (p. 59)
  • I liked seeing the value stream maps throughout the book. I've done drawings similar to these, and seeing other examples helps me think about how I can improve my own diagrams.
  • Another point of agreement between Lean and TOC: If you are spending lots of money to improve you are going about it the wrong way! Any money spent on improvements should be far outweighed by the bottom-line benefits. In my TOC experiences, I have seen bottom-line improvements within months for the cost of the consultants involved.
  • It is not possible to fix everything at once! Be very careful about which specific improvement projects to execute. You might even need to halt other projects that don't relate to the improvements needed to help the organization. (And I will remind: don't start new ones until you have finished the first ones.) (p. 97)
  • Trust isn't the right term within multi-party supply chains. The authors suggest a set of baseline principles that drive a lean enterprise toward the common goal of creating value and eliminating waste together. (p. 276-8)
  • "Local Lean" will only get you so far. It is the same with Theory of Constraints. At some point - often sooner than you might think - it is necessary to step back and reevaluate the Value Chain (Lean) / Goal (TOC) of the organization. (p. 314-5)
  • Lean (and TOC) create a situation where you can achieve "brilliant results from average people using brilliant processes" instead of "medocre (or worse) results from brilliant people using broken processes." (p. 336)

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