Why Lean Production fails to make USA, European and Australian Industry competitive and what to do about it before you go out of business too!

To get 92 percent OEE and more, start creating and innovating your own in-house solutions that are better than Lean.

20 years after they gave away the Toyota Production System to Wormack and Jones for their book, The Machine That Changed the World: The Story of Lean Production, Toyota dominates car manufacturing. That was always their plan.

It is no surprise USA, European and Australian car companies down-size, close factories and go out of business when they use Lean. It was why Toyota’s Board gave TPS away to Wormack and Jones. Ask a professional sports coach how often they expect to win a game if they use the other team’s strategy and tactics against them.

 


Wormack and Jones did not realise that Lean would destroy the USA, European and Australian car industry when they released their book, The Machine That Changed the World : The Story of Lean Production, in 1991. Twenty years later Toyota dominates world car sales and their 1991 competitors have a falling market share and most of them are well on the way to going out of business. What a great result for Toyota and its free release of the Toyota Production System (TPS). What a brilliant strategy to become the biggest and best car maker within two decades.

Toyota gave away their hard-won, original Toyota Production System in order to destroy their opposition. It makes no sense for Toyota’s Board to give a vital competitive advantage to their much bigger competitors unless it was meant to harm them. It is not altruism that spurred Toyota to let the world know about the Toyota Production System. Giving away TPS was intended to trick the competition into playing the game of ‘catch Toyota’.

Any professional sports team coach will tell you that you cannot win games by copying another team’s strategy and tactics and using the same against them. Toyota’s Board gave away their greatest advantage for free with the clear expectation that it would be copied and used by all their competitors. The car industry across the world did what every smart sports coach knows is an impossible way to win the championship—they copied TPS and tried to beat Toyota at its own game. Car company executives who adopted Lean to protect themselves against Toyota destroyed their business’ future.

Since the release of the Wormack and Jones book, The Machine That Changed the World : The Story of Lean Production, countless companies around the planet use TPS Lean Production in the belief that it is their operating salvation. But Lean is a trap for your business to fall into; just as the Toyota Board meant it to be. You start playing ‘catch-up’ instead of becoming creative and innovative at solving your problems simply. TPS is but one way of creating efficient and effective operations. Lean is not the ultimate solution, that still remains to be discovered.

TPS is a business-wide, systematic methodology. You have to change everything about your company and make it like Toyota to make Lean work. That is a thing that managers will never do, so instead companies mistakenly use Lean for business process point solutions. When Lean methods are used for point improvements you impact the performance of the rest of your business system in unknown ways—both good and bad. You may get inventory reduction in production and miss out on sales because a desired model is not available. You may apply JIT to reduce delivery time and increase warranty recalls since poor quality items were installed.

Companies that use Lean as point solutions see improvement. There are countless articles online and in books written about Lean turnarounds that proudly explain in great detail how their operation went from 52 percentage OEE to 80 percentage OEE. It sounds magnificent; until you realise that they needed to get to 92 percentage OEE to be truly world class competitive. That is how Lean tricks you and destroys your business: you believe 80 percentage OEE is a great result and you do no more improvements. It might be a great result from 52 percentage OEE, but you will still go out of business; only it will be painfully longer until your operation becomes unsustainable.

The Toyota Board foresaw it all. They knew that TPS would make them more successful faster if they gave it away and did not keep it a secret within Toyota and its suppliers. By releasing TPS to the world through Wormack and Jones they intentionally stifled innovation and creativity in their competitors. Ask any professional sports team coach how you win games and they will tell you that you need to come up with your own strategy and game plan. You develop and build your unique style and techniques that competitors cannot match. You must play your own game and keep getting better at it. Then you will win matches. You can only lose if you mimic your opposition.

Lean methods and Lean tools are good and they work for Toyota. But they also fail businesses and send companies to the wall. Managers use Lean because they think it will help them to be as productive as Toyota. They implement bits of TPS Lean as point solutions and think it is all that they need to do to be successful. They badly copy what Toyota does and that guarantees failure. They should have used their own better solutions. Ask a professional sports coach and they will tell you that if you want to win the championship you must ‘change the game’ to one that you can win. They will tell you that you cannot adopt another’s strategy and methods and expect to win at playing their game.

How to ‘change the game’ to the one your company can win

To managers in a troubled company Lean sounds like such a marvellous choice to improve productivity. Since the 1991 Wormack and Jones book, The Machine That Changed the World : The Story of Lean Production, Lean has become so prevalent that company managers do not question its adoption. They say, “Everyone is doing Lean and so must we.” They see Lean as the answer to quickly becoming more competitive. They fall into the ‘catch-up’ trap set by Toyota’s Board.

What Company management does not see is that Lean will later destroy their business from complacency and lack of internal innovation and motivation. By using Lean you kill the entrepreneurial drive and innovative spirit in your company and start playing the game of ‘catch-up’. If you adopt Lean you spend years introducing it. It never quite works right for you. What positive changes you get from Lean might push your performance to above average. But very few companies that apply the TPS Lean strategy get to world class performance.

It does not make sense to use a business solution that has little chance of making your company highly competitive. The reason Lean cannot get every company that uses it to world class operational results is a simple human foible—you did not create the solution and so you have no passion for it. If you want 92 percentage OEE and more you need a sure way to redesign your business so that you have the internal drive to make your company that good. Applying TPS Lean methodology in your company will not create the endless passion you need to get to world class performance.

If you want to win in the marketplace you must be unique. You must play the game in the way that you play best. You need to find the love and passion to keep improving, innovating and adapting your skills and tactics so that no one else can play the game as well as you. That is exactly what Toyota does with TPS.

Do not copy your competitors. You gain no advantage if you also play the same game in the same way as the competition. You must have a different answer that is better than what they do. To start making your business a world class certainty, first adopt a methodology that drives your company to select and use the best solutions, and then keeps improving them with better solutions; so that you are always at the top of YOUR game.

If you jump onto the Lean band-wagon you will start training your workforce in 5S, SMED, TPM, VSM, 5 Why, 3P, mistake proof, and more. You will spend a fortune on Lean training providers, use-up man-years of time in courses, alter your company’s processes to make them more efficient and still not be a world class operation. You will see improvement at first; then you will see decline. The excitement passes quickly when there is no passion to sustain it.

Lean fails companies because Lean is used for the wrong reason (catch-up) in the wrong way (imposed on the workforce). The first action to undertake when improving your operational performance is to select the best changes to make. You want changes that bring sure, lasting world class production results and return great operating profits. There needs to be a process of business analysis done to decide what changes make the most profit, and the best ways to get those changes in place. Your analysis may indicate that a particular Lean tool is the right solution to use, but mostly you will find that Lean methods are not your best choice.

At LRS Global Consultants the Plant Wellness Way (PWW) methodology is our tool for finding better plant and equipment reliability solutions than your competitors. It is a tool for designing better reliability creation processes than the competition. With PWW you identify how to build the outstanding operations and maintenance processes needed for world class reliability. PWW gets you to design your successful future. You generate and install your own passionate innovations that keep your operation’s reliability ahead of the competition. With PWW you are sure to ‘change the game’ to the one you love and the one you can win.

 

My best regards to you,

Mike Sondalini
Managing Director
Lifetime Reliability Solutions HQ