Two questions from very different perspectives illustrate how the reasons
for going lean are changing. First from Denmark, where a few years ago
they were very worried about losing manufacturing jobs to low wage
countries to the east. Since then Dansk Industri, the national industry
association has run one of the most successful campaigns I have seen to
encourage their members to go lean. As a result they are not just
retaining manufacturing jobs in Denmark, but they are also running out of
people to fill manufacturing jobs! At the same time they liberalised their
labour market and unemployment is now very low, even amongst young
people.
So their question was “how can we use lean to enable our existing
employees to produce two or three times as much in the future?” As
population ages and declines in many European countries, as well as in
Russia and Japan, this question will be asked more frequently. We are
going to need to find ways to produce the goods and deliver the services
with less people, or to increase immigration. To achieve this means going
beyond streamlining today’s processes and fundamentally redesigning
tomorrow’s products, production processes and supply chains.
The second question was from a group of very senior managers from
China. They are very enthusiastic to embrace lean, and could see how
lean can help make locally produced goods more affordable to local
consumers. But they realise that to meet the growing economic
aspirations of their citizens they will have to do so in ways that require
fewer resources and that create less environmental pollution and
greenhouse gasses. So they were interested in “how can they use lean to
save resources and avoid pollution?” In other words, how can lean help us
also become green?
Lean thinkers are used to tracking the time and effort as a product moves
through an organisation and to distinguishing the few minutes it takes to
create the value customers are paying for from the month or more that it
spends in the organisation. Compressing throughput time from several
months to a few days clearly requires far less space and energy. It almost
certainly also uses less materials and produces less scrap and obsolescent
stock. The ability to produce in line with demand also reduces the
inventories (and hence storage space and energy costs) in the pipeline all
the way to the end consumer.
But the really significant gains come from compressing supply chains by
relocating value creating steps closer together, and where possible also
closer to customers. Most organisations are unaware that their products
take between three months to a year or more to travel through their
current supply chains, often going back and forth across the globe before
reaching the customer. Although current wage cost differentials and low
transport costs encourage this trend, if we look at total supply chain costs
much of this does not make economic sense, as we described in
Lean
Solutions.
If we also start tracking the energy and emissions from all the processing,
storage and transportation steps across supply chains and convert them
into units of CO2 per product we will also be able to see the environmental
footprint of each end-to-end supply chain, We know from earlier work that
the most polluting part of the supply chain for consumer goods is the trip
to the supermarket and then storing the goods in our refrigerators and
freezers at home until we eat them. But it also shows the choices we will
increasingly have to make between for instance air freighting more and
more products across the world or enabling people to fly across the world.
Beyond this the next step is to fundamentally rethink the product. A few
weeks ago, tucked away inside the Financial Times I noticed a very
interesting quote from the R&D Director of Toyota. He announced that
their third generation hybrid engine to be launched in three years time
would be “half, the size, half the weight and half the cost” of the current
generation engine in the Prius. With characteristic understatement he said
he thought a lot of people “might be quite surprised at this”.
They should not have been – Toyota began their green technology quest
back in 1990 when Eiji Toyoda, the post war genius who built the post war
Toyota, questioned whether it was a good idea for Toyota to keep making
cars with conventional technology. At each stage Toyota has clearly
announced their green intentions in their Annual Report – which everyone
ignores - and then fulfilled them! Will the next generation diesel engine
make such a dramatic leap in resource use and cost? What preparations
are your organisations making to meet the green challenges of the future?
Yours sincerely
Professor Daniel T Jones
Professor Daniel T Jones
