-Reflecting on Kaizen, Lean/Agile production and supply chain management-
- Assess what the role of a manager is in the following concepts; Kaizen, lean/agile production or supply chain. 2. What the downsides can be when companies strive for extreme leanness.
There is a lot of information and speculation about the best way to manage production processes and supply chains. Business owners and managers are always looking for ways to make a process more efficient, dependable and/or cheaper. This is a reflection on two concepts that can help to achieve an improvement in processes: lean/agile and Kaizen, using recent literature. Lean and agile are put together as agility is derived from lean, when production becomes leaner companies might realise that some level of agility is necessary to meet demand of customers. There are a lot of comparisons to me made between these concepts, especially in the way they should be implemented. The focus will be on the role of managers.
Looking at supply chains and manufacturing processes in the modern day and age we already assume that there will be a focus on lean production, sometimes with the necessary agility depending on the nature of product or service provided. These approaches only really became widely spread in the 1980s. In over 30 years lean and agile supply chain management have become industry standard practices. However, small and medium enterprises (SMEs) and remanufacturers are not always working in this way (Achanga et al. 2006) (Kurilova-Palisaitiene & Sundin 2014). More recent publications may help to find out what the underlying cause is.
Kaizen appears to work really well if implement correctly, however some companies have stopped working with the Kaizen methodology. Literature hypostases good leadership is one of the most important factors for success. We find that management has an important role in both effective supply chain management and the implementation of Kaizen.
We know that Kaizen has risen from Japan and still is one of the most used ways of managing (mostly production) companies in Japan. It must be stressed that Kaizen is a way of running a business, not just quality management. Implementing Kaizen will involve everyone in an organisation. As teams have to manage themselves and accept their own targets there is no way of escaping Kaizen once successfully implemented. It is more than implementing quality circles for example.
Kaizen is built on the basis of cooperation. Employees on the shop floor (shop floor meaning the primary –production- process) are made responsible for achieving targets set in cooperation with management. (Brunet 2000, p. 2). Kaizen has been revolutionary in the way that employees on the ‘lowest’ level are treated. To achieve this sort of cooperation employees had to feel secure and safe to share ideas and take responsibility. The introduction of lifetime employment and gain sharing (Brunet 2000, p. 1) started to emerge during these years. The role of management changed, it was not top-down anymore. The manager had to take on the role of facilitator to help employees achieve their own goals. This was a massive change in a world where ‘do as you are told’ was still the leading management style.
This begs the question whether the success of Kaizen is dependent on how much culture can change? The whole company has to change its mentality about how relations work between manager and the next layer down, perhaps even changing the whole hierarchy? Maybe Kaizen makes employees handling the primary process more important than anyone in a management position. This would make sense, as improvement in leadership does not always mean production is improving; it depends largely on the ‘shop-floor’ employees. (Glover et al. 2013, p. 1182)
Kaizen in Mexico is a good illustration of how difficult Kaizen is to implement. Kaizen is a complete change in the culture of a company. Kaizen turned out not to work very well in the Mexican maquiladoras (low cost factories to supply the American market) (Vento et al. 2016, p. 694) and earlier by Jorge L. García (García et al. 2013, p. 2188). The results of the research lead by Midiala Oropesa Vento show very clearly that managerial commitment is by far the leading factor for success to “professional benefits of HR, Economic Benefits and HR benefits”. They state “Managerial commitment to Kaizen is the key to its successful implementation.” (Vento et al. 2016, pp. 706,707). The data in this research show that management plays a big role in making sure Kaizen is successfully implemented. Another important factor is education and training (García et al. 2013, p. 2195). Even a very skilful operations manager does not always possess the knowledge to implement a system like Kaizen. Companies must choose their training and education very carefully, managers have to be involved and committed to this process. This may have been one of the issues in Mexico. Maybe the culture in companies was not to let managers be involved in training processes. Training of employees has a bigger impact on a business than training of managers (Georgiadis & Pitelis 2016, p. 418). Maybe a manager just needs to be supportive and facilitate an employees wish to educate themselves. It may have been the case in Mexico that the main investment was in managers. This may have left the employees clueless on how to work with Kaizen.
Teams accept their targets and then lead themselves to improvement in processes to achieve these targets. The manager facilitates the team working on their own and makes sure secondary conditions are met. This is backed up by earlier findings where management and leadership are mentioned multiple times as main critical success factors (García et al. 2013, p. 2189).
If the culture in a company does not change in a way that makes employees feel safe enough to raise issues and speak up, the Kaizen approach to continuous improvement won’t work. The same is the case if managers don’t commit to this approach; management has to ‘carry’ a Kaizen event. It is more than just a new method or a trick to improve processes.
Kaizen has even sparked a counselling model. This makes sense, as continuous improvement is not solely effective in businesses. It may very well be used to start a cycle of continuous self-improvement. Kaizen-Educational (Kaizen-Ed) combines Kaizen and the Bloom’s taxonomy to create a tool for group counselling (Topuz & Arasan 2013, p. 1356). This is an interesting view on a concept like Kaizen, since Kaizen is put in a business environment to approach (production) processes. One that may have benefits if used correctly in businesses as well as education.
Lean supply chain management/production seems perfect, because cutting in wasteful processes is a good thing. For some products a very lean approach resulting in just-in-time delivery of raw materials is extremely effective. For car manufacturers an extremely lean approach to production pays off. It is interesting to consider that car production today is very agile, not just lean. Most manufacturers these days choose not to produce cars unless they are requested. So a costumer pulls a car through the factory to be produced on demand. As most parts are interchangeable it is possible to make it look lean, but it might be super agile in the case of mass-customisation.
Car manufacturers are an interesting case study to look at production processes. Car production has high complexity, little variation and must meet high quality standards. Lean production finds its roots in Japanese car production, starting with Toyota’s Production System (TPS) (Kurilova-Palisaitiene & Sundin 2014, p. 644). A concept like TPS sounds a lot like and may be even the same as Kaizen. That is not surprising as Kaizen is continuous improvement that inevitably will result in cutting out waste in a process, therefor making it leaner.
If we look at other types of manufacturing we see that lean production is not always implemented. Remanufacturing for example is not always lean, even whilst researchers have made models to minimise lead times and even turning remanufacturing into a flow process (Kurilova-Palisaitiene & Sundin 2014, p. 649). Small manufacturing enterprises (SMEs) struggle with implementing lean production as well (Achanga et al. 2006, p. 461). In this research the discovery was that management was the most critical success factor when lean production was implemented in a SME. This means either the wrong decision was made or managers lack quality to lead a project towards more lean production. According to these researchers some managers lack the expertise to utilise lean production effectively.
“The just-in-time has slashed parts inventories in plants to a few hours, while stock of cars at dealers have grown to 90 days.” (Fisher 1997, p. 112)
Maybe making a production process or supply chain ‘leaner’ is not always an improvement? Businesses have to be aware of extra costs upstream or downstream in the supply chain. It may just be relocating assets downstream or upstream. Also having to make a lot more orders to suppliers drives up the cost of transportation massively (Huppertz 1999, pp. 70-72). By increasing the agility it may mean that transportation costs easily double because of less than truckload (LTL) deliveries. When a company upstream in the supply chain still produces in batch or even flow (Bamford & Forrester 2010, pp. 32-33) they will hold the inventory until another company demands it. This may be costly downstream as the deliveries are LTL and the company will still have to charge a higher price because they have to have products available on demand. Holding stock always comes at a price.
When someone orders a pizza at Domino’s they deliver it within a very small timeframe. Then if the neighbour sees the delivery come in, they might order a pizza as well meaning another delivery is made to virtually the same place twice in a row. A process like this is agile, because it adapts very quickly to demand. However, a process like this can in no way be called lean, even if the production process is lean. Different shackles of a chain can have different characteristics. If Domino’s would make it more appealing to pre-order well in advance then they might save a lot of money on wages (a lean approach). All those LTL deliveries can be combined to make far better use of available resources. If we take this example to a bigger scale, a car production plant for example, the financial implications can be substantial. Especially if the leadership is not aware that saving on fixed costs (holding stock) can substantially increase variable costs (transport). Weighing and projecting different scenarios in terms of cost allocation is really important when considering ways of making production more efficient.
Marshall L. Fisher stresses in his article titled: ”What is the right supply chain for your product?” (Fisher 1997) Different products have different effective approaches to supply chain management. This title clearly implies that there is also a wrong supply chain for a product. Maybe the same is true for production? As illustrated above, sometimes companies make interesting choices in regard to being lean or agile in terms of supplying a product to a costumer. Internally companies may make wrong decisions towards choosing lean/agile production.
Kaizen and lean/agile are both concepts and ways of improving processes. They have different approaches. Kaizen overhauls the company when implemented; all employees and teams must implement Kaizen to make it effective. This requires a culture change, something that might be difficult in some environments. We see that in Japan that Kaizen works really well, however in Mexico the concept only worked in a limited number of companies.
Lean production/supply chain management can be implemented in small parts of a production line or supply chain. However, this will identify bottlenecks that then will have implications for the next stage. In today’s world lean seems to be the most attractive way to manage processes, but aiming for leanness is not always the best solution. Managers have to be aware that reallocating stock does not mean a chain of processes has become leaner because of one shackle’s improvement. Singling out one process and improving that is potentially damaging to the company as a whole.
Focussing on agility is not always the best way to manage processes, since agility may come at great expense. Adapting to circumstances quickly may seem a good way to run production or supply chains, however the extra resources required may outweigh the benefits.
Managers are a vital part of implementing any system to increase efficiency. Commitment from management is perceived to be one of the critical success factors when implementing Kaizen. The same can be argued for lean production. Having the appropriate expertise to judge whether lean or agile production or supply chain management is better is vital. Should companies invest in new systems or in management? Education helps to successfully implement Kaizen (García et al. 2013), so maybe a new software program is no guarantee for success (software companies may disagree).
One could argue that all of these improvement systems are a way to oppress employees in the bottom layer, introducing a new concept to a company in order to retain control because the managers know how the system works. This could be the case if managers educate themselves and forget to enable employees to do the same. If we look at all of the systems discussed the control should always moves lower down in an organisation. Kaizen makes teams on the shop floor responsible for targets. Kaizen also assumes that the employees can spot potential improvements. Lean production or supply chain management works in a similar way; the company aims to cut out any wasteful processes and uses experience and creativity from experts (employees) to achieve this. The closer one is to a process the more impact change will have. Educating managers has very little impact, whereas educating employees has a significant impact.
It may be interesting to do further research into the role of managers. Kaizen by definition cannot work if a manager is not open to suggestions. Making processes leaner and more agile will work better if done with input from employees. It may be that are managers detached from their teams. If managers try and improve by continuous improvement and making their own processes more lean, they may be able to relate to employees better. Think about the wastefulness in inefficient meetings and ineffective use of technology. Managers may open up to ideas more and acknowledge employees as experts in processes.
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