‘Lean production system’ is a very popular generic mass production management system. It is also known as ‘Toyota Production System’. Lean system develops highly responsive systems whereby companies produce “goods and services exactly when they are needed: not before they are needed so that they wait as inventory, nor after they are needed so that it is the customers who have to wait”. (Slack, 2001) It is based on three key principles, eliminate waste, involving everyone and continuous improvement.
The lean system was developed by Taiichi Ohno at Toyota in the 1950s. Taiichi was a manufacturing manager and was facing difficulties because of poor supply conditions. He couldn’t plan ahead as he couldn’t predict the supply of raw materials. This was causing cash flow problems as the plan was making more and more unfinished vehicles that couldn’t be sold. To identify which parts were missing he developed a system for linking production stages together very closely and termed it as Just-in-time (JIT) system, using an approach called Kanban which means Signal/Ticket in Japanese. From this the JIT started to evolve and Toyota still says they are still developing the whole lean production system.
In addition to the JIT workflow, the main elements of lean production are flexible job structure and multiskilling, continuous improvement (Kaizen) and high commitment HRM policies where the company allows job security, training, participation and information sharing.
The Lean production, being a very successful system, has been adopted in my countries. In this essay, we will discuss the possibilities and limitations for transferring Japanese lean production work practices to British institutional environment.
Lean Production and HRM:
The introduction of lean production system has a tremendous impact of an organisation’s HRM system. One impact of lean production is level scheduling. The lean production is also very result orientated, so the performance is also a very integral part of Lean production and we all know that only a very good HRM can bring good performance in an organisation. Therefore, Lean production and HRM are correlated in a company’s performance. Rosalind Forrester (1995) has discussed some of the impacts of Lean production on HRM, some of them are described below.
(i) Organisational style and structure:
The Lean process usually demands development of a number of interrelated policies covering virtually every aspect of personnel policy and practice. The transformation from ‘leader’ oriented work to ‘team’ oriented work is usually the biggest change which is evident. In this lean system, through empowerment the difference between traditional white and blue collar workers is lifted. The change in role has implications for organisational structure, creating flatter structures focused on process, not hierarchies. The whole lean process is a people-centred one, with employees becoming more involved and flexible. Lean production has to be a people-driven process, because only the employees can identify ways of improving the existing process or product.
One of the cultural changes that become visible is the waste reduction. This has an impact on both macro and micro departmental level. The whole culture production department shifts away from pushing as much material out to the shop floor, to a system of materials being pulled to the line as production requires them. As a result the tasks of warehouse staff become less to do with goods coming into warehouse, and more focused on the increased frequency of delivery both from suppliers and to the line, which has to be co-ordinated through the Kanban (signalling/ticketing) system. Team leaders usually get involved in the floor level work with other team members, thus, hierarchy is diminished in an organisation.
(iii) Role and selection in job style and flexibility:
As discussed before, the idea of developing a team forces the creation of the concept of team leaders rather than the managers. The team leaders have a broader role than the traditional managers. Their duties usually encompass production of their team, housekeeping, repairs, minor maintenance and quality control. From the HRM perspective, this requires a new selection strategy for the recruitment of team leader who is able to do multi-tasking.
The roles of team members also shift with the introduction of more flexible job descriptions and involves multi-tasking. Individual employees no longer have their own jobs, but have a collection of team responsibilities. To assist in this process each separate task which is carried out is now required to be performed in the “one best way”.
The move towards Lean process puts stress not only on production processes, but also on individuals, making any weak links vulnerable, and drawing attention to the importance of having the right employee in the right position. This forces the recruiters to review the validity and reliability of their selection programmes for every level of the organization.
The team members in an organisation need to be trained on a broader range of work as a result of lean production to include different processes and techniques instead of being concerned purely with how to carry out a single operation. Specific courses have to be introduced to provide the team members with the skills of continuous improvement or Kaizen, allowing them to be able to alter their workplace and solve their own problems. This again takes the responsibility away from previous management roles, changing hierarchy of the organization.
(v) Problem solving:
Lean production triggers the bias towards problem solving in an organisation. Any weaker links in the production process is immediately rectified. This problem solving often improves the employee motivation and thus increases the overall performance of the organisation.
Most often, the introduction of Lean production brings along a different pay structure in an organisation. The package can be organised so that it can create a package which would include base pay and other experience and performance related incentives.
Implications of Lean Production in British Industries:
Following the implementation of Lean production in Japan and the subsequent success stories of them, the British companies had started to adopt the Lean production concept. Below we will look at the case studies from different industries in Britain and see how well the Lean production fitted in the British industries. We will see the how the implementation of Lean production have affected the performance of the company which we can then translate into the success of HRM in Lean production as we know by now that HRM is an integral part of Lean production.
(a) British auto industry:
In a study on British car manufacturing companies, the authors David Primost and Nick Oliver (2003) have conducted a research of the Lean production and the subsequent financial performance. For research purposes, they collected data using two samples – a ‘visited’ sample and a ‘confirmatory’ sample. The visited sample was formed from two hundred UK automotive plants. The ‘confirmatory’ sample comprised 130 single-plant automotive component firms which filed annual accounts with the Registrar of Companies. They found that, in the UK automotive components industry, lean production adoption has not had a significant positive effect on financial performance. The results of this study show that successful lean production adoption is the exception rather than the rule. Managers in countries such as the UK should therefore be very concerned about whether they are in a suitable environment for successful lean production adoption and whether they have the necessary skills and experiences for implementing such techniques. Furthermore, the managers of many of the best performing plants had obtained guidance in lean production implementation – for instance, in tailoring adoption to their specific plant circumstances.
Michael Robertson and Carole Jones (1999) looked into the Lean production and Agile manufacturing in British Telecom. According to the authors, agile manufacturing is a part of Lean production which encompasses four basic principles which are, “(1) Products are solutions to customers' individual problems. (2) Virtual organisations are formed where products are brought to market in minimum time through internal and external co-operation. (3) Entrepreneurial approaches are adopted so that organisations thrive on change and uncertainty. (4) Knowledge-based organisations are formed which focus on distributed authority supported by information technology.”
In the case study, the authors analysed the process of BT which has started to apply some Lean and agile manufacturing for the entire telephony and provision service for residential and small business customers. From the call centre reception of orders/faults to the engineering workforce are under the customer services division. This helps to run the whole process from a customer service perspective rather than just sales or just repairing perspective. The training and development focus has been on multiskilling the field workforce this offers job satisfaction to the employees as well as allowing flexibility to them. BT has also implemented a proactive maintenance. It has an automated system that carries out checks and warns against potential failure. Which helps its staff to take preventive measures before breakdown before the problem occurs.
(c) Toyota’s UK plant:
Toyota has been largely regarded as the pioneer of lean production system. The article details research conducted by Winfield & Kerrin (1996) into the impact that Toyota’s European transplant operation is having on businesses in the region. It is within this business context that Toyota (UK) Ltd commenced producing cars for the European market in December 1993. Toyota chose Derby as its European site as it’s known for its precision engineering skills. Also it was outside of the traditional car manufacturing base of the West Midlands which was in decline. Toyota had employed 2000 people in their plant. This huge amount of employment created a shift in management style and level of production regionally. Toyota also sealed long term contract with its suppliers to ensure the workability of JIT system. Toyota also ensured that its personnel frequently visited the suppliers manufacturing facility and provides technical expertise as well as management training for the supplier’s employees. In some cases Toyota redesign the jobs of the supplier plants. Thus by opening a plant in UK Toyota not only successfully started operating using their Lean production system but also made its suppliers to adopt it. This had brought a change in the way companies operate supply chain system in the region.
(d)British Meat Industry:
In a paper titled ‘Application of lean paradigm in red meat processing’, David Simons and Keivan Zokaei (2005) explains how some lean techniques can improve productivity and quality in red meat cutting plants. According to the study, the two basic lean techniques are Takt-time , which is the basis for smooth continuous production flow and Standardised work, which is the basis for continuous improvement. Authors take a multiple case study approach in this paper. Two sets of case studies present examples from both traditional and advanced meat cutting rooms.
The traditional and advanced meat cutting rooms demonstrated different levels of
productivity and quality based on activity sampling and observation. The traditional cutting rooms had no concept of Lean production. These lines were run at a fast pace producing the waste of “over-production” resulting in variable flow, non-standard work and intermittent operator activity. The advanced lines all run at a pace that operators can apply standard operations and cut to the correct quality. The paper cautiously concludes on operator activity, that traditional lines run at 60 per cent and advanced lines run at 80 per cent; and therefore advanced lines can operate with 25 per cent less labour cost due to improved line balance.
Lean Production and Sustainable Competitive Advantage (SCA):
Michael Lewis (2000) looks at a British company, a multinational company based in Belgium and a French company and finds out how Lean production is impacting the achievement the companies’ SCA. We will just focus on the British firm’s performance for this essay. The company employs 430 people manufacturing electrical sub-assemblies for automotive control systems. The research shows that the British firm had shown a dramatic rise in performance after adopting Lean production. The company had reduced its process inventory by 60%. They have also seen the growth in sales, but overall profit declined. The company was also located close to its customers’ assembly plants which helped the process of Lean production. But with the increase of business, eventually the company had to increase its transportation cost as the new clients were far away from its production plant. The company also found that in 5 years of study, it only released 8 new products. Within the timeframe of the study, the British company enjoyed an impressive lead-time improvement. It was subject to 3 original equipment manufactures’ ‘time-to-market’ initiative and this became a key performance indicator of the firm. Any activity that wasn’t considered contributing directly to the relationships with its partners was eliminated which contributed into staff gaining broader problem solving skills and were able to become experts.
Lean Production and Stress:
In the article “The effects of lean production on worker job stress” the authors have investigated whether Lean production in the British industries are causing stress among the employees.
Stress affects both employees and organisations. Kvarnstrom (1997), of the
International Labour Organisation (ILO), reports that stress may harm individual health and the ability to cope with working and social situations, causing work performance and relationship strains. For organisations, stress causes absenteeism, increased medical costs and higher turnover. According to the article, in Britain, this amounted to about 20 million lost working days in 2001, more than 30 times greater than industrial action losses.
Lean production operates in a ceaseless and well synchronised material flow. It improves performances but at the same time it increases the intensity of work. This potentially poses stress on its workers. For this reason the process is often termed as Lean ‘Mean ’ Production. The research conducts an implementation hypothesis which shows the relation between Lean implementation and job stress was non-linear. The initial implementation stage shows increasing stress as implementation proceeds at low levels. Stress then levels off in a middle stage until it reaches an inflection point. Further implementation shows decreased stress. [See the figure above (Conti, 2006)] After analysing further hypotheses and industry samples, the authors conclude that the Lean production doesn’t necessary have to be stressful. It all depends on its compatibility of health standards and ‘good implementation’.
Lean Production and EU Regulation:
In 1990, European countries were unified into a common market for goods, services, capital and labour which is called the European Union (EU). The taxation for business across the borders of the European countries was removed or in some occasions was more unified. The labour laws however, still remained different. Some countries had a minimum age polices, while others didn’t. There is a maximum workweek hours permitted for Italy which is 48 hours, whereas in UK there is no limit of workweek hours in UK. This type of intra-country differences often impacts the Lean production. (Dessler, 1995)
Lean Production and Trade Union:
A trade union is an organisation of workers. It bargains with the employer on behalf of union members and negotiates labour contracts with employers which could include the negotiation of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies. Traditionally in UK the trade unions are trade based which is also known as Industrial Union. These types of unions attempt to organise all workers within a particular industry. But under Lean production one company usually has only trade union for its employees. This helps the management to negotiate with employees easily they just have to speak to just one representative rather than a lot of different union representatives from different types of employees in an organisation.
From the discussion above, we have seen that, although some British companies have enjoyed success after implementing the Lean production, the process doesn’t necessarily guarantee the improvement of performance in all of the British industries. Managers in countries such as the UK should therefore be very cautious about whether they are in a suitable environment for successful lean production adoption and whether they have the necessary skills and experiences for implementing such techniques.
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