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Lean Transformations in Asian Organizations

Tuesday, June 21st, 2011
transformations

In Asia, the constantly-changing and increasingly competitive global market environments have prompted many enterprises in the region to focus on improving the speed and efficiency of their respective manufacturing processes.

Many find that the traditional manual processes they have used in the past, based on the abundance of cheap skilled labor in the region, are no longer effective in keeping up with the pace of the current business environment. Many have shifted paradigms and adopted lean transformation as a better manufacturing concept.

To further improve efficiencies, these companies have integrated IT applications into their lean manufacturing environment to cope with the growing need of handling enormous amounts of data across all stages of the manufacturing process. This would result in a more accurate and better controlled handling of critical information in real time, thus improving the quality of their just-in-time delivery systems.

The manufacturing sector, however, is not the sole area undergoing lean transformations; it is occurring in other businesses and operations across various industries as well. This includes everything from healthcare, development of high-technology products, IT operations, publishing, retail and any other business that involves certain forms of operations. Lean transformation can help these industries identify and eliminate operational waste and other unnecessary activities, resulting in more streamlined and more efficient operational processes.

The challenge, however, for operations managers in the Asian region, is to identify the specific lean strategies that will be applicable to their particular niche or industry. There are several elements that should be taken into consideration, from differences in the workforce culture to variations in the operational infrastructure. A particular lean strategy that is successful in one scenario may not have the same success in another.

The following provides a brief look into the lean transformations underway right now in many Asian organizations, and how these enterprises successfully implemented and made lean principles work for the betterment of their organizations.

Lean Manufacturing Principles and the Toyota Lean Manufacturing System

For people not familiar with lean principles that are used in various industrial operations, the concept can be summarized as a set of tools and operational practices that involves all levels of the operational environment with the aim of eliminating material and procedural waste and increasing efficiencies. The result is a more streamlined and efficient production, with higher output quality, lower operational costs, and faster cycle times.

The following describes in brief some important facts about Toyota Motor’s lean practices that were developed and perfected over the last five decades and applied in one of the most competitive of all industries.

Lean Manufacturing System – the principles of lean transformation in use at present were based primarily on the Toyota Production System (TPS) used in Japan. Many principles, words, and phrases used in modernday lean manufacturing lingo such as andon, kaizen and kanban were derived from the TPS.

Heart of the Lean Manufacturing System – If the heart of the lean manufacturing system can be summarized into one word, it is value. It is the one thing customers would want from a product or a service that they would pay for. Lean manufacturing is all about focusing all operational resources into creating value-added characteristics for a product or service and identifying and eliminating all non-value added activities.

Giving Value to the Customer – In lean manufacturing, it is vital to identify what is important to the customer and what they consider as valuable to them. Identifying such, the operations can now focus on adding this value into the products and services, thus aligning the manufacturing process to what the customer demands.

Waste – In a traditional manufacturing set-up, wastes are objects that were discarded or rejected. In lean manufacturing, what are considered wastes are not only objects but also processes that do not give value to the customer, while incurring cost to the company.

Continuous Improvement – In lean manufacturing, great focus is exerted towards continuous improvement. The whole operation should be open to changes that will improve any manufacturing process. Procedures and steps that are redundant are replaced or improved.

Benefits to the Company – Lean transformations can provide companies with the following improvements and benefits:

 

  • Increase in morale and productivity
  • Reduced defects in products delivered to the customer
  • Faster delivery time
  • Faster product marketability
  • Total customer satisfaction

 

Lean Transformations in Asian Economies

Emerging Asian economies such as China and other Southeast Asian countries have experienced tremendous growth in recent years and this can be attributed to more efficient and more productive manufacturing industries. Such improvements were achieved after adopting international management techniques and lean transformations in their operations.

In China, tremendous change is occurring in both domestic and multinational companies, which are all focused on increasing productivity and achieving positive results. Workers now participate in kaizen events such as group problem-solving discussions. Lean transformations not only occur in the manufacturing sector but also in other aspects of any business such as in accounting, finance and warehousing. All are now focused on the lean philosophy: everything begins and ends with the customer.

Both small and multinational firms in Southeast Asia are adopting lean transformations, as the “just-in-time” philosophy allows them to compete on the global market. India’s manufacturing and service industries is also slowly adopting lean transformations, with large corporations such as Tata Motors, Wipro and HCL leading the way with the aim of penetrating and operating in the global marketplace.

Making Lean Transformation Work for Your Organization

Despite the tremendous potential of lean principles, not all Asian organizations have successfully implemented and achieved tangible results from their lean transformations. This can be attributed to many aspects but it all boils down to an organization’s commitment to change and continuous improvement.

It has also been a norm in traditional Asian organizations to rely on quick fixes and get immediate results. Many tend to abandon a program if they do not experience immediate gratification, thus causing the organization to lose focus on improvement programs such as lean transformation.

Aside from getting the proper tools and methodologies for lean transformation, an organization can also use the following guidelines to make lean principles work for them:

Start Small – Lean transformation may seem like a major and radical change for organizations that are used to the traditional way of operations. Start by making small alterations on the flywheel of change and continuously make small pushes to move forward. Resistance to change in an organization can be addressed by making organizational structure changes or by conducting developmental training programs.

Follow Toyota’s Cultural Change Model – The success of lean transformation in a particular organization is based not so much on the organization’s knowledge of lean tools but on its willingness to accept change. According to Toyota, there is an estimated 2 to 4 percent in every organization that are willing to accept change, another 2 to 4 percent who resist and impede change, while the rest are just waiting to see what group will prevail over the other.

Traditional management focuses more on those who resist change – In Toyota’s Cultural Change Model, management is urged to focus more on those willing to change by providing them with positive reinforcement and providing them with support for lean activities.

Learn from Successful Companies – Lean transformation is also about employing best practices that are applicable to an organization. It is well to learn these best practices from organizations that have challenged their people to continuously improve and implement successful integrated lean principles into their operations – and which have achieved tremendous tangible results.

Plan and Make the Adjustment – An implementation plan is necessary for lean transformation and this should include and consider all the technical as well as the organizational development elements towards lean implementation. Such a plan should include the following aspects:

Lay a foundation of knowledge – teach people the tools, theories and methodologies they need; assign or hire lean experts that will work hands-on throughout the transformation process

Create teams – These teams facilitate the teaching and training of organizational and development tools to improve team members’ soft skills. Teams also promote communication as well as proper engagement throughout an organization.

Develop Vision – The leaders of an organization should use long-range planning tools in strategy deployment sessions to identify 3 to 5 year visions and breakthroughs as well as annual improvement goals

Use IT to Enable Lean Transformation – An organization’s CIO should be involved in designing and executing lean transformation. Workflows and process can be streamlined and optimized by integrating IT technologies, eliminating manual processes, minimizing errors and improving efficiency.

Take the Lead – An organization’s leaders should take the lead in lean transformation to give it a better chance for success. A change in corporate mindset towards continuous improvement is not something that can be delegated to subordinates, but rather should be embraced by the leaders themselves – thus making good examples of themselves that the rest of the organization will follow. They should take the lead in aligning all organizational activities towards lean transformation goals and they should also constantly communicate these goals and visions to the whole organization on a regular basis.

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