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IENG 451

IENG 451. History of Lean. Craft Production. 1800-1900, workforce consisted of quasi-independent skilled tradesmen Characteristics Decentralized organization, small machine shops General purpose machines Low production volume, high price Only the rich could afford the product

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IENG 451

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  1. IENG 451 History of Lean

  2. Craft Production • 1800-1900, workforce consisted of quasi-independent skilled tradesmen • Characteristics • Decentralized organization, small machine shops • General purpose machines • Low production volume, high price • Only the rich could afford the product • Craft production continues to exist • Lamborghini, Ferrarri, Kellogg Furniture

  3. Mass Production • Taylor’s Scientific Management • Standardized work • Reduce cycle time • Time and motion studies • Measurement and analysis • Often confused as dehumanizing mind numbing work

  4. Mass Production • Henry Ford (1908) • Key to mass production was NOT the assembly line • Key is interchangeability of parts • Pre-hardened parts reduced warping and allowed for standardization • Reduced # of parts (single cast engine) • Move parts to assembly which evolved to moving assembly line • Cut real cost to customer by 2/3

  5. Mass Production • Sloan (1908) • Decentralized General Motors into 5 automobile divisions • Each profit center used standard accounting practices • Unintended consequences • Gap between management and labor widened • Accounting encouraged building inventory rather than customer demand • Intechangeability of labor, promoted unions

  6. Mass Dysfunction • Workers hated mass production • Quality took a back seat to production • Machines became specialized • Cost accounting emphasized unit cost rather than overall efficiency • Batch production encouraged WIP buildup (inventory considered an assett) • Defects replicated throughout the batch

  7. Mass Dysfunction • Engineering became specialized leading to design problems for complex parts

  8. Birth of Lean • 1950 Toyoda visits Ford’s Rouge Plant and concluded mass production would not work in Japan • Japan in a depression with limited capital, domestic market too small • Toyota’s Historic Bargain • ¼ workforce terminated • Kiichiro Toyoda resigned • Remaining employees guaranteed lifetime employment and bonuses tied to profitability

  9. Toyota Historic Bargain • Workers now a fixed cost, much like other capital • Investment in human capital leads to worker skill • Experience wage gap leads to less knowledge loss • Workers have incentive to help improve system • Company and workers had become partners

  10. Virtue of Necessity • Specialized stamping machines not possible • Smaller batches • Quick die changeovers • Leads to substantial cost savings, improved quality • 1969 Ohno begins working with suppliers, begins birth of supply chain management

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