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Lean Manufacturing Makes Oversized Claims

14 november 2011

Is lean manufacturing a crock? A snapshot of companies using various process improvement schemes to claw their way out of the recession raises that possibility.

In September, New York-based management consultancy Alix-Partners LLP released a survey of executives at more than 100 manufacturers that started lean manufacturing initiatives over the previous two years. The results were disappointing to say the least.

Nearly 70% said they failed to cut costs by 5%, the researchers’ minimum benchmark for productivity improvements to be deemed successful. Moreover, most of those polled admitted that any savings were temporary. Just 13% managed to sustain three-quarters or more of the previous year’s savings. And yet the respondents to the survey still sounded drunk on the Kool-Aid: 91% considered their reengineering efforts to be effective.

That wasn’t the only hint of disconnect between perceptions and reality. The Shingo Prize for Operational Excellence - named after Shigeo Shingo, the architect of the vaunted Toyota Production System - is awarded annually to companies that successfully implement supposedly universal quality, productivity or other management standards, from Six Sigma to total quality management.

AlixPartners determined that, three years after receiving the prize, the recipients posted revenue growth and gross profits on par with or weaker than their corporate peers. “Most continuous improvement initiatives focus too much on implementing a particular ‘checklist’ of program tools and processes, rather than on basic execution,” concluded Steve Maurer, managing director and leader of AlixPartners’ manufacturing practice.

Traditional lean and Six Sigma programs may inspire a company to improve one step in the process, he added, but the momentum is seldom sustained. That will come as a surprise to a lot of devotees.

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