From: fulk@cs.rochester.edu (Mark Fulk)
Newsgroups: sci.econ
Subject: Re: lean managment?
Date: 17 Apr 92 15:38:52 GMT
Organization: Computer Science Department University of Rochester

In article <thies.703512110@charly> thies@bl.physik.tu-muenchen.de (Heinz-Georg Thies) writes:
>
>
>What is "lean managment" and "lean production"?
>
>"Lean xxx" seems to be the new buzzword pretending to explain the 
>Japanese and Korean superiority over the European Industry. As far as 
>I understand it, the main points are fewer managers per worker and 
>better flow of information from the workers to the managment even 
>ignoring hierachical barriers.

While lean-this and lean-that have become buzzwords, lean production
is indeed a well-defined concept.  For a popular description, consult:

AUTHOR:   Womack, James P.
TITLE:    The machine that changed the world : based on the Massachusetts
          Institute of Technology 5-million dollar 5-year study on the future
          of the automobile / James P. Womack, Daniel T. Jones, Daniel Roos.
IMPRINT:  New York : Rawson Associates, c1990.

The book gives numerous references to the literature.

``Lean production'' is a set of organizing principles for mass production;
implementing it depends on making numerous other innovations.  For example,
Toyota had to reduce the time to change a die in a stamping press; standard
was two-three days, at the end, Toyota was doing it in two-three minutes.
This required invention of die rollers, self-aligning dies, and a number
of other things.  Multiply that example a hundred-fold, and you get the
idea of what is required to do lean production.  Some principles of lean
production are:

Short supply lines and small supply inventories, achieved with just-in-time
delivery.

Zero-defect quality control (as a goal, not actuality); this means that
production is stopped every time a defect is noticed at any stage, and
the causes of the defect are determined and fixed.

Design for production.

Production line design that permits quick change-over between products, and
quick alterations of designs in production.

Most of these notions, once said, are obvious to the point of banality.
Nonetheless, they are not so obvious that the American and European
auto makers didn't manage to completely miss them.

Now, as for lean management:

I am not quite so sure what this means.  I expect that most users of the
term have in mind the management system of a company like Nucor Steel, which
has 20 managers in its headquarters.  My own impression of management in the
U.S., even at such rather good companies as Kodak, is that it is incredibly
bloated with accountants and other time-servers.  Lean management may
simply be reducing one's management to the number of people actually needed.

Some principles I would follow if I were in managment:

Use service bureaus for the main accounting functions: payroll, accounts
receivable, payable, journals, and the like, thus eliminating most corporate
bookkeepers and accountants.

Use banks and brokerages to manage corporate accounts, thus eliminating
lose corporate finance department.  Use a few, and be aware of abusive
patterns like account churning.

Keep a close association with two good law firms, and minimize or drop the
corporate legal department.

Abjure the glittering megalomaniacal false promise of coporate MIS and
EIS systems.  Top management should not be distracted by the kinds of
detailed data that accountants and most computer systems supply; they
should be asking questions and getting out of the office to see things
for themselves.

Cede more authority than is usual to local facilities managers.  Have
managers of interacting facilities negotiate with each other, rather than
via the hierarchy.  Have facility managers make their own deals with
minor suppliers.  Lose most of the corporate puchasing system.

Tie pay to profits by extensive profit-sharing programs.

Reduce the number of supervisors per worker.

(Depending on market) replace sale networks with direct marketing techniques
or with networks of self-employed local representatives.

Use outside advertising agencies.  Use outside market research firms, but
design the research in-house.

Have facilities managers submit daily facility reports; use these as
the basis for corporate planning.

In short: central management concentrates on strategic planning and market
research.  It intervenes in production or sales only when those units have
conflicts that they cannot resolve.  Workers are motivated by profit sharing,
rather than by the straw boss.
-- 
Mark A. Fulk				Computer Science Department
fulk@cs.rochester.edu			University of Rochester
Omit needless words -- Strunk		Rochester, NY  14627