CHAPTER 2 LITERATURE REVIEW

In Chapter Two, a review of literature related to the Lean Manufacturing principles was conducted and discussed. Detailed topics included in this chapter are for history of Lean Manufacturing,, Quality Management concept.

2.1 History of Lean Manufacturing

Jones, oos, and !omac" #$%%$& found that '(fter !orld !ar II, )i*i Toyoda and

Taiichi +hno at the Toyota Motor Company in Japan pioneered the concept of Lean production, . Toyota Motor Company developed their original moving assem-ly line called 'Toyota .roduction /ystem #T./&, to "eep material flow continuously. Monden #$%01& states that2 The T./ was developed and promoted -y Toyota Motor Corporation and is -eing adopted -y many Japanese companies in the aftermath of the $%31 oil shoc". Thought the main purpose of the system is to reduce costs, the system also helps increase the turnover ratio of capital #i.e., total sales4total assets& and improves the total productivity of a company as a whole, . The Toyoda family originally owned a -ig te5tile company in Japan. (fter !orld !ar II, the Toyoda family decided to start new venture from Toyota (utomatic Loom Company to a Toyota Motor Company. !ren and 6reenwood #$%%0& stated, 'The Toyota (utomatic Loom !or"s was the product of the inventive and entrepreneurial genius of /a"ichi, who perfected Japan7s first power8driven loom and held numerous patent for automatic looms and te5tile production, #. /a"ichi sold his automatic loom patents to finance a research of automo-ile manufacturing system with his son 9iichiro. In the mean time, 6eneral Motors #6M& and :ord assem-ly plants had located in Japan. Therefore, challenging the new automotive venture for the Toyoda 6roup was considered a ris"y -usiness. (ccording to !ren and 6reenwood #$%%0&, the eldest son

of /a"ichi, 9ichiro Toyoda, was in charge of loom production. ;e had a great interest of the automotive engine as well. ;e had studied !estern automotive industry to modify their management into Toyota7s way of automo-ile assem-ly line. )ven though conditions to ma"e competitive automo-ile products against !estern automo-ile products were e5tremely difficult, -oth the Toyoda family and Taiichi +hno were trying to modify num-er of ideas and s"ills imported from the !estern countries. 9iichiro was trying to modify higher production <uantities into smaller production <uantities in order to match with Japanese economy si=e at that time. In addition to the smaller production <uantities, 9iichiro was trying to esta-lish Toyota cars as fuel8 efficient vehicle that would match Japanese narrow streets and tight e5penditure of Japanese people #!ren > 6reenwood, $%%0&. Jordan and Michel #?@@$& stated, 'Toyota and Japan needed a different manufacturing paradigm, . The Japanese have defined that anything prevents the flow of material is called 'Muda, which means 'Waste, in Japanese language. Jordan and Michel #?@@$& stated, 'Toyoda and +hno reali=ed they had to get the most out of each wor"er, and that would happen only if the wor"ers "new how to do many different tas"s effectively, . (fter !orld !ar II when Japanese manufacturing industry was suffering from a poor <uality production system, Toyoda Motor Company started to develop their own efficient production principal. (ccording to Jordan and Michel #?@@$&, 'the Japanese government, with support from the Anited /tates occupation forces, provided a protective cover for struggling Japanese industries while the domestic manufactures tried to find the way,. !hen we tal" a-out the history of Lean, we should not forget a-out ;enry :ord. Because it is not too much to say that he initiated to pioneer the foundation of lean production system in manufacturing industry. 6lo-ally, ;enry :ord is well "nown as a pioneer of :ord Motor Company also "nown -y pioneer of 'Mass .roduction,. In the
-oo" The Machine That Changed the !orld, Jones, oos, and !omac" #$%%$& stated that2

(fter !orld !ar I, ;enry :ord and 6eneral Motors7 (lfred /loan moved world manufacturing from centuries of craft production8 led -y )uropean firms8 into the age of mass production. Largely as a result, the Anited /tates soon dominated the glo-al economy .

;enry :ord "new that he could "eep the prices of his products low -y reducing the production cycle -y using their assem-ly line. ;owever, in the -oo" Becoming Lean, Li"er #$%%C& stated that2 :ord made a dramatic wrong turn at his new ouge comple5. ;e maintained the assem-ly trac" -ut rearranged his fa-rication machinery into process villages. ;e proceeded to run a push schedule in which growing fluctuations in end8customer demand and persistent hiccups in upstream production were -uffered -y a vast -an" of finished units forced on the dealer networ" and e<ually vast -uffers of parts at every stage of production upstream from assem-ly. Thus DflowD production E as :ord termed it in $%$F 8-ecame mass production #a term he also coined, in $%?C, without reali=ing the difference&, and the opportunity to carry lean thin"ing to its logical conclusion was lost . The focus on the :ord flow production system was getting their automo-iles out and "eeping all machines and e<uipment -usy all the time. They did not pay attention whether the ne5t process was ready for producing more products or not. )ventually, they produced e5cess inventory all the time. Anfortunately, :ord Motor Company failed to develop an efficient production system from the original vision of ;enry :ord7s plan.

2.2

ua!ity Manage"ent Conce#t

The first management consultant #engineer named a :rederic" !. Taylor& can follow development of an integrated <uality control. .hilip B. Cros-y asserted the Dnon8 defectiveD program adopted -y the federal government of the Anited /tates, which defines <uality as Dconformance to re<uirements.D The wor" a-out nature improvement is continued. (pplication of these concepts to a service industry resulted in the new concept -ased on the mar"eting approach and the strong customer focus of .hilip 9otlerGs. Deming, Juran, and Cros-y #these people -egan the TQM process& share the common theme of the participatory management #Mighetto > (ssociates, ?@@$&. Deming is widely accepted to -e the teacher of a <uality management, and he is "nown -y the world of his D$F points for ManagementD. Deming -egan teaching a statistics <uality control immediately after !orld !ar II in Japan, and it is admired that it was an

important contri-utor to the nature improvement program of Japan #Cottman, $%%1&. :ollowing are the $F ma*or points of <uality management. $. Create a constancy of purpose for improvement of product and service ?. (dopt the new philosophy 1. Cease dependence on mass inspection as the primary method for improving <uality F. )nd the practice of awarding -usiness on the -asis of price tag H. Constantly improve the process of production and service C. Integrate modern methods of on8the8*o- training 3. Develop tailored methods of supervision and management 0. Drive out fear %. Brea" down -arriers -etween departments $@. )liminate slogans, numerical goals, posters and other pressure8creating devices $$. )liminate procedures that re<uire a specific output from each employee $?. emove the -arriers that stand -etween the engineer and his right to pride in wor"manship $1. Institute a vigorous program of education and retraining $F. )ncourage every individual within the wor"place to dedicate himself to this transformation Quality management has a -ig impact on the entire organi=ation in every competitive -usiness environment. Total Quality Management #TQM& techni<ue is developed -y (mericans to control production and <uality. (ccording to Mighetto and (ssociates #?@@$&2 TQM is a participative management style which emphasis of total employees7 commitment to customer satisfaction. It is a holistic approach to managing comple5 organi=ations and replaces top8down management with decentrali=ed customer8driven decision ma"ing. Total Quality Management is an integrated management system for creating and implementing a continuous improvement process 88 eventually producing

results that e5ceed customer e5pectations. It is -ased on the assumption that %@ percent of pro-lems are a result of process, not employees Cape=io and Morehouse #$%%1& define that 'Total Quality Management refers to a management process and set of disciplines that are coordinated to ensure that the organi=ation consistently meets and e5ceeds customer re<uirements, . (fter !orld !ar II, there was a growing awareness for all nations manufacturing industry to remain compati-ly strong in a glo-al mar"et place re<uiring adopting a new -usiness culture. Japan was trying to analy=e the (merican industry after the war, and desired to ta"e over the challenge of the direct competition with the Anited /tates #Cape=io > Morehouse, $%%1&. TQM is re<uiring the new -usiness culture. )very one of the employees play a part to producing and delivering <uality products. Cartin #$%%1& speculates that2 It will -ecome evident that TQM is a way to manage any organi=ation. It is -eing successfully adopted in industry, government, and services. But it is not a collection of tools that can merely -e plugged in to produce results. /ome tools use alone can produce improvement, -ut only adoption of the fundamental principles will results in ma5imum -enefits. Manufacturing industry has -een to understanding the significance of continuously improving the <uality of their products and service as a means of achieving long8term -usiness goals. Manufacturing industry has also recogni=ed that <uality must -e customer driven from placing the order to delivering the products. Quality improvement is the peculiar portion of a <uality control process. Continuous improvement has to consist of diagnosing core <uality process in the entire system. Ber" #?@@@& stated that 'The continuous improvement concept focuses on finding shortfalls
and sources of varia-ility in administrative, manufacturing, and service process that can detract from a <uality output, and improving the process to eliminate undesira-le outputs,. Ber" #?@@@& has also given the outline for '/trategy for improving Continuous Improvement,. This outline is used very successfully in a large num-er of organi=ations. The outline -elow can provide a good road map for considering <uality management. :ollowing is the $? points outline. $. Define Current /tatus

?. Define +-*ectives 1. /elect Improvement Teams F. (ssign Improvement Teams H. Define .rocesses C. Identify Iaria-ility /ources 3. Identify .otential Improvements 0. .erform )5periment#s& %. Modify Apgrades (s re<uired $@. Implement .ilot Apgrades $$. Measure esults $?. Implement and Move To Je5t .ro*ects

Mighetto and (ssociates #?@@$& states that, 'Management participation and attitude, professional <uality management, employee participation, and recognition reflect a philosophy ma"ing internal and e5ternal customer satisfaction as the organi=ationGs primary goal,. Quality management is for all organi=ations. The only thing re<uired -efore implementation is '!illingness of Change,. )ven leading companies in the Anited /tates have recogni=ed that, in the long term period of time, they will surely support customers further -y delivering higher <uality products at the lowest possi-le cost in a short period of time #Cartin, $%%1&.