Lean Management

I am saddened by the undeserved and bad press that Toyota Motors a great organisation has been receiving in the recent past.

Notwithstanding the latest problems in quality and its first loss in 27 years, nearly everyone knows that Toyota Motors is one of the most successful companies in the world. What is not so widely known is how Toyota got there.

How did a company almost on the verge of bankruptcy several times emerge from the ruins of a war exhausted and destroyed nation to conquer the most profitable, technology savvy companies in the automotive world within a few short decades?

There are many reasons for Toyota's success but the most significant is "Lean Thinking and Management" , which Toyota pioneered and continuously perfects.

It was 1987, New Delhi. India.
Mr. Rahul Bajaj, chairman and managing director of Bajaj Auto group gave the keynote address at a CII (Confederation of Indian Industries) program.

I thought he was speaking something strange, incredible and exciting. He said he wanted to make his scooter and three wheeler manufacturing company "Bajaj Auto" a lean organisation, as this was the way forward. By using lean management he would use only half the people, equipment, energy and time to produce more and better quality products. I was hooked considering the fact that we were investing huge effort for achieving every percentage point improvement on quality, productivity and cost.

Of course Mr. Bajaj did not go into the details of how exactly he was going to achieve this, but knowing him personally and being one of his key suppliers there was no doubt he would implement these daring concepts. Mr. Rahul Bajaj is a deep thinker highly intelligent and a relentless high performing task master. Much of our organisation's success is owed to his personal support If someone could implement lean management in the Indian environment, it had to be Mr. Bajaj.

I asked my fellow industrialists and several management experts about inputs on lean manufacturing, tried to get literature on this topic, unfortunately I discovered nearly everyone were as clueless as me.

In 1992 we approached M and M (Mahindra and Mahindra) to try and sell them our products which had potential to save them several Million of dollars each year. Mahindra and Mahindra gave us an opportunity and decided to work with us as their strategic supplier.

It is relevant to mention that we had the privilege to work with and for both Bajaj Auto and Mahindra  Leaders in their fields, investing in change and their leaders driving their organisations to standout and be respected globally. There was much to learn from their styles and approaches to situations. Both organisations were headed by dynamic extremely hard working and highly capable individuals.

This will be a topic worth pursuing in another post.

Our team visited the plants of Mahindra and members from both organisations had numerous meetings at different levels. With intense focus and dedicated teams our partnership began to bloom.

In Aug of 1994 Mahindra had just emerged from a very serious labour conflict at their Igatpuri plant. Labour wanted more money and benefits, Management wanted higher focus on quality, higher productivity, lower costs at their facilities. Mahindra placed their bets on "lean manufacturing" to successfully get huge increases in productivity. The results were spectacular and now a role model.
One of the key persons responsible for the program became a lifelong friend and a teacher of ours.

At Mahindra and Mahindra, we observed first hand lean manufacturing being born in an organisation. We were fascinated. We asked around in Mahindra for assistance and Mr. Anand Mahindra himself recommended a stately, soft spoken gentleman who looked more like a professor, by the name of Mr. Madhu Kumta who was key to the lean program at Mahindra. I was disappointed I thought Mr. Kumta would be a young dashing man like us, a young person for a new management initiative.

In days to come I would realise how wrong I was to have made this quick prejudgement of Mr. Kumta. Under that soft spoken exterior lay the mind and actions of a revolutionary. Not a confrontationist revolutionary but one who made your thinking stand on its head for he conquered your mind and thoughts and fired your spirit.

We invited Mr. Kumta to visit our facilities and see if he could help us in improving our operational efficiencies. We still had only an inkling of this concept of lean manufacturing. Early in 1995 Mr. Kumta agreed to advise us on how to become a lean organisation.

When you are young and successful it is easy to believe you know everything. Mr.Kumta made us realise how little we knew. In our organisation we went from ridicule, to incredulous. We had to unlearn most of what we knew and start all over again.
It was frightening yet refreshing. Of the many initiatives we brothers had undertaken in our organisation to becoming world class this was one of the most dramatic and with far reaching consequences.

My personal definition is that lean thinking and management is the act of streamlining the organisation so as to overcome inefficiency and waste.
Transformation to implementing lean management, demands great commitment and belief in oneself and the members of the organisation.

We introduced this concept in a small part of one of our factories, and the results were astounding.
Many within our organisation came to realise that we could operate lean, the flood gates were open.

Turbulence always accompanies change. Dramatic change can severely test an organisation.
The journey from mass manufacturing to lean manufacturing was not made without its share of problems.

Lean management does not tolerate inefficiency and waste. Weaknesses are immediately highlighted.

Staff and Manager issues:
The issue is most of the problems are not the individuals fault, the fault often lies in the systems, policies and approach of organisation. The individuals however are always afraid that they will be blamed when problems get highlighted.
It requires maturity from management to realise that the system needs fixing and not go on a witch hunt.

Labour productivity jumped more than 200%.
This dramatic improvement in workmen productivity gave them the false impression that was due to their increased effort and hence they needed salaries to double or more. In reality the work was enriched (made more interesting and with less supervision) and idle time was productively used.
In fact the workmen had to work less and got more output. A win-win formula was eventually worked out to every ones satisfaction.

Inter-functional (departmental) problems.
I hate to use the word department, as the connotation is that they exist for very narrow and limited objectives and divides rather than unifies the organisation. I prefer to use the word function, because when all parts of the organisation function well and seamlessly with each other the organisation functions well.
Having an open and transparent way of working and communicating to shared plans and information normally solves the problem. Non performers find it difficult to hide and a small number of people did leave the organisation.

We realised that just lean manufacturing was not enough , we had to be lean thinking.

In time, we overcame all these problems and achieved spectacular results. Typical measurable results;
Quality improved and the number of defective products went down by 84% of the previous level.
Response time and manufacturing cycle time reduced to 11% of the time it took us earlier.
The number of workmen and staff required was reduced by 67% .
The factory space required was 30% of earlier.
Work in process inventory reduced by 74%

The intangible results were, increased morale, team work, skill and responsibility enhancement of individuals and teams and the passion to improve continuously by challenging themselves and their colleagues.

Many lessons had to be learnt. Just getting a top notch advisor like Mr.Kumta to come and advise was not enough. We have to believe totally in the concept, in ourselves and our people. We must remember that - "Man cannot discover new oceans unless he has the courage to lose sight of the shore."

Many of us simply do not want to leave the comfortable shore we are holding on to. ‘We must change or be changed.’

It is also necessary to have the top management openly and clearly champion lean thinking within an organisation, to have certain key persons with requisite authority and persuasive skills involved in implementing this strategic initiative.

Lean Thinking is applicable not only to manufacturing but is now effectively being applied in various service industries including hospitals etc.

Using lean thinking we could have our cake and eat it too. We achieved a win-win for ourselves and our employees , our customers and nearly all our associates including vendors..
Yes, it is possible to be lean without being mean.


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  2. Shekhar Naik said;

    This is superb; however for students of lean management - and there are really plenty now it would be very useful if you could maybe post a "white paper" on how exactly the transformation took place, what the steps were, how buy in was achieved and how at the end were the various stakeholders convinced to a "win - win" situation. I am requesting this as I have been in in some situations where one or more of the "stakeholders" felt they deserved the "lion's share" of the "gains" as it was "their contribution" that made the change possible and therefore their claim.

    Interestingly but perhaps not surprisingly on occasion it has been "management" which has felt so and at other times "workmen".



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