Lean thinking James P.Womark Banish waste and create weath inyour corpourtion

B ANISH WASTE

AND CREATE WEALTH IN

YOUR CORPORATION

T.Jones

Authors of The Machine That Changed the World

James P. Womack and Daniel T. Jones's classic book Lean Thinking has sold in the hundreds of

thousands in a dozen countries. Today, nearly seven years after the publication of the first edition—

and given ample evidence that businesspeople are finding the book increasingly relevant—it is

clearer than ever that lean thinking is the single most powerful tool available for creating value

while eliminating waste, in any organization. As economies have gyrated, stock markets have

crashed, and the poster companies of the 1990s have flown a ballistic trajectory, the lean exemplars

profiled in the book—led by Toyota—have continued their methodical march from success to suc￾cess by creating truly sustainable value for their customers, their employees, and their owners. In

this revised and updated edition, on top of offering the wealth of practical material from the first

edition, Womack and Jones now bring the story of the continuing advance of lean thinking up-to￾date, and also share a range of new tools aimed at the successful application of lean thinking.

Raves for The Machine That Changed the World by James P. Womack and Daniel T. Jones

"The Machine That Changed the World is a very important book. I am impressed."

—Peter F. Drucker, author of The Post-Capitalist Society

"The best current book on the changes reshaping manufacturing, and the most readable, too... con￾veys a very human sense of managers constrained by limited resources yet trying to do better."

—Business Week

"A revealing and compellingly readable account of Japan's achievement in revolutionizing manu￾facturing An eye-opener even for those who already knew Japan didn't do it all with robots."

—Financial Times (Business Book of the Year)

"This is a book of great understanding, and of hope. It shows how to create an industrial world in

which workers share the challenges and satisfactions of the business. It's a world in which assem￾blers communicate with suppliers and dealers in a way that improves life for all of them. Read it."

—Automotive News

"Truly remarkable. . . . The most comprehensive, instructive, mind-stretching and provocative

analysis of any major industry I have ever known. Why pay others huge consulting fees? Just read

this book." —Philip Caldwell, Chairman and CEO, Ford Motor Company, 1980-1985

U.S. $30.00

Can. $41.0 0

Expanded, updated, and more relevant than ever,

this bestselling business classic by two internationally

renowned management analysts describes a business sys￾tem for the twenty-first century that supersedes the mass

production system of Ford, the financial control system of

Sloan, and the strategic system of Welch and GE. It is

based on the Toyota (lean) model, which combines opera￾tional excellence with value-based strategies to produce

steady growth through a wide range of economic conditions.

In contrast with the crash-and-burn performance of

companies trumpeted by business gurus in the 1990s, the

firms profiled in Lean Thinking—from tiny Lantech to

midsized Wiremold to niche producer Porsche to gigantic

Pratt & Whitney—have kept on keeping on, largely unno￾ticed, along a steady upward path through the market

turbulence and crushed dreams of the early twenty-first

century. Meanwhile, the leader in lean thinking—Toy￾ota—has set its sights on leadership of the global motor

vehicle industry in this decade.

Instead of constantly reinventing business models, lean

thinkers go back to basics by asking what the customer

really perceives as value. (It's often not at all what existing

organizations and assets would suggest.) The next step is

to line up value-creating activities for a specific product

along a value stream while ehminating activities (usually

the majority) that don't add value. Then the lean thinker

creates a flow condition in which the design and the prod￾uct advance smoothly and rapidly at the pull of the

customer (rather than the push of the producer). Finally, as

flow and pull are implemented, the lean thinker speeds up

the cycle of improvement in pursuit of perfection. The first

part of this book describes each of these concepts and

makes them come alive with striking examples.

Lean Thinking clearly demonstrates that these simple

ideas can breathe new life into any company in any indus￾try in any country. But most managers need guidance on

how to make the lean leap in their firm. Part II provides a

step-by-step action plan, based on in-depth studies of more

than fifty lean companies in a wide range of industries

across the world.

(continued on back flap)

(continued from front flap)

Even those readers who believe they have embraced

lean thinking will discover in Part ID that another dramatic

leap is possible by creating an extended lean enterprise for

each of their product families that tightly links value￾creating activities from raw materials to customer.

In Part IV, an epilogue to the original edition, the story

of lean thinking is brought up-to-date with an enhanced

action plan based on the experiences of a range of lean

firms since the original publication of Lean Thinking.

Lean Thinking does not provide a new management

"program" for the one-minute manager. Instead, it offers

a new method of thinking,,,of being, and, above all, of

doing for the serious long-term manager—a method that

is changing the world.

JAMES WOMACK AND DANIEL JONES have

collaborated on analyses of global industrial trends for

more than twenty years. They are coauthors of The

Machine That Changed the World, Seeing the Whole, and

The Future of the Automobile.

Womack is founder and president of the Lean Enter￾prise Institute (www.lean.org), a nonprofit education and

research organization based in Brookline, Massachusetts,

dedicated to the spread of lean thinking.

Jones is founder and chairman of the Lean Enterprise

Academy in the U.K. (www.leanuk.org), a nonprofit orga￾nization affiliated with the Lean Enterprise Institute and

pursuing the same objectives in English-speaking Europe.

Visi t us onlin e at www.simonsays.co m j

Jacket design by Jack Ribik

Authors' photograph by Bachrach Photographers

Printed in the U.S.A.

Copyright © 2003 Simon & Schuster Inc.

Distributed by Simon & Schuster Inc.

Also by James P. Womack and DanielT. Jones

The Machine That Changed the World

(with Daniel Roos)

The Future of the Automobile

(with Alan Altshuler, Martin Anderson, and Daniel Roos)

Seeing the Whole: Mapping the Extended Value Stream

LEAN

THINKING

BANISH WASTE AND CREATE WEALTH

IN YOUR CORPORATION

Revised and Updated

James P. Womack

and Daniel T. Jones

FREE PRESS

For Anne

Both necessary and sufficient;

my picture of perfection

J.P.W.

and

for Pat

My patient and wise counselor

D.T.J.

/ P

FREE PRESS

A Division of Simon & Schuster, Inc.

1230 Avenue of the Americas

New York, NY 10020

Copyright © 1996,2003 by James Womack and Daniel Jones

All rights reserved,

including the right of reproduction

in whole or in part in any form.

First Free Press Edition 2003

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of Simon & Schuster, Inc.

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Designed by Irving Perkins Associates

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10

Library of Congress Cataloging-in-Publication Data is available.

ISBN 0-7432-4927-5

Preface to the 2003 Edition

Lean Thinking was first published in the fall of 1996, just in time—we

thought—for the recession of 1997 and the financial meltdown of 1998. The

book's mission was to explain how to get beyond the financial games of

the 1990s to create real, lasting value in any business. Toward this end, it

demonstrated how a range of firms in North America, Europe, and Japan

took advantage of the recession of 1991 to rethink their strategies and embark

on a new path.

In our presentations to industrial audiences, we often point out that the

only sure thing about forecasts is that they are wrong. (Which is why lean

thinkers strive to reduce order-to-delivery times to such an extent that most

products can be made to order and always try to add or subtract capacity

in small increments.) Instead of a recession in 1997, the most ebullient econ￾omy of the entire twentieth century charged ahead for five more years, into

2001, extending a remarkable era in which practically anyone could succeed

in business.

Given that the book was published years before our ideas were most

needed, it's surprising how many readers took the advice in Lean Thinking se￾riously during the best of times. More than 300,000 copies have been sold in

English, and it's been translated into German, French, Italian, Portuguese,

Polish, Turkish, Korean, Japanese, and Chinese. We have heard from readers

across the world about their successes in applying its principles.

Once reality caught up with our forecast, and the recession of 2001 gave

way to the financial meltdown of 2002, reader interest surged. Indeed, Lean

Thinking reappeared on the Business Week business-books bestseller list in

2001—nearly five years after its launch and with no publicity campaign—an

unprecedented event, according to our publishers.

Given clear evidence that readers are now finding Lean Thinking even more

relevant in their business lives than when it was first published, we have de￾cided to expand and reissue the book. In Part I we explain some simple, ac￾tionable principles for creating lasting value in any business during any

business conditions. We then show in Part II how to apply these principles,

6 PREFACE TO THE First EDITION

step by step, in real businesses, from large to small. In Part III, we show how a

relentless focus on the value stream for every product—from concept to

launch and order to delivery, and from the upstream headwaters of the supply

base all the way downstream into the arms of the customer—can create a true

lean enterprise that optimizes the value created for the customer while mini￾mizing time, cost, and errors.

In the two new chapters of Part IVJ we bring the story of the continuing ad￾vance of lean thinking up-to-date. We track the trend in inventory turns—the

lean metric that cannot lie—across all industries, singling out one industry for

special praise. We also track the progress of our profiled companies. We dis￾cover that as economies have gyrated, stock markets have crashed, and the

poster companies of the 1990s hailed in other business books have flown a

ballistic trajectory, our lean exemplars—led by Toyota—have defied the fate

of most firms featured in successful business books. They have continued

their methodical march from success to success and have done it the hard way

by creating real and truly sustainable value for their customers, their employ￾ees, and their owners.

Finally, in the concluding chapter, we share what we have ourselves learned

since 1996 about lean thinking and its successful application by describing a

range of new implementation tools. These begin with the concept of value

stream mapping, which we have found to be a remarkable way to raise con￾sciousness about value and its components, leading to action.

In revising the book we have corrected a few minor errors and omissions in

the original text. However, we have been careful not to change the pagina￾tion. We know that many organizations use Lean Thinking as a text to guide

their change process, distributing copies widely and often including their dis￾tributors and suppliers. Thus we wanted to ensure that there will be no diffi￾culty in interchanging the two editions.

Today, nearly seven years after its publication, we are even more certain that

lean thinking, as explained in Lean Thinking, is the single most powerful tool

available for creating value while eliminating waste in any organization. We

hope that previous readers will use this new edition as an opportunity to

renew their commitment to lean principles. And we especially hope that

many new readers will discover a whole new world of opportunity.

Jim Womack and Dan Jones

Brookline, Massachusetts, and Ross-on-Wye, Herefordshire, U.K.

February 2003

Contents

Preface to the 2003 Edition 5

Preface to the First Edition: From Lean Production to Lean Enterprise 9

PART I: LEA N PRINCIPLES

Introduction: Lean Thinking versus Muda 15

1. Value 29

2. The Value Stream 37

3. Flow 50

4. Pull 67

5. Perfection 90

PART II: FRO M THINKIN G T O ACTION : TH E LEA N LEAP

6. The Simple Case 102

7. A Harder Case 125

8. The Acid Test 151

9. Lean Thinking versus German Technik 189

10. Mighty Toyota; Tiny Showa 219

11. An Action Plan 247

PART III: LEA N ENTERPRISE

12. A Channel for the Stream; a Valley for the Channel 275

13. Dreaming About Perfection 286

PART IV: EPILOGUE

14. The Steady Advance of Lean Thinking 2 9 9

8 CONTENTS

Afterword: The Lean Network 338

Appendix: Individuals and Organizations Who Helped 341

Glossary 347

Notes 355

Bibliography 377

Index 379

PREFACE TO THE FIRST EDITION

From Lean Production to

Lean Enterprise

In the fall of 1990, we set out on a trip around the world to launch our

previous book, The Machine That Changed the World. Our objective was to

send a wake-up message to organizations, managers, employees, and invest￾ors stuck in the old-fashioned world of mass production. Machine presented

a wealth of benchmarking data to show that there is a better way to organize

and manage customer relations, the supply chain, product development, and

production operations, an approach pioneered by the Toyota company after

World War II. We labeled this new way lean production because it does more

and more with less and less.

As we started our travels across North America, then to Japan (where

many mass producers still reside) and Korea, and on through Europe, we

were greatly concerned that no one would listen. Perhaps the slumber of

mass production was too deep to disturb? In fact, The Machine That Changed

the World found an overwhelming response. More than 400,000 copies have

been sold so far in eleven languages (not counting the pirated Chinese

translation).1

Far from ignoring our findings or resisting our advice, many

audiences during that inaugural trip and many readers in subsequent forums

told us that they Were anxious to give lean production a try. Their question

was seemingly a simple one: How do we do it?

In posing this question, they were not asking about specific techniques—

how to organize teams, how to use Quality Function Deployment in product

development, or how to poka-yoke (mistake-proof) production processes.

After all, there is a plethora of very good books on each of these topics.

Rather, they were asking: What are the key principles to guide our actions?

and How do we as managers, employees, investors, suppliers, and customers

take stuck-in-the-mud mass production organizations and make them lean?

A few thoughtful resDondents asked an even more difficult Question: What

10 PREFACE TO THE FIRST EDITION

The fact was, we didn't know the answers. We had been busy benchmark￾ing industrial performance across the world for fifteen years, but Machine

focused on aggregated processes—product development, sales, production—

rather than broad principles, and we had never ourselves tried to convert

a mass-production organization into a lean one. What was more, we had

been so busy thinking through the initial leap from mass to lean production

that we had not had time to think much about next steps for firms like

Toyota.

The idea for this book emerged direcdy from these questions. First, we

realized that we needed to concisely summarize the principles of "lean

thinking" to provide a sort of North Star, a dependable guide for action for

managers striving to transcend the day-to-day chaos of mass production.

This summary was hard for most readers to construct because the Japanese

originators of lean techniques worked from the bottom up. They talked

and thought mostly about specific methods applied to specific activities in

engineering offices, purchasing departments, sales groups, and factories:

dedicated product development teams, target pricing, level scheduling, cel￾lular manufacturing. Although they wrote whole books describing specific

techniques and a few high-level philosophic reflections as well (such as the

memoirs of Taiichi Ohno),2

the thought process needed to tie all the meth￾ods together into a complete system was left largely implicit. As a result, we

met many managers who had drowned in techniques as they tried to imple￾ment isolated bits of a lean system without understanding the whole.

After interactions with many audiences and considerable reflection, we

concluded that lean thinking can be summarized in five principles: precisely

specify value by specific product, identify the value stream for each product,

make value flow without interruptions, let the customer pull value from the

producer, and pursue perfection. By clearly understanding these principles,

and then tying them all together, managers can make full use of lean tech￾niques and maintain a steady course. These principles and their application

are the subject of Part I of this book.

With regard to the conversion process, we knew of one heroic example—

the original lean leap by Toyota immediately after World War II—but only

in sketchy outline. What was more, our most striking benchmark examples

in Machine were the "greenfield" plants started from scratch by Japanese

auto firms in the West in the 1980s. These were critical achievements

because they blew away all the claims, so prevalent up to that time, that, to

work, lean production somehow depended on Japanese cultural institutions.

Greenfields, however—with new bricks and mortar, new employees, and

new tools—bore little resemblance to the lone--establislied "hrownfip.1rl<;"

11 PREFACE TO THE FIRST EDITION

most managers were struggling to fix. Our readers wanted a detailed plan of

march suited to their reality, and one that would apply in any industry.

We therefore resolved to identify firms in a range of industries in the

leading industrial countries that had created or were creating lean organiza￾tions from mass-production brownfields. Observing what they had done

seemed to be our best hope of discovering the common methods of becom￾ing lean. In doing this, we did not want a survey to discover average practice

but rather to concentrate on the outliers—those organizations recently

moving far beyond convention to make a true leap into leanness.

But where to find them? We knew the motor vehicle industry well, but

we wanted examples from across the industrial landscape, including service

organizations. In addition, we wanted examples of small firms to'comple￾ment household-name giants, low-volume producers to contrast with high￾volume automakers, and "high-tech" firms to compare against those with

mature technologies.

In the end, through a lot of hard digging and some good fortune, we

tapped into networks of lean thinking executives in North America, Europe,

and Japan, and gained hands-on experience from a personal investment in a

small manufacturing company. Over a four-year period, we interacted with

more than fifty firms in a wide range of industries and gained a deep under￾standing of the human exertions needed to convert mass-production organi￾zations to leanness. We describe our findings and prescribe a practical plan

of action in Part II of this book.

To our delight, as we began to find our key examples, this book became an

intensive collaboration between a group of like-minded people across the

world. They believe passionately in a set of ideas, have made great progress

in introducing them, and want to see lean thinking universally embraced. At

the end of this volume we list the firms and executives we have worked with

and describe ways for you to join them. Here let us simply express our

profound appreciation for the hours, days, and even weeks many of them

took with us.

Because we needed to look at the entire firm, indeed at the whole value

stream for specific products, running from raw material to finished good,

order to delivery, and concept to launch, and because we needed to examine

many things which would rightly be considered proprietary, we proposed an

unusual way of working together. In return for access to every aspect of the

firm, including interviews with suppliers, customers, and unions, we offered

to share our drafts with our respondents, asking for criticism and correc￾tions. We stated in advance that any material our example firms could not

bear seeing in the public domain would be deleted, but if the need to protect

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