Since the early days of the Toyota Production System and the buzz generated in 1990 by The Machine That Changed the World, thousands of companies have launched initiatives to eliminate waste in their factories and, more recently, in their back-office functions.
Lean has long provided the philosophy and tool set to achieve a competitive edge in the productivity game, but it doesn’t work for every company. Successful lean companies have achieved year-on-year productivity improvements of as much as 10 percent, while others have struggled just to compensate for moderate wage inflation. Given the ubiquity of lean, the question is: What comes next? The answer is twofold (see figure):
- First, after lean comes “more lean,” since many companies are still applying lean to only a portion of their manufacturing operations.
- Second, those that have rolled out lean broadly will look to fully capture its impact—for example by systematically extending lean production and management systems to areas beyond manufacturing (including input factors and supporting functions).
Paper manufacturer Sappi, for example, has seen natural resource costs begin to outweigh labor costs. Therefore, it will need to reach beyond the factory floor into adjacent value chain functions, particularly in production support and supply chain management, to address resource efficiency. It will also need to address interoperability as it deepens collaboration with suppliers, clients, and other stakeholders.
Consumer electronics companies such as Sony and Philips face the challenge of reducing their time to market in order to outperform their competitors. One way to do this is by using third parties to minimize their own assets and improve operational flexibility—becoming, in a sense, “virtually vertical”—to overcome internal limitations and free themselves to focus on controlling the supply chain.
Leaders in the automotive and durable goods industries, on the other hand, are addressing the topic of efficient, flexible product individualization. Volkswagen, for example, uses modular product platforms to enable product variety in large-scale production. Manufacturers are also introducing modular building blocks for greater cost efficiency, allowing factories to swap out product families to maximize facility usage. Still, the scope for modularization extends far beyond the production line—for example, to organizational structures across factories.
So when it comes to finding the next productivity frontier in manufacturing operations, expand your horizons by revisiting the effectiveness and scope of existing lean initiatives and work with internal functions and ecosystem partners to find additional joint productivity opportunities.