This chapter provides an important foundation with an explanation of how lean concepts apply to the construction environment. The history of lean manufacturing is explained, and how the Toyota Corporation used lean techniques to minimize waste in its processes to accomplish its preeminence in automotive manufacturing. The chapter also describes the work of researchers who sought to adapt Toyota’s approach to the construction environ-ment. Lean principles are described in the context of construction projects as a foundation for the application of integrated delivery approaches and The Last Planner® System (LPS).
Defining Lean Construction
Lean construction has been defined in several ways as the concept continues to evolve. The following descriptions are among the most established examples to date. Greg Howell and Glenn Ballard, co-founders of the Lean Construction Institute (LCI), view lean construction as a new way to manage construction. The objective, principles, and techniques of lean construc-tion taken together form the basis for a new project delivery process. Unlike approaches such as design-build and programmatic improvement efforts (partnering and TQM), lean con-struction provides the foundation for an operations-based project delivery system. From its roots in the Toyota Production System (TPS), this new way of designing and making capital facilities makes possible significant improvements in complex, uncertain, and quick projects.
The Construction Industry Institute (CII) has defined lean construction as “ the continu-ous process of eliminating waste, meeting or exceeding all customer requirements, focus-ing on the entire value stream, and pursufocus-ing perfection in the execution of a constructed project” (CII Lean Principles in Construction Project Team, PT 191).
Lauri Koskela (2002) described lean construction as a way to design production systems to minimize waste of materials, time, and effort in order to generate the maximum pos-sible amount of value.
William Lichtig (2006) observed that lean construction aims to embody the benefits of the Master Builder concept. Essentially, lean construction recognizes that desired ends affect the means to achieve these ends and that available means will affect realized ends.
Lean Theory
In order to appreciate how lean techniques apply to the design and construction processes, we first need to understand how the lean approach improves performance in the manufac-turing industry where it originated and subsequently in the service industry.
Lean production is lean because it uses less of everything compared to mass produc-tion. Womack, Jones, and Roos (1990), in their book The Machine That Changed the World, chronicled the genesis of lean thinking in the automotive industry. They explain how lean production uses half of the resources that are typically consumed: the labor in the factory, the manufacturing space, the investment in tools, materials, and so on. It results in fewer defects and generates an increasing variety of products. Essentially, a lean system pro-vides what is needed, in the amount needed, when it is needed.
Henry Ford pioneered the concept of continuous flow in his manufacturing plants but subsequently placed his company’s emphasis on mass production to meet the huge con-sumer demand that came after World War II. Eiji Toyoda and Taiichi Ohno of the Toyota Motor Company perfected the Just-In-Time (JIT) concept as an alternative to mass produc-tion. The term “lean” is attributed to John Krafcik (1988), a researcher with the International Motor Vehicle Program (IMVP) at MIT. The IMVP was created in the 1980s to study the automotive industry internationally and to examine the differences between mass produc-tion and the innovative methods used by Japanese manufacturers.
The researchers used the term lean to designate what they saw as a new and supe-rior type of production system for motor vehicles (Womack, Jones, and Roos 1990). The researchers were persuaded by the difference in comparative performance measures between Japanese, American, and European companies. Subsequently, it was found that the Japanese advantage was largely because of Toyota, and many academics and practitioners now believe that the Toyota Product Development System and the TPS are exemplars for a new and superior way of designing and making all kinds of goods and services.
Lean production can best be described by comparing it with craft production and mass production. Craft production was practiced in the preindustrial era—it was based on highly-skilled workers making products for customers, one at a time. Examples of craft production would be custom furniture, art works, and hand-built automobiles, products that are generally too expensive for most consumers. Mass production, by con-trast, uses unskilled or semiskilled workers to produce standardized products in large quantities using highly specialized machines, based on processes designed by special-ized professionals.
Mass producers are concerned with large production quantities with a narrow range of products and tend to generate a level of defects that they consider to be acceptable. By contrast, lean producers seek perfection, aiming for zero defects, zero inventories, declin-ing costs, and a wide variety of products. Lean producers are focused on value-added process flow; that is, a continuous addition of value to a product or service (one-piece flow) by avoiding or eliminating interruptions or activities that do not add value. Examples of nonvalue-adding activities would be wasted material and wasted time waiting for value to be added. Lean producers address the root causes of wastes, such as defective processes, poor work layouts, lack of standardization, errors by operators, errors in communication, and poor decisions by management.
When lean first became popular and more widely known, there was a tendency to see it as a collection of tools and techniques, but it is now widely recognized as a fundamen-tal business philosophy. “(Our) final conclusion is that lean cannot be reduced to a set of rules or tools. It must be approached as a system of thinking and behavior that is shared throughout the value stream” (Diekmann et. al. 2004).
Henry Ford established many practices that are embodied in lean thinking even today.
Ford’s “Lean” Business Norms circa 1903–1947 included the following principles:
Foundations of Lean Construction 47
1. That work environments be spotlessly clean.
2. That business leaders think in terms of serving their communities and society at large.
3. That production techniques not be taken for granted but continuously improved.
4. That primary industries should help their suppliers and the service industries to produce cheaper and better products in less time.
5. That managers should not remain in their offices but should walk around, know their workers, and be capable of doing the work themselves.
6. That workers should be trained and have the opportunity to better themselves and make product improvements.
The Toyota Experience: Building on Ford’s Principles
The Toyota Corporation has been highly successful in automotive manufacturing and is recognized as an outstanding example of a lean organization. With regard to Toyota’s recalls in 2009 and 2010, it must be noted that these problems were due to failures of management. The Toyota Production System is still a preeminent example of lean manu-facturing. Toyota began as a loom company in 1926, founded by Sakichi Toyoda, a loom inventor. They began auto manufacturing in the 1930s, influenced by Henry Ford’s con-tinuous flow manufacturing. In the latter part of 1949, Toyota adopted statistical quality-control methods learned through courses provided by Japanese Union of Scientists and Engineers (JUSE). At that time Eiji Toyoda visited Ford Motor in Detroit to gain an under-standing of their mass production system. Ford’s operation was recognized as the world’s most efficient, with a production rate of 7000 cars per day, while Toyota had only produced 2685 cars in 13 years up to that point. In effect, during 1948 a typical American autoworker produced 10 times the output of the Japanese autoworker.
Toyoda studied Ford’s operation for 3 months and saw possibilities for improving the auto production plant in Japan. Taichii Ohno, Toyota’s chief engineer, had also visited Detroit on a number of occasions. Toyoda and Ohno recognized that there was much waste or muda (Japanese term for much waste) everywhere in Ford’s operation. For exam-ple, there was a high inventory cost to keep parts that were later found to be defective.
There was muda of manpower, muda of waiting, muda of transport, and muda of facili-ties. They noted that only assembly line workers were adding any value to the production process. Specialists were responsible for designing the production process and directing workers to follow it. The foremen served only to ensure that assembly line workers fol-lowed orders, and they in turn simply performed repetitious tasks. Shigeo Shingo, an industrial engineer at Toyota identified seven wastes in mass production systems:
1. Overproducing
2. Idle time waste (waiting time/queue time) 3. Transporting/conveyance waste
4. Processing waste: waste in the work itself
5. Inventory waste (having unnecessary stock on hand)
6. Wasted operator motion (using unnecessary motion) 7. Producing defective goods (waste of rejected production)
Ohno realized that all these items of waste represented a financial loss:
Overproducing led to product quantities greater than the market needed.
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Waiting time between stages in production resulted in lost labor.
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Transporting product from one location to another increased energy costs.
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Processing using inefficient methods required more inputs than necessary to
pro-•
duce needed outputs.
Unnecessary stock resulted in excessive inventory carrying costs.
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Wasted motion led to nonproductive time (that incurred cost).
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Defective production would have to be corrected before it could be paid for by the
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customer/client.
These wastes are shown in Figure 3.1. An eighth waste is shown but will be discussed later in the chapter.
Toyota had the challenge of meeting diverse customer needs with a small capital base, as opposed to the Detroit strategy of having a large inventory of cars from which custom-ers could pick and choose. The Detroit strategy was also based on minimizing the cost of each car instead of minimizing wasted inventory. While mass production was effective in minimizing unit costs, any defects that developed in the fast moving process would be replicated in many cars before they could be detected. Toyota’s efforts to improve produc-tivity enabled them to produce larger production volumes at low cost, overly optimistic
Production waste
Idle Time waste
Transportation waste
Other wastes Inventory
waste Wasted
motion Correction
waste
Processing waste
Figure 3.1
Production wastes: eight categories.
Foundations of Lean Construction 49
sales forecasts left them with large inventories of unsold vehicles in the 1960s that led to huge financial losses. Japanese consumers also preferred customized features that would prove to be uneconomic with mass production techniques and the long-setup times they required. Toyoda and Ohno decided that the human and material resources waste they saw in the United States was not appropriate for Toyota, or Japan, for that matter. They decided that a better strategy would be to enable the production system to change rap-idly between different models and types of vehicles while producing minimal amounts of waste.
Ohno found a new way to coordinate the flow of parts in the supply system on a day-to-day basis so that parts would only be produced at each step to meet the immediate demand of the succeeding operation. This led to the development of the Toyota Production system (Ohno 1988). At each work station, teams of workers controlled their local operations-based on continuous observation and relationships instead of by specific metrics. The workflow of a Toyota factory regulated itself through “takt time,” a beat like a metronome, based on a term used by German musicians. This beat matched the daily production demand.
Engineers were required to sense the needs of the operation and opportunities for improvement by standing in a chalk circle for several hours at a time. Later, a card called a kanban (Japanese for “card”) in 1958 was used as a communication tool between dif-ferent production lines, and became an important part of the JIT system. Ohno had been inspired with this idea by observing the U.S. supermarket system in 1950. He wanted every member of the production system to pay attention to the prevention of potential problems and so reduce waste (muda). This system worked so well that in 1959 Toyota produced 100,000 cars per year for the first time—a major accomplishment.
Toyota was subjected to heavy pressure around that time with the failure of the new Toyota Crown in the United States, and Japan’s decision to liberalize trade. This spurred a strategic decision—to compete on the basis of quality. Toyota instituted total quality control (TQC) with the “kanban” system in 1963. Their improved quality and productivity were recognized with the Deming Prize.
Toyota’s Production System
From the 1960s to the 1980s, this system evolved into the highly successful TPS that pro-vided a competitive advantage through outstanding levels of production, high quality, and low costs. The TPS has been described as a combination of methods with consistent goals—cost reduction, quality assurance, and respect for humanity—to ensure sustain-able growth. It has four main elements: JIT, autonomation, workforce flexibility, and cre-ative thinking.
The Toyota Corporation has since evolved the TPS to become “The Toyota Way.”
Toyota was able to produce a car to meet each owner’s specifications in real time.
Workers performed their own quality control without inspectors. With the JIT system, external suppliers delivered parts directly to work stations without being warehoused.
In the mid-1970s, Toyota reduced the time needed to produce a car from 15 days to 1 day, using JIT. It is important to note that Ohno’s improvement of Toyota’s production process was not necessarily a new technology, but rather the result of involving all participants in a new philosophy of avoiding waste of any type.
It is to Toyota’s credit that they shared knowledge with the rest of the world through visitor tours of their facilities. They formed strategic alliances with competitors such as General Motors. They allowed their employees Ohno and Shingo to publish books about Toyota’s JIT success. Toyota’s success was also due to strategic relationships with suppliers.
Adversarial relationships were considered wasteful; instead, Toyota would pick two or three suppliers for each component and guarantee them a specific volume of business.
This trusting relationship reduced waste, cut costs, promoted innovation, and increased profits for all stakeholders.
Just-in-Time (JiT) Concept
Whereas mass production is a so-called push system that dictates production volume based on market forecasts, JIT is a pull system that responds to actual customer demand.
In essence, products are pulled from the JIT system. While push systems are susceptible to over or underproducing based on the accuracy of forecasts, JIT only commits the resources needed to meet the actual demands. The customer is the driver of production. Mass pro-duction emphasizes the propro-duction of the largest possible quantities, as setups and adjust-ments of machines are time consuming. JIT, on the other hand, seeks to build small lots that are better capable of providing variety for the customer. Companies that have used the Toyota approach have reduced setup times by 90% or more. Omark Industries, one of the earliest U.S. companies to adopt the TPS was able to reduce machine setup time from 8 hours to 64 seconds. Overall, JIT facilitates lower costs, shorten lead and cycle time, and leads to improved quality.
The kanban system minimizes inventories through backward requests. Kanban cards follow a product through various stages of production and provide visual control. They contain information such as the part name, description, process instructions, and quantity required. In keeping with the pull system, kanban cards signal “upstream” when produc-tion or the release of inventory is required. In effect, inventory is not created until it is needed. In effect, Toyota’s underlying strategy was to produce a car to meet the require-ments of a specific customer, instead of maintaining a large inventory of cars from which the customer could choose. The application of JIT results in a lower inventory of raw mate-rials and of parts, less work in process, and shorter lead times. It also leads to a reduction in floor space, less overhead, and lower costs. However, there is a risk that inventories may fall to critically low levels. To be successful, JIT is dependent on very high quality and reduced setup times—the concept calls for raw materials and components to reach a production operation in desired quantities when needed and not before. The supplier and customer have to work closely for this to occur and there is little to no inventory.
Production leveling accommodates fluctuations in demand and the number of setup activities is reduced so that little time is required for changing over to different product mixes. (In modern manufacturing, the kanban card has been replaced by an electronic equivalent.)
Toyota’s Way
The Toyota Corporation has continued to evolve beyond the foundation of the TPS. The TPS was represented by two pillars—JIT and autonomation. Liker (2004) describes 14 principles in the contemporary Toyota Way. The Toyota Way represents an important foundation for lean construction. Economics were a factor in the Japanese use of human resources; it proved too expensive to rely on few highly qualified people. Lean thinking as represented in The Toyota Way, sees the most cost effective way of improving product qual-ity as empowering all people in organizations (Table 3.1). This varies significantly from the prevailing model in the construction industry, which emphasizes power and control.
Foundations of Lean Construction 51
Accomplishing a Lean State
Lean can be characterized in terms of objectives, principles, and methods or tools.
According to Glenn Ballard, co-founder of the Lean Construction Institute, the lean ideal is to provide a custom product exactly fit for purpose, delivered instantly, and with no waste. If one attempts to conduct business or deliver projects while maximizing value and minimizing waste, then in a minimal sense that represents lean. But it would make little sense to call someone lean who claims to pursue those objectives but disregards funda-mental principles. These principles are identified in the Construction Industry Institute’s report (CII PT 191), which focus on the process level, or the 14 principles defined in Jeffrey Liker’s The Toyota Way, as described above that deal with the lean enterprise. Ballard points out that the same holds for those claiming allegiance to these principles but not using available methods. For example, a candidate might proclaim the principle of cre-ating connected process flow, but fail to use pull mechanisms to release work between specialists or fail to reduce batch sizes or fail to right size work-in-progress inventories.
Lastly, since lean is a never ending journey in pursuit of perfection, it is more appropri-ate to ask about the rappropri-ate of learning rather than the level of conformance to the ideal—
remember the fable of the tortoise and the hare.
How can you tell if a project or company is lean? Ballard suggests you assess yourself by answering the following questions:
Are you pursuing the lean ideal?
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Are you following the appropriate principles when striving for the lean ideal?
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Are you using the best methods for implementing those principles?
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How fast are you learning as a project organization?
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Table 3.1
A Representation of the Toyota Way
A Representation of the Toyota Way