ChaPter oBjeCtiVes
Looking back on the last five decades of Lean’s evolution, we find many important lessons learned that have a direct applicability to Lean IT, what- ever the industry. We will:
• Examine flow, pull, and visual signals and contrast their simplicity and clarity with the complexity of material requirements planning (MRP), a popular manufacturing push-scheduling technique. • Explore kanban, heijunka, and mixed model production and under-
stand their impact on stability, efficiency, and flexibility (agility). • Propose a step-by-step process for creating an effective IT demand
management decision-making process.
Simplicity is the ultimate sophistication.
—Leonardo da Vinci Factories are complex and chaotic places where events rarely go as planned.
When not approached with caution, software intervention can amplify the
existing complexity and chaos. Lean manufacturing practitioners have learned to simplify their production processes, aligning, balancing, and reallocating resources so work will flow along value streams, orchestrating
activity through pull signals and visual cues. Work is pulled by customer
orders rather than pushed by a forecast-driven schedule. At the start of the
transformation process, Lean practitioners focus on customer value and the value stream. Lean practitioners eliminate as waste the obsolete, the
unnecessarily complex, and the ineffective, including counterproductive
information systems. Technology is not reintroduced until the underlying
processes have been simplified and stabilized.*
Since Toyota’s production, product development, and management systems laid the foundation for Lean practice, it seems natural to ask about their approach to IT to inform our own efforts. There is a com- monly held misconception that Toyota is reluctant to use information technology. Toyota is in fact a significant IT investor and innovator;
however, they do not lead with technology solutions. They first focus
on business solutions, with emphasis on stabilizing and improving processes through relentless problem solving, supported by appropri- ate data. Electronic information systems are then carefully deployed to automate standard work, reduce the potential for errors, and support effective measurement.
Looking beyond Toyota to other large, global, manufacturing and supply chain enterprises, Nike’s growth could not have occurred without exten- sive reliance on pioneering information technologies; their IT organiza- tion includes nearly 1,500 staff in 60 countries. Over the last decade, Nike has made significant investments in a sophisticated technology infrastruc- ture for product development and supply chain management (not without
some expensive learning experiences along the way),1 which enables them
to continuously innovate while improving operating efficiency.
Now that the essential technology framework is in place, Nike has turned its focus toward business process improvement as a driving force in IT strategy. In fact, the chief information officer (CIO) of Nike reports to the chief operating officer, ensuring an operational focus throughout all IT initiatives. As an indication of transformation in their culture, the globally renowned “Just Do It” company has rebranded their IT depart- ment as Lean Business Solutions (NikeLBS).
According to Lean Enterprise Director Steve Castellanos, “At Nike, we turned our Lean focus toward the enterprise some years ago and as we did
*For more on Lean IT in a manufacturing environment, see Lean enterprise systems, using IT for
it became evident that our information technology delivery model was out of sync with the business processes that they were designed to support. This realization was the driver behind the organizational changes that brought the former IT and Process Excellence organizations together into what we now call Lean Business Solutions. With this structure our intent is to position LBS
against enterprise-wide opportunities in an aligned and synchronized way.”2
Another global supply chain organization, Tesco, has been on their Lean journey for over a decade, with a particular emphasis on essential infor- mation systems. The fourth-largest global retailer drives growth through innovation with small, local stores selling fresh and innovative products. By simplifying and standardizing their business processes and informa- tion systems, Tesco is able to open new stores quickly, while adapting to local market conditions and consumer preferences.
Tesco’s supply chain systems operate by Lean replenishment rules that issue pull signals directly to suppliers on a daily basis. Unlike traditional retail models, this system does not rely solely on forecasts of consumer purchases. Daily consumption and replenishment signals help reduce inventory, handling, shrinkage, and stockouts, helping Tesco to ensure variety and freshness, while quickly spotting new trends and emerging problems. It’s interesting to note that Taiichi Ohno’s early inspiration for just-in-time inventory replenishment came on a visit to the United States, where he observed refrigerated products being replenished from behind as they were pulled off the shelves of supermarket coolers. So, in Tesco’s case, Lean has come full circle.
But even with Tesco’s strategic focus on market growth and advanced supply chain technology, it’s clear that it has internalized the primary focus of Lean: customer value. According to Mike Yorweth, Tesco’s group technology and architecture director, “We’re such a big business and it’s … complex. So you’ve got to make everything as simple as you possibly can, and standardizing makes things simple for people. If their jobs are easier to do, it means they can focus on customers. Ultimately that’s what we’re
here for.”3
Toyota, Nike, Tesco, and countless other innovative manufacturing and supply chain organizations around the world have successfully leveraged IT capabilities with their Lean practices in a variety of ways. But it’s not just about big companies; the efficiency and lower costs of Lean operations and information systems create opportunities for small, agile companies to compete with larger ones.