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Lean Operations is a management term to describe a company's use of lean production¹. Lean producers combine the advantages of quality craftsmanship and mass production, while avoiding the high cost of the one and the rigidity of the other. They use teams of multi-skilled workers and highly flexible, increasingly automated methods to produce a wide variety of products.

The theory of lean operations was first introduced shortly after World War II in Japan. Eiji Toyoda and Taiichi Ohno of the Toyota Motor Company pioneered the concept of lean production. This concept was popularized in the early 1980's by book called The Machine That Changed the World ². Today, Japan is home to many corporations that have adopted this concept.

The notion that the world is facing a massive overcapacity crisis is reinforced by current financial reports. It seems that too many businesses exist for the number of customers available. K-Mart, J.C. Penney, and Sears, all of which are fighting bankruptcy, are the most recent companies to illustrate this point. But why are stores like Target and Walmart doing so well? In reality, the world has an overabundance of mass-producing companies who lack the competitive lean-production capabilities necessary to survive in today's changing market.

Lean production is "lean" because it uses less of everything as compared to mass-production. This means half the human effort, half the floor space, half the investment in resources, and half the engineering hours to develop a new product in a fraction of the time. It also requires keeping far less of the necessary inventory on site, resulting in less waste and defects. Taken together, these advantages lead to a greater and ever increasing variety of products.

Perhaps the most striking difference between mass-production and lean production lies in their ultimate objectives. Mass-producers intentionally set limited goals for their product. This translates into an acceptable number of defects, a maximum level of inventories, and a narrow range of standardized items. To do better, they argue, would be too expensive or exceed their human capabilities.

Topics to Consider

• Are my company's facilities using lean operation techniques?
• As a consumer, is it better to use suppliers that provide a lean, high-quality approach to business?
• Is my company focused on what we do best, or are we trying to do it all?