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    New Blog Address: management.curiouscatblog.net

    Sunday, September 25, 2005

    The Lion of Lean

    Great article - The Lion of Lean: An Interview with James Womack by Francis J. Quinn, Supply Chain Management Review:

    Let's just take one example in the purchasing area. People say, "Yes, we're going to have a lean purchasing organization. And we'll start by having target pricing." You say, "Great, but how are you going to do target pricing?" "Well, we'll set the prices 5 percent below what they are now and that will be our target pricing." "Fine, guys, but you haven't done any analysis. With true target pricing, you actually have to look at every step and figure out what it costs - including what's happening out in the world right now with regard to materials. The costs are really going up, and this reality has to be factored into your pricing approach; otherwise, all you're doing is squeezing your suppliers."


    As Deming said page 31 of the New Economics: "A numerical goal accomplishes nothing. Only the method is important not the goal."

    Lean people are always technology skeptics. They're not Luddites, mind you, they're just technology skeptics. They spend their time on creating a process that requires as little information as possible, while the rest of us try to figure out how can we get more and more and more information.


    Perhaps the most interesting example is 7-Eleven in Japan. It's probably the leanest grocery company on the planet, doing demand-driven replenishment multiple times during the day. Solectron is doing a good job of going lean in contract manufacturing. You find some examples in unexpected places, too. One of my favorites is the post office in Canada. Postage rates in the United States keep going up, and the USPS [United States Postal Service] is losing a fortune. On the other hand, Canada Post is keeping rates steady and pays hundreds of millions of dollars in profits to the Canadian government. What's the difference? Canada Post went lean.


    More lean thinking articles - Womack articles.

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