Lesson 6 Discussion
The lean philosophy calls for value creation through the elimination of waste. The Lean Management reading for Lesson 6 outlines 8 potential forms of waste in healthcare. There are many other forms of waste in the healthcare industry. Pick one of the forms of waste discussed in the reading material, or one of your own, and provide a solution to make the process lean.
Lean Management—The Journey from Toyota to Healthcare Open Access Rambam Maimonides Medical Journal Abbreviations: CODA, Commission on Dental Accreditation; GM, General Motors; ROI, return on investment; SODM, School of Dental Medicine; TMC, Toyota Motor Company; TPS, Toyota Production System; VMMC, Virginia Mason Medical Center. Citation: Teich ST, Faddoul FF. Lean Management—The Journey from Toyota to Healthcare. RMMJ 2013;4 (2):e0007. doi:10. 5041/RMMJ. 10107 Copyright: © 2013 Teich and Faddoul. This is an open-access article. All its content, except where otherwise noted, is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Conflict of interest: No potential conflict of interest relevant to this article was reported. * To whom correspondence should be addressed. E-mail: sorin@case. edu RMMJ|www. rmmj. org. il 1 April 2013 Volume 4 Issue 2 e0007 RAMBAM GRAND ROUNDS Lean Management—The Journey from Toyota to Healthcare Sorin T. Teich, D.M.D., M.B.A.,1* and Fady F. Faddoul, D.M.D., M.Sc.2 Associate Professor, Assistant Dean of Clinical Operations, Department of Comprehensive Care, Case Western Reserve School of Dental Medicine, Cleveland, Ohio, USA; and 2Professor, Director of AEGD, Department of Comprehensive Care, Case Western Reserve School of Dental Medicine, Cleveland, Ohio, USA ABSTRACT The evolution of production systems is tightly linked to the story of Toyota Motor Company (TMC) that has its roots around 1918. The term ―lean‖ was coined in 1990 following the exploration of the Toyota model that led to the ―transference‖ thesis sustaining the concept that manufacturing problems and technologies are universal problems faced by management and that these concepts can be emulated in non-Japanese enterprises. Lean is a multi-faceted concept and requires organizations to exert effort along several dimensions simultaneously; some consider a successful implementation either achieving major strategic components of lean, implementing practices to support operational aspects, or providing evidence that the improvements are sustainable in the long term. The article explores challenges and opportunities faced by organizations that intend incorporating lean management principles and presents the specific context of the healthcare industry. Finally, the concepts of ―essential few‖ and customer value are illustrated through a simple example of process change following lean principles, which was implemented in a dental school in the United States. KEY WORDS: Lean management, Pareto, waste, continuous improvement, healthcare, quality, customer value Lean Management Rambam Maimonides Medical Journal 2 April 2013 Volume 4 Issue 2 e0007 HISTORY OF THE LEAN CONCEPT The evolution of production systems is tightly linked to the story of Toyota Motor Company (TMC) that has its roots around 1918 when Sakichi Toyoda, who held a patent for an automatic loom that revolutionized the weaving industry, established his business. After selling the patents in 1929, the company reinvented itself in the automotive industry that, at the time, was dominated in Japan by local subsidiaries of Ford and General Motors (GM). Truck and car production began in 1935, and in 1937 TMC was formally incorporated. By 1950, the entire Japanese auto industry was producing an annual output equivalent to three days of the US car production; it was around this time when Eiji Toyoda was sent to the US to study manufacturing methods. Another valued TMC employee, Taiichi Ohno, who joined the company in 1943, joined the visit and reasoned that the Western production systems had two major flaws1: 1. Producing components in large batches resulted in large inventories, and 2. The methods preferred large production over customer preferences Little by little, through much iteration, the Toyota Production System (TPS) evolved and provided a tool that used innovation and common knowledge, and that functioned well in an environ- ment with different cultural values compared with the Western hemisphere. Only in 1965, when the system was rolled also to TMC’s suppliers, TPS began to be documented, and it was largely unnoticed until 1973 when the oil crisis affected the global automotive industry. The performance gaps between Toyota and other car-makers were highlighted in 1990 in the book The machine that changed the world,2 in which the term ―lean‖ production was coined. The exploration of the Toyota model led the authors to postulate the ―transference‖ thesis that sustained the concept that manufacturing problems and technologies are universal problems faced by management, and that these concepts can be emulated in non-Japanese enterprises. In the next few years, the process of ―extension‖ was accelerated by reports of Western companies in diverse sectors, incorporating lean principles that involved3–5: 1. Identification of customer value 2. Management of ―value stream‖ 3. Developing capabilities of flow production 4. Use of ―pull‖ mechanisms to support flow of materials at constrained operations 5. Pursuit of perfection through reducing to zero all forms of ―waste‖ Customer value identification was crucial in moving away from a production floor focus towards an approach that sought to enhance this value by adding product/service features while eliminating wasteful activities. As such, value is related to customer requirements, and it will be the customer that ultimately determines what constitutes muda (waste in Japanese) and what does not. Lean is a multi-faceted concept and requires organizations to exert effort along several dimen- sions simultaneously; some consider a successful implementation achieving major strategic compo- nents of lean, implementing practices to support operational aspects, and providing evidence that the improvements are sustainable in the long term.6 Clearly, this ambitious approach requires deep commitment and is setting a bar that impacts the organization at all levels. The question is how one can assess if a company is ready for such a drastic change and what it would take in order to ensure a successful transformative process; it is probably easier to provide an answer to the following complementary question: What are the main reasons for failures in companies that tried to implement a lean culture? These were identified as lack of senior commitment, lack of team autonomy, lack of organizational communications, organiza- tional inertia, and lack of interest in lean.6–9 Another major factor is that lean provides principles for theoretical efficiency that implies more production with a smaller work-force; therefore workers may fear for their jobs.10 Recipes for implementation and lessons learned from failures have been reported6,7; the common threads of these were that organizations need to change at a behavioral and cultural level and this should be translated directly into an endless process of continuous improvement. Despite these being framed in the realm of tangible strategic business direction, ―cultural changes‖ and ―endless improve- ment‖ are abstract concepts; furthermore, these principles imply that there is no horizon for successfully completing the task because the improvement process is infinite. Lean Management Rambam Maimonides Medical Journal 3 April 2013 Volume 4 Issue 2 e0007 Another crucial aspect that should be considered is that lean practices should be considered under the umbrella of their cultural origin. The main three characteristics of Japanese management thinking are harmony and group loyalty, consensus in decision-making, and lifetime employment, all encompassed in the concept of ―respect for people.‖ This concept was not historically understood in the USA where companies only focused on ―continuous improvement.‖11 We submit therefore that the main sources of failures mentioned above are not the technicalities related to lean implementation, but principles that constitute a larger puzzle. Clearly there are stages and steps in implementation of the lean culture, such as prioritizing projects and areas that should be restructured, but the larger picture that implies cultural changes sustaining an endless process may be too intricate for many companies. So, is lean doomed to be successful only in a handful of companies that are already positioned for the deep structural changes required by this philosophy, or is there a solution that can lead others to benefit from it? Is lean a medicament for the healthcare industry that faces unprecedented technological and financial challenges? In order to address these questions, we have to explore terri- tories that at first glance may seem unrelated. THE PARETO PRINCIPLE The Pareto principle is referred to as the 80–20 rule or the law of the vital few.12 The Italian economist Vilfredo Pareto noted around 1906 that 80% of the land in Italy was held by 20% of the population. He confirmed his findings when he analyzed properties in other countries, but, most interestingly, he also noted that the rule also applies in biology; it was Pareto who noticed that 20% of the pea pods in his garden produced 80% of the peas. In time, it became evident that the axiomatic principle applies in economics, customer relations, software develop- ment, etc. In 1937, Joseph Juran stated that this principle also applied to defects, concluding that 80% of the problems are caused by 20% of the defects—and he named this effect the Pareto principle.9 A later example was provided by Microsoft that observed that by fixing 20% of the most reported bugs, 80% of the software crushes will be eliminated.13 Because most decisions are made under uncertainty,14 the vital few must be identified if a program of improvement is to succeed. The importance of the vital few lies in the fact that nothing of significance can happen unless it happens to this (20%) segment.15 LEAN IN THE HEALTHCARE INDUSTRY It was the same Joseph Juran who linked manufacturing and the healthcare industry; he wrote: ―as the health industry undertakes … change, it is well advised to take into account the experience of other industries in order to understand what worked and what has not. … [I]n the minds of many, the health industry is different. This is certainly true as to its history, technology and culture. However, the decisive factors in what works and what does not are the managerial processes, which are alike for all industries.‖16