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Roos: higher quality from half the effort

interview

By Karen Kaplan

After a five-year, $5 million study of the automobile industry, the International Motor Vehicle Program at MIT presented its findings in a recently published book titled The Machine that Changed the World. [See story, page 1.] The researchers examined what they have come to call the lean production system, a production method fundamentally different from mass production techniques. The program director, Professor of Civil Engineering Daniel Roos '61, discussed the study in an interview on Oct. 2.

Q: What was the focus of this study, and what were you hoping to discover?

A: The focus of the study was both specific and general. From a specific point of view, the focus was to examine the dynamics of change that the automobile industry is undergoing and to understand what the principal forces of change were. From a more general point of view, it was to examine what we have called the lean production system, which is a fundamentally different approach than the traditional mass production system, as it relates to a variety of manufactured goods, not just automobiles, and to understand what the basic principals are in production.

[el3]

Q: Can you briefly describe how lean production works?

A: Let me begin by giving the characteristics of it. You can manufacture goods of significantly higher quality with roughly 50 percent of the effort that was previously required. You can do it in a far shorter time period, about a third less, and you can do it with about one third of the effort in terms of engineering time. You can turn out a much broader diversity of product. So you're simultaneously getting improvement in productivity and quality with less effort and at a much greater diversity of final product. Those are the characteristics of it.

The way the system works is that you have a very different objective function than you do with mass production. With mass production, you want to produce lots of copies of the same product. With the lean production system, you have three fundamental objectives. The first is perfect first-time quality. Good enough is not good enough. Second is waste minimization; waste of all kinds, be it human waste, be it equipment waste, be it factory waste. The idea of the final repair area to fix problems is something that is not acceptable in the lean production system. And thirdly, continuous improvement.

How do you do this? The first way is to have a system that forces errors to appear, because if there's an error something's wrong, and it has to be fixed right away so it doesn't happen again. So you will find in all lean production facilities that workers have pull-chords to stop the production line. Now that implies that one has to have intelligent workers, that you can't have workers that just routinely do a task without understanding how this fits into the overall production process. Rather than simply operating as individuals, the workers are organized into teams that cooperate with one another. They share ideas; they share improvements. So you're pushing responsibility down the ladder, from top management to the work floor. It is a systemic set of principals that guide all aspects of the production process.

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Q: How did you become involved in this project initially?

A: Actually, this was a follow-up study to one that began about 10 years ago, and let me talk about it from an MIT point of view, because there are two characteristics that are important.

First, the subject matter was such that lots of different groups at MIT could make contributions. It was an exciting project from an interdisciplinary point of view, bringing together the whole community, from the policy and social science community to the management community, to focus on an important set of issues. MIT can go beyond doing traditional research and could focus on problems of major national and international importance. MIT coordinated a network of researchers from throughout the world. In fact, we had 45 researchers from 17 countries. The idea was that we would develop a series of comparative research studies where people in their own countries would all examine the same issues, so we could assemble an international data base.

The second aspect was a series of policy forums where we brought together senior officials from industry, government, organized labor, and the financial community to do two things. First, we examined the results of the research. We were very concerned that this work be realistic with what was actually happening in the industry and therefore should be subject to review by people who knew. And in addition to the verification, to make suggestions for additional research to be carried out. But beyond that, it served as a mechanism to increase international understanding.

So that's why we got into it, and it's continuing because the Alfred P. Sloan Foundation has given us a grant to do an additional three-year research effort focusing on the motor vehicle industry which will build upon the International Motor Vehicle Program.

Q: Did any of the results of your study surprise you?

A: We knew that Japan would have very good plants but what surprised us, and many things surprised us, was the variation in Japanese plants. There were good Japanese plants and there were bad Japanese plants. There were good American plants and bad American plants. The best American plants were better than many of the Japanese plants. What we tended to find was corporate culture was more important than international culture. If a company had good plants in the United States it had good plants in Europe, it had good plants in Mexico, and Japan. And that was very important because one of the principal conclusions of the study was that, yes, there is a new way of making things that we call lean production, and it did originate in Japan, but it is not a function of Japanese culture, it's transferable, and we see the principals now being transferred here in the United States.

It also surprised us how badly the European manufacturers did in comparisons of productivity and quality. We differentiated between luxury cars and the so-called production cars. In both cases we found the same phenomenon. As a matter of fact, we found a case where one luxury manufacturer spent more time in the final repair area getting the car up to acceptable quality than one Japanese plant spent assembling the entire car.

Q: Why do you think lean production will be as revolutionary as mass production?

A: It combines the best features of craft production and mass production. In other words, craft production says that you can develop a highly personalized, very diverse range of product, which is something one really needs in today's market, and you can do it at a cost that's competitive with or better than the traditional mass production system. Well that's a dynamite combination, to be able to customize the product and to do it at a lower cost than traditional mass production.

Also, from a social point of view, it's a more challenging, creative system, in terms of stimulating workers, involving people in the process of manufacturing and producing a product. It's a very flexible and adaptable system, which is something that mass production is not, and we're living in a world of uncertainty and change, where the characteristics of flexibility and change are really very important.

Q: Is lean production the biggest advancement since mass production?

A: There certainly have been continual improvements made to mass production, but we view this more as a paradigm shift, a fundamentally different way of

thinking about the process as opposed to incremental improvement.

Q: To what extent should lean production be copied in the United States?

A: Each company and each industry is going to have to make a decision. A lot of the techniques have been around for the the last five or 10 years in this country. We often find very mixed results when companies implement them, and it's not surprising. Those are simply components of the total system, and unless you have the right framework, those are simply gimmicks. The challenge is to get the framework and the foundation right, and then to start implementing the various components, each of which helps in your overall total objectives.

Q: Have US companies been trying hard enough to adopt lean production techniques or should they go further?

A: We believe they should go further, but they've made a good start. It'll probably take a decade, but companies can turn themselves around in relatively short periods of time if there's sufficient pressure to do it. Companies can be energized, companies can be changed, and we think that's necessary.

[el3]

Q: Will it be more difficult for lean production to catch on here than in Japan?

A: Lean production was first introduced in Japan after World War II. That was 40 years ago. We don't think it's going to take 40 years for it to be implemented here, but clearly it's going to take some time, and in our sense it's more like a decade.

Q: Will there be a problem with labor unions?

A: Workers will have to be more intelligent, and that's a big plus. What is a real social dilemma is that it's clear that fewer workers are going to be needed, not just because of lean production, but also because of automation. There will be fewer jobs because the automobile industry is not a high-growth industry. If we had expanding markets, that would be one thing, but we don't. The challenge is how can companies downsize themselves and be competitive at the same time that workers are given time to retrain and move into other industries, and who should bear the brunt of that responsibility? Is that a corporate responsibility or is that a social responsibility, in which government should participate?

That's a huge dilemma for the unions, because they want to be cooperative in terms of making sure that they retain jobs, but the unions are democratic and it's very difficult to gain cooperation with management if at the same time brothers are being laid off. Right now, it's an area where the companies are bearing major responsibility and if we do look at a number of public policy options in terms of where the government can play a creative role that certainly is one, to bear more of the responsibility.

[el3]

Q: What would be the consequences if the United States continued to mass produce?

A: What we're seeing is a very disturbing trend of the United States losing market share in many of its industries. The automobile industry is in transition. Almost 40 percent of cars are made by foreigners or in foreign countries, and that percentage is going up as the Japanese enter new market segments. There's concern that the penetration will continue, and unless the United States is able to re-orient itself in terms of production capabilities, it's going to be very difficult to stay competitive.

[el3]

Q: Are you going to lobby the government in any way to encourage them to subsidize companies?

A: No, we don't view the role of MIT as a lobbying or an advocacy group. The contribution of MIT is supplying some understanding and knowledge so that appropriate policy can be set. Part of our problem right now is that there are lots of advocates of different ideas all claiming different results and so very frequently we just don't know who to believe. What we can do is provide a consistent data base and analyze different alternatives so that intelligent choices can be made.

Q: In speaking to various groups about your findings, what ideas have you tried hardest to impress upon them?

A: That we're witnessing some fundamental changes that we ought to be aware of, and that those ideas are transferable to the United States. It's important that we as a country move forward if we are not only going to stay competitive but regain a productive edge. We have enormous technological strength, and although we have lost some of our technological strength, we still are superior in many, many areas, and those are just enormous capabilities that should be harnessed in terms of this country's capabilities to compete in the future.

Q: You recently received funding for a new investigation. What will this one be about?

A: It will build upon this program. This program was to identify what constitutes best practice, and it turns out, fortunately that what constitutes best practice can be systematized in terms of what we call the lean production system. We understand that. Now the challenge is to take those concepts and transfer them to industry. We will be continuing some of the research on an international benchmark to better understand the processes of research, product development, and manufacturing.

The second major activity will be to understand how best practice can be broadened to include many of the environmental objectives: How one can be competitive and socially responsible, how a lot of social concerns can be factored into the strategic planning process, and what new types of processes should be set up between the public and private sectors to achieve social objectives. That's a very important objective in regard to both product and process.

A third area of focus is going to be on technology and how companies gain access to new technology. In an era where the rate of technological development and the broadening of technology is increasing so rapidly, no one company or country can gain access to everything, and therefore one needs shared undertakings. We want to look at Europe and the United States and Japan and see how different ventures are being followed.

This one is too long: 2.29 inches

There is a new way of making things that we call lean production, and it did originate in Japan, but it is not a function of Japanese culture . . . and we see the principals now being transferred here in the United States.

1.46 inches

Lean production combines the best features of craft production and mass production.

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It's clear that fewer workers are going to be needed, not just because of lean production, but also because of automation.