Book review:
The Machine That Changed the World
by James Womack, Daniel Jones and Daniel Roos

by
Anshal Savla and Saniya Alekar

Summary

When The Machine That Changed the World was first published in 1990, Toyota was half the size of General Motors. Today Toyota is passing GM as the world's largest auto maker and is the most consistently successful global enterprise of the past fifty years. This management classic was the first book to reveal Toyota's lean production system that is the basis for its enduring success.

Now reissued with a new Foreword and Afterword, Machine contrasts two fundamentally different business systems -- lean versus mass, two very different ways of thinking about how humans work together to create value. Based on the largest and most thorough study ever undertaken of any industry -- MIT's five-year, fourteen-country International Motor Vehicle Program -- this book describes t he entire managerial system of lean production.

Nearly twenty years ago, Womack, Jones, and Roos provided a comprehensive description of the entire lean system. They exhaustively documented its advantages over the mass production model pioneered by General Motors and predicted that lean production would eventually triumph. Indeed, they argued that it would triumph not just in manufacturing but in every value-creating activity from health care to retail to distribution.

Chapter 1 - The Industry of Industries in Transition

This chapter talks about how Toyota surpassed GM as the largest automaker due to implementing the practice of lean production. This chapter gives a brief idea about the differences between craft production, mass production and lean production. Craft Production: Makes use of highly skilled workers to create custom goods which are expensive and are of high quality. Mass Production: Makes use of semi-skilled workers to produce same kind of product in large quantity. This production technique requires a large space, large number of workers and is quite inflexible. Lean Production: Everything is less compared to mass production technique. Makes use of half the space, workers, time, investment in tools and the time to develop the product by using skilled workers and pushing responsibility down the organizational hierarchy.

Chapter 2 - The Rise and Fall of Mass Production

This chapter focusses on mass production and lean production. The author starts by talking about mass production in the late 1800s and how it wouldn't be feasible in today's world. He gives us a brief introduction of Evelyn Ellis (the first person to drive an automobile in England) and P & L and summarizes craft production. The craft production companies, to the author's surprise, survived till the present day by continuing to focus on tiny niches, their target customers being the super rich who could afford such luxury. For example, Aston Martin. A definite threat to these craft firms was lean production which was especially significant in countries like Japan. The key to mass production according to the author was "the complete and consistent interchangeability of parts and the simplicity of attaching them to each other". Interchangeability, simplicity and ease of attachment taken together gave Ford many advantages over his competition. The author takes a look at the precise characteristics that made Ford successful.

The author then talks about how Alfred Sloan of General Motors was a worthy and necessary competitor to Ford. "Sloan's innovative thinking also seemed to resolve the conflict between the need for standardization to cut manufacturing costs and the model diversity required by the huge range of consumer demand." The diffusion of mass production was due to the rise of lean production, the birthplace of which was said to be Tokyo, Japan. "The Japanese were developing an entirely new way of making things, which we call lean production." We will now move on to chapter 3 where the author talks about the rise of lean production.

Chapter 3 - The Rise of Lean Production

This chapter describes how Ohno studied Ford’s mass production system and noticed that their view of letting defects creep into the last stage and rework on them let to endless multiplication of defects. He tries to develop a system wherein workers work in teams lead by team leaders and have the power to stop the entire line if the encounter a problem they can’t fix. Eventually all problems got documented and Toyota yields approached a 100%. Ohno didn’t want to integrate the vertical and followed a building to order system than the other way around.

Chapter 4 - Running the Factory

The author draws a comparison between GM’s and Toyota’s production system. They compare the space used, inventory, time and defects between both plants to conclude that Toyota’s plant was more efficient. They also studied more plants throughout the world and assert that it’s wrong to equate lean production to Japan and mass with the Western world. The truly lean plant has two key organizational features: Tasks and responsibilities are transferred to those workers actually adding value to the car on the line. There is a system for detecting defects that quickly traces every problem, once discovered, to its ultimate cause. In the end, it is the dynamic work team that emerges as the heart of the lean factory. Building these efficient teams is not simple. First, workers need to be taught a wide variety of skills so that tasks can be r otated and workers can fill in for each other. Workers also need to be good at simple machine repair, quality checking, housekeeping, and materials-ordering. They must also have the ability to think proactively to devise solutions before problems become serious.

Chapter 5 - Designing the car

The author starts the chapter by talking about how General Motors was trying to compete with Ford and the Japanese. To build a new car model, the challenge was managing the matrix, to satisfy the needs of both the functional department and the product development department. As GM-10 model cars were launched, General Motors realized they were expensive to make and not easy either. Honda's product development process was quite different from General Motors'. "Honda decided to subdivide its development work into one Japanese team responsible for the basic car and two sub-teams, one in the USA and one in Japan. Once the product plan was set, the Honda team steamed ahead at breakneck speed and with no interruptions." Thus the Accord became the largest selling car model since 1989. The author then talks about product development strategies from all over the world. The importance of lean techniques is highlighted by the author and according to him, lean techniques in the following areas make it possible to do a better job faster, with less effort:

After giving us an idea about the statistics of lean production vs mass production, the author talks about the consequences of lean production and also invention in lean and mass production. "The advantage will always lie with the lean producer." Towards the end of the chapter, the author talks about how the Japanese focussed on innovation and built high-tech wonders. According to the author, so far, the Japanese lean producers have not failed at epochal innovations like solar powered vehicles, they simply haven't tried using ideas nearly ready for what is to come in the motor vehicle industry. "A much more difficult challenge probably lies just ahead", the author states, hinting the evolution of lean production as well.

Chapter 6 - Coordinating the supply chain

This chapter walks through the steps in the vehicle production process and the large gaps between the method and result of mass production and those of lean production. For example, when it comes to parts the assembler is only loosely acquainted with the technology and totally dependent on a single outside supplier, the lean producer takes care to learn an enormous amount about the supplier ’s production costs and quality. In lean production, the contract lays the basis for a cooperative relationship, one that is fundamentally different from the relatively adversarial relationships between supplier and assembler in the West (mass production). The practice in the best lean-production companies is to deliver components directly to the assembly line, often hourly, certainly several times a day, with no inspection at all of incoming parts.

Chapter 7 - Dealing with customers

In this chapter, the author talks about how in mass production, the system is geared towards the need of the manufacturing process and not the customers’ needs. This creates a less than amiable relationship between the dealers and the customers. In contrast, in lean production, the system is geared towards meeting the need of the customers’. The author draws a comparison between the market size of the United States and Japan and the huge difference between the number of dealerships between the countries to show that dealers form a integrated part of the lean production system.

Chapter 8 - Managing the lean enterprise

According to the author, if the lean approach is applied to the following activities, "it will complete the lean enterprise".

He then talks about the advantages of global enterprise. The following are the advantages of global enterprise according to the author:

The author then talks about managing the glocal enterprise and the "European failure to gain a global presence". The Japanese faced extraordinary global challenges. "The company that takes the boldest leap in the global market is the one in the weakest position at home." This was the case of Japanese companies.

Chapter 9 - Confusion about diffusion

The author talks about the problems existing companies face when it comes to adopting new production techniques. He talks about how mass production was gaining popularity in Britain, however it did not become the dominant form of production. Englishmen had a long experience of craft working and were not so tolerant. They were as the author states, "highly suspicious of mass production". By the time British car companies came close to match the productivity of Americans, "American-style mass production was already under siege from Japanese-inspired lean production". When lean production arrived, it began to replace mass production but the same number of cars were manufactured. Hence, many jobs disappeared. As the author states, "lean production displaces armies of mass production workers who by the nature of this system have no skills and no place to go".
Initial Misperceptions of Lean Production:
"Anything that is new is likely to be misunderstood, typically by attempts to explain the new phenomenon in terms of traditional categories and causes."
Diffusion through Japanese investment in North America
Japanese does not equal Lean:
According to the author, some of the weaker Japanese firms may fail due to weaknesses in product design and marketing. The author then provides some statistics regarding the United States vehicle production and the Japanese vehicle production. He then talks about western "careers" vs the Japanese "community". People in Japan were not too quick to leave their jobs as compensation in Japan, depended entirely on seniority, so it would not make sense to leave a company only to start from the bottom at another. The transition to lean production in Europe:
According to the author, Europe should be more understanding of the internal logic of lean production. "The European companies have sought to perfect mass production as the Japanese have continued to perfect leanness, and they are farther behind than the Americans were in 1980s." The author states that European mass production industries must learn to compete with lean producers.

Chapter 10 - Completing the Transition

The author states that economic policies and organization structure can play a role in hindering the transition to lean production. The author feels that for and multi-national organization to be successful, there needs to be an integrated, global personnel system that promotes personnel from any country as if nationality didn’t exist. Also, it needs a system that allows horizontal flow of information between manufacturing, supply, research and development and distribution.