Lean Management—The Journey from Toyota to Healthcare
Open Access Rambam Maimonides Medical Journal
A
eviations: 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: XXXXXXXXXX/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
y/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 co
espondence 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
evolutionized the weaving industry, established his
usiness. After selling the patents in 1929, the
company reinvented itself in the automotive
industry that, at the time, was dominated in Japan
y 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 prefe
ed 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
egan 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
easons 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
um
ella 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
elated 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
estructured, but the larger picture that implies
cultural changes sustaining an endless process may
e 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 te
i-
tories that at first glance may seem unrelated.
THE PARETO PRINCIPLE
The Pareto principle is refe
ed 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