Dysfunctional Lean Manufacturing in America - Cutting Costs instead of Reducing Waste

The majority of efforts in American manufacturing to implement lean manufacturing principles are dysfunctional because management does not understand the basic difference between cutting cost and reducing waste. Just closely look at all the case studies, articles, shareholder reports, executive interviews and official news releases to see what corporate actions are described as lean. A review will quickly tell you which companies understand lean principles and which companies think they understand them.

Dysfunctional lean results from the misguided actions caused by misunderstanding lean manufacturing principles. In America, we take a twisted view of applying lean principles by cutting costs with massive layoffs, bullying suppliers, reducing service, blind outsourcing, and de-contenting products. In this view, our management decisions are based only on the dollar impact and not terms of what is value or non-value added. Costs may be quickly reduced in this approach but at a price of value deterioration.

On the other hand, waste reduction is the systematic approach to eliminate process activities that add no value to our customers and maintain all the value added elements. Only elements of waste are targeted for elimination. Management decisions are focused on value and non-value added measures. This simple approach follows the belief that you do not focus on costs because you already know that eliminating waste will always result in a cost reduction benefit.

Another way to look at it is from the customer point of view. Cost cutting takes things away from the customer while waste reduction gives things to the customer.