Lean manufacturing gone too far?

November 2, 2008

“5S” in the world of lean manufacturing stands for “sort”, “straighten”, “shine”, “standardize”, and “sustain”. While it is hard to argue with the success of lean manufacturing on the assembly line, how far should the concept be taken? For example, can an employee add a hook on a door to hang a sweater? According to some 5S proponents, the answer is “no” – it doesn’t contribute to “aesthetic uniformity”.  Put a box of papers on top of a file cabinet – another “no no”.  This raises the question of how far a employer should go to dictate how employees do their job. One might argue that the employer should care only about output and not about process. Another may argue that employees will not maximize output because they will not choose the right process.  It would be nice to see some data on whether application of 5S to office environments indeed yields improvement.

Wall Street Journal, October 27, 2008 – Neatness Counts at Kyocera and at others in the 5S Club

Aldi’s operational simplicity

November 2, 2008

Aldi, the German founded grocery chain,  is a fascinating retail concept.  Like the wholesale club stores (e.g., Costcos) they sell a limited number of different items within each category.  Unlike the wholesale club store, and like a convenience store, they sell through a small physical layout.  Consequently, not only do they have limited variety within each category, they have limited overall variety – a typical grocery store carries 45,000 different items whereas an Aldi carries about 1,300 different items.  And unlike grocery stores, Aldi prides itself on its no-frills approach to service – you have to bag your own groceries, you can’t pay with a credit card or check, items are displayed in the boxes they were shipped in, most items are private label and you have to rent a grocery cart.  So why are people shopping at Aldi – in a word, “price”. Aldi claims “its private-label products were 16 percent to 24 percent below those at discounters and big-box stores, and 40 percent less than those at traditional supermarkets.”  This strategy is very much akin to Southwest’s initial approach in the airline industry – offer a very specific service to customers, with absolutely no additional service, and charge them a noticeably lower price.  It can be argued that Southwest has drifted away from that strategy.  In the current economic climate, Aldi may have extra reason to stick to its approach.

Wall Street Journal, Sep 7, 2008 – The Allure of Plain Vanilla