Lean Management, Kaizen, Kata and Keiretsu

Lean management is a modern concept for process optimization throughout the value chain (Helmold & Terry, 2021). Lean management focuses on making inefficiencies (waste) transparent and on altering these into value-adding activities (Ohno, 1990). The value chain reaches in this context from the upstream (Suppliers) over the own operations to the downstream side (Customers), as illustrated in Fig. 1.1 (Slack & Brandon-Jones, 2021). Inefficiencies are everything, e.g. an activity, a process, a product, which is considered as something for which the customers are not willing to pay for or to spend financial means. The customer is the central point in the lean management concept. The primary objectives in the lean management philosophy are to create value for the customer through the optimization of resources and create a steady workflow based on real customer demands (Helmold, 2021). It seeks to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value (Bertagnolli, 2020). The philosophy has its roots in Japan and operations but is presently widely spread across the world and industries. Lean management focuses on the following:

Kaizen’s philosophy is continuous improvement in small steps. But in reality, improvement is not uniform, but discontinuous, sometimes faster and sometimes slower. With Kaizen, we sometimes face major obstacles and get stuck. In this case, we have to change the system, the framework conditions, in order to be able to improve further. A concentrated effort is required to make a breakthrough for Kaizen. This method is referred to as Kaikaku and helps improve quality in production (Japanese 改革, Reformation, Transformation). Kaikaku is called “breakthrough kaizen” or “kaizen lightning”. Kaikaku means “revolution in thought and action” and “improvement of great significance” (Radenkovic et al., 2013). With a concentrated use of force, it temporarily accelerates the speed and scope of Kaizen. Kaizen is the continuous improvement of an activity with the purpose of increasing the performance in a production system, usually less than 20 or 30% in a given period of time (Radharmanan et al., 1996). Opposite of Kaizen is Kaikaku, which represents drastic change or radical improvement that is usually a result of big investments in technology and/or equipment (Imai, 1986). This way of making improvements can be considered impossible to constantly improve the process, so based on that, there is a need to conduct radical change in the company (Pfeffer, 1998). Kaikaku is not like Kaizen, which is started by all employees; Kaikaku usually starts from the top management of the company and then goes to lower levels of workers (Yamamoto, 2013). This is because Kaikaku represents crucial strategic changes. Table 2.1 compares Kaizen and Kaikaku (Helmold, 2021) and shows the differences between the two methods.

The term kata comes from Japanese martial art and describes the detailed definition of movement sequences. Through practice and application, these become routine and internalized to such an extent that they are practically reflexively carried out without thinking. Transferred to the management of organizations or companies, kata means the development and anchoring of routines in thinking and acting on all organizational levels.

A keiretsu network (系列 ネットワーク) or keiretsu value chain network (Japanese: integration, order or system of stakeholders, partners and suppliers) represents a means of mutual security, especially in Japan, and usually includes large manufacturers and their suppliers of raw materials, systems and components (Ahmadin & Lincoln, 2001). Keiretsu groups are defined as clusters of independently managed firms maintaining close and stable economic ties, cemented by a governance mechanism such as presidents’ clubs, partial cross-ownership and interlocking directorates. Within the broad definition lie two distinctive variations. The horizontal keiretsu are conglomerates covering several industries linked by cross-shareholding, intra-group financing and high-level management by a central (often shadowy) body of directors. The vertical keiretsu networks are groups around one big manufacturer and consist of a multi-layered system of suppliers focused on the core company (Gabrowiecki, 2006). Keiretsu networks have received much attention in the European automotive and transportation sector through the success of Japanese companies like Toyota, Mitsubishi or Hitachi and other conglomerates in achieving improved customer service, better inventory control and more efficient overall channel management (Freitag, 2004). Keiretsu, which is a form of Japanese business network, shares many of the goals of several business functions. The concept of a keiretsu network was introduced by Toyota in the mid-1980s (Imai, 1986) and transferred to affiliates and suppliers outside Japan (Kalkowsky, 2004). Figure 4.1 depicts the example of a Keiretsu network structure including the core business functions and enterprises of bank, insurance and finance companies. These core businesses are surrounded by companies in leading industries like automotive, food or machinery and electrical applications. In addition to this, keiretsu networks may include supporting businesses such as warehousing, transportation or component supplies. Keiretsu networks are differentiated into horizontal (same layer) and vertical keiretsu networks (different layers).

Kyouiku (教育) is the term for learning or education. Social education and lifelong learning (shougai gakushuu) are terms used to refer to companies, adult education and related activities in Japan. Adult education originated immediately after the Second World War with the enactment of the Fundamental Law of Education (1947; revised in the 1980s). Since the mid-1980s, lifelong learning has been the more commonly used term. Not only does lifelong learning involve going to school to learn how to read and write, but it can also involve the learning that takes place outside the classroom through volunteering, outdoor activities, sporting events and so on. Companies in Japan promote learning activities for their employees. Companies have become learning organizations. A learning organization is ideally a system that is constantly in motion. Events are taken as suggestions and used for development processes in order to adapt the knowledge base and scope for action to the new needs. This is based on an open and individualized organization that allows and supports innovative problem-solving. Mechanisms that support such learning processes are the following:

Hoshin Kanri (方針管理) also called policy deployment) is a method for ensuring that a company’s strategic goals drive progress and action at every level within that company. This method eliminates the waste that comes from inconsistent direction and poor communication. Hoshin Kanri strives to get every employee pulling in the same direction at the same time. It achieves this by aligning the goals of the company (Strategy) with the plans of middle management (Tactics) and the work performed by all employees (Operations). Hoshin Kanri starts with a strategic plan (e.g. an annual plan) that is developed by top management to further the long-range goals of the company. This plan should be carefully crafted to address a small number of critical issues. Key items to consider when developing the strategic plan are the following:

The Toyota Production System (TPS), the Just-in-Time Production System or Lean Production System can be described as the ideal combination of four principles (Imai, 1986). These principles are the zero-defect principle, the pull principle, the tact principle and the flow principle, as displayed in Fig. 7.1 (Helmold & Samara, 2019).

Added value can be defined as products, services, processes and activities, which generate a certain value to the organization and enterprise. Value-added must be regarded from the customer viewpoint and is everything for which the customer is willing to pay for. It is important that value-added is recognized and perceived as value by the client (Bertagnolli, 2020). Many studies have shown that we only add value to a product for less than 5–15% of the time, and the rest of the time is wasted (Helmold & Terry, 2021). The opposite is non-adding value or waste. Waste (Japanese: Muda, 無駄) is anything that adds cost or time without adding any value, or any activity that does not satisfy any of the above conditions of value-added is a waste or a non-value-adding activity in a process. The focus in operations management must therefore be on eliminating such activities like waiting time or rework (Liker, 2004). Enterprise must target value-added processes and eliminate or reduce waste, whereby waste can be visible (obvious) or invisible (hidden), as shown in Fig. 8.1 (Lehmann, 2021). The main idea of lean management is about highlighting the things that add value by reducing or eliminating everything else (waste) (Sahoo, 2019). As a proven consequence, when you eliminate waste, the quality of products improves, while production time and costs are reduced. Figure 8.2 illustrate that waste must be ideally eliminated or reduced.

The Japanese meaning of change management is Henkou Kanri (変更管理) and can be translated from Japanese to mean “change, modification or alteration” in English. In the 1980s and 1990s, Japanese management principles were successfully implemented into enterprises around the globe. Japanese enterprises like Toyota, Sony or Panasonic had productivity and efficiency advantages against Western-style managed companies by more than 40–60%. The Japanese-style system predominant in the 1980s and 1990s has not been discussed in such an overwhelming and positive context as Japanese companies have been suffering from slumping revenues due to the prolonged economic depression. It is widely known that Japanese companies, on the contrary, are being asked to learn the management systems of newly industrialized Asian countries, including China and India (Sato & Parry, 2013).

Operations systems are not like they used to be in the past. The twenty-first century will confront enterprises and manufacturing companies with completely novel generations of technologies, services and products based on intelligent and smart technologies (Daim & Faili, 2019). In order to meet competition on global markets and to ensure long-term success, the companies need to adapt to shorter delivery times, increasing product variability and high market volatility, by which enterprises are able to sensitively and timely react to continuous and unexpected changes. One of the major cornerstones to meet these challenges is the implementation of digital information and communication technologies into production systems, processes and technologies, which allow novel developments by combining the physical world and fast data access and data processing via the Internet (Industry 4.0) (see Fig. 10.1). Industry 4.0 is a name given to the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things, cloud computing and cognitive computing. Industry 4.0 is commonly referred to as the fourth industrial revolution (Gilchrist, 2016). Industry 4.0 fosters what has been called the smart factory and smart supply chains. Within modular structured smart factories, cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions. Over the Internet of things, cyber-physical systems communicate and cooperate with each other and with humans in real-time both internally and across organizational services offered and used by participants of the value chain. There are four design principles in Industry 4.0. These principles support companies in identifying and implementing Industry 4.0 scenarios (Helmold & Terry, 2021):

If a few decades ago, companies faced the problem of not having enough data from which to analyse and extract valuable information that would help them make better decisions, today, they are facing a new challenge. Today’s companies have access to a tremendous amount of data, referred to as “big data”, which is growing at a remarkable pace each day. A variety of sources can be used to gather the data, including but not limited to company databases, surveys, social media, the Internet, transactions, sensors etc. The data can appear in a structured format as reports, or mainly unstructured (more than 80%) as images, videos and audio. The big data contains hidden information, and only by knowing how to extract the information will the companies be able to improve their performance, gain a competitive advantage and survive in the market in the long term. Digital transformation imposes the need for business transformation, i.e. investing in advanced information technologies and systems and, above all, in finding staff who have the necessary competencies to discover the hidden potential in data and to invest in the existing intellectual capital in gaining analytics and operations research skills. Analytics provides the answer to the question of how to extract information from raw data that will create values such as higher profit, increased customer and employee satisfaction, increased efficiency, productivity, quality, etc. for the companies. Operations research is the application of analytical methods, techniques and tools that are used to solve real complex problems and help the decision-makers in making faster and fact-based decisions. According to the Institute for Operations Research and the Management Sciences (INFORMS), “Operations Research and Analytics enable organizations to turn complex challenges into substantial opportunities. They transform data into information, and information into insights for making better decisions and improving results” (INFORMS, n.d.). As the amount of data that companies faced yesterday is smaller than the one they will face tomorrow, operations research and analytics have become the most important ingredient for companies to operate successfully.

Aviation is one of the pivotal transportation modes that has a transformative impact on both social and economic production factors – mobility. Clearly, the aviation industry with its elements creates interaction between sustainability of both nations and organizations – economic, social and environmental ones. Moreover, the aviation industry supports the improvement of production mobility. In essence, the aviation industry may give more effective and efficient sustainable support to the business environment and sustainable development if it is lean in both operations and management.

The automotive industry represents a significant contribution to the global economies by manufacturers, suppliers, logistics companies, distributors or third parties. The Original Equipment Manufacturers (OEM) are nowadays more focused on leaner supply chains, which integrate suppliers and customers with the own operations. Enterprises will have to continue to innovate to adapt to changing consumer demand and regulatory changes. The OEMs are outsourcing non-core competencies to raw materials, component and systems supplier and must therefore create the optimal transparency of materials and information flows. In addition, it is visible that other activities, i.e. research & development, product development or logistics services, are carried out by third parties. The same trend is visible on the customer side (downstream). Customers wish to obtain their products immediately after the placement of orders, which has a significant impact on the entire value chain, too. Another trend is the competition on a global basis. Customers expect more value and functions for lower cost from the OEMs.

In the construction industry, there is almost full employment, which is why the question arises as to why this industry has to change at all. The answer is obvious if you think of the almost everyday delays, cost and quality deficiencies as well as legal disputes and consider the image of this industry. The causes of these problems are usually and typically poor planning and execution. But what is the reason for this?

Rail transport (also known as train transport or railway industry) is a means of transferring passengers and goods on wheeled vehicles running on rails, which are located on tracks. In contrast to road transport, where the vehicles run on a prepared flat surface, rail vehicles (rolling stock) are directionally guided by the tracks on which they run. Tracks usually consist of steel rails, installed on sleepers (ties) set in ballast, on which the rolling stock, usually fitted with metal wheels, moves. Other variations are also possible, such as “slab track”, in which the rails are fastened to a concrete foundation resting on a prepared subsurface. The railway industry consists of sale, manufacture and operation of railway technology. Rail transportation, primarily consisting of freight shipments and passenger service, plays a vital role in the economy of many countries. The industry is characterized by a high extent of labour division and globally collaborating value chain networks (Helmold et al., 2017). Value chain and supply chain partners are integrated into supply chain networks and concepts. The world’s railway network spans over 1.3 million route-kilometres worldwide. The United States operates by far the longest railroad network in the world, closely followed by Russia, China, India, Canada, Germany and France. Japan was adjudged number one in the ranking of countries with the highest-quality infrastructure for railroads in 2019. The average annual market volume of railway technology in North America is forecasted to reach around 32 billion euros by 2023. Western Europe will be the region with the highest market volume. The collective region of Asia, Oceania and the Middle East accounts for the largest rail passenger traffic globally, with around three trillion passenger-kilometers travelled annually.

Lean experts investigate to what extent the principles of lean management, which are already a proven concept in industry for process-oriented quality assurance while increasing efficiency, can be applied to the control, support and core processes in the healthcare sector (Kraft, 2016). Learning from the best-practices examples of other industries, there are three success-relevant recommendations for action for the introduction of lean projects in hospitals:

The origins of lean practices date from late nineteenth- and early twentieth-century industrial engineering. Lean practices have evolved over the decades since then to become much easier for non-specialists to understand and use. It is now common for people with backgrounds and interests far from industrial engineering to become highly competent lean management practitioners. Therefore, the lean management system has the benefit that everyone in an organization can apply the practices without the need for specialists. Lean higher education (LHE) refers to the adaptation of lean thinking to higher education, typically with the goal of improving the efficiency and effectiveness of operations. Lean, originally developed at the Toyota Motor Corporation, is a management philosophy that emphasizes “respect for people” and “continuous improvement” as core tenets. Lean encourages employees at all organizational levels to re-imagine services from a customer’s point of view, removing process steps that do not add value and emphasizing steps that add the most value. Lean focuses on the concentration of valued-added activities or products and the elimination of waste. Examples of waste in higher education can be described with the TIMWOOD model given in Table 17.1.

A project is a purposeful and mostly unique project, which is subject to constraints on time, resources, costs and other elements, e.g. the use of personnel, financial means or operating resources (PM, 2018). Within projects, there are client-determined begin and completion dates inside which the task must be handled. Complex projects and task management are not the same as would be expected, as ordinarily several capacities are included. The functions often comprise project management, design, production, procurement, quality management, logistics, human resources, finance and other departments. The term project is derived from the Latin language (Latin: proiectum, thrown forward). In the seventeenth century, the meaning of “construction project” as a project definition prevailed in Germany (PM, 2018). Due to their developing multifaceted nature, ventures place unique requests on the project board and hence additionally arrange the executives for both clients and the contractor and order processors. Frequently, there are a few included groups or offices in complex tasks. Because of their unpredictability, ventures involve huge arrangements with clients, providers, banks or different stakeholders. Examples of projects include.

Pecha Kucha (Jap.: ぺちゃくちゃ) is a lecture technique in which images (slides) suitable for an oral lecture are projected onto a wall. The format is specified: 20 images (slides), which are faded in for 20 s each. The total time of 6:40 min is therefore also the maximum speaking time and ends there. Pecha Kucha is a registered word mark in Japan, Germany and other countries. Pecha Kucha was first used in Tokyo in February 2003 by the two architects Astrid Klein and Mark Dytham as part of a design event and has meanwhile found widespread use in business and at universities. In the meantime, the format is also used for communication in museums, for example, in the Stadtmuseum Berlin since 2012. The topics are mainly in the areas of design, art, fashion, culture and architecture. However, this presentation style has also been transferred to other areas. The major aim of Pecha Kucha is to eliminate the waste of time for audience. The advantages of this technology lie in the short, concise presentation with rigid time constraints, which make lengthy presentations and the associated fatigue of the listener (“death by powerpoint” syndrome) impossible from the outset.

A real and profitable lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. An ideal way to introduce a practical view in terms of lean thinking is to deploy the 7 Manufacturing Basics, a handpicked selection of core lean improvement tools, methodologies and techniques to grasp control of any shop-floor situation. He has used many tools independently to tackle various situations. But as time progressed, it became very apparent that some combinations of these lean tools and elements work very well together when deployed in a specific sequence. They should be part of the skill set a team leader uses in daily work on Jidoka and Kaizen reinforcement, assuring quality, controlling processes and making incremental improvements often.