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Do Lean Companies Create Fewer Jobs?
No, they create more. If you assume the lean company grows sales at the same rate as some poorly management company then it may well be that the lean company creates fewer jobs. However that is not a valid assumption. Deming provided the reason in his presentations to Japan in the 1950’s with his chain reaction. From page 3 of Out of the Crisis
For an example of this process at work see GM, Ford and Toyota. Toyota defines lean (Toyota’s management system is what was called lean manufacturing by Jim Womack and Dan Jones). Toyota continues to add employees while Ford and GM have been shedding jobs.
It is true, for lean (and un-lean) companies alike, productivity is improving (it just improves more at lean companies) which means that fewer people are needed to produce the same amount as we have in the past. We have posted previously about the mistaken belief that jobs are moving overseas.
Job losses are the result of poor management - one of the core principle of lean thinking, Deming’s thoughts… is respect for people (providing good jobs, no layoffs, etc.). It is obvious that productivity continues to improve, which is a great thing. Management must manage that, and other matters, successfully. When management fails employees pay with their jobs (and very unfortunately senior management just pay themselves more and more).
The way to create jobs is to follow Deming’s chain reaction of systemic improvement.
Related: lean manufacturing portal - Dr. Deming on Management Topics - Manufacturing Jobs - No Excessive Senior Executive Pay at Toyota - Purpose of an Company
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January 20th, 2008 at 7:04 pm
Interesting. I was thinking on the same lines. People don’t understand the production system and claim that businesses are outsourcing jobs. Not entirely true.
Toyota is very open with TPS because it wants its suppliers outside Japan to do business the same way as them. I think one of their ideas is that you don’t need 10 people standing around to do a job meant actually for 2 or 3. Thats wastage of resources.
January 24th, 2008 at 11:49 pm
[...] we have been hearing about layoffs left and right. In situations like these, who can we blame? Curious Cat Management reacts to Lean Insider’s question: Do Lean Companies Create Fewer Jobs? Same with John of Curious Cat, I’m on Deming’s side when he says: improve quality, lower costs, gain market share, provide more and more jobs… [...]
March 2nd, 2008 at 10:53 am
“Keiper Automotive has slashed more than $2 million in costs and saved 100 jobs from layoff - all by reducing waste…”