Construction Contractor's Digest

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“In the beginning there was a need” – Taichi Ohno – creator of Lean also known as the Toyota Production System. In post – war Japan many needs were evident. As you know, things were not easy, but the ambition was great. There was no option other than to develop a production and business system that was scalable for the planned growth to come. So the business need is in many ways was a competitive edge. There are winners and losers in business. If Lean can give a competitive edge in some or all areas, this is a value and implementing Lean would be fulfilling the need for a competitive edge. That is, to stay in business, to make a profit, lower cost, to win customers, provide financial options for the owner, survive the market, etc. in the construction industry. The birth of Lean was at a single automobile manufacturer, Toyota Motor Corporation. All participants were focused and served that company’s needs. A single entity focus can make for great strides quickly. Restating what Ohno said, “In the beginning, there was a need.” The need was felt greatly by the employees and managers of Toyota. Lean is a production system. It was born in a manufacturing plant. More specifically, it was created in an automobile manufacturing plant from the quality movement. Ford, Deming, Ohno and others are given significant credit for the establishment of Lean thinking and production. Lean is based on increasing the speed of the production and business cycle. This is a great need for construction firms. You can see why the contracting community is active in discussing the Lean approach. You may be curious about the difference between Lean and Six Sigma. What is Six Sigma? It is a level of quality that is based on statistical measure. It is centered on the number of 3.4 defects per million. This is an extremely high standard in construction however, to have a company reach this level of excellence many great things would follow. Six Sigma may be a good addition to Lean however, since it is based on improving repetitive processes, it seems misaligned to construction. Our repetitive processes are few. Think jet engine turbine blades (10,000) versus commercial concrete structures (each is unique). Even invoice processing may be too varied to use Six Sigma. The Lean methodology is a better fit. It emphasizes speed of the process first. See our books, “The Practical Construction MBA” and “Managing a Construction Firm on Just 24 Hours a Day” – both are adopted by McGraw Hill Professional Books. Matt Stevens is a management advisor who works only with construction contractors. He has been doing so since 1994. He has more than 30 years’ experience in the construction industry. McGraw Hill published his first book titled "Managing a Construction Firm on Just 24 Hours a Day". His newest book, "The Practical Construction MBA" - both are available on www.amazon.com and www.stevensci.com. Stevens Construction Institute, Incorporated is located at stevensci.com.

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