Free Capitalist Network - Community Archive
Mises Community Archive
An online community for fans of Austrian economics and libertarianism, featuring forums, user blogs, and more.
Forums
 »
Economics
 »
Economics Questions
 »
Austrian Economics and Lean Manufacturing

Austrian Economics and Lean Manufacturing

rated by 0 users
Answered (Not Verified) This post has 0 verified answers | 33 Replies | 2 Followers

Top 150 Contributor
Male
633 Posts
Points 11,275
Torsten posted on Thu, Jun 16 2011 7:40 AM

Is Lean Manufacturing a practical application of Austrian economic theory?

Having followed Austrian economics and especially the audio lectures for a couple of years I was wondering what the relationship with lean manufacturing and its underlying ideas would be. My interest stems from being a consultant/trainer for lean thinking and lean manufacturing myself. What actually triggered the question for the relationship is the importance of value in both Austrian economics and lean manufacturing as well some other issues that may somehow interface.

The main principles of lean manufacturing / lean thinking are:

  • value as defined by customer and avoiding waste
  • value stream mapping make the flow and creation of value visible
  • flow / ensuring flow
  • pull principle
  • perfection or continual improvement

Here are other possible relationship or fields common interest between Lean Thinking and Austrian Economics:
* Value Theories - Value as defined by customer
* Lean enterprise and spontaneous organisation around a value stream.
* The lean enterprise and the theory of the firm.
* Lean Approaches versus bureaucratic approaches
* Lean and business cycles.

I am more then willing to investigage this further and provide more information on the matter and would like to hear more comments on this. Of course I would like to write articles on this and publish them on my web site on lean manufacturing citing information I got here , too

All Replies

Top 150 Contributor
Male
633 Posts
Points 11,275
Reply
Torsten replied on Mon, Jul 4 2011 5:02 AM

John Podlasek:

I guess you would have to tell what exactly is fat manufacturing.  I have am not up to date with that.

He made that term up as a contrast to lean manufacturing. He claims that all business try to be "lean" and not to be "fat". I did say something above on this. The opposing paradigm to lean manufacturing is mass production. Needless to say that the same arguments that apply against "lean" would also apply to "mass".

  • | Post Points: 20
Not Ranked
Male
17 Posts
Points 250
Reply
John Podlasek replied on Mon, Jul 4 2011 9:02 AM

To me lean is business, so it applies to mass production as well.  You must improve, you must keep your customer happy or you will go out of business.  TPS (Toyota production system) is a mass production system, and does not apply to other companies.  In my companie we make over 500 different products.  We do not make a product per say. We have machines and produce whatever fits our business model. We will never have one piece flow,or a direct pull system, and we have to keep inventory, but I argue that our company is very lean in regards to our industry.  

I would attribute our business as a product of Keynesian economics,, but that is the world we live in, and what needs to be understood.

 

John

  • | Post Points: 20
Top 150 Contributor
Male
633 Posts
Points 11,275
Reply
Torsten replied on Wed, Jul 6 2011 10:58 AM

John Podlasek:
To me lean is business, so it applies to mass production as well.
When I am talking about mass production, I mean the paradigm or strategy not necessary just “producing a lot”. Of course mass production was already a major a huge leap forward in terms of productivity (and getting more lean via standardisation, flow on the production line etc. ) just like Adam Smiths pin factory was. But the main emphasis is still on economics of scale. Produce more, get better terms, sell at lower price, be able to cut margins. Also note that mass production is a derivative from FW Taylors “scientific management”.

Here is a comparison between craft, mass production, lean manufacturing:

Feature

Craft

Mass production

Lean Manufacturing

Focus

Set of Tasks

A specific product

Value for Customer

Operational style

Single, unique items, done by craftsmen

Batch and queue pushed through production line

Synchronized flow activated by a pull

Overall aim

Master the craft

Reduce cost per item

 

Quality

Workmanship

Inspection

Prevention, design, process control

Business Strategy

Customisation uniqueness of product

Economics of scale, standardization

Flexibility, quick response to customer

Improvement

Master driven experiential improvement

Expert Driven improvement projects

Team Driven continuous improvement

Management style

Seniority

Scientific management

Delegation to work force

Also see Table 4.1. on p97 in Lean Enterprise Value Insights from MIT’s Lean Aerospace Initiative by Murman et al.

Of course it’s not always possible to apply all the aspects of Lean.

Not Ranked
1 Posts
Points 5
Reply
didoslament replied on Wed, Sep 7 2011 7:21 PM

Sorry for the late comment (I happened across this while looking for something else)....

I knew a good deal about Austrian economics when I first heard of lean, and lean immediately brought Austrian economics to mind:

  • Mass production is not only expert-driven, but also plan-driven, leading to the sort of mal-investment associated with the boom-bust cycle. In Lean, we observe what is happening and modify to get better value to the customer.
  • Mass production does not acknowledge or admit spontaneous order; Lean provides a beneficial environment for it.
  • And, of course, the very same people who think that regulation is a solution to business problems say that lean won't work in their company.
  • | Post Points: 5
Page 3 of 3 (34 items) < Previous 1 2 3 | RSS