“Artificial intelligence is going to replace literally half of all white-collar workers in the U.S.,” said Ford’s CEO Jim Farley, in the latest in a succession of executives warning of large-scale job cuts from AI.
Such claims can be pretty convincing—and unsettling. Large-scale AI-related workforce reductions to date, however, are almost exclusively limited to AI-aligned companies like Meta and Google, writes Industry Week (Aug. 7, 2025).
That said, it’s undeniable that tools like ChatGPT are already having a profound influence on the future of OM work. And the bar keeps raising as AI platform providers release more powerful versions. (ChatGPT currently has around 700 million weekly users).
AI-first companies may be willing to shell out big money for AI “agents” that take the place of human workers. A popular target is workflows that are standard across many companies, such as handling employee queries to accounting or HR. Such work, however, is not as straightforward as it may seem.
Nobel Laureate Daron Acemoglu predicts that over the next 10 years, only 5% of all tasks currently undertaken by humans will be profitably automated. He calls for a more human-centric approach. “That best possible way is a much more pro-human approach to AI that’s much more targeted at working with human decision-makers”.
Acemoglu’s findings are consistent with what lean leaders have been saying for decades. Uniquely human capabilities are essential to continuous improvement and central to lean’s most important pillar—respect for people.
Toyota’s approach to technology has been to articulate the need to improve the process and then, before evaluating automation solutions, investigate ways of meeting that need by simplifying the process (e.g., removing unnecessary steps). Taking this step avoids the common mistake of automating waste and leads to more effective and durable technology solutions.
A key point here is that continuous improvement is a holistic undertaking that seeks to reduce costs and increase value. This is starkly opposed to the common preoccupation with cost cutting, and the use of AI as primarily a vehicle for reducing headcount. The human skill areas in the left column of the above table, however, are not widely recognized or developed in most organizations, and a culture that supports them takes years to build. Lean organizations, accordingly, place considerable emphasis on developing and nurturing skills such as listening, collaborating, problem solving, following a vision and mentoring.
Classroom discussion questions:
- How does Toyota’s approach tie with AI use?
- How can Chat GPT impact manufacturing work?
With inflation keeping the cost of raw materials high, it has become more important than ever for manufacturing companies to reduce waste as much as possible.
The chain’s efforts in distribution operations that handle goods from general merchandise to pharmaceuticals are meant to” (1) help restock its stores faster and (2) free workers to help customers in stores and fill online orders for pickup and delivery.
The shift marks a return to the “just-in-time” inventory management strategy (our topic in Chapter 16) that many companies had employed before pandemic-driven product shortages and volatile shifts in consumer demand prompted a switch to a “just-in-case” stockpiling approach. Companies are now better able to predict shopper demand and feel they can hold leaner inventories amid moderating spending growth and fewer supply-chain disruptions. They prefer not to hold large inventories because the excess stock ties up capital, requires more space and people to manage it, and runs the risk of becoming outdated as trends change.
