By Stewart Bellamy.
Looking back now on more than five decades in manufacturing, I often think about just how much more may have been accomplished had I — and the companies I worked with — been exposed to this ‘lean stuff’ earlier.
After 20 years as a continuous improvement practitioner, plus countless hours of ongoing personal study time, one thing has become abundantly clear: A lean journey is infinite. The more you learn, the more there is to know.
What follows are a few observations from my career on several key elements routinely misunderstood, or not even considered, in many lean initiatives.
High quality, quick delivery, low cost — pick any two
Have you ever seen this statement posted in a business? Maybe it’s just the unwritten mantra of the owner? Either way, it’s not an uncommon thought.
The premise is that you can have high quality and fast delivery, but it won’t be cheap. You can have high quality and low cost, but it won’t be fast. Or, you can have fast delivery and low cost, but the quality may suffer.
But why should customers have to compromise?
A lean organization’s strategy is to provide all three, simultaneously: Fulfill customer needs with the highest quality, in the shortest lead-time, and at the lowest cost. Lean or not, most organizations do recognize — and even state — these concepts, in some form or another, as guidelines for success.
The golden riddle is how to make it happen.
In a 2009 article entitled TPS vs. Lean, longtime Toyota Production System (TPS) authority Art Smalley describes Toyota’s far more comprehensive version of what organizational success looks like. He states, “For over 50 years, TPS in Toyota has been primarily concerned with making a profit, and satisfying the customer with the highest possible quality at the lowest cost in the shortest lead-time, while developing the talents and skills of its workforce through rigorous improvement routines and problem solving disciplines.”
Four key points stand out for me in the Toyota version:
• Making a profit: Getting paid a fair price for your products while simultaneously seeking every opportunity to minimize costs. Basically: No profit, no company, no jobs.
• Leadership: Taking ownership for the advancement of your workforce’s capabilities; developing a tiered system for the delivery of training, coaching, and mentorship at every level.
• Respect for people: Not about remembering everyone’s name and what sports their kids play. This is about recognizing, through direct observation, where impediments to easier, safer, faster work are present, and then committing the necessary resources to eliminate the obstacles.
• Kaizen: Identifying problems with current work processes and learning, through collaboration and experimentation, where improvements must be made. The ultimate outcome is developing a new standard work and finally sharing what was learned.
More than 90 per cent of lean implementations are not sustained
According to Art Byrne in his excellent book, The Lean Turnaround, only 5-7 per cent of companies attempting a lean implementation see long-term sustainable success. So, what differentiates the winners from the losers?
For the winners, senior leadership is the catalyst guiding the initiative. Lean becomes the culture driving organizational strategy, which — in turn — means that every member of the organization is committed, engaged, and involved every day in the effort.
Regrettably, the overwhelming majority (the remaining 93-95 per cent) see lean as merely an operational cost-cutting program — usually implemented part-time, by someone in middle management, who applies lean tools with a primary focus on production floor performance. And although this does generate some short-term positive results, it falls far short of what is possible when the whole organization gets involved.
That is not to say that there aren’t organizations who see success with this limited operational approach. There certainly are. One can’t help but wonder, though, just how much are they leaving on the table.
Strategic alignment is more than a buzz-phrase
The ability to align everyone’s energies in meeting ‘true north’ objectives (corporate intent) can be extremely challenging.
For one thing, the increments of measurements at the facility, department, and individual levels will be very different. At the facility level, operations management may have annual or quarterly targets. At the departmental level, they’re looking at monthly or weekly numbers. And the production folks (the value-adders) need daily, hourly, or even minute-by-minute indicators.
Beginning at the top of the hierarchical pyramid, with the ownership group, a structured process is developed that makes expected outcomes clear and visible at every level. The number of levels is, of course, dependent on the size and structure of the organization.
Now that everyone has a clear understanding of what is excepted of them, we need a similar structured process that tracks and reports back on results. This is where we invert the pyramid, with the frontline folks now driving the bus. Results at each level then become the input to the next, and so on, until results reach the ownership group.
One more point about data reporting: The chances of getting meaningful, accurate, and timely information from the folks who report to you is greatly improved when you take a collaborative approach. Rather than imposing a predetermined reporting method on people, try this alternative approach:
Describe what must be measured and take the time to explain why it’s important. Then ask for two or three suggestions on how they would provide the needed data. Once you reach agreement, people now have ‘skin in the game’ and feel far more obligated to do it well.
Another — and perhaps more significant — benefit of accurate and timely reporting is the opportunity for a lead-hand, supervisor, or manager to see very quickly when problems inevitably arise, and provide support in getting things back on track with the minimum of disruption to productivity.
The cost, profit, price equation
Back in the ‘good old days,’ when I first began project estimating, traditional thinking said that the manufacturer sets the price by simply calculating material, sublet services, labour, and overhead costs, and then tacking on an anticipated profit margin.
This formula (cost + profit = price) assumed that, except where a deal could be found on cheaper materials or sublet services, costs were generally fixed. With experience, it becomes apparent it’s rarely that easy.
Try looking at it from a different perspective: Price – costs = profit.
Although there’s no mathematical difference, lean thinkers recognize that costs are not fixed, and selling price is ultimately determined by the customer and market. Taichi Ohno’s book, Workplace Management, dedicates a chapter to this subject. He muses that, “Costs do not exist to be calculated; costs exist to be reduced.” Appreciating this fact shifts the focus towards the internal factors that drive organizational costs.
The truth about kaizen
Kaizen is perhaps the most misunderstood component of any lean initiative, most often seen as a prescheduled, event-based, group activity.
The Japanese term kaizen is typically translated to mean good change or better way. But good change only describes the expected outcome. A deeper understanding of the Kanji characters provides a more literal translation:
Kai means self-reflection. In manufacturing terms, this means each individual (including you) studying their own work processes to identify where improvement opportunities exist and thinking about what needs to happen to reach the next level.
Zen, meanwhile, means sacrifice. No improvement happens without change — sacrificing the comfort and safety of the status quo and committing (sacrificing) the time, effort, and energy necessary to achieve an improved state.
This helped me to understand why kaizen is a way of thinking, and not an activity or event.
Just start doing
Mark Twain once wrote that, “Gradual Improvement is better than delayed perfection.”
Picture this: As a manager, you approach the people in your department and explain the company needs to reduce costs to remain competitive. You ask them to implement changes to their work that would free up one month of additional productive work per year. This seems like an almost impossible challenge.
Now, what if you asked them to find ways to reduce the time they spend waiting, searching, and walking to find materials, tools, workspace, and information, by just five minutes per hour? This seems much more realistic, right? Believe it or not, when you do the math, it provides the same results.
That’s the lesson I’d like to leave you with: Lean isn’t some grandiose concept you need to spend years planning or preparing for. It’s about making and sustaining small but meaningful change.
Why not stop the excuses and start making those changes right now?
Stewart Bellamy is a certified lean black belt and the co-founder of the Lean Practitioners Association of Saskatchewan (LPAS). The 2018 LPAS Conference runs November 13-14 in Regina; details are available at www.lpasask.com.