The Role of Leadership in Continuous-Improvement and Lean Journeys -- What's Missing?

“What is missing from leadership in most continuous-improvement and Lean journeys?” That's the question I posed this past week to Brent Timmerman, who recently published a book entitled Starting Lean from Scratch: A Senior Leader’s Guide to Beginning and Steering an Organizational Culture Change for Continuous Improvement that addresses this topic head on. Here is Brent's complete response:

When an organization is beginning a continuous improvement and Lean journey, the leaders must be prepared to change their behaviors. It’s almost certain that some of the legacy approaches that the leaders have been previously using to manage their people will contradict the culture that they must build to facilitate a Lean journey. These mixed messages will stop the desired transformation in its tracks.

I think that you can imagine three “spaces” within the organization that must be shaped and sustained by the leaders for the continuous improvement transformation to be successful:

  • The Space of Trust—this is the space of individual and collective trust relationships between the leadership and the staff; it is the “feeling” of trust within the organization. This space is crucial and foundational before the organizational journey can even commence.
  • The Space for Change—this is a smaller space, set within the Space of Trust, where organizational change happens. When this space is properly formed, the people begin to support change, get excited by change, and they even want to get involved with the changes themselves.
  • The Space for Continuous Improvement—this is the smallest space, contained within the Space for Change, and it consists of every continuous improvement event, activity, or effort. In the early days of a Lean journey, you must get colleagues to believe that the organization is serious about the transformation it is undertaking. As a result, the leaders must shape each continuous improvement event so that the team can be successful. When the team feels success, they start to believe. When others see teams of their colleagues succeed, they start to believe as well.

In short, the leaders cannot simply delegate to others the support of a Lean journey and expect success. This requires truly a shift in the culture of the organization, and the culture is defined by the behaviors of the leaders. Before the leaders can ask the staff to change, the leaders must be prepared first to change some of their own approaches to management.

What do you think of Brent's perspective? Have you seen instances in which leadership behavior completely contradicts the culture the organization is trying to foster through a Lean initiative?


Can Lean Principles Be Applied to Procurement and Purchasing Processes?

While there are many books written on the basics of the "supply" side of the supply chain (i.e. strategic sourcing, sourcing/procurement and purchasing), however, there hasn’t been much written on those areas from a Lean perspective. That situation was rectified when Paul Myerson published his significant book entitled Lean Demand-Driven Procurement: How to Apply Lean Thinking to Your Supply Management Processes.

I recently spoke with Paul Myerson and asked him: "Why haven’t organizations placed more emphasis on applying Lean principles to procurement and purchasing processes?" Here is his complete response:

While there are a fair number of books, articles, and blogs written on the basics of the “supply” side of the supply chain (i.e., strategic sourcing, sourcing/procurement, and purchasing), there hasn’t been much written on those areas from a Lean perspective. This is quite surprising, considering not only that supply chain costs (primarily procurement and transportation), can range from 50% to 70% of sales, resulting in what is known as the “profit-leverage” effect (measured by the increase in profit obtained by a decrease in purchase spend), but also helps drive downstream quality, productivity, and efficiency.

If you were to ask someone who knew a bit about Lean thinking how they defined Lean procurement, they would probably say that it’s about increasing productivity for procurement staff so they can spend more time on value-added activities rather than administration. While that is certainly true, it is also important to extend the view to how it connects and interacts with other processes, functions, suppliers, and customers, as today, procurement plays an important role in improving the flow of information and materials throughout the entire supply chain.

It is important to establish best practice Lean procurement functions that go beyond contract negotiation and establish crucial operational requirements, utilizing strategic sourcing activities such as market research, vendor evaluation and integration to support Lean activities such as Just-In-Time and Vendor Managed Inventory (VMI) programs.

Furthermore, inventory management and sourcing supply chain decisions are directly linked to a company’s financial performance and can, as a result, can affect a company’s cash flow and profitability.

Therefore, a procurement organization must consider:

• The prevention of production disruptions due to inventory or material shortages, while remaining flexible to meet changes in customer demand or cope with market volatility.

• The trade-offs of inventory carrying costs and customer service levels.

• Optimal buying quantities that consider the trade-offs of inventory carrying cost and volume discounts.

• Moving from reactive to proactive procurement operations.

In summary, Lean procurement provides opportunities for process improvements and savings through cost reduction, eliminating wasted time and efforts, and improved cost analysis, and can improve contract compliance and develop better, sustained partnerships with suppliers and other business partners.

What do you think of Paul's perspective on Lean procurement? Does your company apply Lean principles to its procurement and purchasing processes? What results have you seen?


Employee Engagement -- Is it Increasing or Decreasing? Can it Be Sustained?

Most companies know the very visible and measurable benefits to having an engaged and involved workforce -- healthy workplace culture, lower turnover rates, and more satisfied customers. Many Gallup research studies are showing that employee engagement is rather low throughout many industries, and this topic is thoughtfully addressed in a new book by Lonnie Wilson entitled Sustaining Workforce Engagement: How to Ensure Your Employees Are Healthy, Happy, and Productive.

I spoke with Lonnie recently, and we discussed his book and the importance of employee engagement. I asked him: "Why are employee engagement levels so low?" Here is his complete answer:

The typical view of an “engaged employee” is some hard-working soul who asks few questions. He just keeps his head down and works hard to get the wash out.  Well, that falls far short of real engagement; which is an employee who is not only making a physical commitment (hard working), but an intellectual commitment (problem solving) and an emotional commitment (caring attitude) to his work, to his colleagues, and to his company.

The most comprehensive studies that have been done to quantify engagement levels in the US show that overall engagement is in the 30% to 32% range, with manufacturing even lower at 25% to 26%. These data are disturbing to most…and should be. That was not always the case.

Many years ago, engagement levels were higher, much higher. That changed when we grew as a country and as an industrial giant.  In the early 1800s, there were few factories and suppliers were very close to their customers. Think of the local tailors who made your clothes or the local smithy who fixed your wagon. They always worked hard. And at that time suppliers not only knew their customers, they cared about supplying them exactly what they needed and when they needed it.  Should problems arise, they would - Johnny-on-the-spot to fix the problems. These craft tradesmen were the epitome of engagement with physical, intellectual and emotional commitment attached to all they did.  

Then came mass production to make more products and make them cheaper. Next the railroads made distribution over long distances a reality and the craft worker became a mass producer usually making only part of a product as assembly lines were implemented. This effectively disconnected the worker from both the customer and the finished product. This drove a wedge between reality and any caring attitude they once had.  

Next, in an effort to improve both quality and worker productivity, the practice of “scientific management” was created. The most attractive aspect to the business owner was the concept of “best methods”. Known as Taylorism, it was now the job of engineers and managers, not the workers, to develop the best methods. This effectively drowned out any intellectual commitment the workers once might have had. 

With the impact of mass production, the advent of the railroads, along with the implementation of “scientific management”;  the concepts of emotional commitment and intellectual commitment were effectively severed from the worker and we are left with what we have today in manufacturing … 25% engagement levels. It need not be that way…..we can do much better.

In his book, Lonnie examines engagement from top to bottom integrating the theories of the scholars, with the experiences of the practitioners. He explains, in simple terms, how engagement can be achieved and why people try so hard to create a fully engaged workforce with both the best of intentions and a true passion to achieve it … yet fall short.

He believes there is a simple reason -- achieving engagement is all about management and the many changes that must be made, and that raises the crucial question: Is management both willing and able to recognize, accept, and execute the needed paradigm shifts? The stark reality is that the changes that must first occur are in the thoughts, beliefs, and actions of the management team. This book gives you a path to follow that may achieve just that. And the remaining question for the senior management is: What are you prepared to do?

How engaged are the employees in your company? Do you feel management is contributing to increasing or decreasing employee engagement?