Lean New Year’s Resolutions

            Some resolutions that might contribute to the success of lean initiatives in the year ahead:

• I will keep an open mind and not insist on doing something the way we’ve always done it just because that’s the way we’ve always done it.
  
• I will adjust my metrics to only measure that which truly adds customer value.
  
• I will talk to my customers and not assume I know what they consider to be of value.
  
• (For managers:) I will step back and not try to substitute my judgment for the team’s.
  
• I will try to learn about lean from other industries, not just my own.
  
• I will apply lean to all parts of my enterprise, not just the shop floor.
  
• I will work to align strategies, tactics and incentives throughout my enterprise.
  
• I will genuinely try to build relationships with my supply chain partners and not just squeeze them for a better deal.
  
• I will attend a lean conference to learn from the experience of others.
  
• I will read a new book about lean. (OK, we’re a publisher, so that’s a little self-serving. But that doesn’t mean it’s a bad idea.)

Feel free to post a comment adding more resolutions.

            I am on vacation during the week ahead, so my next posting will be after the first of the year. Happy Holidays!

When Metrics are the Problem

Metrics drive behavior, and the wrong metrics drive the wrong behavior.

Leanblog (now there’s a user name) writes:

At my company the direct labor productivity metric is the main decision making point for any activity at the plant. As such there is a lot of management resistance to using operators to work on lean activity. It is believed by most of the management team that lean activities will not pay off in direct labor productivity improvement. And it is true that if I use direct labor for a kaizen event the department will take a direct labor productivity hit in the month the event occurred. This is especially true if we are working on flow improvement, 5S, visual management, LTA which may never improve direct labor productivity. Over several years this culture remains an obstacle to Lean.

It’s an old-fashioned way of thinking. You want the workforce to be as productive as possible, so you measure direct labor productivity. This tells you whether each worker is producing as much as he or she possibly can.

But here’s a thought: Direct labor productivity is not a good metric. It doesn’t matter whether each worker is producing as much as possible. What matters is whether the plant is producing the amount of product the customer wants. And that is not the same thing.

Convincing management to give up their entrenched belief in direct labor productivity as a metric is not likely to happen. What’s needed is more of a stealth strategy.

Don’t talk about direct labor productivity. Talk about other metrics – or better yet, set a goal. Tell management that if they give you the people you need to make lean improvements within a specified period of time, say a month or a couple of weeks (the less time, the better), you’ll give them measurable improvements in cycle time and capacity – in other words, the ability to move more product out the door more quickly. You might be able to lay some groundwork yourself first, perhaps with a spaghetti diagram that will show wasted movement. Working on flow improvement, one of the lean approaches mentioned, sounds like a good idea.

By the way, on the Productivity Press Web site, you can download a free article (originally published in the Lean Manufacturing Advisor newsletter), about good vs. bad metrics.

 Other comments?

Chinese Supply Chains: Not Yet Lean

I previously wrote about how Chinese companies have generally not yet adopted lean practices in their factories. A new report says they are also not doing a good job at managing their supply chains – yet.

            In a report prepared for the recent APICS conference, Wei Quang Qu of Allied Supply Chain Management Solutions writes that, with China still a young market with cheap labor, the business focus tends to be on sales rather than the efficiency of the supply chain.

            But, according to the report, that is changing: “As the global competition competes on cost, efficiency and flexibility, there is no exception for Chinese enterprises. So more and more companies are switching the core competency onto supply chain management.”

            It’s not easy, at least partly because Chinese companies have traditionally been unwilling to share information with supply chain partners. But according to Wei, a hard lesson was learned in the second half of 2004.

            “The Chinese automobile industry experienced a continuous drop in sales,” she writes. “The whole supply chain suffered, with large amounts of excess inventory and obsolescence, which affected dealers, car manufacturers, and tier-one and tier-two suppliers. The inventory piled up on each level until the second quarter of 2005. All stakeholders of this chain learned a lesson: If the information could be shared among the whole chain, in a timely manner, and if integrated planning is in place, the bull-whip effect could be reduced greatly.”

            Chinese companies are also having problems with ERP implementations, for a variety of reasons (surprise, surprise).

            “Overall,” Wei writes, “the Chinese supply chain is under a big transition and development,” with support of lean and other improvement strategies starting to take place.

            My take on this is that, if you do business in China (or plan to) and know how to apply lean principles to the supply chain, now is the time for action. If you can establish yourself as one of the better-run, more efficient players in this marketplace before a lot of other companies have done so, it enhances your chances for success. And if you haven’t been working to achieve a lean supply chain, you better get started.

 

Leadership and Respect

Employee engagement and empowerment, which are cornerstones of a lean strategy, are finally beginning to get the recognition they deserve.

            My comment is prompted by a forecast from consulting firm BlessingWhite, which says that leadership priorities will change next year. (And my thanks go to Skip Reardon, for being the first to describe the report in his Be Excellent blog.)

            BlessingWhite projects that leaders will focus on seven key issues in 2007. Two in particular caught my eye.

            One is Driving Productivity Through Engagement. According to the BlessingWhite news release, “Employee engagement will continue to be a pressing concern, and those responsible for leading will need to pay close attention to not only the level of employee satisfaction but also the degree of contribution.”

            In contrast to the traditional manufacturing practice of treating employees as unthinking cogs, lean has always been based on the belief that employees can and should contribute. This includes the concepts of cross-functional teams with the authority to make improvements, encouraging employees to stop production when a problem is found, soliciting employee suggestions, and so on. And when BlessingWhite talks about paying attention to the degree of contribution, the firm is echoing the lean concept of measuring what you do with the right kinds of metrics.

            The other issue the firm mentions that struck a chord was Connecting Individual Contribution to Strategy: “There is a lingering gap between employees knowing their organization’s business strategy and recognizing their own role in it. Closing that gap will help improve engagement, productivity and profitability.”

            Indeed it will. And in recognition of that, lean includes the concept of hoshin kanri, which involves development strategic objectives and relating them to strategy and tactics at all levels of an organization. (Read our book, Hoshin Kanri for the Lean Enterprise by Tom Jackson for more information.)

            The five other issues that BlessingWhite says leaders will face next year are:

• Executive Self-Development
  
• Correcting Cultural Corruption
  
• Re-emerging Focus on Retention
  
• Inspiring All Generations
  
• Developing Leaders for Short – and Long-Term – Needs

 

The BlessingWhite news release never mentions lean specifically. But taken as a whole, the seven issues seem to embody a central concept of lean: Respect for employees.

            I’m glad more people are jumping on this bandwagon. It’s about time.

Building Up Excess Inventory

From the comments of readers about management roadblocks, dlankford writes:

 

I have a new manager that wants to build up inventory even though he understands that we should be building JIT. The area we have cleaned out for finished goods is no longer large enough and now they want to put finished goods in several different locations.

 

            The first question that comes to my mind is, why does the manager want to build up finished goods inventory? (The implication here is that products are being made to stock, not to order, and the goods being built up go beyond whatever orders there are.)

            We don’t have a lot of information here, so I can only speculate that the manager thinks his job is to produce – and the more he produces, the more he is doing his job, and the more it makes the shop floor look productive, which (he believes) makes him look good.

            There are other unknowns here as well. Is the manager building up inventory of products that match whatever sales forecast the company has? Is there much (or any) communication between production and sales?

            It’s hard to know where to begin. It sounds as if there is a lack of a company-wide focus on the customer, and producing what the customer wants. There needs to be inter-departmental sharing of goals and objectives, so that everyone has the same view of how to serve customers.

            Moreover, everyone (especially production) needs to understand the negatives of producing excess inventory, including the fact that unsold goods are a liability, not an asset, and including the recognition that storage is not the most productive use of space.

            A more positive approach might be to persuade the manager that the focus should be not on constantly producing, but on improving production, reducing cycle times, so that the company can respond to customers faster. The ability to do that might help sell more goods that are truly desired by customers.

            Achieving that change in thinking is not easy and takes constant reinforcement. Getting sales involved might help, if they’re concerned about having to sell excess finished goods that customers don’t necessarily want.

            Any suggestions?

 

Lean Deployment is Coming Into Its Own

Companies are finally looking more at the big picture when it comes to lean. They may have trouble bringing that picture into focus, but at least they are beginning to see it.

            That’s the conclusion I come to after speaking with Michael Kuta, who sees lean from the consultant’s perspective. Mike is managing partner of Productivity, Inc. (And no, I wasn’t speaking to someone in my own company. Productivity Press and Productivity, Inc. were, at one time, under the same ownership. But Productivity, Inc. has since been spun off as a separate business. We publish books, they do consulting, training and conferences.)

            Most companies he and the other consultants work with, Mike says, are already doing something with lean, to some degree. But they’re hitting a wall.

            One problem, he says, is deployment. Companies can’t seem to move from their vision or strategy to the workplace, with the result that “employees are not working on those workplace activities that are directly supporting the strategy.”

            That, he says, suggests “a continued lack of discipline in standard work.”

            Related to deployment is the issue of project management, where Mike also sees a lack of discipline.

            “I don’t see organizations having a structured way to manage the daily activities of their change process and waste elimination. I don’t see organizations having a way to monitor and measure the influence or impact of their projects,” he comments.

            These trends have changed the consulting business. “When people call us today, the days of them calling here and wanting to talk about ‘can you do changeover reduction workshops’ – those days are pretty much gone. It’s ‘can you help us deploy and manage the process?’ That’s the big call out there now,” he says.

            Another problem in lean implementations, Mike adds, is that, to support a transformation, you need “a critical mass of people who understand what needs to be done so they can make a contribution.” As a result, he notes, “we see a lot of people calling here today, not really asking for individual tools, but asking for an educational curriculum – the whole package.”

            To deal with these trends, Mike and the other consultants try to “position the needed change under an umbrella of leverage, wanting to leverage all the good things a company is doing. Because most organizations have some kind of improvement plan, we don’t advocate going back to zero and starting over again.”

            Instead, they follow a kind of variation on PDCA (plan, do, check, act). It’s more check, act, plan, do: Check what the company is currently doing, make the necessary adjustments to get them back on track and move forward.

            I’ve often criticized people and organizations that view lean simply as a set of tools, so I’m encouraged by what Mike is saying. True commitment to, and involvement in, lean is still pretty rare, but if companies are looking more at overall deployment vs. kaizen events, we may be headed in the right direction.

 

The Truth About Product Development

It’s a bit disconcerting when someone seems to dismiss lean manufacturing as old news. Something along those lines appears in the latest issue of Industry Week magazine, in the column by Editor-in-Chief David Blanchard.

            Blanchard writes about the inaugural Manufacturing Excellence Awards, known as MAXA, similar to the magazine’s Best Plants awards, except that MAXA is specifically for facilities located in Singapore.

            He argues that the distinguishing characteristic of the winners is their focus not on low cost or high technology, but on customer-driven product development.

            That’s a fair point. However, Blanchard describes how he asked Professor Kumar Bhattacharyya, one of the awards judges, to talk about the best practices of the winning factories.

           

            'All of the manufacturers that we visited are using best practices,' Lord Bhattacharyya says. 'Lean manufacturing, Six Sigma, kaizen, teamwork – these are all things of the past. Every manufacturer these days has a continuous improvement or quality program going. To be the best of the best, you've got to have something extra.'

 

            In one sense, Blanchard is right. Being in touch with what your customer wants and responding with appropriate, high-quality, innovative products is critical to success in today’s marketplace. I’ve said so myself. Another champion of this idea is Jerry Flint, automotive columnist for Forbes magazine, who has long argued that Detroit’s problems stem in large part from how rarely it produces products that capture the desires and passions of drivers.

            The problem I have is not with Blanchard, but with Bhattacharyya. First, the professor is, at the very least, exaggerating when he says every manufacturer has a continuous improvement program. He also makes no mention of the fact that the programs at many companies are poorly implemented, or, in some cases, nothing more than lip service.

            However, what bothers me more is the professor’s implication that product development is somehow separate from continuous improvement. Improvement strategies are just as important in product development as they are everywhere else. Read our book, The Toyota Product Development System by James Morgan and Jeffrey Liker for evidence.

            And this is true not just of lean. Focusing on the voice of the customer is a fundamental principle of six sigma as well.

            Moreover, Bhattacharyya does a disservice to manufacturers looking for guidance when he casually describes improvement strategies as “things of the past.” Lean, six sigma et al may not be new, but they are just as important and relevant today – perhaps even more so – as they were decades ago.

            So yes, focus on product development as a critical part of your business strategy. But make sure product development is a fully-integrated piece of your improvement strategy as well.

 

 

Follow-Up: Management Roadblocks

The comments people have posted so far, responding to my request yesterday for examples of roadblocks to lean caused by management, certainly reveal some of the difficulties and frustrations in the workplace.

            One theme I see in several of the comments has to do with management engaging in the wrong kinds of behavior because they focus on the wrong metrics or on incorrect beliefs about performance. Some have to do with managers simply not understanding what lean is all about.

            Here and in future posts, I’ll discuss specific comments. I encourage others to do so as well, adding to what I say, offering alternative suggestions, and letting me know if you think my ideas are all wet.

            (I’ll intersperse these with other posts of news, research and trends about lean, the main focus of this blog.)

            The first comment comes from chess000, who writes:

 

            My biggest challenge with my middle manager is trying to agree on the conditions that make up a product family. It is difficult to have someone change their mindset on what has traditionally been classified as a family. Many times, we have determined this by size or function rather than by the process steps and cycle times. Our facility makes nearly 2000 different products and determining which of those fit into what families has proven extremely difficult.

 

            Often, it helps to go back to the fundamental reasons for a lean practice. Why do we classify products into families? By grouping products with similar process steps and cycle times, we can create manufacturing cells capable of performing those process steps, and therefore capable of producing all products in that group or family.

            I don’t know whether chess000’s company already has cells or is trying to create them. And I certainly don’t know whether the middle manager can be persuaded to see the light.

 

            But here’s one thought: Often, I find that HOW an issue is communicated has a significant impact on how that issue is addressed.

One communication strategy here might be to forget about discussing product families. Simply speak with management about cells – ‘I’m creating this manufacturing cell to produce this product, and I believe it could also be used to produce these products because they involve similar process steps.’ Highlight the benefits of being able to produce numerous products in a single cell.

That’s a small suggestion, and while it may not be the solution to this problem, I hope it might help.

Other ideas?

 

Are your managers roadblocks to lean?

Sometimes the biggest challenge in a lean transformation is management itself. In some cases, top management may not be fully behind your initiatives. In others, middle managers may resist change and undermine your efforts. Or maybe management just doesn’t understand what lean is all about.

 

Some examples:

• Your manager puts you in charge of a lean initiative, saying “we’ll try it for a month.”
  
• Your manager insists that he or she must approve all improvements proposed by a team.
  
• Your accounting manager or CFO says lean isn’t working because unit cost increased.

Those are just a few. I’m sure there are many, many more.

 

Do you have a lean management problem? You’re not alone. Share your problem on the blog and read what problems others have. Then we’ll all try to come up with ideas that may help.

 

Register, log in and post a comment. Let’s use the blog to help each other.

Lean is Not a Public Relations Tool

I have to disagree with our friends at the American Society for Quality (ASQ), who I believe recently gave lean manufacturing a little too much credit.

            ASQ issued a news release reporting the results of its most recent Quarterly Quality Report. This report examines the American Customer Satisfaction Index, a measure of the quality of the goods and services as perceived by consumers. It’s a national indicator produced by the University of Michigan’s Ross School of Business in partnership with ASQ and CFI Group. Its sponsors include ForeSee Results and Market Strategies.

            One of the highlights of the latest report is that, in the food and beverage category, Sara Lee had the biggest gain in perceived quality, 4.6 percent. This moved Sara Lee into the ranks of the highest-rated companies, right behind the three companies tied for first place: H.J. Heinz, Hershey and General Mills.

            The author of the Quality Report, Jack West of ASQ, said in a news release, “Sara Lee’s recipe for improvement has been a combination of major restructuring that included shedding of certain non-core food product lines and the introduction of lean manufacturing processes that have improved employee efficiency in their plants.”

            Let’s think about that statement. It is undoubtedly true that Sara Lee sold off businesses and launched lean initiatives. And it is possible that those initiatives have improved the quality of its products.

            But ASQ’s index is a measure of perceived quality, not actual quality. Do consumers really judge the quality of products based on whether the company that makes them has sold off divisions or is involved in lean manufacturing? Do most consumers even have the slightest clue what lean manufacturing is? I don’t think so.

            I’ll admit it is possible that people perceive the products to be better because they actually are better, and the reason they actually are better is lean manufacturing. Frankly, I think that is a bit of a stretch, particularly when ASQ itself says a chief benefit of Sara Lee’s initiatives is improved efficiency – not higher quality. There may be a relationship between the lean initiatives and the improved perception. However, I’m not convinced it’s a causal relationship.

            I’m a believer in lean, but let’s be realistic. While companies have used their lean achievements to impress customers, this generally occurs when the customer is a manufacturer being courted by a supplier. Lean, to my knowledge, has rarely, if ever, been used to impress consumers. And I’m not aware of any PR campaign by Sara Lee to tell people how much its processes have improved.

            Lean can do many things. Improving your public image generally isn’t one of them.

 

Closing the Supply Chain Gap With Lean

In a reinforcement of the beliefs of those of us who are lean advocates, according to a new academic study, supply chain experts agree you need to focus on the process (read: take a lean approach) to succeed in today’s world.

            The study was described at the recent APICS conference by three of its authors: Dr. Steven Melnyk of Michigan State University, Dr. Rhonda Lummus of Iowa State, and Dr. Robert Vokurka of Texas A&M. (Joe Sandor of Michigan State was the fourth author.)

            The study, designed to identify critical supply chain issues facing managers in 2010 and beyond, involved two groups of supply chain experts – one of corporate executives, the other of academics. They responded to questions, then took part in a workshop.

            The top issues the experts identified are:

• Supply chain disruptions and supply chain risk
  
• Leadership within the supply chain
  
• Managing the timely delivery of goods and services
  
• Managing product innovation by drawing on the capabilities of the supply chain
  
• Implementing appropriate technology to allow seamless exchange of information within the supply chain

            The experts then identified 16 initiatives to get there from here, and summarized those initiatives into six strategic initiatives.

            Of the six, the one that jumps out at me is “Manage through a process orientation with appropriate measures.” That sure sounds like a description of what you do when taking a lean approach. Lean is all about focusing on the process and making sure you measure what really needs to be measured.

            The five other strategic initiatives are:

• Achieve strategic visibility/alignment and information integration
  
• Acquire exemplary supply chain talent and leaders
  
• Utilize supply chain optimization models (e.g., risk, cost)
  
• Focus on relationship building and trust both between and within companies
  
• Align and realign supply chain architecture/structure

            Like me, you may be thinking that while everything described so far is good, it doesn’t tell us a lot we don’t already know.

            But don’t despair: There may be something of more practical value available in the future. The study is moving into a new phase, with the survey participants involved in subgroups that will focus on identifying management practices and research agendas that may help close the gap between current performance and future needs. The subgroup areas are operational, strategic, collaboration, metrics, risk and cost models.

            And according to the survey authors, identifying those best practices is critical. In an executive summary prepared for the conference, they wrote, “Those organizations that are best at closing the gap will have a competitive advantage. Those who have not prepared for the future will face unacceptable risk and higher total cost.”