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.”

 

Leveling Demand at Boeing

I was intrigued by an article in The New York Times this week describing how Boeing is actually turning away orders, even from some of its best customers.

            Boeing is hot right now, partly because of troubles at Airbus. Orders for Boeing’s extremely popular 737 and the new 787 are pouring in.

            But current Boeing executives remember how the company was hot not quite a decade ago. At that time, the company accepted every order coming in the door. Production couldn’t keep up, and serious problems resulted. Many of today’s executives used to work for people who lost their jobs because of what happened.

            So today, Boeing is taking only the work it is sure it can handle. For example, Southwest Airlines, a very good customer, wanted to add two planes to an existing order for 737s, and Boeing said no (though it did make Southwest aware of two nearly-new planes that could be purchased elsewhere). Keep in mind that planes being ordered now won’t be delivered for several years.

            In effect, Boeing is seeking to level demand. And if I read the story correctly, it is trying to do so not in a high-handed or arbitrary way, but by communicating with customers so they will understand and accept what the company is doing.

            Leveling demand and building partnerships with customers are certainly elements of a lean strategy, and I’m inclined to commend Boeing for its approach.

            Now I’ve never heard of Toyota declining an order from a customer. But that doesn’t mean Boeing has done anything wrong. True, Toyota is probably better at predicting demand than Boeing. However, selling planes is very different from selling cars, with longer lead times, hugely expensive products (and correspondingly huge orders), and a global marketplace that can suddenly change in a radical way (as it did after 9/11).

            Perhaps Boeing has learned more about lean than the U.S. automakers. Ford’s hiring of Alan Mulally of Boeing to be Ford’s CEO increasingly looks like the right move.

            The Times article also noted that, in contrast to its practices years ago, Boeing now does little more than design and final assembly. Major assemblies, including parts of the fuselage and wings, are built by suppliers in a variety of countries and shipped (in 747s) to Everett, Washington. That may not be lean, but it certainly spreads risk on to suppliers.

            One last note: Early this year I went on a public tour of the Boeing facility in Everett (which, they boast, is the largest building in the world by volume, according to the Guinness book of records). It’s quite a sight; if you’re ever in that area, make it a point to go.

 

The Greening of Lean

I was impressed by a Baxter Healthcare presentation at the recent AME conference for two reasons. First, the speakers described how to apply lean principles in an unusual way – and it’s always good to find new ways to achieve the benefits of lean. Second, they dispelled a common myth about lean improvement efforts.

            The myth is that making your operations leaner and more efficient will automatically help you when it comes to energy and environmental issues.

            But as Jenni Cawein and Rob Currie of Baxter pointed out, while the company has seen a dramatic decrease in non-hazardous trash since beginning a lean journey four years ago, there have been no corresponding decreases in use of energy or water.

            The reason is that these areas are typically ignored during kaizen events. The result can be – and for Baxter, sometimes has been – that a kaizen event may produce some operational improvements but actually make things worse when it comes to EHS (environmental health and safety).

            For example, a kaizen team at one Baxter plant decided that segregating plastics was a waste of time. As a result, the piles of clean, segregated plastics – which had been producing recycling revenue – turned into a non-revenue-producing pile of trash.

            The good news is that by applying lean to EHS areas, or by incorporating EHS metrics into lean methods, significant benefits can be achieved.

            Typically, measurements on the shop floor might focus on cycle time, takt time, WIP, etc. By also measuring energy usage and water usage, for example – and taking those measurements every day – problems can be spotted more rapidly, causes identified and problems solved.

            This approach produced annual savings for Baxter of more than 200,000 euros in energy costs at one European plant. And Baxter calculates that as a company, its EHS-related improvement efforts produced $23.6 million in income, savings and cost avoidance in 2005, plus another $62.2 million in cost avoidance as a result of efforts during previous years.

            Baxter is now inserting EHS data into value stream maps. In addition to listing cycle time and scrap rates, some maps now also show the amount of hazardous waste generated (per X number of units) and the gallons of water used per day at each of the steps of a production process.

            Baxter – a $9 billion manufacturer of healthcare products such as IV delivery systems as well as dialysis and anesthesia products – is applying a variety of lean tools and methods to include EHS issues in its improvement efforts.

            This approach also is getting a boost from the EPA, which has launched a “Green Suppliers Network,” at least in its region covering the six New England states. It is a joint effort with other agencies to help small companies focus on EHS waste.

            The program, as described at the conference by Linda Darveau of EPA, involves a review of environmental impact opportunities, the cost of which is discounted by EPA for qualified suppliers.

            Would this approach help your company?

A Lean Thanksgiving

Thanksgiving is tomorrow, so I thought I’d depart from the usual subject areas for this blog to ponder how one might achieve a lean Thanksgiving.

            And no, I don’t mean preparing a low-fat meal. I’m talking about applying lean principles to make preparation of Thanksgiving dinner easy and efficient.

            Now I have heard of male executives schooled in lean getting into trouble with their wives for doing just that. Apparently the wives didn’t appreciate being told how to organize their kitchens. So if you are not the person who actually does the cooking, take that into account before you try this at home. 

            I did a little research on the Internet to see if there was anything that might apply here. I found some articles offering a few pearls of wisdom.

            One you read frequently is to, whenever possible, prepare ingredients in advance, preferably the day before. That is consistent with lean principles – certainly one of the tactics of quick changeovers is to have everything ready to go before the changeover actually occurs. (OK, we’re not talking about changeovers here, but you get my point.)

            Another that I liked was to let other people do the small stuff. I’ve certainly assisted my wife by doing my share of peeling, chopping and the like. And that is consistent with the lean principle of having each person in a cell perform a specific set of tasks. A parallel thought is to have guests simply bring some of the dishes.

            What goes on in the kitchen on Thanksgiving Day might be viewed as a high-variety, low-volume value stream. A variety of different products are being made, each in low volume. Has anyone ever tried to create a turkey day value stream map?

            Certainly scheduling is important here, as different dishes take different lengths of time to prepare and may have overlapping demands on kitchen resources, such as utensils, pans and the stove.

            Another critical element is cell (read: kitchen) design. All the chef’s tools need to be close by, arranged in the right sequence and easy to access.

            If you want to see an example of the value of these principles in the kitchen, try watching the television program “Top Chef” on the Bravo cable network. It’s a culinary version of The Apprentice. You’ll notice that some of the contestants have no trouble completing a given show’s challenge within the allotted time while others scramble and end up with just a few seconds left.

            In any event, I don’t expect you to spend tomorrow thinking about lean. Let me simply offer a Thanksgiving wish that your holiday consists of good food, good times with family and friends, and as little stress as possible.

            That’s it for this week. I’ll see you all on Monday.

 

Lean Networking

If you want to learn about lean, your choices include hiring a consultant, attending seminars and conferences, visiting Internet forums or chat rooms, and reading books (yes, we publish a few).

            But there’s another alternative, not widely available: joining a local lean networking group.

            These are few and far between. One, described at the recent AME conference, is the Jacksonville Lean Consortium, the three-year-old brainchild of Jerry Bussell, a VP of operations for Medtronic. 

            Medtronic, which has offices in Jacksonville, has been involved in lean for some time. Bussell (who is a big booster of his home city) says the consortium grew out of an idea he had: “What if we took the whole city of Jacksonville lean?”

            The consortium’s mission is to improve the performance of businesses and organizations in the Jacksonville area, known as the First Coast.

            It started out as a group of 16 companies in the area. Last year, another group of 16 was created.

            Each group meets once a month at one of its member companies. They tour the facilities, and members offer a critique. They then go around the room asking “How are you doing?” to discuss best practices and share knowledge and experience.

            Actually, it’s more involved than that. The group has objectives and strategies for individual members, which range from implementing standard measurements in every value stream to implementing a minimum of three kaizens per week.

            And the consortium’s goals go beyond just spreading lean knowledge. They want to promote economic development in the First Coast region by positioning it as a center of excellence and a good place to do business.

            When Bussell and Lad Daniels, president of the First Coast Manufacturers Association, created the consortium, they modeled it after a similar organization in Vancouver. “We stole shamelessly,” Bussell says.

            And I know of at least one other example of this type of organization: the Northwest High Performance Enterprise Consortium, based in Portland.

            These types of groups can be extremely valuable, both in helping more businesses become lean and in creating pockets of business excellence.

            I suspect this type of group doesn’t work well if it becomes too large. Therefore, you need many of them around the country (and the world) to have a large-scale impact.

            Do you know of others? Is your company involved in one? Let’s do some online networking – share what you know with the rest of us.

 

The Lack of Lean Partnerships

I recently heard statements that were a perfect example of two things: what lean manufacturing is all about, and everything that is wrong with the U.S. automotive industry.

            The statements came at the recent Center for Automotive Research conference on suppliers, from Frank Macher. He is CEO of Collins & Aikman, a major automotive supplier that has been in bankruptcy since May of 2005.

            “I actually received an apology from Toyota for allowing us to go into Chapter 11,” he said. He explained that his company had worked closely with Toyota on development of some products, and the automaker told him it should have done more to improve the supplier’s prospects. And since the bankruptcy filing, Toyota has been a source of support and continued business, Macher added.

            On the other hand, he said, his conversations with U.S. automakers were “very confrontational. It was almost, how dare we go into Chapter 11 on them.”

            Toyota understands a true lean strategy means developing close relationships with your supply chain partners.

            But the U.S. automakers don’t think about partnerships. As Macher put it, “it’s about price, and it has been about price for a very long time.”

            As he spoke, Macher’s anger and frustration were almost palpable. He described the challenges suppliers face; to those of us unfamiliar with the inner workings of these relationships, they were shocking, or at least discouraging. Among them:

• Customers promise to reimburse suppliers the cost of tooling required to make a new part, but the reimbursement goes unpaid for up to two years.
  
• Customers order unrealistically high volumes, and the supplier gets stuck with the cost of the excess.
  
• Customers seek bids on future business that they know is unprofitable. “To allow people to bid on business three years down the road that they know is underwater to start is immoral,” Macher declared.

            He proposed a customer/supplier bill of rights. The customer, he said, has the right to expect quality products, built to specification every time.

            He then rattled off a long list of supplier rights, including realistic volumes, a pay-as-you-go commitment, timely tooling reimbursement and more.

            My favorite: “It is not a sin to make money.”

            Macher recognizes the changes taking place in the industry. If better relationships can be established, he said, “At the end of the day, we’re all going to be smaller, but I think we’re going to be healthier.”

            He declared, “Suppliers have to be able to provide a quality product without any compromises. But in turn, we should receive fair compensation.

            “Is that really asking too much? It doesn’t seem like it. It seems like fair pay for a fair day’s work is a real deal.”

 

Lean, Productivity and Government Statistics

I’m always a little skeptical of business statistics from the government; they often don’t tell us what we really want or need to know.

            However, I’m at least a little bit intrigued by the latest figures on productivity.

            The government’s productivity figure is a measure of how much an employee produces per hour. It would be nice if this figure told us something about the application of lean principles in the marketplace, or how that is changing over time, but the metric is probably too rough to do that.

            In any case, productivity for the third quarter of this year was unchanged after a 1.2 percent gain in the second quarter. That’s because output and hours both increased 1.6 percent.

            The one interesting part of this report (which comes from the Bureau of Labor Statistics) is the breakdown of the productivity figure.

            It’s actually an average of three figures, for business (whose productivity went up 0.1 percent), non-farm business (productivity unchanged) and manufacturing, where productivity went up 5.9 percent. (I’m not clear on exactly what is included in each of the first two categories.)

            And the manufacturing figure is an average of two other figures: an 8.6 percent increase for durable goods manufacturers, and an increase of 2.0 percent for nondurable goods manufacturers.

            (Yes, I know, for each of those “average” figures, if you add the category numbers together and divide by the number of categories, you don’t get the government’s figure. If anyone can explain that, please post a comment.)

            The point is that, when it comes to productivity (as measured by the government), manufacturing is doing better than other sectors.

            Does this mean anything? Can we say that lean has anything to do with the difference? I look forward to your comments.

           

Building Public Support for Lean

It’s always encouraging when lean principles are applied to the public sector to make government work more efficiently. In a small community, every aspect of government could be affected.

            In the U.S., that might be one town. But elsewhere in the world, it could be an entire nation.

            Jayanth Murthy of the Kaizen Institute has been working to achieve exactly that kind of implementation. At the recent AME conference, he spoke about his group’s efforts to banish muda (waste) from the entire country of Mauritius – an island nation off the coast of Africa with a population of 1.2 million.

            The Institute didn’t start out in Mauritius with the government as its client. The group had been working on lean implementations for textile companies in Mauritius, and that led to contact with the government.

            The government efforts, which began five years ago with full support from the president, have focused on throughput time – reducing how long it takes for a government department to provide service to citizens. Targeted areas have included at least 10 ministries, from the police department to the tax office to the prime minister’s office.

            There have been real gains, such as reducing the submission time for a passport application from 45 minutes to seven minutes. And word of the Mauritius initiative has prompted interest in other countries; Kenya has launched a similar program after a visit to Mauritius by a Kenyan official, and programs are also being established in Botswana and Dubai. (The Mauritius activities were the focus of an article in the AME magazine Target earlier this year.)

            However, what I find most interesting about what is happening in Mauritius are efforts to involve the general public and not just government employees.

            The improvement efforts were accompanied by an advertising campaign for “Muda-Free Mauritius,” and schoolchildren were encouraged to become “Muda Busters.” (The children were asked to explain the concepts to others, and collect signatures, which they could redeem for prizes.) The campaign is ongoing.

            Think of it as making your customers aware of your improvement efforts, and encouraging them to support those efforts. If successful, this kind of PR campaign could condition people to expect and demand efficient service, which can help sustain the drive for continuous improvement. Now there’s a way to achieve culture change.

            U.S. politicians always talk about the inefficiencies of government and how we need to improve. The issue is so old in this country, with so little progress having been made, that our population may be too jaded for a PR campaign (even in one local community) to have much impact.

            Nonetheless, I hope the efforts to apply lean to the public sector in this country continue. And with any luck, the successes achieved may build some public support.

            By the way, the Mauritius government that has been supporting the lean initiatives was thrown out of office in elections last year. The lean initiatives are still in operation, but their long-term status remains unclear.

 

The Grim Automotive Industry Outlook

Comments at the recent Center for Automotive Research conference on “Supplier Challenges, Investor Opportunities” included some optimism that things will get better – after they get worse first.

            The optimism, such as it was, focused on the idea of a burning platform in the automotive industry. “I think the will for survival will cause these companies at the bottom to make gigantic adjustments,” said John Casesa, managing partner of Casesa Strategic Advisors.

            But he and other speakers said there will continue to be a major shakeout of suppliers first.

            For example, Brad Coulter, director of Amherst Capital Partners, said that a third of the nation’s tool and die shops – 4,000 out of 12,000 – have closed since the year 2000 – and we still have overcapacity. Meanwhile, prices have fallen up to 30 percent in the last four years.

            Casesa commented that the problems facing Detroit are structural, not cyclical.

            “I think it IS that bad now,” he said. “This crisis is upon us right now. We are in the eye of the storm right now.”

            He added, “Business failures and liquidations may be required. Companies have to go away. That’s going to be very painful.”

            He also said, “The data say to me: the domestic companies will continue to lose share for the foreseeable future. And the Japanese and the Koreans will continue to win for the foreseeable future.”

            What will it take to turn things around? “Right now the main theme is shrinkage,” Casesa noted. “It’s an absolute necessity, but probably not sufficient. It’s not the solution to the problem.”

            Tom Stallkamp of Ripplewood Holdings alluded to lean principles when he said “You have to get a culture where internally they know they have to generate cost reductions” that are greater than price cuts.

            However, he displayed some pessimism that suppliers understand that.

            “You can’t believe how unbelievably juvenile some of the business plans of suppliers are,” he said. “They’re all based on hope and prayer.”

            Stefano Aversa of AlixPartners commented that “cash is king” and “it’s wise to insist on a cash culture.” (Allow me to point out that lean companies typically have strong cash flow.)

            Aversa also singled out information technology as an area for improvement.

            “You are probably spending too much on IT,” he said. “We say that it’s time for lean IT. As a rule of thumb, virtually any company can cut IT spending by 20 percent and be better for it.”

            And perhaps the most telling comment on what is lacking in the industry came from Casesa, while he was discussing the need for automotive companies to go in new directions – consolidation or a different customer base, for example.

            “There has to be some vision of what the new business model is,” he said.

 

Lean Jobs – The War for Talent is Back

            If you’re looking for a job that requires lean skills, you’re in a good position right now – if you can document what you’ve accomplished.

            I say that after speaking with Adam Zak. Adam is a headhunter; specifically, he is managing director of Adams and Associates International, an executive search firm that specializes in filling lean positions.

            He says that for his firm, finding good people is a bit more difficult than it used to be, particularly in the middle to upper-middle levels of management.

            “The companies that are being successful, they are hanging on to those folks with every possible market-driven incentive that they can,” he told me. “They do not want to lose those people. This year we’ve seen more counteroffers than we’ve seen in the last five years.”

            He also commented, “This is the age of the empowered individual. Not a lot of companies are spending as much as they should, I think, on the training and development side. The people that are doing it on their own (obtaining training) have a lot to offer, and they are asking for a lot more than they did two years ago.

            “The war for talent is back, and I believe that it’s really being fought in the area of lean, operational excellence, continuous improvement.”

            Adam states that demand for people with supply chain expertise is particularly strong, but “not so much working with vendors. Customer demand has become a very large area, trying to understand, what are the customers doing, and what can we be doing to actually get closer to those customers. I am the supplier; what does my customer want? Am I doing the right kinds of lean things internally?”

            He adds, “I’d almost call it more of a marketing-driven lean. Companies are trying to draw a clearer and direct line to the customer organization. We’ve been talking a lot about product development for two to three years. This past year, we’ve really seen people come to us and say, ‘can you find people who know how to drive product development?’”

            There is also strong emphasis on distribution and warehousing. As an example, he notes, “we’re doing a search for a chief operating officer for a catalog outfit. They want to drive lean through this process, whereby you and I order golf shirts, and we want to have them personalized, and we want 10 for all the members of our golf team, each with a logo and a name. That’s a very complex distribution and production process. People are looking at that.”

            And “lean accounting is finally coming into its own,” Adam adds, noting that his company is involved in searches for CFOs and heads of accounting.

            Lean is also not just for manufacturing anymore. Demand for lean people in financial services is strong, Adam says, and “healthcare is coming into its own.”

            One challenge he faces is that “there are a lot of people who have only basic knowledge. They’ve gone to a seminar or conference or two, and read some books, and they’re marketing themselves as lean experts when they are not. It’s taking a little more time for us to figure out who’s really got the performance-based background.”

            If you are hiring, Adam advises you to look for people with a solid track record, who can demonstrate what they have actually done in implementing lean and who can, in some way, show what they can do for you.

            And if you’re job-hunting, he urges you to keep a weekly diary or log of your lean accomplishments.

            “I know that may be heresy, because we’re talking about team environments,” he says. “But you really have to be able to track the kinds of things you’ve tackled, what’s worked, what hasn’t. Track the metrics. Those will be team metrics, but they’ll show individual accomplishments as well. That’s what people are looking to see.”