Lean Resolutions: Respect for People

Last year at this time, I posted a list of lean resolutions designed to help increase the chance of success of your lean initiatives.

As I look back on those, it occurs to me that the majority of them focused on doing lean right from a conceptual or technical standpoint. Only a few touched on the very important lean concept of respect for people.

The holiday season tends to be a time when we try to pay a little more attention to treating others well. In keeping with that spirit, this year I offer a list of resolutions (in no particular order) on Lean Respect for People.

I will try to treat others with civility and courtesy.
I will listen to what others have to say.
I will give my subordinates real authority to solve problems.
When problems arise, I will consider first whether the cause is the process rather than the person.
In evaluating performance, I will focus on objective metrics rather than subjective opinions.
I will work to help others improve their skills.
I will try to learn from criticism without getting defensive.
I will try to address complaints without getting defensive.
I will spend more time listening than talking.
I will try to remember that it’s not about me.

If you can think of additional resolutions, add them below. Happy New Year!

Improving College Courses Through Lean

One of the more intriguing presentations I heard at the recent AME conference proposed applying lean principles to higher education. And I don’t mean using lean to improve the admissions process or other administrative procedures (though those could probably benefit from lean initiatives). I’m talking about using lean to actually improve the content of college courses.

The presentation came from Bob Emiliani, Ph.D., an associate professor in manufacturing and construction management at Central Connecticut State University in New Britain, CT.

Emiliani spent 15 years working in industry before switching to education. He first taught at the Hartford campus of Rensselaer, from 1999 until 2003, when he took his current position.
While at Rensselaer,
Emiliani launched an effort (involving other faculty members) to improve courses through kaizen events.
The key tool of the events was a self-assessment form filled out by professors. It asked “To what extent does my course exhibit the following characteristics?” That was followed by a long list of specific subjects. A few of them were:

Purpose and Learning Objectives. Purpose and learning objectives for each class and each assignment are documented and reviewed at beginning or end of each class. Customers understand course content and direction. P&L objectives reflect the content.
Comparative Analysis. Course contains comparisons to alternative management thinking and practices used in other countries and companies.
Organization and Sequence. Logical flow of material (ideas, concepts, tools) from one class to another and throughout the course.

On each item, the course was ranked from one to five, one being “not at all” and five being “always.”

This approach has its limitations, and Emiliani’s list of lessons learned includes the ideas that course content should be compared with that of other institutions, and that students and employers should be surveyed.

But there were improvements that resulted, from making a course syllabus shorter to better defining student expectations to increasing student feedback (and the response to it). Student response to changes so far has been positive.

Emiliani also classifies improvements according to lean tools and concepts. For example, improving organization of course content and sequence is 5S. Returning graded papers and projects in time for discussion in the next class is just-in-time. Creating a standard syllabus format and a simple one-page schedule is standard work. And recognizing that students’ time is valuable, establishing expectations more clearly and establishing clear grading criteria all represent respect for people.

What Emiliani did was on a small scale, and hasn’t gone beyond one location. I hope it goes much further.

The Market for Lean Jobs is Strong

Qualified people seeking lean management jobs are able to find more opportunities and higher salaries now than they did a year ago.

So says Adam Zak, managing director of Adam Zak Executive Search, an executive recruiting firm specializing in lean positions.

I spoke with Adam about a year ago and called him again recently to see how the lean job market has changed.

“Everybody is after lean specialists at all levels,” he says. “Prices are going up. For most positions, they are easily 10 to 15 percent higher for the same role in terms of total compensation.” Also on the positive side for job-seekers, employers are “not as taken aback by the price tag.”

In addition, Adam says, “it is not unusual to see people looking at multiple offers if they should decide to make a change.”

One reason for these changes, he suggests, is that nowadays, when speaking with top company executives about the value of lean, “you are no longer speaking Greek. They all get it. For so many years, people equated lean with a being a non-fat organization, cutting people or resources. People understand today that lean is about continuous improvement. It’s about growth and not just about cutting costs. It’s gratifying to see.”

However, he observes that “people are now asking for Lean Sigma experience” rather than just lean or six sigma experience. “Most people do recognize that lean is the system and sigma is one of the tools that gets you there. Particularly at the very senior level, you can’t get it done with lean alone. The last four or five very senior level searches we’ve done have been for people with experience in both.”

One complication in the lean job market, Adam notes, is fallout from declining housing prices and problems in sub-prime mortgages.

“It is creating lots of problems for companies as well as potential candidates,” he notes. “More and more people are simply not going to move. That is particularly true where the company is a consulting firm and its people travel a lot, or they have very broadly dispersed operations, and the lean and six sigma people have to travel a lot. They ask, ‘why do I have to relocate?’

“If the company feels they do need to relocate, they have got to have a strategy right up front on what they are going to do about the housing situation.” That may involve helping a new hire sell or buy a house, offering an allocation for maintaining two homes, or other incentives. “In our last four searches this year, there was a problem. Some use creative strategies. In some cases, they paid for temporary living, hoping next year or so the situation will abate.”

Adam sees more hiring of lean specialists in service industries, ranging from software development to office processing to airlines. And in many cases, he says, “it has nothing to do with lowering costs,” but is focused on simplifying and/or standardizing procedures, among other goals.

One interesting development, he adds, is that “all the large private equity firms that are doing huge buyouts now have some type of executive who at very senior levels is responsible for continuous improvement – for figuring out how to drive lean sigma throughout their portfolio companies. And a part of their due diligence is to have some continuous improvement people on the analysis team.”

Asked about advice for job-seekers, he comments, “I am still amazed by the number of resumes I get where a person actually has very strong lean or lean sigma skills, but the resume is written in a very old-fashioned way, simply detailing their experience.”

Instead, he says, the resume should focus on “what was the problem, what was the solution I applied, what were the results. Strong lean leaders need to recognize that their resumes need to be a reflection of what was done, what the results were and what they did afterward.”

Also, more companies “are beginning to apply lean principles to how they actually do recruiting,” and they are seeking to eliminate paperwork and shorten cycle time. One result is “an increase in the number of initial telephone interviews. Quite often that initial contact is an hour to two hours. Your personality doesn’t necessarily shine through (on a call). There is no body language to see, no eye contact. People need to figure out how to do that more effectively.”

Adam believes that, even if the economy worsens in 2008, demand for lean executives will remain strong.

“Continuous improvement has become such an important part of so many companies’ broader, long-term strategy,” he says. “When they need to improve, lean and sigma are a key part of that. It is not a temporary thing. My sense is that these positions are becoming much, much more important to companies. In the bad times, they deploy them into more critical areas, so they can help fix them.”

Lean + Sustainability = Good Business

You are going to be hearing a lot about applying a lean approach to environmental problems. That’s because national concern about the environment has never been greater, and approaching sustainability issues with lean thinking makes sense. It is an approach that works, as demonstrated by several presentations at the recent annual conference of the Association for Manufacturing Excellence.

The fact that the conference had an entire track on these issues, titled “Lean & Green,” shows how important these issues have become. I’ve written in previous postings that lean is green. Also, we recently published Green Manufacturing: Case Studies in Lean and Sustainability, a compilation of articles from AME’s Target magazine.

One excellent presentation at the conference came from Interface Americas, a LaGrange, Georgia, manufacturer of commercial carpet, tile and interior fabrics. Dave Gustashaw, vice president of engineering, described how respect for the environment has been made an integral part of the company’s ethics, That gives Interface a positive image. Gustashaw said, “I’m always amazed at the number of people who know Interface from both our ethics and our products – two excellent ways to introduce yourself in new markets.”

But what Interface does on sustainability is also good business. Gustashaw described how Interface is now taking methane gas produced by a local landfill and using it to generate power at its plant. This has several effects:
It reduces smog and the global warming potential for the community, and also decreases the extent to which the landfill pollutes the water table.
Revenue from sale of landfill “air waste” reduces the tax burden for residents or buys more services.

The city has a long-term revenue stream and Interface saves 30 percent on the cost of energy vs. the usual natural gas price.

That is just one example. Overall, Gustashaw said, Interface has achieved a broad range of benefits from its approach, including:

Cumulative Avoided Costs from Waste Elimination Activities
$336,000,000 (1995-2006)
Manufacturing Waste Sent to Landfills
70 percent reduction (1996-2006)
Energy from Renewable Sources
16 percent (2006)
Recycled and Bio-based Materials Used
20 percent (2006)
Green House Gas Emissions
60 percent reduction (1996-2006)
Water Intake
Broadloom – 62 percent reduction (1996-2006)
Modular – 80 percent reduction (1996-2006)
ReEntry Program – Carpet Diverted from Landfills
103,000,000 lbs (2006)

Regardless of what you believe about global warming or its causes, what Interface is doing makes sense. Let’s hope their approach is part of a growing trend.

Trade Agreements Are Not the Root of All Evil

Congress, under the influence of rich multinational corporations, is on a path to decimate U.S. manufacturing through horrendous trade agreements.

That is the view of Brian Sullivan, director of sales, marketing & communications for the Tooling, Manufacturing & Technologies Association, a Michigan-based non-profit organization. And if you think I may be exaggerating, overstating Sullivan’s position, then read his words in a recent posting on an Industry Week forum:

The morally shameful ‘I-don’t-care-about-you-because-I’ve-got-mine’ mentality exhibited by Congress and this Administration is a national disgrace. Our representatives and legislators, collectively, have been responsible for trade policy that has resulted in a cave-in of the manufacturing industry. Where are these people who were elected by us to look out for our interests? Where are these people who were supposed to be our legislative champions?

They’re in Washington, alright. But a lot of the time they’re not doing what they’re supposed to be doing on our behalf. Instead of being at the Capitol, you know what they’re doing? They’re sitting in the donut shop. But they’re not eating donuts. They’re feeding on complacency. Our complacency.We let the people who we’ve elected sit in the donut shop of big business cronyism and collusion.

We let them sit in the donut shop of the sweet deal. We let them sit in the donut shop of personal self-interest at our expense. And we continue and continue and continue to re-elect them. And we never call them on it.

Strong words. But putting the rhetoric aside, what is that Sullivan and the TMTA want?

Members of our association… wonder if things will change in time. They know that most of their woes emanate from disastrous trade laws that have been written in Washington DC…

We need fair trade reform and we need it now. We need to force our elected officials to re-do trade policies. From the ground up. And the first thing that should happen is that there should be a freeze on all new trade agreements, especially by this current Administration, until major pro-domestic producer and worker trade strategies are put in place. It’s awfully clear that we’re not going to get any help from this White House and that’s a real shame.

Congress must create a National Trade Commission. Congress must pass currency manipulation legislation. Congress must address the unfair advantage caused by the rebate of VAT taxes by passing a border equalization tax. Congress has to enact countervailing duty laws. Congress has to pass laws that standardize Rules of Origin. They have to pass laws that address infrastructure imbalances including regulatory standards and enforcement standards.

That’s a long list of issues, and I’m sure that on some and perhaps most of them, the TMTA makes legitimate points. Duty laws, currency manipulation and the like can all create significant problems for manufacturers.

But I cannot accept Sullivan’s claim that “most of their woes emanate from disastrous trade laws.” Globalization would be taking place with or without government help, as well as the sharply increased competition that accompanies globalization. And globalization is as much an opportunity as it is a challenge.

What all manufacturers need to do is develop a lean mindset and pursue a lean strategy in order to become as competitive as possible. That can be achieved, and is being achieved – and not just by big companies. Being competitive in today’s world is also a possibility for the small and mid-sized companies that the TMTA says it represents.

Problems in the laws governing international trade should be addressed. But they should not be used as an excuse for all the problems and challenges facing manufacturers.

The Patient Transporter: A Bandage Instead of Lean Healthcare

Have you ever heard of a patient transporter? That is a person who works in a hospital whose job is to move a patient from point A to point B. (I thought that is what an orderly does, but I guess my knowledge is out of date.)

A recent article in The New York Times profiles Fuat Sarieminli, a patient transporter working at Long Island College Hospital in Brooklyn. Written by Jan Hoffman, this well-written, gripping article makes it clear that the transporter and others like him, are critical to reducing patient waiting time.

The din builds, the stench ripens, and the backup balloons for X-rays, CT scans and hospital beds. But the patients keep trooping in by foot and by ambulance.

And now there are no stretchers for those new patients. The emergency department is careering toward diversion — that clumsily named, must-avoid status where incoming ambulances will be told to divert to other hospitals…

(The transporter) whips down remote hallways, alights on some empty stretchers huddled together and systematically races them back. With heavy steel bars, sturdy wheels and thick padding, each weighs several hundred pounds (and that is before piling on the patient and monitoring equipment).

“Fuat! Fuat!” hollers the X-ray technician, as Mr. Sarieminli speed-walks by. “Bring on those patients, baby, bring ’em on!”

“Fuat! Fuat!” hails a nurse. “Get this patient to CT scan!”

“Fuat! Fuat! This patient needs a hummer!” a nursing assistant calls out, using the hospital nickname for the sturdy new wide-body wheelchairs for larger patients.

Over the next 15 minutes, Mr. Sarieminli, rescuing stretchers and moving eight patients to the emergency room’s X-ray and CT scan departments, imperceptibly begins to break apart the logjam. Diversion averted.

Even so, it will be two and a half hours before beds upstairs become available so that Mr. Sarieminli can actually transport patients cleared for admission to their hospital rooms…

“Without Fuat, we can’t get the job done,” says Dr. Tucker Woods, vice chairman of the emergency department.

The article notes that at the hospital,

…some 35 patient transporters work under the command of the logistics department. From a central dispatch system, similar to that of a taxi company, transporters are sent to move patients to diagnostic appointments and operations. The dispatcher watches the progress of each job on a computer monitor: blips of red, yellow, green and purple signify “nursing delay,” “patient in bathroom” or that the transporter is taking too long…

Mr. Sarieminli, however, is not tracked by the computer. The emergency department is so busy and his job is so demanding — on a typical shift he will make about 50 trips from Point A to Point B — that the computer cannot keep up with him.

In fact, most transporters do not like working the emergency room. The work is not only faster-paced than elsewhere in the hospital, but “transporters feel disrespected here,” says Mr. Sarieminli, assaulted by the cacophony of so many on-the-spot bosses, commanding him to move someone right now.

I suspect that similar situations exist at many other hospitals.

The important question is: Does anyone at these hospitals recognize that there are systemic problems here? That maybe they need more than a system that tracks transporters? That they should be looking at hospital layout, flow of patients from the emergency room to other points, and where stretchers and wheelchairs are stored, among other items? In other words, that they should be applying lean principles to this situation?

Some hospitals are. I wish more of them were.

The Wii Shortage: Would Lean Have Helped?

Whenever a manufacturer says there is a shortage of their product because they didn’t anticipate the huge demand, I can’t help wondering: Would they be able to keep up if they were lean?

Lean can provide the flexibility to ramp up production quickly in case of sudden spurts in demand. So would you have a better chance of finding a new Wii game console if Nintendo were lean?

Consider the following from Wired:

The Nintendo console's broad appeal -- and a maxed-out supply chain that can't be ramped up to meet holiday demands -- is making it almost impossible to snag a Wii at normal retail outlets. With eBay scalpers selling them for hundreds of dollars over the console's $250 list price, it's easy to envision fistfights in store aisles as desperate shoppers compete for the few units on the shelves.

"I've never seen anything like this," says Michael Pachter, a videogame industry analyst with Wedbush Morgan Securities, about the overwhelming demand for Wiis. "Nintendo could not have expected this level of popularity."

So, why doesn't Nintendo just make more and cash in?

It's not that the company isn't trying. It's bumped up production from about 1 million to 1.8 million a month, says Nintendo Senior Vice President George Harrison, with roughly a third of them earmarked for North America.

Part of the problem may be not just the ability to ramp up production quickly, but to decide to ramp up production quickly.

The shortage stems from this unprecedented demand, and from the fact that Nintendo had to make its final production decisions for the holidays early this year, Harrison says. The company planned on being able to stockpile Wiis through the summer, when demand for videogames typically slackens.

But Wii, Nintendo has since found out, isn't like any other videogame system. Unceasing demand throughout the year has thrown the game industry veterans for a loop, disrupting what had been a "very seasonal business."…

Ultimately, Wii production numbers -- and the United States' allocation of consoles -- are determined by Nintendo's home office in Kyoto, Japan. Harrison says the company will continue producing 1.8 million Wiis every month until demand subsides.

That should happen next spring. But with many high-profile game releases coming after Christmas, like Super Smash Bros. Brawl and Mario Kart, Wiis could be hard to find well into 2008.

To be fair, a lean strategy doesn’t guarantee that you will accurately predict demand for a new product. So even if Nintendo were lean, there might still be a shortage.

But as far as I know, Nintendo does not follow a lean strategy. I’ve been unable to find any evidence suggesting that they do. Perhaps if they had, the shortage wouldn’t be as severe.

We're back!

After an absence of a few weeks due to our transition to new ownership, I'm pleased to say the Lean Insider blog is back in action. I'll be posting regularly again, bringing you news, research and trends of all things lean. I look forward to your comments and ideas. Feel free to email me with any thoughts or suggestions.

One note: While all previous posts and comments are still here, in switching to a new platform we were unable to preserve user registrations. Those of you who wish to comment or simply register will need to create a new registration. I apologize for any inconvenience.

Study: Planning is Key for Successful Lean Implementations

For a successful lean implementation, focus intently on planning, communication and training before beginning implementation.

            That appears to be the conclusion of a recent study of U.K. manufacturing companies, conducted as part of a Ph.D. research program.

            All of the companies involved in the study were at various stages of lean implementations, and all of them were dissatisfied with the results of those implementations.

            The researchers conducted what are described as organizational culture assessments. From these assessments, they identified three problem areas:

 

• Communication: “Employees saw the type and level of communications as being inadequate in engaging them with Lean, often inconsistent and contradictory.”


• Training and Development of Employees: “Insufficient training and development of staff before and after the initial implementation of Lean made left employees not knowing what it was all about, and how to operate in the new ways of working. This extended to managers also.”


• Planning: “Overall, employees felt that there was a lack of coherent planning and direction, which led them to doubt the ability of the management to manage, as well as to lead?the implementation of Lean.”

 

            This reinforces the idea that lean is not just a set of tools you start throwing at problems, but a broad, strategic approach to business that requires high-level planning and coordination, as well as extensive communication and training.

            I can’t help thinking of the home-repair television program “This Old House,” whose slogan is “measure twice, cut once.” Perhaps the equivalent slogan here would be “plan twice, implement once.”

 

Demand for $2,500 Car Drives Innovation

I previously wrote about the efforts of Tata Motors in India to build a car and sell it for only $2,500. The plan is intended to respond to huge customer demand in India for low-cost cars. It is achievable because Tata is embracing a lean manufacturing strategy.

In today’s edition of The New York Times, writer Heather Timmons says that what Tata is doing represents a “revolution” that “could change what most of the world drives.”

Toyota and Renault-Nissan are among several other companies also seeking to build low-cost vehicles in India, though they won’t all have sticker prices as low as $2,500. With one of the lowest average ages of any large nation, and a population that is not affluent, the demand for this type of vehicle is huge. So the foreign carmakers are eagerly jumping into the Indian market, joining a small number of local auto manufacturers.

And according to the Times, India is only the beginning:

If global manufacturers can figure out how to make small, cheap cars in India, they are expected to start exporting them to other fast-growing markets where the proportion of car ownership remains small — places like Southeast Asia, Africa and the Middle East.

By the way, since my first article, Tata has named its new vehicle; it is called, appropriately, the People’s Car.

Of course, the key to making these cars successfully is making sure your production methods are as good as they can be – in other words, lean.

Part of that involves tossing aside old ways of thinking. The article says that

…manufacturers and suppliers will need “exceptional creativity and inventiveness,” Wolf-Henning Scheider, president of Robert Bosch’s gasoline services division, said in a speech in June. “Slimmed down versions of existing components and systems are not sufficient.”

Daryl T. Rolley, general manager for international operations at Ariba, a sourcing and procurement company working closely with Tata, agreed. “There are so many legacy costs built into a design, and trying to engineer those out is difficult,” he said. “It’s better to start with a clean sheet of paper and engineer low costs in.”

There is also some interesting description of an existing plant in India operated by Maruti Suzuki, a joint venture between Maruti of India and Suzuki of Japan.

…inside Maruti’s gates, the company has created a self-sufficient, streamlined island: 4,700 Maruti employees work inside the gray buildings, as do at least as many employees of suppliers, whose warehouses and production plants ring Maruti’s main factories.

The site generates its own electricity and recycles its own water. Inside the main factory are all the materials the company needs for two hours of production at the current rate of one car built every 21 seconds. The nearby suppliers’ warehouses stock materials for hours more.

Maruti, which is still majority owned by Suzuki, has plans to increase its already highly automated process, with the goal of cutting its production time in half and trimming costs. Already, giant swiveling robots do much of the welding. Manpower is employed mostly to check for errors.

“We have made the entry for our competitors smoother,” Mr. Khattar of Maruti said.

I’m not clear on whether Maruti is actually involved in a lean approach or is simply focused on automation. I hope it is the former.

The article also notes there are concerns that rapid growth in the number of cars in India could contribute to the country’s pollution problems and increase the number of accident fatalities.

Now if lean concepts could be applied to address those problems, and not just manufacturing issues, that would truly be innovation.

Improving Patient Flow is Now a Trend

Along with other lean blogs and healthcare blogs, I’ve been posting a variety of items about how growing numbers of hospitals are applying lean principles to their operations. It’s nice to see this trend confirmed by an article in mainstream media.

A recent article by the Kansas City Star describes recent developments at hospitals in that region. One is Olathe Medical Center. The article, by Robert Cole, notes:

 

Olathe, and nearly every other major Kansas City hospital, continues to spend large sums to add new diagnostic clinics, critical-care equipment and services that include trauma and high-risk maternity.

But patient flow, from the parking garage to preadmission testing areas to oncology suites, is becoming a key aspect to expedite health-care delivery.

An Olathe spokesman, Mike Jenkins, is quoted as saying that

…patients are immediately triaged by a nurse when they arrive at Olathe’s emergency room. They’re taken to ER suites, and registration is completed at the bedside using wireless handheld computers.

“They’re not sitting and filling out paperwork,” Jenkins said. “Families feel much better knowing that the patient is already being treated.”

St. Joseph Medical Center in Kansas City is also mentioned.

 

St. Joseph recently completed a remodeling of its ER waiting room and registration area. The medical center tries to locate high-volume outpatient services convenient to front entrances, an increasing health-care trend.

 

In fact, St. Joseph is making a promise:

In June, St. Joseph began marketing 30-minute guaranteed emergency room service.

If a patient doesn’t see a doctor within 30 minutes of their check-in, they receive two free movie passes. But extreme emergencies take precedent, said Gordon Docking, CEO.

“If someone comes in with chest pain or stroke symptoms, they go right to the head of the line,” he said.

Personally, I find that to be a strange incentive. What do movie passes have to do with healthcare? If I’m so sick I find it necessary to travel to an emergency room, and I end up having to wait a long time to be treated, a couple of movie passes aren’t going to make me feel better, emotionally or physically. However, I’ll at least give St. Joseph credit for putting itself on the line (albeit in a strange way) by publicly promoting its commitment to better service.

 

But my main point is not about what Olathe or St. Joseph is doing. It is that what they are doing appears to be part of a trend.

 

Another example is a recent news release from Signature Hospital Corp., which owns and operates four hospitals in Texas, Arkansas and West Virginia. The company announced a quality and safety initiative, one focus of which is the application of lean principles. (Another focus is the implementation of a new computer system designed to link financial and clinical databases across the organization.)

 

I hope and believe the trend is real. Lives will be saved as a result, and some pain will be eliminated from the hospital experience.

 

What examples of the trend have you seen? Tell us by posting comments below.

Identifying a Truly Lean Company

A recent posting on LinkedIn Answers asks the rather intriguing question, How does one find a truly progressive company?

            The writer says

 

I am seeking a way to find a company that is truly interested in continuous improvement, team building, and personal growth. I have encountered companies that say they are committed, but in reality have no interest in anything other than maintaining the status quo. Are there tell-tale signs or questions than can be asked in an interview that would be indicators of those where the management is behind continuous improvement?

 

            So far, nine people have posted responses. While all of the responses are well-intentioned, and a few may even be helpful, none of them seems to address the question from a lean perspective.

            Rather than try to address this myself, I thought I would throw it out to all of you blog readers. How can you tell if a company is truly committed to a lean philosophy and strategy? Can you find out, or at least get some idea, from an interview? What else should you be looking at? What are the signs of a lean operation? I look forward to your comments.

 

Continuous Improvement of Air Safety

I was fascinated by a story this week about improvements in air safety. While I may be stretching things a bit, it seemed to me to be a good example of an attitude of continuous improvement in the airline industry.

The New York Times reported that fatal crashes of airplanes in the United States have declined 65 percent over the last 10 years.

            Part of the reason is technology, such as improvements in cockpit instruments that help planes steer clear of mountains when visibility is poor.

            However, the story also says

 

…part of the explanation certainly lies in the payoff from sustained efforts by American and many foreign airlines to identify and eliminate small problems that are common precursors to accidents.

One oft-cited example is a discovery in the last decade by US Airways (then US Air) that many of its planes approaching Charlotte Douglas International Airport in North Carolina were coming in “high and hot,” too fast and at a steep angle.

As a result, airplanes were conducting “unstabilized approaches,” meaning pilots had to fiddle with flaps, throttle and other controls just before landing.

The US Airways discovery at Charlotte was something new because the airline did not demonstrate it after a crash or from pilot reports.

The airline instead tapped into the system that feeds information to one of the “black boxes,” the flight data recorder, and siphoned off a stream of data that went to a removable recording device. Then it analyzed flights by the hundreds and looked for unusual patterns, a technique now common with airlines.

Convinced, the FAA changed the approach procedure there, and the airport installed a system to guide planes at a proper angle.

 

…In other places, improvements have been as simple as better signs on taxiways to prevent planes from moving into the path of other aircraft.

 

“It’s not one thing. It’s a series of small things,” said John Cox, who was an Air Line Pilots Association safety representative for 20 years. Many of those small things were minor problems observed in everyday operations, he said, then counted, scrutinized and eliminated before they caused an accident.

 

I doubt that those involved in these improvement efforts were familiar with lean principles or terminology. However, what is important is that they were not simply being reactive. They were studying processes that, on the surface, seemed to be working reasonably well and looking for ways to improve them. And that is what continuous improvement is all about.

 

A Different Approach to Engineering Education

            Incorporating lean into the curriculum of engineering and business colleges is a good idea, but it involves more than teaching students lean principles. It should involve teaching them to think in a lean way – always striving for improvement, always seeking to focus on the customer and eliminate waste.

            That is why I was impressed by an article in the Sunday magazine of The New York Times this week about Franklin W. Olin College of Engineering in Needham, Massachusetts.

            The college officially opened in 2002, funded by $400 million from the F. W. Olin Foundation. Tuition is free, though students do pay about $12,000 per year for room and board. Non-engineering courses are offered through arrangements with other nearby colleges.

            However, the most distinctive feature of the college, according to the article by John Schwartz, is its approach to education:

 

Most engineering schools stress subjects like differential calculus and physics, and their graduates tend to end up narrowly focused and likely to fit the stereotype of a socially awkward clock-puncher… Olin is stressing creativity, teamwork and entrepreneurship — and, in no small part, courage…

 

Its method of instruction has more in common with a liberal arts college, where the focus is on learning how to learn, than with a standard engineering curriculum…

 

Alison Lee, a recent graduate now in South Korea on a Fulbright scholarship, said the process of solving seemingly insurmountable problems is an Olin rite of passage, like the project that was given to her and her fellow students: build a robot that can climb a wall. When it worked, she said, “it was the moment of realization that I could do anything.” The problem-based process is good preparation for the real world, said another student, Meenakshi Vembusubramanian. “You’re not going to go into a job and get a thermodynamics problem set,” she said. “You’re going to have a problem that’s badly defined.”

 

Benjamin Linder, an assistant professor of design and mechanical engineering… pushes his students not to just follow instructions. “Engineering,” he says, “has traditionally been focused on doing it right, but not on what’s the right thing to do.” That means designing products that are environmentally friendly and that respond to the needs of the people using them and not just to what the purchasing department wants. He urges his students to be more than team players. The goal, Linder said with utter earnestness, was to teach fledgling engineers “how to be bold.”

 

There was no mention of lean in the article, and I didn’t find any lean references on the college Web site. Nonetheless, Olin strikes me as encouraging a mind-set that is thoroughly consistent with lean thinking, and I hope lean is or becomes part of its curriculum.

Also, other college engineering programs are adding lean to their offerings, and I’m sure they are producing fine engineers who are independent thinkers. But Olin does seem to have more of a focus on this goal than most other schools.

The article did sound one cautionary note:

Richard K. Miller, the president of the school, admitted he is concerned that few of the class of 2006 are going on to graduate study in engineering or jobs in the field. Some graduates have told him that they are not happy in their first jobs and feel like cogs in a machine. “I’m hoping to get the message to our kids that a little bit of patience and endurance could pay off in the end,” he said. Still, “this is one of the things that keeps me up now.”

In some companies, he says, the freethinking products of Olin might have trouble fitting in. “Does industry want people like that? I think that’s a very good question, but I think this goes beyond what industry wants,” he said. “This is the right thing to do — this is what industry needs. If the country had more people like this, we’d be in a much better situation.”

 

Lean and Forecasting: What Do You Need?

I was amused and a bit intrigued by a new report from a supply chain software and services company. The report from Supply Chain Consultants is entitled “Forecast Less and Get Better Results” and is written by authors Tom Wallace and Bob Stahl.

In a news release, Wallace comments,

 

In today’s era of lean manufacturing and sales & operations planning (S&OP), it has become more apparent that the approach of a highly detailed long-term forecast is not necessary. Instead, an aggregate planning tool that only uses detailed analysis for a short-term plan produces more valid results with better indicators of the future. Additionally, an aggregate approach in executive S&OP requires less work and enables a company to perform valid simulations quickly.

 

The news release claims the report

 

…challenges conventional forecasting and planning wisdom that states that companies need to project forecasts and plans far into the future at a detailed, highly granular level.

 

Is that conventional wisdom? It probably is among people who believe in forecasting. Personally, I don’t know, but I do know I have often heard the old adage that the forecast is always wrong.

More to the point, forecasting is something you rarely hear discussed among lean advocates. In a pull system, you produce based on customer orders, not forecasts.

Of course, you do need some type of high-level forecasting to plan purchasing, staffing and so on. But I wonder whether Wallace and Stahl are really saying anything that lean devotees haven’t known for some time.

What degree and level of forecasting does a lean operation need? That is the real question. If you have answers, please post them below.

Creating a Satisfying Workplace

Does a lean strategy make a company a good place to work? I would certainly think so, since a fundamental concept of lean is respect for people. And a column this week in The New York Times reinforced that idea.

            The column was written by Milton Moskowitz, who co-authored (with Robert Levering) the book “The Best Companies to Work for in America,” published in 1984. Since then, the two of them have developed an annual update of the list, published every January in Fortune magazine.

            In his column, published as a “Preoccupations” article in the Sunday edition of the Times, Moskowitz writes:

As a result of our surveys, people are always asking me what makes for a good workplace. Early on, Robert and I came up with this definition: A good workplace is one where management trusts the employees and where employees trust the management.

Of course, there’s more to it than that. We do evaluate companies on various attributes — communication, training, recognition and rewards, pay and benefits, fairness, camaraderie, celebrations. But our primary measuring rod is the employee response to the survey, including voluntary comments.

Employees enter yes-or-no responses as to whether they agree with statements like these: “I feel I get a fair share of the profits of this organization,” “I am proud to tell others I work here,” and “There is a minimum of politicking and backstabbing here.”

A not-so-surprising lesson is that it takes more than high pay and lavish benefits to make a work force happy. Employees tell us how important it is to work for a company whose culture embraces fairness, teamwork, education, fun and contributions to society. And they thrive on being engaged in the company’s mission.

            That certainly sounds like a description of lean culture. Which raises an interesting question: Why isn’t Toyota on the Fortune list?

            The list is compiled by the Great Place to Work Institute, a research and management consulting firm co-founded by Levering. I’ve read their eligibility guidelines, and – unless I am misinterpreting them – there is nothing that would exclude Toyota.

            To be considered, a company must first be nominated. Is it possible that no one has ever nominated Toyota? Possible, though it seems unlikely.

            Once a company is nominated, it must agree to take part in the review process, which includes sending surveys to at least 400 randomly selected employees and completing a Culture Audit questionnaire. Did Toyota receive a nomination and then decline to participate?

            Another possibility, but one I view as the most unlikely, is that Toyota was nominated and participated, but just didn’t make it on to the list.

            Does anyone have any information about this? (I have contacted both Toyota and the Great Place to Work Institute. The Institute won’t discuss companies not on the list. Toyota hasn’t responded yet.)

            By the way, the top 10 companies in the 2007 Fortune list are, in order:

• Google


• Genentech


• Wegman’s Food Markets


• Container Store


• Whole Foods Market


• Network Appliance


• S.C. Johnson & Son


• Boston Consulting Group


• Methodist Hospital System


• W.L. Gore & Associates

Consultant: Sourcing from China is a Mistake

At least one consulting firm actually understands that going abroad to reduce manufacturing costs is a bad idea.

            Lean advocates have long argued that the increased waste from overseas sourcing – in the form of additional transportation plus longer cycle time – makes no sense. Unfortunately, too many businesses and consultants believe – wrongly – that the lower production costs in China make up for any negatives.

            Kudos to Boston Consulting Group, which issued a report earlier this year entitled Surviving the China Rip Tide: How to Profit from the Supply Chain Bottleneck.

            BCG cites a variety of factors other than actual manufacturing that contribute to costs, including delays caused by bottlenecks at ports and the increased risk of stocking items that don’t sell because you had to purchase them too far in advance.

            The authors of the report – George Stalk, Jr., and Kevin Waddell – don’t say you should never outsource from China. Rather, they argue that if you do pursue that strategy, you should be focusing on your supply chain processes:

 

We believe strongly that a firm focus on reducing time and variability in the China-anchored supply chains serving North America and Europe can help companies dramatically reduce their costs, improve their margins and build competitive advantage. We believe that such performance improvements will dwarf the more conventional profit-improvement efforts now under way at most of the companies we are familiar with. We also believe that companies should be looking closer to home (North American companies to Mexico, Central America and South America and Western European companies to CEE), where the cost-of-labor penalty is more than compensated for by superior supply-chain performance that is significantly less variable and virtually unaffected by port and surface-capacity constraints.

 

In their rush to source from China, many companies are blindly walking into a strategic trap. The trap is thinking that sourcing from China will result in lower product costs, when in reality the supply chain dynamics will, in many cases, drive up overall costs and reduce profitability, thereby creating an opening for a competitor. The only hope for these companies is that all of their competitors will make the same mistake. But competitors that do not source from China – or that focus on supply chain speed – will be competing with a different set of economics. The first company to see and correct the strategic error of sourcing from China without an appropriate investment in supply chain dynamics to minimize costs will seal the fate of its competitors.

 

            Stalk and Waddell don’t actually use the word “lean” in their report. But they seem to understand.

 

            Incidentally, in a posting on the same topic, Kathleen Fasanella at the Fashion Incubator blog writes about the book Birnbaum’s Global Guide to Winning the Great Garment War. She comments:

 

His greatest lesson is that it's a wasted exercise to chase the lowest cost production considering the variables of quotas, the nation of origin politics and general conditions including infrastructure. If anything, I think this book is more likely to convince you to produce domestically than not.

Accenture Buys George Group: An Encouraging Acquisition

Earlier this year, I leveled some criticism at consulting firm Accenture for what I believed was a misguided article on their Web site about cost control. I suggested that people at the firm paid lip service to lean principles without really grasping their true essence.

            Now comes word that Accenture has acquired another consulting firm: George Group, a name that is pretty well known in lean and Six Sigma circles.

            I have no personal experience with George Group, and I am not trying to say anything good or bad about the quality of their work. However, I do know that what it calls Lean Six Sigma is one of the firm’s specialties, along with areas it labels Fast Innovation and Conquering Complexity. Founder Michael George has written several books, including one on Lean Six Sigma for Service (not published by Productivity Press).

            In a news release, Mark Foster, chief executive of Accenture’s management consulting and integrated markets group, said the acquisition “will significantly expand Accenture’s capabilities in process excellence and next-generation process re-engineering.”

            George Group employs 250 people, which is equal to about 0.16 percent of Accenture’s global workforce of 158,000. So I don’t know how much influence George Group will actually have on its new owner’s operations.

            But I hope Foster is right in suggesting there will be a real impact (even though I don’t care for his use of business jargon like “next-generation process re-engineering.”) Accenture is so large that its work has an impact on a sizable number of businesses. If this acquisition improves Accenture’s understanding of lean, and subsequently helps more of its clients become lean, then I hope this deal works out well for both parties.

 

What Should You Expect From a Lean Initiative?

The latest Industry Week survey of U.S. manufacturers causes me to raise this interesting question, particularly since lean has made significant gains in popularity.

            The article about the survey, written by David Blanchard, notes that

 

…nearly 70% (69.6%) of all plants have adopted lean manufacturing as an improvement methodology)... What's more, lean is more than twice as popular as the next closest improvement method, Total Quality Management (34.2%).

 

            Similarly, the article includes a table of “strategic practices,” with Continuous Improvement at the top of the list, cited by 76.9 percent of respondents. It is followed, in order, by Recycling/Reuse Program, Quality Certifications (e.g., ISO), Customer Satisfaction Surveys, Value Stream Mapping, Kaizen Events/Blitzes, Environmental Management, Benchmarking, and so on.

            (Environmental Management showed the biggest increase from last year, and the category of Recycling/Reuse Program was new this year.)

            However, Blanchard notes that

 

…just because something is popular doesn't necessarily mean it's working according to plan, and part of the reason is that manufacturers have a wide variety of expectations when it comes to lean. Most companies believe that lean's main benefits come from cutting costs, but that's a mistaken perception, observes James Womack, founder of the Lean Enterprise Institute. 'Lean management is not a quick solution for cost reduction,' he points out. 'It's a fundamentally different system than traditional management for organizing and managing employees, suppliers, customer relationships, product development, production and the overall enterprise.'

Be that as it may, cost reduction strategies are on the rise, with the number of companies focusing on 'low cost' up 1.9% from last year. The only other area seeing a bigger gain is 'high quality.' Conversely, product development strategies are somewhat on the wane, with focus on 'product variety' down 2.8%, 'customization' off 2.3% and 'innovation' down 0.3%.

            I’m sure Blanchard is correct when talks about a wide variety of expectations. So I ask, what can we, or should we, expect from lean?

            I don’t mean at the kaizen level. Most people understand that a specific improvement project will have a specific goal, such as reducing cycle time by X percent.

            I’m speaking more broadly. Should a CEO expect that adopting a lean strategy will reduce costs? Improve time to market? Increase capacity? All of the above, and more?

            All of the above is the easy answer, but it is too vague and general to satisfy a CEO. What is a more satisfying answer? And should the answer focus on quantity as well as quality, meaning the amount or percentage that time to market is typically reduced or capacity is typically increased?

            Or to put it another way, how do you make a case for lean to the CEO?

            I suspect many of you have thoughts on this subject. Post them below.

 

The Customer Experience: What You Need to Know

Every business says it is committed to meeting the needs of its customers. But most do a poor job of that because they are not in touch with what the customer experiences.

            That is the position of Chris Meyer, Ph.D., chairman of the Strategic Alignment Group, a consulting firm. I heard Meyer speak at the recent Customer Needs Discovery & Innovation Congress sponsored by the Management Roundtable.

            Meyer argues that there are many factors contributing to the customer experience, including the logical, the emotional and more. Customer satisfaction, he says, is equal to customer experience divided by customer expectations.

            One problem, he said, is that while many companies collect feedback from their customers, too few do anything meaningful with it. A survey conducted by his firm of European companies found the following list of declining numbers:

 

• 95% of enterprises collect feedback


• 50% alert staff of the findings


• 30% make decisions using this insight


• 10% deploy and improve


• 5% inform customers of the change

 

            Too often, there is a wide disparity between the company’s view of whether a compelling customer experience was discovered, and the customer’s view. This results, Meyer says, from confusion, arrogance, no accountable owner, an internal focus, no persistent data or metric, and other factors.

            He described several examples of companies discovering they were out of touch with customers.

            One was McDonald’s. They wanted to increase milkshake sales, so they developed some new, sweeter flavors they thought kids would like. Sales went down.

            Research into the problem revealed that a significant percentage of milkshakes were purchased not by kids, but by adults in the morning for breakfast. (Seems odd to me, but apparently a lot of people like something slightly sweet that is filling enough to last until lunch.) So they went back to the old flavors and re-tooled the marketing to target adults.

            Another was Gilead, a pharmaceutical company that began selling a new anti-viral AIDS medication, promoting its life-saving effects. Sales were good to new AIDS patients, but not to existing patients.

            Research revealed that existing patients were convinced that their current medications were saving their lives, and didn’t want to risk switching. Gilead re-tooled the marketing, promoting the fact that their new drug had fewer side effects.

            Marketing is not the only issue here. Having a strong understanding of customer value – a lean fundamental – strengthens product design, customer service and more.

            None of this is new, but Meyer was an engaging, down-to-earth speaker who helped remind those of us listening of fundamental realities we sometimes forget.

            Has your company ever found it was out of sync with its customers? Were you able to solve the problem? Tell us about it by posting your comments below.

 

Nine Authors at the Productivity Inc. Conference

While many of the authors whose books we publish often speak at conferences and workshops, a rare opportunity to hear a wide range of authors is taking place next month.

At the 12^th Annual Lean Management Conference sponsored by consulting firm Productivity Inc. Oct. 15-19 in Atlanta, nine of our authors will be leading presentations or workshops, all at this one event.

The authors are:

 

·        Clifford Fiore, author of Accelerated Product Development: Combining Lean and Six Sigma for Peak Performance

·        Chris Harris, co-author (with Rick Harris) of Developing a Lean Workforce: A Guide for Human Resources, Plant Managers, and Lean Coordinators

·        Ray Floyd, author of A Culture of Rapid Improvement: Creating and Sustaining an Engaged Workforce (to be published in February 2008)

·        Thomas Jackson, author of Hoshin Kanri for the Lean Enterprise: Developing Competitive Capabilities and Managing Profit

·        Beau Keyte and Drew Locher, co-authors of The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes

·        Ray Louis, author of Custom Kanban: Designing the System to Meet the Needs of Your Environment  as well as the soon-to-be-released Creating the Ultimate Lean Office: A Zero-Waste Environment with Process Automation

·        Brian Maskell, co-author (with Bruce Baggaley) of Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise

·        James Vatalaro, co-author (with Robert Taylor) of Implementing a Mixed Model Kanban System: The Lean Replenishment Technique for Pull Production

Several of these men have authored other books as well; I list just the most recent ones above.

Since the conference lasts an entire week, not all of the authors will necessarily be there on any given day. Also, some of the authors do not appear on the conference Web site because not all workshop speakers are listed online. Check with Productivity Inc. for details.

I can’t recall another event where this many authors of lean books were assembled at one time. If you can, I urge you to attend and take advantage of their collective brainpower.