Lean New Year’s Resolutions for a Recession

For the past two years, I have posted lists of Lean New Year’s Resolutions. The lists from 2006 and 2007 could apply to any situation. This year I decided to create a list particularly relevant to our current economic problems.

So here are my resolutions, in no particular order:

I will regard my knowledgeable, experienced employees as assets and will not lay them off when business is slow.
I will use the downturn as an opportunity to improve operations.
I will attempt to cut costs through process improvement rather than outsourcing or offshoring.
I will use the downturn as an opportunity to provide additional training to employees.
I will solicit ideas from my employees as to how we can cope with the recession.
I will seek to maintain good relations with my suppliers despite my ordering less from them.
I will communicate with my customers to find out how I can best provide them with value during difficult times.
I will use the downturn as an opportunity to expand my knowledge of lean by attending a conference.
I will use the downturn as an opportunity to expand my employees’ knowledge of lean by having them attend a conference.
(Shameless plug:) I will use the downturn to expand my knowledge of lean by reading some new lean books (and sharing them with my employees).

Add your resolutions below. Happy New Year!


For the Lean Advocate on Your List: Lean Furniture

For those who believe lean should apply to everything:

Designer Daniel Harper has created what he calls I-lean furniture, promoted as being ideal for “Bars, Lounges, coffee houses, for teachers, rest areas, bus stops, loft style spaces, impromptu gatherings.”

Only $1200.

Yes, I know this embodies a different definition of lean. But I couldn't resist.

I'll be on vacation for the next week. Happy Holidays!


Charities Need to Learn About Lean

Like a lot of people, I go through an end-of-year ritual of sending donations to a variety of charities I support. The end of the year serves as a deadline that encourages me to make the donations so I can deduct them when I file my income taxes.

In going through that ritual this year, I came to the conclusion that there’s a lot of waste in how charities solicit donations – and at least some of that waste could be eliminated by taking a lean approach.

The waste is primarily in the form of the junk mail the charities send me. Once I’ve donated to a charity, over the next year I might receive more than a dozen letters (some multi-page), brochures and “gifts” to get me to donate again. And that doesn’t include the emails.

(Also, some of those “gifts” are really stuck in old ways of thinking. Several different charities send me personalized return address labels. Who writes letters anymore?)

Now I know that charities have extensive experience with direct mail. I’m sure they closely track the return they get on their mailing campaigns, and I’m sure they wouldn’t engage in them if they didn’t consider them worthwhile.

Yet I believe they could sharply reduce their expenses – and stop annoying me – if they engaged in a little lean thinking.

What, exactly? Lean is all about creating value for the customer – and the customer defines value.

They are sending me sales pitches for a cause that they hope I will conclude has value. They already know I consider it valuable because I donated previously. I would view their organization as having even more value if they only sent me one or two reminders asking me to donate again in the following year, rather than a dozen.

But they don’t know that. Why not? Because they only solicit my money, and not my feedback (at least not about their marketing techniques). They might give me the option of getting off their mailing list, but not of receiving fewer letters.

Value is defined by the customer. To know how the customer defines it, you have to listen to the customer.

I wish more charities understood that.

P.S. When it comes to actually making a donation, about half the charities I dealt with gave me the option of donating online – which I view as very convenient. With the others, I have to mail a check or a credit card number back to them (and pay the postage myself). That is inconvenient for me, and it takes more time for the charity to actually get their money. More waste that could be eliminated.


The Tennis Ball Exercise

I wrote previously about a kaizen event I attended recently at Food Sciences Corp. in Mt. Laurel, New Jersey. I wanted to describe a particular exercise we experienced at the event that, in the space of a few minutes, helped teach some key improvement principles.

I’m sure this is not a new technique, but it was one I had never experienced before.

Sal Runfola, director of operations at Food Sciences and the person directing our event, had six members of our group stand around a conference room. He gave a tennis ball to one man, who was instructed to toss it to someone else. The second person had to toss it again, but only to someone who hadn’t touched it before. This went on until the sixth person had the ball.

This created a “process” for tossing the tennis ball. It had to be touched by each person, in the order established by the first set of tosses, and that order could not be changed.

Next, Sal gave three tennis balls to the first man and told him to send each one through the process, one after another. This effort was timed; it took 10 seconds.

Sal then ordered the group to significantly reduce the time it took for three balls to go through the process.

The men rearranged themselves, so that instead of standing on opposite sides of the room, they were in a line, in process order. With this formation, processing three balls took four seconds.

Sal’s response: Not good enough.

Ultimately, the men formed a tight circle, their hands in the center, so that the first man could simply drop the balls, having them roll down the hands, touching each man in order. Cycle time was reduced to one second.

The point Sal made afterward was that he had told the group to improve the process, but had not said anything about how to improve it. The men had to come up with that themselves.

And that’s what lean, in at least one respect, is all about – getting those directly involved with a process to creatively come up with improvement ideas while managers get out of the way.

Want your people to learn lean? Go buy some tennis balls.


The Irony and Sadness of Ford and Boeing

I find several kinds of irony in the fact that, of the Big Three American automakers, Ford is the only one that looks like it may survive the current economic crisis without a huge government bailout.

(And before anyone launches an argument with me, yes, Ford is seeking some of the $25 billion the government is providing for technology improvements, which does smell somewhat like a bailout. But unlike GM and Chrysler, Ford is not telling the government it also needs additional funds simply to survive. Ford did ask for a line of credit, which comes close to a bailout. However, GM and Chrysler are a lot closer.)

Lean manufacturing is almost synonymous with the Toyota Production System. But Toyota did not originate all of the principles that make up lean. Some of them go back to the original master of mass production, Henry Ford. (Read Henry Ford’s Lean Vision: Enduring Principles from the First Ford Motor Plant by William A. Levinson.)

Ford lost its way and for many years engaged in the same kind of non-lean manufacturing as GM and Chrysler. And like those two companies, Ford lost market share and fell on tough times.

Ford’s efforts to solve its problems have achieved more than those of the other Detroit automakers. And those efforts have come under the leadership of Alan Mulally, former CEO of Boeing – a company known for embracing a lean strategy. I see that as ironic, though it may be just a vindication of lean principles.

However, there is certainly irony in the fact that Mullaly is helping turn Ford around at a time when Boeing is facing problems. And other than the world economic crisis, Boeing’s biggest problem is construction of the delay-plagued 787 Dreamliner – which was conceived when Mulally was CEO.

I don’t know whether Mulally was involved in the decision to outsource a great deal of the design and construction of key components for the Dreamliner. That decision is the source of many of the current problems, largely through poor communication with, and oversight of, suppliers. One would think he had to have given at least some support to that strategy.

Sometimes we learn from our mistakes, sometimes we don’t. It appears that the lean education of the U.S. automotive and aerospace industries is, at best, incomplete.


Which of Your Processes are Most Important?

Determining where to focus your improvement efforts can be a challenge, but an important one. That idea was reinforced for me recently by reading about a keynote address given at a healthcare conference.

The address was by Don Berwick, CEO of the Institute for Healthcare Improvement, speaking at IHI’s annual National Forum this week in Nashville. (Productivity Press was at the conference. Check out our books on healthcare management.)

Berwick’s address was described in one of my favorite blogs, Life as a Healthcare CIO, written by Dr. John Halamka, CIO of the CareGroup Health System, and also CIO and Dean for Technology at Harvard Medical School. He writes:

Don hypothesized that 80% of healthcare can be reduced to approximately 100 processes. If we focus on perfecting these 100 processes, we're likely to make a major impact. IHI will soon implement an Improvement Map as a next step to the 5 million lives campaign.

That’s an intriguing idea. If true, it probably applies to nearly all organizations and industries, not just healthcare.

Do you agree? Can your business be reduced to 100 (or so) processes? How do you prioritize which processes to perfect?


Why You Should Speed Up Processes When Business is Slow

This guest posting is written by James Jelinek and Fletcher Birmingham, co-authors of Quick Changeover Simplified: The Manager’s Guide to Improving Profits with SMED.

Question: As a plant manager, why should I have my people work on reducing set-up and changeover time now? The market is so slow, we don’t have enough orders to keep the machines running.

Answer: You are not alone. As recession deepens, you will have plenty of company.

Every indication calls for a severe recession of 12-18 months, but it will pass.

If your plant truly is so slow that you don’t have enough orders to keep the machines running, perhaps workforce reductions are needed. However, this short term “fix” can have very long term negative impact as a solid experienced workforce is a treasure to be protected. I recommend you consider the following before you act.

While recessions are hard, at times they can be a great opportunity to take actions to improve your operation.

Eliminate any “D” players – many other employees may be wondering “what’s taking so long?” Sometimes we (myself included) keep people too long when we have high growth periods simply to keep up with the work load. Now may be a time to trim dead weight. Better yet, other “A” players may come on the market. This may be a good time to trade up.

An acquaintance of mine – Red Scott of Vistage – once said “a little success can lead to a lot of overhead.” I bring this up to remind all of us that improvements can be found in the office as well as the shop floor.

This may be a terrific time to really talk to your people about what it will take to not only survive this recession, but to emerge stronger. They will understand this message. They read the paper and understand the threat. My experience tells me they will appreciate the challenge and the leadership. They will rise to the occasion. The book Good to Great states the “Stockdale paradox” (Admiral James Stockdale): “you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties to confront the most brutal facts of your current reality. Whatever they might be.”

Specifically, with respect to set up reduction and changeover time I offer the following thoughts.

Reducing set up and changeover time is a necessity in good times and even more necessary in bad times. The firm having the most efficient cost structure has the advantage. If your industry is truly distressed, this factor could determine who is the “last man standing.” I would also advise that now may be a good time to focus on your per piece run times as well. Recently, we have done this on certain key parts we run. We were able to work with our tooling vendors to find ways to reduce run times 30-50 percent. While set up was not affected, as we only changed the perishables, I ask you to focus on both set up and run.

Remember that reducing set up and changeover not only reduces cost, but enhances flow-through. This factor can allow you to offer shorter deliveries. This offer should be well-received by customers who want to keep inventories low. I see a potential competitive edge. This may be a good time to “take market share.”

Finally, I would highly recommend that you do something now. Do not hesitate. This recession is an opportunity to take actions that will enable your firm to emerge “leaner, meaner, and stronger on the other side.” Even if things are so dire that the excess capacity cannot be used to serve other customers, action can be taken to cut expenses and conserve cash.


Have Toyota’s Managers Lost Respect for Their Workers?

A key principle of lean is respect for people, and I generally regard Toyota as better than most of its competitors in following that principle. Therefore, I’m a bit puzzled by recent reports of steps Toyota is taking to address the current slowdown in business.

The actions being taken are not confusing on their face. Toyota announced it would reduce production in Japan and reduce management bonuses.

Toyota didn’t say how much it would save by cutting bonuses. The amount is probably not huge, and I suspect that action is somewhat symbolic. Nothing wrong with that. Symbols can be important. With this one, Toyota is saying managers, not just line workers, must sacrifice.

What troubles me is that Toyota said its 10-percent cut of bonuses for 8,700 managers in Japan excludes top executives.

Why exclude top executives? None of the news stories I’ve seen about the announcement explains this.

The Toyota announcement isn’t receiving major coverage. It is understandably overshadowed by the spectacle of the CEOs of the Detroit automakers appearing in Washington again to beg for bailout money. (Don’t get me started.)

But on the surface, it certainly appears that Toyota is giving its top managers special and preferential treatment. And that appears disrespectful to the thousands of lower-level employees.

Perhaps there are good reasons for the exclusion. If so, I’d like to hear them.


What Went Wrong With Boeing’s Dreamliner

One of the features of a lean supply chain is the close working relationship between different companies in the chain – a relationship that should be a trusting partnership.

In this kind of relationship, the partners provide each other with honest and timely communication. They understand each others’ capabilities, they set reasonable if ambitious goals, and they help each other where appropriate.

This relationship also requires a manufacturer to oversee its suppliers with utter diligence and constant awareness of what is happening.

According to its chief competitor, Boeing – a company with enough experience in lean initiatives to know better – apparently failed to establish these kinds of relationships with its supply chain partners on the problem-plagued Dreamliner program.

In an exclusive report on his blog, FlightBlogger, Jon Ostrower describes a competitive intelligence report prepared by Airbus on Boeing’s Dreamliner program. (Kudos to Jon for an excellent piece of reporting.)

Ostrower notes that the Airbus report contains copies of slides labeled BOEING PROPRIETARY, “raising questions about the methods and sources the European consortium utilizes to collect its data,” he comments. That is a serious issue, but one I won’t be discussing here.

While there have been many reports of Dreamliner’s problems and delays, the Airbus analysis – and Ostrower’s reporting of it – provide more detail and bring into sharp focus some of the things that went wrong. Ostrower writes:

Airbus believes Boeing's early production issues fundamentally originated in a lack of oversight on both design and assembly integration for the high level of outsourcing.

All of this was further exacerbated, according to Airbus, by "low-wage, trained-on-the-job workers that had no previous aerospace experience" working at supplier partners. Airbus believes "inadequate supplier capability in design," contributed further, citing as an example that "Vought had no engineering department when selected" by Boeing.

Combined with an "insufficient supply of frame, clips brackets and floor beams" the result was a "loss of configuration" control stemming from production records on "deferred work that were found to be incomplete or lost in transfer." In addition, parts that did arrive complete to final assembly were "found to be completed incorrectly" requiring additional rework in Everett.

In addition, Airbus cites a quality assurance cycle time that was not in line with the production rate demand, as well as a "lack of qualified non-destructive inspection/quality assurance personnel (NDI/QA) and equipment at Tier-2 and -3 suppliers."

Some bloggers and analysts raised questions from the outset about Boeing’s decision to outsource so much of the work on the Dreamliner, often to companies located far away.

This may be oversimplifying, but it appears that Boeing simply lost control of the Dreamliner production – or perhaps never had it in the first place.

It’s a sad story. We can only hope it teaches lessons – not just to Boeing, but to other companies as well – for the future.


The Missing Solution for Healthcare Waste

Remember the famous statement by an advertising executive who said he knew half of his advertising was wasted, but he didn’t know which half?

That seems to be the state of healthcare in the U.S. today. Everybody agrees there is a lot of waste. But no one seems to know what to do.

Actually, that’s my assessment. The people in healthcare think they know what to do. But they just don’t get it.

I come to that conclusion after reading a recent article in The Washington Post. The article, by Ceci Connolly, quotes a variety of top healthcare executives as agreeing about the vast extent of waste in healthcare.

The article also says they agree about the solution.

Yet among physicians, insurers, academics and corporate executives from across the ideological spectrum, there is remarkably broad consensus on what ought to be done.

A high-performance 21st-century health system, they say, must revolve around the central goal of paying for results. That will entail managing chronic illnesses better, adopting electronic medical records, coordinating care, researching what treatments work best, realigning financial incentives to reward success, encouraging prevention strategies and, most daunting but perhaps most important, saying no to expensive, unproven therapies.

Those are not bad ideas, but they really don’t get to the nitty gritty of solving the problem. For example, I agree with the idea of realigning financial incentives to reward success. But once a hospital sees that eliminating waste is in its financial best interest, then what? How does it eliminate the waste?

What is missing from the list in the article is a focus on process improvement – aka lean. Healthcare leaders need to understand how to identify waste, how to eliminate it and how to measure improvement.

To be fair, one of the people quoted in the article is Gary Kaplan, chairman of Virginia Mason Medical Center in Seattle. Virginia Mason is one of the few institutions that really is making progress by applying Toyota principles. For example, the article includes a description of how the hospital saved money by focusing on physical therapy for people with back problems, and not requiring them to have MRIs, because they realized there was no evidence the MRIs did much good.

But there are far too few institutions making these kinds of efforts. Here’s hoping that changes in the future.


A Lean Initiative Can Be a Real Eye-Opener

I firmly believe that the most important benefit of any lean initiative is not the improvements that may be achieved in cycle time or inventory or cost, but in how it changes the way people think.

That point – and I’m certainly not the first one to make it – was reinforced for me recently when I took part in a kaizen event. Called “The Machine Whisperer” (love that name), it was sponsored by the Association for Manufacturing Excellence and hosted by Food Sciences Corp. in Farmingdale, NJ.

Food Sciences processes and packages dried food products, primarily for weight-loss. The two day event featured a half-day of training, then a day and a half of actual work, as those of us involved attempted to improve the performance of a large, complex bagging machine. (There were nine of us in the group, not counting the folks from Food Sciences – seven from manufacturers, myself, and Pat Panchak, editor-at-large of AME’s Target magazine.)

Food Sciences had already been through some TPM training and several previous kaizen events. They had achieved some impressive improvements in performance.

It’s all about breaking away from old ways of doing things, looking at operations with “new eyes,” as some members of our group put it, and thinking of them in new ways.

The best example I can think of occurred not during our event, but earlier in the Food Sciences lean journey. Sal Runfola, director of operations and the person guiding us, described how the company began tracking machine stoppages – something that had never been done before. The data gathered revealed that during a particular four-hour period, one machine stopped – briefly – 38 times. Now there is information that will focus your mind! The operator was so used to dealing with stoppages, he had no idea they occurred that often. And neither did anyone else.

However, what was more important than the actual data was that Food Sciences came to see the value of collecting that data. And that type of recognition is what lean improvement is all about.

How has lean helped you to think differently? How has your company benefited? Share your experiences below.


The Impact of Lean on Green Numbers

Economies of scale and lean are two separate concepts that I have always thought sometimes seem to be at odds with each other.

Lean focuses on one-piece flow and on making only the quantities that your customers need. By using lean approaches to improve your processes, you should be able to reduce their cost, making it not only feasible but profitable to produce small quantities.

On the other hand, the basic definition of economies of scale is that the marginal cost of production decreases as your volume increases. The more you produce, the less each unit costs.

In any operation, there probably is some minimum volume you need to produce to be profitable. And your marginal cost may go down as you produce more – provided you can sell what you manufacture.

I am pondering these issues because of a comment I heard at a recent high-level Energy Conference hosted by Forbes magazine. The comment occurred during a panel discussing electricity, and it came from Charles Gay, Ph.D., vice president and general manager of the solar business group of Applied Materials.

Gay’s group manufactures solar panels and related products. He said that the cost of electricity produced by solar devices would be competitive today – without any improvement in existing solar technology – as soon as the volume of production increases. “We’re taking manufacturing economies of scale and applying them in the solar sector,” he said.

You may be tempted to ask, so what? Sure, the price would be competitive if they sold more. And if pigs had wings, they’d be pigeons.

Still, I thought his statement provided an interesting insight into the challenges of going green. The day I spent at the conference brought home the fact that, from a business standpoint, going green is all about crunching numbers. What is the cost per kilowatt of electricity from solar vs. wind vs. nuclear power? How do you calculate the ROI on a green initiative? What is the payback period? What will happen to the cost of oil in the future?

You could say that all of business is about crunching numbers. The difference here is that green issues involve crunching numbers in ways that most people haven’t experienced before, and that also involve a lot of uncertainty as to what many of those numbers are or will be.

And for me, this reinforces even more strongly the relationship between lean and green, which I’ve written about before. A lean approach can remove waste from green approaches (which are themselves about removing waste), and can therefore move up the day (or lower the minimum production point) where those initiatives become profitable.

That is good for both business and the environment.


Not All Customers Define Value the Same Way

You run a U.S. company, and you have worked to make your processes lean. You are doing a good job of creating value for your customers.

Now you set up additional operations in another country with the exact same lean processes. Will they work just as well?

Not necessarily.

Why not? Because value is defined by the customer, and when you start serving a new market or a new set of customers, the definition of value may be different.

That’s a valuable lesson, and one that clearly comes across in a recent article in Forbes. The article – co-authored by three people, the most well-known of whom is writer and Harvard Business School Professor Clayton M. Christensen – is titled “Innovation vs. Poverty.” Its main point is that smart companies can create wealth in emerging markets – if they focus on understanding the needs of customers in those markets and create new solutions for those needs rather than try to apply solutions from elsewhere.

One example the authors describe (of a company making mistakes) is Citibank, which has two branches in Zambia emphasizing corporate banking services.

It has reasoned that corporate customers do not need dozens of branches, and therefore it can save on branch operating expenses. The bank also realizes that several multinational customers value one particular job that Citibank helps to get done: simplify financial systems by keeping funds in one global bank, no matter what countries the customer operates in.

Yet there are many functions offered by Citibank, which, while valued by corporate customers elsewhere, have less relevance to Zambians' job requirements. Zambian companies often do not value long-term investment and lending services, and if they do seek loans, they often go abroad to avoid local interest rates that can exceed 20%.

Many Zambian businesses transact in cash, so they benefit little from Citibank's sophisticated reporting systems. Cash transactions could be handled through local Citibank branches, but Citi's emphasis on the corporate market--and its conclusion from developed countries that branches are of limited value--severely limits this offering.

In contrast, Zambia's Finance Bank has grown rapidly in recent years with an entirely different business model. The firm has 33 branches in Zambia, drawing long lines of customers depositing or withdrawing as little as $5 at a time. The bank recognizes that its customers often rely on unreliable public transportation and that it can win their business by being close to them. It allows wholesalers of consumer goods such as beer or soda to pay their suppliers through its branches, rather than having to transact large sums in cash with a delivery-truck driver in a busy public market. This service gains the bank a foothold at some of Zambia's largest corporate customers.

I’m an advocate primarily of lean, but from a communications perspective, I give a lot of credit to the developers of Six Sigma for coming up with the phrase Voice of the Customer. You have to hear it clearly, no matter what improvement methodology you pursue.

Has your company ever succeeded (or failed) to properly serve a new set of customers? Share your experience below.


Hospitals Should Pursue Simple Solutions to Prevent Medical Errors

I have no problem with technology, but too often organizations look for a high-tech solution to a problem that can be addressed with something much simpler.

Therefore, it was refreshing to read about a recent study that suggests an easy way to reduce medical errors: color-coding medication bottles and syringes.

The study, described by The Washington Post, was conducted by anesthesiologists at Penn State Hershey, and was to be presented at a meeting this month of the American Society of Anesthesiologists.

Volunteer anesthesiologists, residents and nurses drew medications with different colored labels at an ever-increasing speed to mimic an emergency situation. When the color of the label on the syringe matched the color of the label on the medication bottle, fewer near-mistakes occurred compared to when the colors didn't match, though the number of actual mistakes was too low to make a comparison. When peel-off labels were taken off the bottle and placed on the syringe to be used, errors were reduced and fewer commands were skipped.

What I particularly like about this is not only that mistakes are reduced, but that those involved see the value in going for the simplest solution.

"Many 'high-tech' solutions have been suggested, including use of bar codes, radiofrequency identification for medications, and computerized medication administration processes," researcher Dr. Elizabeth H. Sinz, of the department of anesthesiology at Penn State Hershey, said in a news release issued by the society. "But besides their high costs, all of these methods have flaws that may produce as many errors as they eliminate. Furthermore, these solutions are often impractical for fast-paced situations in operating rooms or during emergencies."

Visual controls are a basic and extremely effective lean tool. I hope that more people will see their value and not be blinded by the glitter of technology.


Data Centers Waste Lots of Electricity

As a lean devotee, I can’t help but think of what lean can do whenever I hear about waste. And I heard some striking facts about waste recently while attending an energy conference held in New York City by Forbes magazine.

One of the panels at this high-level conference focused on information technology, and most of the discussion focused on how the number of huge data centers is growing rapidly. And those data centers use vast amounts of electricity – inefficiently.

Peter Gross, CEO of EYP Mission Critical Facilities (a division of HP), noted that energy consumption by data centers in the U.S. is doubling every five years. He mentioned a report by Gartner Group that said by 2010, the typical corporation will spend more on energy for its data centers than it spends on servers.

But a lot of that energy is wasted. Gross noted that because of leakage from transmission lines and some other factors, only about one-quarter of the energy coming into a data center actually goes to the servers. Astonishingly, 60 percent of the data centers around the world use more than 150 percent of the power needed by the servers, Gross said.

To make matters worse, the servers are underutilized. Rich Lechner, VP of Energy Efficient Technologies and Services for IBM, said with many servers, only about six percent of capacity is utilized. Gross said this was partly because of redundancies that became part of server design in the 80s and 90s, as a means of improving reliability.

Where does lean come in? I believe that most of the solutions to this problem will come from technology, which is not by itself lean. However, I am also certain that lean tools can help identify the solutions. It might be possible to use some load leveling approaches to improve utilization of servers. And perhaps some mapping could identify where the greatest amounts of electricity are being lost.

Have you ever tried to address these problems? Have lean tools been of any help? Please share your experiences below.


The Best Lean Books in a Recession

A lean strategy is valid for both good times and bad, and should not be viewed only as a way to cope with a downturn. But at the same time, I recognize the current recession may give a new sense of urgency to managers wanting to improve processes. You may be looking for materials to help you do that.

Which book is right for you depends, of course, on what you want to accomplish. So I conferred with my colleagues here at Productivity Press to assemble a list of timely books, at least some of which you may find useful.

Maura May, our publisher, offers several suggestions. One is Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise by Brian Maskell and Bruce Baggaley. This book will help you focus on cash flow, on the financial implications of freeing up capacity, and so on.

A downturn can be a good time to get back to fundamentals, so Maura also suggests the classic Toyota Production System: Beyond Large-Scale Production by Taiichi Ohno. And since a recession may also be a good time to update training of your staff, she recommends The TWI Workbook: Essential Skills for Supervisors by Patrick Graupp and Robert Wrona, as well as our entire series of Shopfloor books.

When times are tight and you can’t invest in new equipment, maintaining the old equipment is a top priority. Therefore Maura also recommends either Uptime, 2nd Edition: Strategies for Excellence in Maintenance Management by John Dixon Campbell and James Reyes-Picknell or TPM in Process Industries by Tokutaro Suzuki.

Mike Sinocchi, our senior acquisitions editor, believes that a downturn is a good time to focus on building or strengthening a lean culture, to keep all employees feeling that they are contributing to the greater whole. A strong culture can keep employees focused and involved and looking down the road more so than just week by week. Therefore, Mike recommends four books that can help do that:

To their suggestions, I add some of my own. During a recession, companies often hunker down and focus just on surviving rather than coming up with new ways to serve customers. If that’s what your competitors are doing, now may be the perfect time to innovate and be creative. Therefore, I recommend a couple of books on product development: The Toyota Product Development System: Integrating People, Process, and Technology by James Morgan and Jeffrey Liker, and Value Stream Mapping for Lean Development: A How-To Guide for Streamlining Time to Market by Drew Locher.

These are just suggestions. I welcome your comments as to other books that you have found valuable or believe may be especially relevant to current times.


How to Bail Out the Auto Industry

I don’t want to bail out the auto industry. I don’t like the concept of government bailing out private industry. And I particularly don’t like the idea of helping companies that are on the verge of failure not only because of economic conditions, but because for too many years they made bad decisions about how to operate and what to manufacture.

I believe most people agree, but then take the view that some companies are too big to fail. Automotive News recently suggested that “the view in many Detroit offices” is that “Like falling dominoes, the collapse of GM or Chrysler would force many suppliers out of business. In turn, those bankrupt suppliers would knock out Ford Motor Co.”

On the one hand, if that is true, the desire to prevent such a collapse is understandable. On the other hand, the only way GM or Chrysler will survive at this point, even with government money, is to close plants and lay off thousands of people. So how much worse would a collapse be? In fact, some people are arguing that bankruptcy would be a good option, as it would force a restructuring in the face of real market conditions without the crutch of government help.

Whether a bailout will be passed in Washington is uncertain. The most recent news reports indicate opposition is growing.

But the idea is not dead yet. So if we’re going to do it, let’s think about how to do it right.

I’ve read a variety of columns arguing that any bailout – excuse me, rescue package – should come with conditions. I’ve seen calls for everything from the government getting equity to kicking out current management and appointing a government trustee.

I inclined to agree with all of that, and I propose a new condition. Any company getting funds must make a deep commitment to lean production, possibly hiring a lean expert to oversee operations. It’s something the automakers should have done on their own years ago.

Don’t get me wrong: At this point, I don’t believe even a rapid lean transformation will ease much of the pain the U.S. automakers are suffering. But it couldn’t hurt.

Your thoughts?


How to Make Your Intranet Lean

Do you have a lean intranet?

You may not know, because you’ve probably never heard that phrase before. I hadn’t, until I read a posting on a
blog written by Patrick Walsh, an information architect with a background in manufacturing.

Walsh argues convincingly that intranets can be improved by applying lean principles. He came up with the idea, he says, after reading an article that said intranets have too much useless content.

In the article the author states ‘The vast majority of intranets would be far more productive and collaborative if they deleted at least 90 percent of the content they currently have’. Not long ago I was responsible for redesigning the intranet for a large local government department. Having giving it a lot of thought I ended up cutting out around 40% of the content, much of which I had been responsible for inserting in the first place. It was painful but I was quite staggered with the minimalist, clean lines of the redesigned intranet. No one seemed to miss the content that had been removed and I started to get compliments on how easy navigation had become.

Walsh discusses ways in which specific lean principles can be applied to intranets. One of my favorite parts of his posting is where he suggests that intranets may have their own seven types of waste.

Candidates for the seven wastes in intranets might be –

No vision of exactly what the intranet is for (if you don’t know where you’re going you can never get there and everyone’s time is potentially wasted)
Poor or no metadata scheme (again wastes everybodys time and the potential for improvement)
Search not optimised (wastes your users’ time)
Poor categorisation and navigation (wastes your users’ time)
Poor, irrelevant or incomplete content (wastes your users’ time)
Obsolete content still accessible (wastes your users’ time)
Typographical and grammatical errors (wastes your team’s time going back to fix errors)

That’s not a perfect parallel with the traditional seven categories of waste identified by lean principles, but so what? Walsh is thinking of how lean principles can be applied in new ways, which is the kind of thinking I like to see.

So how lean is your intranet? And how can you apply lean where it’s never been applied before.


Lean and the Economic Crisis

Current economic problems are shifting the lean landscape, increasing interest among certain industries, adding a new sense of urgency to reducing costs and sparking a heightened focus on innovation.

That is the impression I get after speaking with Michael Kuta, managing partner of consulting and training firm Productivity Inc. Mike, whose company deals with a wide range of clients, shared his thoughts with me in a recent conversation.

(Note: Productivity Inc. and Productivity Press used to be one company. Productivity Inc. was spun off separately a few years ago, and Productivity Press – my employer – is now part of Taylor and Francis.)

In the current economic climate, “There’s a much greater desire to talk about cost down, cost out,” Mike says. “In that discussion, where it will lead is to put a greater emphasis on getting the cost out of the operation, but trying to do so in the context of not sacrificing longer-term visions.”

In the past, “we might have spent 60 percent of the time talking about vision, and 40 percent talking about cost out. That has flipped. Companies are really tightening up the old cost belt. ‘Hold on to the cash’ has become a beat through system. There is a greater sense of urgency to use lean techniques to get waste out of the organization.”

That has led to some shifts in how Productivity Inc. might provide consulting services, Mike notes. “We put a much greater emphasis on the three-month or six-month project orientation with the company. The concern is, what can we do now to involve employees to get cost out? We would expedite the whole value stream mapping process, try to focus on improvement opportunities, do what we can do in the short term to show improvement is possible. In the past, we might have spent more time on strategic deployment. Now we’re getting out to the gemba much faster. That’s not all bad.”

In U.S. manufacturing, “80 percent of our business is in process manufacturing. There was much more of a balance in the past. There is a direct relationship there between the industries that have moved offshore and those that have stayed behind. It is difficult to move a process industry offshore. A lot of discrete manufacturers have really left the universe.”

On the opposite side of the coin, Mike notes that consulting work Productivity Inc. is doing in Asia is primarily with discrete manufacturers. And in Europe, the firm works primarily with service industries, especially financial services and healthcare.

Mike sees strong interest in lean from the financial and healthcare sectors, not just in Europe. What do they want? “In the financial sector, it’s no different from healthcare, no different from the manufacturing sector. They’re trying to find ways to collapse the amount of time it takes to provide quality services. How can we do that in an expedited way with less resources. In one particular case, we have a client into automobile leasing, looking at how to collapse the time it takes to open and close a lease – if someone leases a car, how to put them in the seat quickly. It’s all time and money to them. “

One of the most interesting insights came from Productivity Inc.’s recent annual conference. “The greatest interest at the conference was the series we put together on innovation,” Mike says. We did a four-day program on innovation. Each day built off the previous day. It was all centered around creativity and knowledge. It was very well received. I believe it’s the early innovators of maybe the next generation of lean, of process improvement – how to take something that has proven to be workable and take it to a whole other level.”

He adds, “It was attended by people at a level who can really do something about it. There was a VP for strategy and innovation. There were people from healthcare and finance institutions at a strategy level. They’re really into the whole innovation movement – How to gain a better understanding of the technologies available to us today, how to marry those technologies more closely with the cultural side of the company. There is still a deep feeling out there that we have yet to really learn how to use the interventions available to us and create new interventions that will harness the creativity of the critical mass.”

Overall attendance at the conference was down, which is not surprising in a recession. “The training budget is one of the first to shut down. That hasn’t changed,” Mike comments.

But he urges companies not to undervalue the importance of training:

“If I was in a leadership role today, I would have to look around and ask the people working for me to reach out and challenge their organizations on how to harness the energy of the critical mass – increasing their level of understanding of cause and effect, short-term building of a problem-solving culture. How to get people quickly aligned working on projects that have a direct link back to our strategic intent.

“I believe we have 60 percent of the people working on the wrong darn things. I often see poor project management and find projects that are not directly aligned to strategy. I would reach out into the employee community and increase the level of understanding of cause and effect, and provide employees with simple, easy-to-use tools that will enable them to drive to root cause. I would take that energy and learning and get it focused with good project management. People still wanted to be involved. Leverage them and get them working on the right things.”