Lean Implementation Problems: Different Cultures, Same Mistakes?

I was recently perusing an article that appeared in the March 2010 issue of Asian Social Science titled Why Most Chinese Enterprises Fail in Deploying Lean Production authored by Lixia Chen and Bo Meng . In the section that details the problems encountered when deploying lean production, the four main mistakes that Chinese enterprises commit are:

1. Solely paying attention to lean tools.
2. Hoping to achieve quick results.
3. Indiscriminately imitating and copying the practices of others.
4. Mastering the superficial knowledge without understanding the essence of lean production.

I couldn't help but smile just a bit when I read those four obstacles -- Are any of these mistakes really specific to Chinese or any Asian culture? I'd bet that if I asked you to explain the four main causes of lean implementation failures in the USA, you'd construct a list almost exactly like this one. Is it not just basic human nature to try to simplify a complex transformation and merely focus on the immediate results?

Have any readers worked for or consulted with manufacturing organizations located in China? Please share your thoughts.

Toyota Customers and Their Confidence

As the congressional hearings on the Toyota recalls continue on Capitol Hill here in the US, Zogby International released the results of this interactive poll. Although it's interesting that most of the general adults surveyed still believe that Toyota vehicles are more safe than those produced by other automobile manufacturers, it's the information gleaned from current Toyota owners that's the most revealing: 39% believe that Toyota vehicles are more safe than other vehicles while 47% believe that Toyota vehicles are equally safe as other vehicles.

As the hearings continue today with testimony scheduled from Toyota president Akio Toyoda and the resulting media analysis and spin, most will be curious to see how these poll results might change. What are your thoughts of this poll? Are you surprised by the results? In regard to the congressional hearings, there has been much conversation about the intent and motives. Do you feel the hearings are providing a fair forum for Toyota and its customers?

To Whom Do You Listen? The Customer or the Market?

Many businesses throughout the years have been using an array of processes to capture customers' explicit requirements and as well as their unstated "wants" -- these techniques strive to hear "the voice of the customer." Recently, expanded, more robust versions of these processes have been developed and applied with the intent of capturing the "voice of the market" instead of just the voice of the customer. I asked Eric Reidenbach, author of a recent book on the topic, to explain the differences between the two. He replied:

"'Best in Market' is the accolade bestowed upon the market share leader. Look at John Deere in agriculture and Caterpillar in construction and you will find the two leaders who have built their leadership on the basis of superior value. Customer value is the best leading indicator of market share and top line revenues and comes from a deep understanding of how markets define value. Note that I said markets and not customers.

Many companies slavishly monitor the voice of the customer (VOC) but ignore the more powerful voice of the market (VOM). Market share derives from three sources:
1. Retaining current customers
2. Upgrading current customers to buy more, buy more frequently, etc.
3. Acquiring new customers.

The VOC is important in achieving the first two components of market share but cannot address the third component. It is the VOM that provides the information platform for acquiring new customers by being able to provide information on the competitive dynamics that drives share gains. Your value proposition is relative to that of your competitors and requires constant management. After all, if you are not managing your value proposition, who is? Answer: your competitors."

Your Lean Skills Are In Demand

I found this recent news release quite revealing. According to a study performed by the Avery Point Group based on more than 3,000 job postings, it appears the demand for candidates with Lean talent and experience is far outpacing the demand of those with specific Six Sigma backgrounds. In addition, the majority of those organizations seeking to fulfill job openings with Lean talent are no longer requiring candidates to possess some Six Sigma experience as well. Do you think this trend is the result of the particular economic environment (i.e., employers with limited resources are seeing more value in Lean than Six Sigma)?

Perhaps, because of Six Sigma's longer history of traditional training and certification programs, more employees already have some type of noted Six Sigma experience thus creating a larger supply than demand? Speaking of certifications, what are your thoughts about the recent development of Lean certification programs established by various universities, firms, and associations, such as the Association for Manufacturing Intelligence (AME), the Society of Manufacturing Engineers (SME), and the Shingo Prize organization?

Another important point stated by Tim Noble in this release is these findings may indicate a possible progression "toward a decoupling of Lean and Six Sigma." After years of Lean techniques finally achieving integration with Six Sigma initiatives, do you feel this trend is indeed occurring? If so, do you think this trend is beneficial in the long term?

Corporate Sigma: Making Lean Six Sigma Holistic

One of the common complaints I hear about Lean Sigma initiatives is the failure of the organization to maintain momentum. Often the initiative begins with enthusiasm and energy and important strides are accomplished, but then it encounters the "glass wall" -- the initiative plateaus and the crucial goals remain unattainable. I posed the question "Why do Lean Sigma initiatives often deliver below expectations?" to Anwar El-Homsi (author of Corporate Sigma: Optimizing the Health of Your Company with Systems Thinking). He offered this reply:

"Lean Six Sigma tools have been successful in improving processes within the corporation, and several of these successes are well documented by many the companies. However, even with the documented successes due to the application of these tools, many companies still failed to meet strategic business goals. Why these corporations failed in spite of a successful Lean Six Sigma program? What did they miss? Some of the Lean Six Sigma program success factors include the need to have the right leadership, a compelling organizational vision, a well defined business plan, projects that are truly linked to business objectives, engaged and motivated people to execute the plan, etc. But one of the most important factors that imperative for success is the utilization of systems thinking. We need to think about improving the entire company holistically - not just focus on individual processes.

Sometimes, an improvement to a process in one area of the corporation can negatively impact another area or the entire company/business. Often, this negative effect is delayed and the impact is not realized until it is too late to do anything about it. The concept of 'Corporate Sigma' eliminates this problem and it addresses all the factors listed above. It combines the power of Lean Six Sigma and Systems Thinking to assess the performance and the quality level of the entire company, assuring both Lean Six Sigma program and corporate success."

Taking Toyota Out of Lean?

Like most lean advocates, I surely enjoy reading about presentations or case studies that detail the application of lean think and culture to new business and nontraditional industries. I was quite happy to read this article about a presentation given by Darren Bassett from FormaShape (a Canadian company that produces huge water slides) given at the recent "Composites 2010" convention in Las Vegas. He explains the benefits the organization received after adopting a lean initiative and, more specifically, how a specific TAKT time was established.

What I find curiously interesting about the article is the section that gives a brief background on the origin and history of lean. It states that the beginnings of lean manufacturing date back to Henry Ford's early 20th-century plants, but then continues with "the concept was taken up by the Japanese in automobile manufacturing in the '40s...." Not once is there a mention of Toyota! In addition, most lean practitioners know that lean culture was not something generally "taken up" by all Japanese automobile makers. The term lean was coined retroactively to describe the Toyota Production System -- the methodologies and culture we call "lean" were specifically honed at Toyota.

Do you think that because of the negative press Toyota has been receiving lately in regard to its recall of so many vehicles, writers are now shy to associate benefits derived from the most-powerful production system of the past 60 years with its originator? I might be reading too much into this one specific article, but do you think committees and organizations that sponsor lean and performance-improvement conferences will start to explicitly downplay the association of lean with Toyota?

What is Critical to Being Lean?

When analyzing specific processes during a lean initiative, the primary goal is to eliminate all waste and streamline all the activities and subprocesses. But documenting process maps and product flows can be overwhelming – the focus often becomes blurred and the mass of information generates more confusion than insight. Ultimately, the improvement plan fails or just achieves marginal results.

I asked Marvin Howell (author of Critical Success Factors Simplified: Implementing the Powerful Drivers of Dramatic Business Improvement) to explain where practitioners should begin and what questions should be asked to keep the plan on course. He replied:

"First, they need to define the existing process. Then they must know what waste is and what is not. If not waste, it must add value to the process; otherwise get rid of it. What are the inputs to the process? Are they all required and how do we ensure they are quality? What is the product we are producing? Do we know what the customer’s requirements are? How satisfied were the customers with past products or services provided to them? Have their expectations changed? If yes, why? What are the desired outcomes such as cost, quality level, time to market, efficiency or productivity, sales and market share? Do we need to retrain the process participants in the new process? How do we ensure that the new lean process will be operational in time to gain the market share we desire? Is there a tool or technique that will help us ensure what is critical is achieved? Can we use it to measure progress and have time to take corrective action if something goes wrong? Is the technique complicated requiring engineers or scientists to accomplish? The answer is critical success factors (CSFs).

Define your goal, purpose, or objective. Then ask what is critical to achieve the goal or objective. Next, measure the progress. Monitor the progress, check and take corrective action if needed. In other words, use the plan-do-check-act method (the Deming Wheel). Anyone can use the technique to help achieve success. Will you know what is critical? Ask anyone that has an unsuccessful or has a failed project or objective why it happened? You can bet they know. Of course, their answer will be one or more of the CSFs that should have been identified prior to starting the effort, measured, and checked along the implementation path to make sure it would be achieved. The CSFs method should be used on any improvement effort and, yes, on every lean initiative."

The Toyota "Crisis" -- Is it the Problem or the Response?

I’m sure all lean practitioners and advocates are quite dismayed and disappointed with the continual reports of Toyota’s problems with their accelerators and braking systems emanating from all the news outlets. Of course, unfortunately, the current situation has also provided endless fodder for sarcastic sniping throughout the blogosphere. Although I think these current woes in no way repudiate Toyota’s noted production philosophy and culture or its massive accomplishments during the past 50 years, the credibility issues cannot be ignored. When reading or watching the news coverage, one realizes that the central topics -- Toyota’s equipment failures and its supply-chain process – have been overtaken by the debate of whether Toyota’s response to the crisis has been clear, timely, and at least adequate.

I’d very much like to hear the opinions of this blog’s audience – Are you satisfied or dissatisfied with Toyota’s response to this crisis? How has this crisis been affecting Toyota’s reputation? Do you think many business leaders and pundits will co-opt this crisis as an opportunity to wrongly declare that ultimately lean methodologies are critically flawed? Most importantly, what do you think Toyota can learn from its own lauded production system during this time?

Quick Wins on the Green Journey

The third and final part of my discussion with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win) focused on the areas of any organization where quick improvements could be accomplished. Brett has some important suggestions here:

"When starting out on the green journey, one does not have to dive in head first. There are many initiatives that can be undertaken to realize significant cost savings without tying up large amounts of resources. Not only will these initiatives realize cost savings, they will go a long way in gaining the buy-in needed to develop a greener culture.

Here are a few quick wins to get started with:

1. Air Compressors -- Identifying and repairing leaks in air compressor lines can result in hundreds even thousands of dollars in annual energy savings. In addition, many times the PSI level is far too high for what is actually needed. By simply lowering the PSI level a few notches, one will see immediate savings.

2. Peak Shaving -- A close examination of one’s electric bill will reveal a hidden peak demand charge. This charge is based on the one-time largest draw of energy over a 15-minute window. For example, turning on all the lights, motors, equipment, computers and so on at the same time will draw a large amount of energy for a short period of time. With a peak demand charge anywhere from $5+ per kW, one can save a great deal of money by simply staggering start ups. Often times the electricity provider will help with this project at no cost.

3. Computers -- Although the energy consumption of a single computer is relatively low, adding up the energy consumption from all computers represents a significant cost. Many times computers are left on overnight so that updates and maintenance tasks can be performed. By simply scheduling these activities to occur on a specific night, computers can be shut off at the end of each day to realize cost savings.

4. Water Coolers -- It is cheaper to use water coolers that treat tap water than to use water coolers that are fed from a bottle.

5. Hot-Water Tanks and Pipes -- Uninsulated hot-water pipes and tanks result in large amounts of heat loss requiring greater amounts of energy to keep water at desired temperatures. By insulating these tanks and pipes, heat loss is minimized resulting in lower energy consumption and ultimately, cost savings.

6. Side Skirts -- For transport and logistics companies or those with fleets of trucks, there is a simple way to dramatically increase fuel consumption, with very little investment. Side skirts for tractor trailers greatly reduce drag and can increase fuel savings by as much as 15%.

These are just a few of the many quick wins that can be had by putting on the green lens. Harvesting this low hanging fruit is an effective way to start realizing cost savings and build momentum for a more comprehensive green transformation. The key is to have a process or a 'road map' to follow."

A Lean and Green Benchmark

To continue our discussion of sustainability and green manufacturing, I present part two of my “digital dialogue” with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win). In this post, he presents a great case study in “green thinking”:

"In business for more than 30 years, Interface Inc. is a publicly traded company with 2007 annual revenues of $1.08 Billion. They are headquartered in Atlanta, GA and have offices in more than 100 countries.

Interface is arguably best known in the green world for being a leader in industrial ecology by closing the loop on carpeting. Their ability to take back their carpets and make new carpet out of it with relatively minimal environmental impact in the process has shown that green thinking is not only possible it is practical and just plain good business.

Under the leadership of founder and chairman Ray Anderson along with the support of key change agents such as senior engineer Dave Gustashaw, Interface has a vision of being the world’s first environmentally restorative company by 2020. That’s right, environmentally restorative, not environmentally friendlier or even neutral but to actually have a positive impact on the environment.

Interface looks at waste not only form the customer’s perception of value but also extend that thinking to include the environments perception of value. Although they admit they still have a long way to go, their results serve as inspiration for what can be achieved with a commitment to banish all forms of waste. Have a look at the remarkable stats of their 15-year 'lean and green' journey, you will be amazed.

Cumulative avoided costs from waste elimination – $372,000,000
Total waste sent to landfills from manufacturing – down 66%
Total energy use – down 45%
Total renewable energy use – 27%
Percent renewable or bio-based materials in products – 25%
Net absolute greenhouse gas emissions – down 82%
Water – down 75% modular, 45% broadloom
Post consumer/industrial diversion from landfill – 133,000,000 lbs.
Safety – 60% reduction in recordable accidents.

Still think that going green is a financial drag and a “nice to do” in good times?

The trick to achieving results with green is to have a process and road map to follow. The lean and green process provides this map.

* Information extracted from the an article appearing in the Association for Manufacturing Excellence’s Target Magazine (Volume 24, Issue Number 5). The article was written by Dave Gustashaw and Dr. Robert Hall.

Green… Just Plain Smart Business

My recent posts on "lean and green" and sustainability have generated some emails from practitioners working in this area. Brett Wills, author of Green Intentions: Creating a Green Value Stream to Compete and Win, sent me some fairly detailed insights that I'd like to share here in three successive blog posts. Here is part one:

"Attitudes of customers, employees, and stakeholders are changing. Indicators are constantly showing they are increasingly attracted to those companies who respect the environment and people and are committed to improving sustainable processes. For some, however, there is an illusion that going green is a financial drag. This thinking inhibits the change that is necessary to compete and win in today’s economy. Fortunately, this thinking is rapidly changing as more and more companies continually post results to the bottom line.

Companies like Coca Cola, Kraft, Heinz, Toyota, Interface and HP are showing how going green cuts costs, grows market share, strengthens brands, and increases competitiveness. These companies are clearly illustrating that going green is no longer a 'nice to do' program in good times but a key ingredient to succeeding in the new, reset economy.

The rub is that going green can be difficult if one does not have the tools, techniques, and thinking required for a successful green transformation. The good news is that all the ingredients needed for a successful and profitable green transformation are readily available. In addition, one can quickly learn to apply these tools to immediately realize cost savings and other business benefits with little to no investment and quick implementation.

One such tool is the lean and green process that allows one to quickly uncover the often hidden and costly green wastes laying in an organization. Committing a relatively small amount of time to learning and applying this process will allow one to immediately begin harvesting the low-hanging fruit. These quick wins enable one to get the buy-in and support needed for continuous green improvement.

Whichever way one looks at it, competing and winning in today’s new economy requires a strategy that includes green."