"Lean Versus MRP" or "Lean and MRP"?

I attend many Lean conferences throughout the year that focus on different areas of the supply chain. Presenters there often state how the concept of material requirements planning (MRP) is outdated and works as a detriment to Lean thinking. In addition, there have been many articles published that discuss the "Lean versus MRP" debate. I recently had an email conversation with Derek Singleton about this very topic. Derek is an enterprise resource planning (ERP) market analyst and writes for the Software Advice website. He has some interesting ideas about the use of software during the planning process, and I'd like to share his thoughts here:

Three Ways Manufacturing Software Can Adjust to Lean Principles

There’s a long-standing debate between manufacturing planning strategies. The debate is between proponents of material requirements planning software -- better known as MRP software -- and lean manufacturing advocates.

The crux of the dispute boils down to whether sophisticated software tools are needed to adequately plan production. Proponents of MRP software believe that today’s complex manufacturing challenges require formal planning tools to get an accurate picture of the production requirements. Lean advocates, on the other hand, argue that these planning tools actually get in the way of accurate planning because they’re too slow and transaction-intensive to pace to actual consumption, or adjust to demand fluctuations.

Three Components to Incorporate in Manufacturing Software

I see three main ways that manufacturing software can evolve to adapt to the demands of lean manufacturing. Each way focuses on bringing lean principles front and center of manufacturing software packages.

1. Make Value Stream Mapping a Core Software Component - One of the most important tools in lean manufacturing is create a value stream map to outline the flow of information and materials in the manufacturing plant. Modeling how information and materials flow through a shop floor will allow manufacturers to more easily identify production bottlenecks.

2. Monitor Cycle Times Intensely - The most important metric to know in manufacturing is how long it takes for materials to arrive on the dock and to leave in a completed product. In order to improve cycle times, these times need to be monitored and tracked. A subset of monitoring and tracking cycle times is keeping track of production status.

3. Locate Key Places to Add or Remove Inventory - While there’s ample functionality in manufacturing software for determining what to stock and how much to stock, there is little functionality to help manufacturers figure out where to stock. Functionality that can tell a manufacturer where to stock will help them figure identify the best places to protect against volatility, which will ultimately help avoid product shortages.

These are a few ways that I can see manufacturing software changing to adapt to the requirements of lean manufacturing. However, I’d like to hear your thoughts. What needs to change in manufacturing software to adapt it to lean manufacturing principles?

What do you think of Derek's ideas? What are your views on the role of MRP within a Lean initiative?

What are We Learning from Our Projects?

Recently, I had the chance to speak in person with Dr. Willis Thomas, author of a new book published in November 2011 titled The Basics of Project Evaluation and Lessons Learned. His book provides the framework to conduct lessons learned using the Project Management Body of Knowledge (PMBOK) as a standard.

When I asked Willis why he chose the PMBOK approach for lessons learned he replied:

Project managers trust and are comfortable with the PMBOK for five Process Groups (Initiation, Planning, Executing, Monitoring/Controlling and Closing) and nine Knowledge Areas (Communications, Cost, Human Resources, Integration, Procurement, Quality, Risk, Scope and Time). Many project managers run projects using these categories.

The approach I take is very simple; to overlay what has been done right, done wrong and could have been done differently using these 14 process group and knowledge area categories. This matrix, creates a 5x9 table of 45 categories, with three variables per category (right, wrong, differently), which results in potentially 135 elements for review.

This compartmentalizes the collection process for lessons learned so that it is situation-specific. The project team can then determine what lessons to review -- that is, what went right during project initiation regarding communications. Of course, each factor should allow for comments to detail characteristics of the lesson.

A primary goal for lessons learned should not only be to avoid making the same mistakes in projects (summative reflection), but to strategize for improvement (formative thinking). This approach can help project managers to be consistent in their approach to evaluating projects.

What do you think of Willis' advice? Have any of you used this process?

To Be, or Not to Be... A Project Manager

At the recent Association for Manufacturing Excellence (AME) conference in Dallas, I had the chance to talk with Adil Dalal, author of a new book called The 12 Pillars of Project Excellence: A Lean Approach to Improving Project Results. An important part of his book essentially provides the "5 Powers" needed to transform from a project manager to an advanced project leader. In addition, it provides groundbreaking techniques to achieve excellence in project leadership that can result in six sigma type results or failure-free projects.

I basically asked Adil what it means to be a project leader instead of a manager, and here is his response:

A project, by definition, is a "temporary" endeavor undertaken to create a "unique" product, service, or result. Thus, every project is like an expedition through the unknown terrain to reach the summit of success. When something "unique" is being created – how can we expect to manage it? Are we not required to lead the "unique" transformation effort? Today, most project managers fail because there is too much "management" and too little "leadership" during the journey. Only project managers who undergo a paradigm shift and transform themselves into project leaders by providing guidance and direction to their team can be truly successful in their expeditions every time. Attempting to manage a project is like trying to hang on to the tail of a wild tiger. The focus is always on countering the tiger’s every move to avoid the fatal jaws. Thus, a project manager is constantly in a reactive mode and there is no time for creativity. On the other hand, leading a project is like riding a tame tiger. Although there is a healthy level of anxiety and adventure, the focus is on guiding it in the right direction. Thus, a project leader is always proactive.

What do you think of Adil's ideas? What characteristics do you see lacking in most project managers? Does your organization have more project managers or project leaders?

Not Only Achieving the Excellence, But Sustaining It...

Some surveys conducted during the past 30 years continue to find that upwards of 80% of the companies that start down the road to manufacturing excellence, using techniques such as TQM, Agile Manufacturing, Theory of Constraints, Lean, Six Sigma, Lean Six Sigma and others, end up stalled within two to five years. All these journeys probably began very seriously with high hopes for continuous improvement (CI), but early results eroded and hopes of sustaining long-term results faded. Based on the short-term results, every company that has used the various tools has found that they work. The point most often missed, however, is that continuous improvement is not, nor will it ever be, solely about the tools.

I recently asked Larry Fast (author of a new book titled The 12 Principles of Manufacturing Excellence: A Leader's Guide to Achieving and Sustaining Excellence): What does it take for companies to learn how to sustain their CI journey? Here is his response:

My book devotes almost no time on the use of tools but rather to those critical “infrastructure” items that must be in place for an enterprise to sustain the improvements for the long term. For example, the principles of safety and good housekeeping (#1 & 2) focus on the trust and discipline necessary to change culture while helping the hourly associates develop both competence and confidence in their ability to work a new way.

The principles (# 3 &5) of using only authorized formal systems/standard work further develops the discipline necessary for culture change while each important work process is being re-engineered for standardization and capability. A strong preventive/predictive maintenance system (# 4) demonstrates leadership’s commitment to making sure the machine operators always have equipment that is in proper working condition so they can control their process and deliver great products. Principles #10 and 11 provide the standard work necessary to perpetuate the replenishment of the trained people necessary to effectively fulfill their roles every day. Absent the sustaining of comprehensive training and communications, skills disappear, performance deteriorates and the dream of CI dies.

The final point is that the culture changes very gradually – that is, not because of some feel-good initiatives, but rather because the leadership has sustained their commitment on the pathways to excellence. When management reestablishes its credibility, it is because they have collectively provided the focus and organizational alignment consistently, day after day, month after month, year after year such that the workforce develops trust in their leadership. Further, when management provides the context for their work, provides the proper tools, training, maintenance, systems, processes, communications, follows up with attention to detail on commitments that have been made, then the associates experience the change. In fact, they live the new way of working and thinking, and begin to willingly take ownership/accountability for their work without feeling "put upon."

The culture of Operator-Led Process Control is not the starting point. It is the vision of the culture that we seek. And it will evolve as the outcome from meticulous execution of the first eleven principles to a level of Stage 4 excellence. But make no mistake: The first day any member of leadership decides to stop doing the training, the preventative maintenance, or the communications, that’s the first day that the business starts going backwards from whence it came.

What do you think of Larry's points? Do you agree with his comments about management credibility?

Toyota Benchmarked... Yet Again

There's a great article worth checking out over on the CNNMoney / Fortune site. It's one thing to see software companies adapting Lean methodologies, but it's quite another to see them transform their culture, and Menlo Innovations seems to be doing the latter. Jeffrey Liker confirms: "Any piece you see in Menlo you'll see somewhere else. What you won't find [elsewhere] is all the pieces working together…."

The article covers four techniques that contribute to Menlo's success -- Assigning bite-sized pieces of work, Keeping projects in plain sight, Observing the customer in action, and Training workers to stay flexible -- but, it's this last area that I found quite insightful, and CEO Rich Sheridan's explanation of "towers of knowledge." Because all programmers at the company work in pairs, no one employee becomes the sole "owner" and facilitator of a particular project. This keeps programmers available to delve into other areas as well making all projects team efforts.

What do you think of Menlo Innovations' work atmosphere and business techniques? Will it become a benchmark for its own industry? Do you know of any other software developers that are building this type of culture?

"Made in the USA" -- Can it Happen Again?

During the past 20 years, US manufacturers have moved their production operations, at a massive rate, to foreign countries that offer cheaper labor costs.The migration of US manufacturing jobs to such locations as China have resulted in cheaper products, but the overall effect on the US economy has been hotly debated. Will manufacturing in the United States ever see a resurgence?

Tim Hutzel and Paul Piechota recently published a very interesting and timely book titled Keeping Your Business in the U.S.A.: Profit Globally While Operating Locally, and they feel that the current adage -- "The US can't compete with offshore labor costs" -- is a mere myth. Both have spent the past three years researching companies that have flourished while manufacturing their products in the US and their book documents just how these organizations achieved this goal.

I recently asked both authors why they believe the US can recover from the out flow of manufacturing, and here is their response:

A burning issue that is certainly in need of a remedy is the mass departure of manufacturing from the US to foreign countries. The results of this exodus are felt every day. As much as you would like to buy US-made products, this has become an impossible task. It is heartbreaking and disturbing that so many products, such as bicycles, clocks, garments, shoes, and computers are not produced domestically anymore.

Manufacturing can return to the US because many companies have been hurt by the rush to outsource. We have heard the tales of many business leaders regretting their outsourcing decisions -– the unplanned costs, poor quality, uncontrolled processes, long delivery times, graft, monstrous order quantities, inventory nightmares, lost and damaged products, oversight trips overseas, confrontations, half-truths, excessive order-to-remittance times, and added debt. In addition, there are social and national implications of outsourcing -– unemployment, increased government jobs, loss of skills, weakened national defense, loss of tax base, and unbridled national debt.

In our book, we clearly illustrate three manufacturing companies that have been able to resist the outsourcing trend and achieve overwhelming success while keeping jobs in the US. We have examined the successes, failures, lessons learned, and methods used by each company to achieve and sustain profitability.

What do you think the future holds for US manufacturing? Will labor costs in China only eventually rise? Will shipping and inventory costs associated with production in foreign countries eventually be important factors in cost?

The Supply Chain Executive?

I recently came across this great article written by Michael Koploy over on the Software Advice site. Koploy argues that technology companies must appoint more persons with strong supply chain backgrounds at the C-level (top-level executive) to operate at utmost efficiency. He believes that a talent crisis is, unfortunately, holding back this field from gaining increased exposure among executives.

Koploy notes Apple Inc.'s recent appointment of Tim Cook as new CEO of the company is groundbreaking because "a supply chain-minded executive is a rare sight" and believes "organizations need to take Apple’s lead and include supply chain-minded executives at the leadership table: to help organize, implement and manage strategies to improve the business’ value chain."

One of the most important points made in this article is essentially a statement that I've heard during many supply-chain presentations at various Lean conferences: Supply-chain experts must now "transition from a traditionally execution-based role to a strategic one."

Koploy's list of attributes for the ideal supply-chain executive candidate are:

1. Experience managing large, global supply chains.
2. A track record for being able to adhere to lean and just-in-time fundamentals.
3. Experienced enough with SCM software to know how to implement and leverage its benefits.
4. The ability to continually push both strategic and operational supply chain improvements.

What are your thoughts on Koploy's assertions? Should more companies follow Apple's example? How should the industry respond to the skills' shortfall?

What Toyota Team Members Have to Say

Productivity Press recently published a very special book -- One Team on All Levels: Stories from Toyota Team Members, Second Edition. This book, written by Tim Turner and his colleagues at Toyota's Georgetown, Kentucky facility, is far from another technical explanation of the Toyota Production System (TPS) -- It is rather a clear illustration of the culture it creates.

One such insightful recollection was provided by Raymond Bryant, an assistant general manager in the assembly department. He writes:

We often say that the most valuable resource we have is our workforce, the team members. I don’t just believe this, I know it.

Our company functions on the basic principals of the Toyota Production System (TPS). The Toyota Way guides us as we go about doing daily and longer term operations. When asked, "What is TPS?" the reference is usually to the tools widely talked about (andons, kanbans, etc.). As one of the many students of TPS (we all are still studying and learning), I have come to the conclusion that the success of TPS is in the commitment of our workforce to pursue it.

The tools are easily copied and put into place. They are, for all practical purposes, simple. The ability to understand and use them is equally as simple. The commitment to use them seems to be the struggling point for many organizations. Why? This is the "million dollar question."

I believe that our success is in the very simple understanding of what TPS really is. This I would define as:
1. Always doing the right thing.
2. Always knowing that you can do better.

The significance is in the "simplicity" of these two concepts. All of our workforce, each team member, can understand, make decisions, and feel proud of these two guiding thoughts.

Pulling the andon is simply "doing the right thing." Alerting your staff or assistant manager when a problem has come up in a project is also done for the same basic reason. The one making the decision to notify and possibly seek help, along with the one that is receiving the news and/or request both know that this is the "right thing" and expected in our culture. This naturally carries beyond our work life into our personal life.
We sadly lost a team member some time ago in an automobile accident. Along with the strong support you might expect to see of the family during the days after this tragedy, many of the team members and leaders gathered together several weeks later to complete a home project that he had started. This was the "right thing to do."

My role is pretty basic in the grand scheme of things:
1. Setting clear goals that, if met, equal success (this requires face-to-face discussions to clarify and provide the why behind them) approving the ideas and methods suggested on how to reach those goals (this requires even more discussions, primarily listening, coaching, and the willingness to see many other points of view).
2. Supplying the support and/or resources needed (this really requires the highest amount of listening skill, because the secret is knowing when not to give input).

A successful manager knows not "when to say something," but when "not to." Thousands of minds, all working to "do the right thing." Everyone understanding that "we can always do better."

What are you thoughts of Raymond's ideas? Have any of you visited Toyota's facility in Kentucky?  Have any of you experienced Toyota's leadship firsthand?

What Happens When Two Automakers Cross Paths at an Airport?

I actually had to read this great article over on the International Business Times site a couple of times to ensure I got it right! Toyota and Ford Motor Company will work together to develop a gas-electric hybrid fuel system for their respective pickup trucks and SUVs. According to the article, the seeds of the idea were planted when Ford CEO Alan Mulally and Toyota CEO Akio Toyoda "crossed paths at an airport." I guess it should not be that surprising considering Alan Mulally was an executive at Boeing prior to his position as CEO at Ford -- Boeing was an ardent adopter of the Toyota Production System, which helped develop one of Boeing's best-selling jet airliners: the 777. I'm glad the article included some lines about the long history the two companies have shared dating back to the 1930s -- especially  Kiichiro Toyoda's (Toyota automotive founder) admiration for Henry Ford's 1926 book Today and Tomorrow.

What are you thoughts on this joint venture? Is it a win-win? Do you think it will ultimately benefit the consumer?

Mapping the Process -- Finding the Waste

Robert Damelio published a second edition of his best selling book The Basics of Process Mapping this year, and I recently spoke with him about it. I asked him: "While you were developing the second edition of your book, which of the most important concepts in your book still often gets misunderstood?" Here is Robert's reply:

One of the most important (and often misunderstood) properties of work is "waste." Those familiar with the cost of poor quality concept often tend to equate “waste” with defects, rework, returns, inspection, appraisal, failure in test or operation, etc. In general these are forms of waste related to work outputs.

It turns out that more forms of waste, and much greater cost are associated with the resources used and applied during a work activity. This is why waste is defined as any work that does not create value as perceived by the customer.

Here is a table from the new edition of Robert's book that illustrates his points:


What do you think of Robert's table? Do you think his definitions and examples are accurate? What are your experiences with process maps? Do they help diagnose and improve work?

Are Team Conflicts Often Part of the Process in Lean Design Projects?

Have any readers been involved in a construction project that applied Lean design techniques ? Most often, the benefits described involve reduced time and waste. This article over on the Construction Digital site discusses the reduction of risk such as "owner changes, constructability changes, incompatible design, rework, budget overruns, misinterpretations, unsafe construction, and project team conflicts." The success of a Lean design project relies heavily on the efficiency of the cross-functional team, which can include architects, construction managers, investors, and consultants. Although it is crucial for this team to in place right from the beginning of the project, I wonder how long it takes the players involved to overcome obstacles in regard to "territory" and autonomy. When these teams are first form, are interpersonal conflicts initially increased? Are personality conflicts and territorial issues greater for a team such as this because of the vastly different perspectives on the project each member brings to the table? Last year, Productivity Press published a book by Gary Santorella titled Lean Culture for the Construction Industry: Building Responsible and Committed Project Teams that touched on these issues.

I'd like to hear from professionals out in the field who have firsthand experience with these teams and if they initially appeared to hasten or hinder a project. The eventual measurable benefits of these teams greatly increases the success of the project, but do these teams cause initial rough spots?

Green in a Globalized World

During a recent email exchange with Joao Neiva de Figueiredo -- co-editor of the recently released book, Green Products: Perspectives on Innovation and Adoption -- I asked him what he thought were the most important considerations for the sustainable adoption of green products and services in an increasingly globalized world. Here is his complete response:

"In analyzing examples of green product innovation and adoption in various countries around the world, I believe the three necessary conditions for sustainable adoption of green practices are:

1. The need for a systemic approach in which the different moving parts in the development and adoption of new technologies are addressed with attention to their many linkages. In addition, interrelationships between these new technologies and institutions and markets need to be considered systemically. It is not enough to have a brilliant solution for one part of the puzzle if the linkages to related issues are not examined and solutions found.
2. The need for mechanisms that align the incentives of all stakeholders to ensure widespread adoption of a green technology. The first step in the process is necessary to correctly identify the stakeholders and their objectives. This can be a complex process because often major stakeholders are not even at the table and therefore cannot explicitly defend their own point of view. Once stakeholders are identified, it is desirable that markets, society, and governmental institutions provide incentives for those stakeholders to behave in a way that favors adoption of the green innovation.
3. It is necessary for the innovative solution to address each of the three 'people, planet, profit' dimensions (i.e., social, environmental, and economic considerations need to be integrated in any large-scale proposed green solution). Furthermore, from an adoption standpoint it is helpful to use both a top-down and a bottom-up approach (i.e., policies that stimulate thinking globally and acting locally seem to be the most successful).

I've seen several cases that illustrate these precepts and therefore help sharpen our understanding of the necessary conditions for successful green product innovation and adoption. Whether tourism in the Galapagos or mass transport in Mexico City, whether ethanol in Brazil or electric cars in Japan, each case has lessons that are useful to us as we strive to make ours a greener planet."

What do you think of his conclusions? Have you seen any examples of green practices that have adopted these tenets? Have you seen green projects that have failed due to poor planning or incomplete considerations?

Lean and the Smaller Companies

I recently read this article, authored by Glyn Finney, over on the Achieving Business Excellence site, about the effectiveness of Lean implementations within smaller organizations. Two interesting points stuck out:

1. Because smaller organization do not have the resources to employ Lean management senseis to drive the initiative, many now have the option of robust online courses.
2. Smaller organizations often comprise employees that work together much closer than their larger counterparts -- the Lean management systems will reveal waste much quicker.

Do you agree with Finney's points in his article? Do you think that online courses are improving to the point that they can be used in lieu of a sensei? Do any readers have any experiences with online courses? How about experiences with Lean initiatives in smaller companies? What were the particular challenges?

Perceived Quality and Market Share

Last week, I had a phone conversation with Robert Fantina, co-author of the recently released book, Your Customers' Perception of Quality: What It Means to Your Bottom Line and How to Control It, about customers' buying habits and what they consider value-adds. Many attendees at conferences I attend often state that their companies' products and services are of very high quality, yet they struggle to maintain market share. Shouldn't the quality speak for itself? I posed this question to Robert, and here is a summary of his answer:

Unfortunately, many companies do all the right things in terms of quality, including reducing their defects to near zero, eliminating call waiting times, etc., and still struggle to hold onto their customers. Repeatedly, this appears to be because their customers do not perceive them as delivering quality.

High quality in products and services is vital but insufficient; despite high quality, customers may still perceive quality to be inferior. What is causing that perception?

The answers to that question are many and complex. Unfortunately, it appears that a variety of concerns experienced by customers translate in their minds into ‘poor quality.’ For example:

• A customer that buys a product though a third-party distributor and has problems with that distributor, may view the quality of the product as poor.


• A customer who loves his/her product, but then struggles to find some information on a difficult-to-navigate website, may begin to view the quality of that product as poor.


• The company that orders 1,000 widgets, and receives them all individually wrapped, and must discard/recycle all that wrapping, may say that quality is poor.

While it is clear that none of these issues in any way reflects the actual quality of the product, they can influence customers' perception of quality. And if their perception of quality is poor, the actual high-quality of the product is meaningless.

Do any of you suffer from this situation? How did you recover? Have you experienced an instance in which the delivery of a product or service affected its popularity? How did you discover this?

Safety and Sustainability Are Not Barriers to Business Success

Last week, I spoke with Dennis Averill (who recently published a book titled Lean Sustainability: Creating Safe, Enduring, and Profitable Operations) about employee and environmental concerns in relation to business success. I asked him, "How can a business create and maintain operations that are safe, sustainable, and profitable?" Here is Dennis' full reply:

Some business leaders still contend that protection of employees and the environment, and conducting their operations in a safe and sustainable fashion are barriers to business success. These myopic managers maintain that safety and sustainability are extra work that require additional resources, and divert business efforts away from the primary job of building efficient and profitable operations. It is a myth that safety and sustainability are contrary to business success.

The key to achieving safe, sustainable, and profitable operations is integrating and leveraging Lean methodologies in all areas of the business. Safety and sustainability are not additional or separate work, but rather, they are the way one runs a “Lean, Green, and Serene” enterprise. Lean, SHE (safety, health, environmental protection), and sustainability focus on similar objectives:

1. Eliminating accidents, incidents, waste, and losses.
2. Increasing operational efficiency.
3. Conducting business in a sustainable way that conserves resources and reduces the business’ environmental footprint.

By linking an organization’s Lean, SHE, and sustainability processes, a natural synergy and efficiency is created that benefits all areas of the business, and offers the enterprise a real prospect of achieving sustained profitable growth, or, as is commonly expressed, “the opportunity to do well by doing good.” However, as with any complex business endeavor, realizing the vision of “Lean, Green, and Serene” is easier said than done. In other words, the devil is in the detail. The novel and effective approaches that I've used are:

1. Autonomous Safety -- which supplies employees with knowledge skills, skills, and motivation.
2. Triple Zero -- the achievement of zero accidents, zero environmental incidents, and zero losses.
3. Green Value Stream Mapping -- the application of value stream mapping to environmental and sustainability issues.

Are any readers currently involved in an Lean initiative that considers both safety and sustainability? What was upper management's initial reaction to the plan? Did they feel it would merely reduce efficiency as well as profits?

The TWI Programs -- Who Needs a Trainer?

Donald Dinero, author of two books on the topic of Training Within Industry (TWI) -- Training Within Industry: The Foundation of Lean and TWI Case Studies: Standard Work, Continuous Improvement, and Teamwork -- spoke at the recent TWI Summit in Florida. After his presentations, I mentioned to him in an email: "The TWI Programs appear to be very simple. Does one really need a trainer to start?" I decided to reprint his entire response here:

"Because the TWI programs are skill based, there never will be a 'how to' book for them. You can read and absorb as much as you want about the TWI programs but, as Walter Dietz says in Learn by Doing, 'One must learn by doing the thing; for though you think you know it, you have no certainty until you try it.' In my books, I've tried to pass on some of that knowledge from lessons learned by others. However, it cannot be emphasized too much that a short time spent with an experienced, competent trainer will save countless hours. You should know that the TWI programs will work for you no matter what organization you are part of. If you find that they do not work, it is because you are not using them properly. Back up, analyze the situation, and try again. When used correctly, they will yield benefits beyond what you have expected.

An experienced trainer is required if you want to be as good as you can as quickly as you can. Without a qualified trainer, you will experience much trial and error and may never achieve optimum results. As with learning any skill, there are many nuances that can cause one to succeed or fail. If these nuances were the same for everyone in every organization, they could be documented. Because every person is an individual and every organization has its own culture, we must rely on a knowledgeable person to coach us initially. The programs are standard and will apply to all organizations, but they must be implemented on an individual basis because each organization has its own culture."

Have any readers embraced the TWI programs within their organizations? Did you employ a trainer right from the start? What were the cultural hurdles?

The Virginia Mason Medical Center Discovers Its True Customer

I found this great article by Michael McBride over on the DARK Daily website about the Virginia Mason Medical Center (VMMC) and its Lean journey. Other than the important financial turnaround that VMMC achieved, the medical center appears to have learned the most crucial lesson: "...that the patient, and not VMMC itself, was the true customer."

The article includes some quotes and insights from chairman and CEO Gary Kaplan, MD, who leads the Lean initiative, which began 10 years ago. He interestingly reaffirmed the pivotal role IT plays in process redesign: "You have to redesign your work first. The data comes first; and IT can help eliminate manually based errors." In addition, although it is is not detailed in the article, Kaplan achieved what can sometimes be one of the hardest early hurdles by "securing buy-in of all senior leadership at the hospital."

Are any of the readers of this blog familiar with the Virginia Mason Medical Center? Do you think it has set the right example for other medical facilities to follow? Are there areas that still lack improvement?

The story of the Virginia Mason Medical Center's Lean odyssey has been revealed in book titled Transforming Health Care: Virginia Mason Medical Center's Pursuit of the Perfect Patient Experience authored by Charles Kenney.

Creating Productive Conversations Among Conflicting Employees

During a recent conversation with Steve Dinkin, president of the National Conflict Resolution Center and co-author of the recently published book The Exchange: A Bold and Proven Approach to Resolving Workplace Conflict, I asked him if he had any tips on how one can transform a meeting with conflicting employees into a productive conversation. Steve had quite a detailed answer, so I thought I'd include his complete response in this blog post:

Start with an icebreaker. Most people will be ready to complain, debate, or argue at the beginning of any conflict-based conversation. They have marshaled their most compelling arguments and are ready for battle. If you go straight to the topic of controversy, most people will quickly get stuck in defending their positions and attacking their opponents.

That’s why you need to do something different. You should begin with an icebreaker, but this is not just a light introductory activity. It is a way to non-confrontationally initiate a conversation about difficult issues. An ideal icebreaker asks for a person’s own take on something that’s both work-related and positive. For example, if the conflict involves two employees involved in the same project, you might break the ice by asking each of them how they became involved in the project and what they hoped to achieve.

It is important to listen. Conflict resolution is tricky because too many managers ignore the fact that sometimes what they aren’t saying is more important than what they are saying. Often the best resolutions come from listening carefully to what the other person has to say. Being an active listener sends the message that you are genuinely concerned about him or her and the dispute. Put plain and simply, it’s the best way to get good information.

Ask an open-ended question. It can be as simple as, ‘So, tell me, what’s going on?’ Then listen carefully to that person’s side of the story. You’ll know it’s time to insert yourself into the conversation when the discussion turns negative.

You can acknowledge someone’s emotions without seeming like you are taking his or her side. Especially at the beginning of talking about a conflict, you’re building rapport, even if it’s with an employee you’ve spoken with millions of times before. When there’s a conflict, you’re treading on new ground, and showing that person you are willing to see his or her side of the story is how you will set the foundation for working toward a solution.

Use and encourage positive language. This one might seem like a no-brainer, but any frustrated manager knows how easy it can be to slip into negativity after a conflict has affected a work group. Always think before you speak. Use positive, easy-to-understand language. Don’t fall into repeating, verbatim, paragraphs from your company’s HR manual.

Remember, you’re having a conversation, not a trial. If you keep the language positive, whoever you’re addressing will likely mirror what you’re doing. Even referring to the department’s needs can be stated in very positive terms, which will lead to a more collaborative (rather than punitive) tone in the discussion. For example, if the manager says, ‘This has increasingly affected the entire team, and we need to address it so we can get everyone focused back on the project goals and having a comfortable working environment. I am looking forward to establishing a good working relationship between the two of you and improving morale for everyone on the team,’ it will set a constructive atmosphere. When you keep things positive, you can work toward great solutions efficiently and effectively.

Work toward SMART solutions. Sustainable solutions are SMART solutions. That means they’re:

Specific -- Be clear about who will do what, when, where, and how.
Measurable -- Be clear about how you will all be able to tell that something has been done, achieved, or completed.
Achievable -- Make sure that whatever solution you agree on fits the situation; that it complies with both the law and organizational policy; that everyone involved has the ability and opportunity to do what is required of them. Don’t set up anyone to fail.
Realistic -- Check calendar dates for holidays and vacations; look at past performance to predict future actions; allow extra time for glitches and delays; don’t assume that the best-case scenarios will come true.
Timed -- Create reasonable deadlines or target dates; include a few ideas about what to do if something unexpected occurs; be willing to set new dates if necessary.

Once you have your SMART solutions in place, immediately put them in writing. Putting solutions in writing is very important, and not just for legal reasons (and for covering your back). It’s a way to honor the work that you and your employees have accomplished. It’s also a way to keep people’s memories from diverging from the agreed-upon solutions. Verbal agreements have a way of being remembered very differently by different people—and then becoming the subject of another conflict. It’s safer and easier for everyone to have the solutions written down, in order to be able to easily verify them later.

Do you agree with Steve's advice? Have you ever been in a meeting that's turned unproductive because the focus has been on bickering instead of achieving goals? Do you have any suggestions to add to Steve's response?

Does Lean Help the Smaller Companies?

I came across this article over on the Bloomberg.com site that details the struggles of Saab (the Swedish carmaker) during the past year to remain in business after its sale to Spyker Cars from General Motors. The situation is quite grim with suppliers halting shipments because of unpaid debts.

A quote from Garel Rhys, president of the automotive industry research center at Cardiff University in Wales, stood out. He states that: "There was a period about 25, 30 years ago when people mistakenly thought that things like lean production would allow the smaller carmakers to survive easily against the bigger companies. Nothing of the sort has happened."

What do you think of this statement? Is this the promise of Lean production? Can successful Lean initiatives alone guarantee survival? I look forward to your comments.

Is IT Overfed Yet Undernourished?

Steve Bell and Mike Orzen -- whose book, Lean IT: Enabling and Sustaining Your Lean Transformation, just won a 2011 Shingo Prize for Operational Excellence, Research and Professional Publication Award -- recently authored a short article for the online magazine IT Today.

Because 80% of most firms' IT (information technology) budgets are spent on "maintaining," while only 20% goes to "improving," Steve and Mike contend that this situation, like the disturbing trend in the eating habits of the US population, has created "overfed yet undernourished" IT operations and infrastructure. These costly efforts are not focused on creating value.

The authors feel that many organizations forget that "Lean is not free, it requires investment" and must remember to "create sufficient slack time in the schedule to allow workers to perform continuous improvement activities."

Are any readers of this blog involved in a Lean initiative focused on the IT function? Do you agree with Steve and Mike's assessment?

Lean Office? Really?

Last week at the Annual Shingo Prize Conference, I had a chance to talk with Drew Locher, who just recently published a book titled Lean Office and Service Simplified: The Definitive How-To Guide and has previously won a Shingo award for a book he co-authored titled The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes. During our conversation, I asked Drew: "Can lean really be applied in an office and service environment where so much variation exists?" Here is Drew's complete response: Much of the variation found in an office and service environment is "self created." Lean concepts such as standard work, batch reduction, and leveling are just a few that directly address much of the variation that is encountered. For example, the lack of standard work usually means that people perform similar activities in different ways. This creates variation. An individual "batching" a particular activity creates variation in the amount of work that moves from person to person or department to department. For example, if a person performs an activity once a week, then a week’s worth of work will arrive at the next step all at once. Further, if the person performs this weekly activity at different times it creates still more variation for the recipient. From the recipient’s viewpoint, the demand for this work will appear to be very unpredictable. It is due to the manner in which it is processed by the previous person, however, and this can be changed and improved. Now, not all variation can be eliminated. We can, however, often accommodate still more of the variation that remains. Believe it or not, unplanned work can be planned for. We can put aside time for "drop-in" work so that it can be processed in a way that minimizes disruption. Experience has shown that up to 90% of the variation that people struggle with can be addressed by the application of lean concepts. The result is a much more predictable work environment that is more productive and less stressful. Has any reader of this blog tried apply Lean to an office, service, or transactional environment? Do you agree with Drew's comments?

What is Applied Concept Mapping?

Brian Moon of Perigean Technologies recently co-authored a book titled Applied Concept Mapping: Capturing, Analyzing, and Organizing Knowledge, and I asked him, quite simply, "What differentiates Applied Concept Mapping from other knowledge diagramming approaches?"

Brain gave me a clear and succinct answer, so I thought I'd post it here:

Applied concept mapping is the application of concept mapping to problem solving in the workplace. Concept mapping is a theoretically and scientifically grounded diagrammatic method of knowledge representation developed by Joseph D. Novak in the 1970s and originally intended for educational purposes. In the past couple of decades, concept mapping has been applied to a myriad of knowledge problems in the workplace, many of which are covered in our book.

While there are many approaches to “mapping intellectual landscapes," “idea mapping,” and “visual thinking,” applied concept mapping is distinct in many ways. Few if any, are grounded in as extensive a theoretical and scientific base as concept mapping. None require the level of specificity that is the hallmark of an effective concept map. Indeed, concept maps require not only the articulation of key concepts, but the specification of the nature of the relationship between them. This specification, as well as the semi-hierarchical shape of the map and the extensive use of ‘cross-links’ that emerge as otherwise disparate concepts are connected, distinguishes concept mapping from other approaches to knowledge diagramming.

When created in the CmapTools knowledge modeling software kit, concept maps can be put to a vast array of uses: knowledge elicitation, transfer, and management; lexicon and ontology development; modeling; training and organizational learning; product, software, cognitive systems, and organizational design and engineering; stakeholder engagement; analysis; and distributed planning. This flexibility in application is a major differentiator – innovations in application spring readily from the basic notion of representing key concepts and specifying their relationships.

Has any reader of this blog ever used concept maps as a problem-solving tool? Did they effectively help improve the process?

Spend Analysis -- What Makes a Part "Right"?

After Michael D. Holloway published his latest book -- Spend Analysis and Specification Development Using Failure Interpretation -- I discussed with him the effects of machine downtime and replacement costs. I asked: "If I'm working in a plant, and I have so many different parts that I buy, how can I possibly figure out what is costing me the most in terms of reliability and affecting my operations?"

He had an insightful answer, and I'm reproducing it here:

Great question! First, many items purchased are done so because items either wear out or break prematurely. Some items such as pumps and motors may leave a big impression on us because the failure is dramatic but a screw, grease, or an adhesive may not be such a big deal at first glance. That is where many people make a costly mistake. One must first understand cost and value before one can appreciate the cost of failure. It is best to follow a Purchasing Specification Development Process, and I have outlined one in my book. It will aid you in identifying the reasons for purchase and failures as well as how to determine which items are costing the most. In addition, it will help you develop a comprehensive procurement specification that will drive down operation costs. When you are able to talk about these failures and examine the data as it relates to not only the cost of the item but the downtime and labor it takes to repair or replace it, it becomes obvious what to attack first. It is very important that you don’t take on too much and also to include others from different parts of the operation. Often the operators understand the equipment far better than anyone else.

What is the common factor that influences a purchasing decision in your organization? Is it price? Would this be the case if the engineering, production, and maintenance teams were involved in the purchasing requirements and part and product procurement specifications?

Process Capability and Discrimination Ratios

During a recent phone call with Douglas Relyea, author of the book The Practical Application of the Process Capability Study: Evolving From Product Control to Process Control, he mentioned some common questions that arise when consulting with leaders or organizations. I'll let Doug take it from here:

"A company CEO asked me this question just this week, and I receive many similar questions in regard to gauges:

I understand the measurement process analysis (MPA) performed on product XYZ bond strength indicates we have a discrimination ratio (DR) of 2 which, if I understand correctly, means we can use this gauge to separate XYZ product into only two categories – good and bad. Should we buy a new gauge?

My answer is:

No. A low DR is not always a negative. A low DR can be the result of manufactured product that has very little variation as compared to the variation of the measurement process.

In this case, the product variation is 9 gms/in² and the measurement process variation is 47 gms/in². The customer specification is 400 gms/in², minus 50 gms/in² with no upper limit stipulated. The production records indicate the bond for this particular product is generally produced with a mean of 500 gms/in². This measurement process is suitable to tell good product from bad and, in this case, that is all that is required. "

Do you agree with Doug's assessment?

What About Standardized Work?

I recently spoke to Timothy D. Martin and Jeffrey T. Bell, who recently published a book titled New Horizons in Standardized Work: Techniques for Manufacturing and Business Process Improvement, about the role standardized work plays the performance of processes. I asked them flat out: "What would be the most important point that you want to make about standardized work?" Here is their unedited reply:

Over the years, we learned quite a bit from the many mistakes that we made as well as our successes in applying standardized work in many diverse processes. We also found that others were often very interested in how we “saw” ways to apply standardized work. To ensure that we did not lose these experiences, we tried to summarize and capture the thinking behind our adaptation efforts. This is one of the reasons behind the idea of “new horizons”. We felt it was important to share these experiences and hopefully offer more detailed information on standardized work itself. Although there are a lot of books about the Toyota Production System (TPS) and lean manufacturing, standardized work often appears in limited detail. We felt that this might have led to some of the common misconceptions that we were running into about standardized work.

One of the main misconceptions is that there appears to be a common belief that standardized work applies only to manufacturing processes with short repeatable work cycles. We believe that standardized work principles can be applied to virtually any situation where work is involved. Toyota has taught us that we should not blindly copy what they have done, but rather that we must instead strive to understand the thinking behind TPS so that it can be adapted to our processes. This thinking, which includes standardized work, can be adapted to processes used in the office, on a construction site, in the kitchen, in an operating room, or even in the board room. The extent of these principles and philosophies is limited only by your determination."

Do you agree with Tim and Jeff? Can standardized work really be effective off the manufacturing floor? Do you think it would work with long work cycles? Is it dangerous in some particular professions to standardize work?

Misguided Pragmatism and Its Impact on Lean

I recently had a conversation with John W. Davis, author of Progressive Kaizen:: The Key to Gaining a Global Competitive Advantage and president of WFM Associates, and he discussed what he call "misguided pragmatism" in regard to Lean initiatives in US companies. I asked him to elaborate and here was his response:

It has been well over a decade since US industry was introduced to the Toyota Production System (TPS). During the same period, US manufacturing has gone through the greatest surge of plant closings and layoffs since the Great Depression - and the trend seems far from over. At first glance, this would serve to leave the impression that Lean Production has not been the panacea it was touted to be. But is the culprit Lean itself or how US industry typically aligns itself to the task?

That is a question that has and will continue to be explored in corporate offices and boardrooms across America. But to do the matter justice, the issue of conventional mindset and its impact simply cannot be ignored. Misguided pragmatism comes to bear when management accepts the need for change, but holds strong proclivities related to the way business has always been conducted. Coupling this with pragmatism surrounding the value of the change itself and the result will always be a restriction in the depth of Lean implementation pursued.

If the ultimate mission, assumed or otherwise, is to implement some of the tools of TPS, efforts will be applied at inserting various levels of Kanban, SMED, Poka-Yoke, etc. On the other hand, if the mission is aimed at fully and irreversibly changing the system of production (and is clearly understood as such by all concerned), strong efforts in achieving that goal can occur. The driving objective has to be more than making incremental improvement to an old and cumbersome system of production. It has to be aimed at establishing a mindset that a full and complete change to the system of production is absolutely crucial. If that one point is effectively understood, everything else will tend to fall in place.

What do you think of John's opinion? Do you feel that Lean initiatives have the tendency to merely "shine and polish" an outdated system instead of creating a transformation?

Lean for the Public Sector

I recently spoke with Bert Teeuwen who has spent 12 years as trainer, coach, and implementer of Lean in both industrial and public environment and currently serves as a consultant with the WagenaarHoes organization. He recently published a book titled Lean for the Public Sector: The Pursuit of Perfection in Government Services.

I asked Bert: "The title of your book suggests that processes in government are so unique they demand a specific Lean method to improve them. Why are these particular methods needed?" Bert's reply was quite interesting:

Most books about Lean are written with industry in mind. All the examples are about machines and installations. Some books are about Lean in the office, but civil servants are not impressed by all these examples from businesses. Public servants want to read a book about Lean when it contains examples from their own working environment.

The main reason, however, is that Lean in the public sector is indeed different! Organizations in the public sector function on a non-profit basis, so what should they do with the time or money earned with Lean? Another point is that considering a citizen as a customer is not always correct. Citizens are customers sometimes, but often they are subjects, voters, taxpayers, and users. When a parking guard or a policeman gives you a bill for incorrectly parking your car. Are you his customer? Are you in the position to say no and go to a competitor? In addition, consider the application for a building permit. As far as the applicants are concerned, they can build perfectly without that permit. But the permit was not created to solely serve the applicants but, for example, to protect their neighbors against excessive and intruding extensions to the applicants' houses. There is a different discussion about who is adding value to whom in the public sector.

And what about the pull principle? What is pull in the public sector? Is pull in the public sector always better? No, sometimes push is better, because the government has a duty to provide certain services for its citizens, even when they don't ask for it.

What are your thoughts about Bert's reply? What do see as the particular needs of the public sector in regard to Lean initiatives?

Receiving Effective Feedback

I recently had a conversation with change management expert Rick Maurer, who recently published a second edition of his best-selling book, Feedback Toolkit: 16 Tools for Better Communication in the Workplace. While we agreed that feedback is essential at work, I stated that many would say that they don’t receive effective feedback. I asked Rick to offer his opinion on why many employees feel this way. Here is his response:

"Feedback can mess with our self-image. In spite of what we say, most of us don’t want people telling us that we fell short or are doing something the wrong way. So, we set up mechanisms to protect ourselves from hearing anything that might disrupt our fragile view of who we are. For example, we surround ourselves with the proverbial yes-men and yes-women or we send mixed messages. The movie model, Samuel Goldwyn, once said 'I want people to tell me the truth, even if it costs them their jobs.' Wise employees understood which part of the message to heed.

If we want a workplace where colleagues give us feedback, then we must do things that assure people we truly want to hear from them. Here are a few points to consider:

• Only ask for feedback if you are willing to hear what others have to say. Otherwise, you are setting them and yourself up for a very uncomfortable exchange.
• The only appropriate response to feedback is 'thank you.' Of course you can ask questions of clarification, but don’t make excuses or explain your reasons for doing something.
• Make it easy for others to give you feedback. Jack was a client of mine who asked people to anonymously write reactions to a new management initiative on index cards and submit them to his secretary. At the all-hands meeting, he first said 'thank you.' And then he picked up that large stack of cards and responded to questions and comments. He did not defend himself. He took responsibility for his actions and decisions, and used their feedback to engage them in a conversation about what comes next.
• Jack found a way that made it easy for him to take in what others had to say. Note that he did not ask for comments during the meeting. He knew that he might hear something that would cause him to go ballistic, and that would end the meeting. . Getting comments before the meeting gave him time to react privately before he met with the team."

What are your thoughts on Rick's comments? Does your workplace environment foster true communication or is it merely an exercise?

The 2011 Lean and Six Sigma Conference

I recently received a brochure for the upcoming 2011 Lean and Six Sigma Conference in Phoenix at the end of February, and I am quite impressed with its program. The application of Lean techniques to nontraditional industries, such as health care, and to different areas within an organization away from the shop floor, such as administration and product development, has proliferated within the past 10 years -- It's great to see this conference reflect that. I'm glad to see more presentations focusing on creating Lean culture as opposed to strictly applying tools as well. In addition, such Productivity Press authors as John Casey, Robert Damelio, Mike Osterling, and Karen Martin lead sessions while Adil Dalal delivers a keynote address.

Other than learning about successful applications and case studies, attendees also have numerous opportunities to network with the veterans who have lead or participated in transformations. These informal one-on-one, side conversations often prove invaluable to those just beginning the Lean journey.

Mark Graban's "Lean for Haiti"

Today's blog entry features a special note from Mark Graban, author of the book Lean Hospitals: Improving Quality, Patient Safety, and Employee Satisfaction and founder and lead contributor of LeanBlog.org:

January 12 marked the one-year anniversary of the earthquake that devastated Haiti in January of 2010.

Last year, I was fortunate to meet a special person -- Russell Maroni, an x-ray tech at Akron Children's Hospital. He volunteered in Haiti for 15 days in February 2010 as part of the earthquake relief efforts. He was unexpectedly, and necessarily, pressed into service in a medical role, not only caring for patients, but also using his formal lean training from ACH to help improve processes and radiology patient throughput at a field hospital.

Russell wrote a very compelling, and very personal, journal during his time in Haiti. He and his colleagues took many pictures. We are sharing this all in a PDF eBook that we are freely distributing - to share the story and to create awareness for Haiti relief needs. We are asking people who read the book to consider donating to the Friends of the Orphans, which runs an orphanage in Haiti.

The journal isn't mainly a 'lean story,' although it does include his hand-drawn A3 plan. It's a very personal story, of his own prayer and contemplation of the trip, and his experiences in the midst of that tragedy.

To read more, go to the Lean for Haiti site, which has links to the PDF and other social media sites for the relief effort.

Barnes-Jewish Hospital (St. Louis) and its Lean Results

According to a recent article over on the STL Today website, Barnes-Jewish Hospital in St. Louis has seen dramatic improvements during the past five years with its "patient-centered care" approach. With the hospital's focus on value stream analyses and standardized work, the term "patient-centered care" is quite synonymous with Lean management.

According to Dr. John Lynch (vice president and chief medical officer), streamlining the hospitals preparations for surgery saved about $1 million in 2010. The hospital performs about 40,000 surgeries per year. In addition, standardizing the installation of patients' intravenous lines "lowered the hospital's central line bloodstream infection rate by 40 percent in the last year."

I think Dr. Lynch's reply to the criticism that these techniques might cause rote "cookie-cutter care" is important -- according to Dr. Lynch "we only use standardization when it makes sense." The hospital does not resemble an assembly line: "We're more like a body shop, where every car comes in with its own problems," Lynch says. "We always allow room for individual patient variation. We're not telling the surgeon where to cut."

Although Barnes-Jewish hospital has put such tools as kanban, poke-yoke, and root-cause analysis to great use, the major area for improvement is the reduction of wait time in the emergency department. Solutions here are difficult because of the dramatic increase of patient visits each year. Do any readers of this blog have some suggestions for increasing the efficiency for admitting patients? Should the focus be on decreasing the wait time or adding value to the wait time?