Can You Plan and Execute Strategic Productivity Improvements Without Incurring Large Expenditures?

In February, Alin Posteucă published a book entitled Beyond Strategic Kaizen: Performing Synchronous Profitable Operations, which presents a methodology that achieves simultaneous and consistent systematic operational and financial improvements in a strategic and operational manner. It achieves both synchronous operations at market demand by fulfilling takt time and profitable operations in accordance with profit demand by fulfilling takt profit. In short, the Strategic Kaizen mission is striving for the fulfillment of the ideal state of operations called synchronous profitable operations.

When I spoke with Alin this past week, I asked him: "How do you plan and execute strategic productivity improvements to meet financial and operational expectations simultaneously without further expenditure?"

Here is his full response:

This is a difficult time for manufacturers. To survive, manufacturing organizations must activate their entire potential for planning and executing strategic systematic productivity improvements, they need Strategic Kaizen -- they must go beyond traditional Kaizen activities and beyond the daily activities of continuous improvement based on the reduction or elimination of waste empirically at the shop floor level.

Naturally, a question arises: How is the new concept of Strategic Kaizen for performing synchronous profitable operations defined? "…it is a participatory, systematic, and scientific planning and control process used to align financial and operational business strategy with strategic systematic improvement activities to meet the goals of Takt Profit and takt time at the same time regardless of sales trend (increasing or decreasing)."

Therefore, in this book, I did not limit the Strategic Kaizen to a mere strategic improvement approach. It goes beyond since its main purpose is to direct a complete and continuous strategic transformation to the ideal state of operations, to the state of synchronous profitable operations by meeting successive targets of Takt Profit, or ”the target profit per minute in the bottleneck operation”, and implicitly by meeting the successive targets of takt time. 

As is known, the concept of "synchronization", or JIT and its practice are very important, but it is very difficult for all manufacturing companies to achieve a complete and especially profitable "synchronization". For final manufacturers, "synchronization" seems to be still an extremely effective method, but for their suppliers, "synchronization" is not always adequate, and it is not always profitable enough.

But let's return to your question more specifically. By applying the unique methodology in seven basic processes of Strategic Kaizen presented in detail and with real case studies only in this book, executives have a new way of thinking and acting to move the business to the next level.

In the first five processes, strategic productivity improvements are planned, as follows:

1) measuring and studying the full potential for strategic productivity improvement;

2) calculating ideal Takt Profit and setting strategic expectations for stratified KAIZENshiro;

3) annual financial reconciliation by establishing annual KAIZENshiro budgets and the annual Takt Profit target (financial catchball);

4) annual operational reconciliation by establishing the production target time and by developing the Balanced Scorecard and KPIs (operational catchball);

5) organizing, planning, and learning for Strategic Kaizen.

Then the last two processes focus on the implementation and management, as follows:

6) implementing annual feasible Strategic Kaizen projects in six steps;

7) results, standardization, horizontal extensions, and future plans. 

In conclusion, I recommend both final manufacturers and their suppliers use Strategic Kaizen to simultaneously satisfy the urgent need for "synchronization", or operational need and "profitability" to achieve complete and continuous strategic transformation and to achieve continuous strategic improvement in manufacturing costs of at least 6% per year and with a total of 30-45% for five consecutive years, based on the reduction/elimination of costs of excess inputs and the associated cost of failing to utilize those optimally, costs that exist in their organization anyway, without significant investments, with financial visibility of improvements at the level of KAIZENshiro budgets.

So, the main job of managers is to improve productivity systemically, without investment, and especially strategically, through the now available new Strategic Kaizen thinking and methodology.

What do you think of Alin Posteucă's idea of Strategic Kaizen? Do you think this methodology can achieve synchronous profitable operations?

What is Operational Excellence in the Office?

Kevin Duggan, with Tim Healey, recently published an important new book that expands on, and transcends, the topic of value stream mapping titled Operational Excellence in Your Office: A Guide to Achieving Autonomous Value Stream Flow with Lean Techniques. I asked Kevin to specifically tell me: “What separates this book from all the others on value stream mapping?” Here is his complete answer:

Operational Excellence in Your Office is much different than previous value stream mapping books. The subject matter of this book is achieving true Operational Excellence in the office, and not ways to merely eliminate waste in the office. True Operational Excellence is defined as “when each and every employee can see the flow of value to the customer, and fix that flow when it breaks down.” This means we establish “self-healing value streams” that run autonomously day in and day out without management intervention.

The book provides a detailed overview of exactly what Operational Excellence is and how it applies in the office. The book does not teach how to create value stream maps, but it uses value stream maps to show how to design self-healing flow in the office. 

The word design here is key. In many value stream mapping techniques, we have been taught to make a current state map, look for waste, and think of an ideal state, or use brainstorming tools to try and develop a future state. However, in Operational Excellence, it’s different. In Operational Excellence, we create a current state; however, we then put it on the wall and just leave it there. The next step is to learn the nine guidelines of office flow. These guideline teach us how to handle high variation in customer demand (as the concept of traditional takt time just won’t work in the office), how to sequence work, where we can possibly do a one-piece processing cell, how to move work through the office using workflow cycles, how to move large amounts of information from one area of the company to another, where we can initialize work and at what points can we re-sequence work, how to tell if the office flows are on time, and what to do when the customer changes their demand or new demand comes in that exceeds what the value stream was designed to do. 

The key to these guidelines is that they provide a method to design what we will then consider to be normal flow. And by establishing normal flow, we have then established what abnormal flow is. 

Understanding and reacting to abnormal flow is a state that very few companies achieve. However, this is exactly the goal of Operational Excellence: seeing, understanding, and correcting abnormal flow without the need for any management intervention. Without the need for management to direct and control information flow in the office with status meetings, update meetings, or meetings to fix abnormal conditions, management can now spend their time on activities that grow the business, or offense activities. 

What separates this book from other value stream mapping books is that we are not teaching value stream mapping in this book; we are teaching how to design value streams that achieve Operational Excellence in your office. Value streams designed using the guidelines in the book can then become self-healing, and deliver the service day in and day out autonomously, without the need for management intervention, freeing up time for management to spend on growing the business. 

Are there any readers familiar with "self-healing value streams"? If so, what have been your experiences?

Lean, Value Stream Mapping, and Process Industries

I spoke with Peter L. King this past week about his new book, Value Stream Mapping for the Process Industries: Creating a Roadmap for Lean Transformation. This book is Peter's the third book on how Lean concepts apply to process operations, so I asked him: "What fuels this interest?" Here is his complete reply:

Actually, it’s much more of a passion than an interest -- a passion created during my 18 years applying Lean concepts to DuPont’s operations. I found it very frustrating that none of the available literature nor any of the courses I took could put Lean in a context that was appropriate to the kinds of processes I was working on, such as synthetic rubber extrusion, sheet goods manufacture, household and automotive paints, bulk chemicals, food and beverages, and carpet manufacture. These processes were quite different from the discrete processes, such as bolting sheet metal together to make refrigerators or automobiles, discussed in the then current books. I wanted to share my experiences with others in similar process industries to help them climb the Lean learning curve much faster than I did.

Value Stream Mapping (VSM), the subject of the latest book, is a very good example. While the format presented in Learning To See is very appropriate to both parts assembly and process operations, it must be expanded and adapted to completely describe the wastes and flow barriers found in process operations. Because the number of material types tends to expand significantly as material moves through a process operation, the VSM must clearly illustrate this diverging product flow. Traditional Lean deals with takt (customer demand) as a time factor, whereas in processes it is much more effective as a rate factor. While the assumption is often that takt is constant throughout the operation, in process manufacturing, however, it often must increase as you move back through the process to accommodate yield losses. And, the fact that key pieces of equipment are often shared across several product families presents a challenge on how to balance the need to clearly and simply illustrate flow with the need to be thorough and complete; bad choices in this area can understate utilization and hide bottlenecks. These are just a few of the issues I faced in creating effective VSMs for DuPont’s processes which are all described in the book.

A well-constructed VSM can be the blueprint that a Lean architect uses to guide a complete Lean transformation, as the examples in the book demonstrate. 

Do you have experience applying value stream mapping to the process industries? What have been the challenges?

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?