Redeveloping Product Development at Volvo

I came across this interesting article that provides a little insight into how Volvo developed one of its new trucks -- the Volvo FMX. According to Gunnar Eliasson (a market manager for Volvo Trucks), customer input and specific requirements are now influencing the design of Volvo's trucks in a much more direct fashion. As product lifecylces are much shorter due to increased competition, response to customer demands must be more immediate.

With the Volvo FMX, the development process included customers, drivers, sales staff, and marketing specialists and then prototypes were built and tested after input and "wish lists" were distilled. A very crucial point of the article is a quote from Jeffrey Liker (author of The Toyota Way) who noted that this new process is what separates Lean product development from traditional product development: "In Lean production, specialists work together freely across several departments and areas, all so as to be able to better meet customer demands. At the same time, this approach promotes constant learning about the production processes and understanding of how product development is conducted."

Do you know of any companies that include this type of input very early in the process? How has it affected lead times?

Most companies' major concern with this type of process is the dissemination of important "secrets" to competitors. The more various "outsiders" involved in the development process so thoroughly increases the potential for leaks. Eliasson, however, reveals that the priorities and outcomes have greatly changed: "The benefits of inviting customers into the product development process far outweigh the risk that information might spread to our competitors."

Lean Culture in a Pharmaceutical Company

Over at the PharmTech.com site, an article by Christian Houborg details a case study on how Lean can drive the creation of an improved culture within pharmaceutical companies. One of the main issues the author addresses is how pharmaceutical companies should integrate a Lean methodology into their current good manufacturing practice (cGMP) approach. Houborg's case study examines the approach used by Lundbeck (an international Danish pharmaceutical company engaged in the research and development, production, marketing, and sale of drugs for the treatment of psychiatric and neurological disorders). The four-phased approach consisted of:

1. Building consensus in the management group.
2. Building the pilot and proving that it works.
3. Running a large number of Lean events and building a culture around these events.
4. Increasing the focus upon Leaders after two successful years.

The fourth phase is quite interesting because it revolved around a Lean leadership development program, which itself followed four sequential modules:

1. Lean Leadership Foundation -- concentrates on getting the basics accurate.
2. Lean People Leadership -- focuses upon the qualities and needs of the individual manager's team.
3. Lundbeck Lean Acceleration -- the existing situation in the company is analysed, with consideration of what had and had not worked with the objective of speeding up the transformation further.
4. Sustaining Lean -- sustaining momentum is discussed and all participants present the result of their Lean project.

These four modules geared toward the leaders are probably instrumental in sustaining the Lean gains by preventing stagnation and backsliding -- This is the point where the organiztion prgresses from applying techiques to developing an improvement culture. The most important part of the article is summed by the author when he states that the "approach is much more than just about waste elimination; Lean has become a complete business paradigm. Employees that were earlier engaged in Lean teams are now partnered with the top managers, driving Lean culture in their area together."

What are your thoughts on this case study? Does Lundbeck's Lean system contain facets missing from most initiatives?

The Wall Street Journal and "The Drawbacks of Lean Manufacturing"

Back in July, an article, authored by Daisuke Wakabayashi and Jung-ah Lee appeared in The Wall Street Journal that reported such companies as Apple Inc. and Nissan are experiencing delays in production because their respective suppliers cannot fill the currently increased demand for certain parts required in popular products. The authors claim that the reason for this these shortages stem from "the drawbacks of lean manufacturing methods, which call for carrying little inventory but make supply snags tougher to offset" and generally believe that "the pitfalls of Lean manufacturing methods, a hallmark of cash-rich and efficient companies, arise when parts either prove faulty or in short supply."

Previous to this article, I had never seen Apple referred to as a Lean organization -- I've come across no other articles that have described the company as such, and I've never seen Apple reference it in its literature. Surely the authors could have provided a bit more discussion about Apple's global supply chain and how it functions before making the claim to help warrant their argument.

This article has come up quite periodically during discussions with colleagues during the past month, and I'd very much like to hear readers' opinions and thoughts about it. What was your reaction when you first read this article?

The Lean Plateau

According to this article on the Supply Chain Brain forum, which details survey results provided by Capgemini Consulting, "dissatisfaction with lean initiatives is highest one to two years after initial launch." As expected, the initial enthusiasm resulting from practical process improvements of first-time kaizen events and the application of Lean tools soon gives way to stagnation or backsliding because "long-term behavioral changes have not yet become embedded in the organization." In other words, if an organization's culture is not altered or transformed, the Lean initiative will eventually hit a sluggish plateau.

The article contends that the absence of four correctly functioning key factors -- Leadership, Recognition, Strategic Alignment, and Performance Management -- often lead to an initiative's inability to sustain. I have always maintained that there is that crucial disconnect between the application of Lean tools and and true behavioral change when participants are just "applying" but not "understanding." In your experiences, what causes Lean initiatives to stall? Can participants who expressed enthusiasm and optimism for the Lean initiative when it commenced, but are now disheartened at two-year mark, be reinvigorated?

So Lean, What Have You Done for New Hampshire Lately?

According to this article authored by Catherine Blake and published on the Business NH Magazine website, the New Hampshire Manufacturing Extension Partnership (NHMEP) the economic effect of Lean in New Hampshire during the past five years has been "305 new jobs, 593 retained jobs that didn't go off-shore or get eliminated, $194.9 million increase in sales, $75.2 million spent on new investment, and... $29.1 million in cost savings." The article contends the reason why all companies don't embrace Lean initiatives "has everything to do with human capital" and the investment in training to build Lean culture. What many New Hampshire manufactures don't know is that a grant is available "for qualified prospects through Governor John Lynch's job training fund."

Some of the New Hampshire companies that have benefited from successful Lean adoptions are: RF Hunter (a maker of oil filtration systems), Salient Surgical Technologies (a developer of technologies to simplify surgeons' work), High Liner Foods (a processor and marketer of seafood products), and BAE Systems (a global defense, security, and aerospace company).

Lean as a Political Platform

The Lean Insider blog is not endorsing any particular candidate for the Senate seat in Washington state, but in terms of political angles, I could not help but find one of independent candidate Paul Akers' positions quite interesting. In this article published on the Edmonds Beacon site, Akers (the owner of FastCap -- a product development company that makes woodworking tools and equipment) believes he is a different type of candidate because he is a "Lean manufacturer" and "Lean thinker" and would use this methodology to reshape the government culture if elected.

Although many politicians speak of eliminating waste in government, Akers feels most don't have the proper skills to accomplish it. He contends, however, that his background in owning and managing a company that "empowers people to eliminate waste every day" makes him especially qualified.

Here's Akers' summation of his "10 to Lean" plan: "You cut taxes by 10 percent, you cut spending by 10 percent, across the board, for three consecutive years, and implement a Lean strategy throughout the federal government. Every federal agency will have one Lean thinker who will teach people how to eliminate waste and increase quality. By default, that will shrink the size of the federal government, shrink spending, create more jobs, and more opportunity for everyone with lower taxes. It’s a winning formula."

I'm sure this is the first instance in which I've heard such an explicit use of Lean as part of a political campaign. What are you thoughts? I welcome all insightful comments.

Staying Lean (and Beautiful) While Outsourcing

In the June 2010 issue of GCI magazine, David Becker, in an article titled Speed to Market: Becoming Lean Through Outsourcing, contends that although outsourcing is usually incorporated to just save costs, it actually can save time, foster creativity, and improve quality and flexibility. Becker focuses on the beauty-products industry in which "taking a product from trial to mass production" can be the most wasteful and time-consuming task in product development. As in most industries, full supply-chain development and partnership, which should be based on constant communication and realistic expectations, is crucial to any product.

An interesting quote comes from Justin Ames, director of custom manufacturing at Neways Inc. (a company that focuses on the research and development, manufacture, and fulfillment of personal care products): "Look for companies on a continuous cycle of implementing initiatives. Neways Inc. is obsessed with quality and on-time deliveries. If one of our initiatives positively affects this measurement, then we build on it. If it doesn’t, we review it, change it, or throw it out and try something else." Essentially, Lean customers can foster Lean suppliers and Lean Suppliers can enhance Lean customers.

Please feel free to comment or cite examples in which a supplier has hastened or energized a customer's Lean initiative.

Manufacturing Today... In a Nutshell

I recently browsed across this clear and concise article by Stephen Jannise titled "A Plain English Guide to Modern Manufacturing Methods" on the Manufacturing Software Advice website. Stephen maintains that modern manufacturing should comprise three main concepts:

1. Reducing waste.
2. Maintaining quality.
3. Accelerating production.

The reduction of waste focuses on seven methodologies: Just-in-Time (JIT), Kanban, Just-in-Sequence (JIS), Total Productive Maintenance (TPM), Quick Response Manufacturing (QRM), Cellular Manufacturing, and Single-Minute Exchange of Die (SMED).

For maintaining quality, the concepts that enhance Six Sigma are listed: Define, Measure, Analyze, Improve, Control (DMAIC); Define, Measure, Analyze, Design, Verify (DMADV); Critical to Quality (CTQ); Quality Function Deployment (QFD); and Suppliers, Inputs, Process, Outputs, Customers (SIPOC).

Accelerating production is crucial because of the customized needs of the modern consumer. To maintain flexibility, manufacturers embrace: Machine Flexibility, Routing Flexibility, Computer-aided Design (CAD) and Computer-aided Manufacturing (CAM), Computer-integrated Manufacturing (CIM), and Taguchi Loss Function.

Stephen essentially contends that for a current manufacturing operation to remain successful, it must embrace an initiative that combines both Lean and Six Sigma. I found this article a great primer on the targets and techniques all manufacturers should be incorporating into their respective business strategies. What are your thoughts? Do you think Stephen has has overlooked any important areas?

The Seattle Children's Hospital Improves Its Own Health

On Friday, July 9, The New York Times published a revealing article about the continuous performance improvement initiative (C.P.I.) at the Seattle Children's Hospital. Not only has this initiative dramatically improved patient care, but it helped cut costs per patient by 3.7 percent, which resulted in a saving of $23 million.

The article interviews Patrick Hagan, the hospital's president (as well as co-author of the forthcoming book Leading the Lean Healthcare Journey: Driving Culture Change to Increase Value), about the use of tools used most notably at Toyota such as kaizen. Hagan believes that "the highest-quality care also is the most cost-effective because we make fewer mistakes and create better outcomes."

An interesting part of the article deals with initial resistance to C.P.I. from doctors because many thought some patient-care decisions would be removed from the physicians. Dr. John Waldhausen, the division chief of pediatric general and thoracic surgery at the Seattle Children's Hospital, changed his mind as the initiative developed. He states that "C.P.I. is the same scientific method we learned in medical school, including hypotheses, data collection and analysis. It is not opinion and conjecture — it is data-driven."

Customization Versus Price

Do you think the buying habits of online shoppers are changing rapidly? According to this revealing article by Peter Crawfurd published on the Huffington Post site, the habit of conveniently purchasing a variety of standard items quickly and cheaply from one online retailer might be evolving into a different buying pattern: customers are seeking more personalized and customized products at affordable prices with quicker delivery times.

One of the goals of Lean production is dynamic flexibility -- to efficiently produce customized products in the smallest lot sizes possible while satisfying customer demand and clearing a reasonable profit. Crawfurd cites some companies that are currently striving to follow this model (including his own ShirtsMyWay.com), but do you think customization at this very individual level will ultimately survive and overcome the expense? Is this the model that most online retailers will soon be adapting?