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?

Porsche Gets Its Speed from Toyota

I just read this great article over at the Bloomberg Businessweek site titled Porsche ‘Shock Therapy’ Spurs VW, Lufthansa Efficiency Drive. Other than pointing out that Porsche currently has the highest profit margins in the industry, the article discusses how Porsche, under the auspices of CEO Wendelin Wiedeking, began benchmarking Toyota's Lean production techniques back in the 1990s. This current success could indeed be attributed to the lessons learned from Toyota.

One section of the article -- "Taught By Toyota" -- points out how Porsche fully embraced a JIT (just in time) delivery system in cooperation with its suppliers: "Porsche took steps to fine-tune cooperation with suppliers to ensure factories received parts just when they were needed on the assembly line."

For years, Toyota has been operating its "Toyota Production System Support Center" at its North American manufacturing and engineering headquarters in Kentucky "where it holds ongoing seminars for outside companies, as well as schools, hospitals and charities." It appears Porsche has followed this lead as well as it has established its own consulting division and has worked with such clients as "Deutsche Lufthansa AG, Volkswagen AG, and Meyer Werft GmbH" who have "all turned to Porsche to make their manufacturing processes more efficient."

In 1993, Porsche "had a net loss of 122 million euros ($162 million) and sales of no more than 14,000 cars" and now in 2010 posted an "operating margin in the automotive unit in the fiscal first quarter of 19 percent" and earned honors in J.D. Power & Associates’s annual quality study.

What do the readers of this blog think of Porsche's success? Does it come as a surprise? Is Porsche building a new culture within its organization?

Lean Labor Management

I recently read a very informative article by Stephen Jannise on the Software Advice site that covers a concept often left out of Lean manufacturing discussions: lean labor management. This article pinpoints three key effects that Lean principles can have on labor management, particularly within the manufacturing industry. These effects are:

• The metrics of effort and success will differ from a non-Lean environment because the goals for productivity have changed.
• Employees will be expected to work with greater flexibility and adapt to unique problems that arise each day.
• Relationships between co-workers, superiors, and subordinates will be reshaped to emphasize managed cooperation over individualized labor.

Jannise continues with a more detailed analysis of each of these areas and makes some crucial points, such as: "If managers in a Lean workplace are going to convince workers to handle more complex tasks, then they must devise ways to reward flexibility," but the overarching theme reinforces an overall transformed mindset. All those involved in the Lean initiative must be ready to exit their respective comfort zones and realize that the majority of the traditional metrics and behaviors not only don't apply, but will ultimately prove detrimental.

The A3 Problem-Solving Process

One of the most effective problem-solving approaches used by Toyota is the A3 report. "A3" is actually a paper size (11" x 17") that was used at Toyota to keep problem-solving documentation consistent, structured, and clear.

I recently spoke with Daniel D. Matthews, who spent 14 years as trainer, coach, and implementer of Lean Manufacturing at Toyota and recently published a book titled The A3 Workbook: Unlock Your Problem-Solving Mind. I asked Dan: "What would you say is the biggest mistake people make when trying to solve problems and how can the A3 problem-solving process help?"

Here is his complete response:

"The one mistake that is consistent from class to class is that participants jump to potential causes or even countermeasures before they fully understand the characteristics of the problem.

My first step is to coach them to ignore their natural inclination to take some kind of action. In the A3 problem-solving process, you are encouraged to delay acting on the problem until you have stated it clearly and precisely.

It is critical that you identify the facts that explain what is actually occurring and try to make your first 'sense' of the problem more specific. To do this, you must remove the subjectivity and replace it with facts.

To accurately depict the current situation, it is important to look at existing data related to the situation. Make sure that you go and see the situation for yourself; don’t rely on others to provide you with the information you need.

The data you gather will also help you later in the process when you have to break the problem down. To truly understand the problem, you must break it down into specific characteristics. The key to solving any problem is to follow the process and let the facts lead you instead of acting on your opinions and feelings."

Are you using A3 reports to solve problems? Do they hasten the path to the root cause?

Lean and Human Resources

I first met Cheryl Jekiel -- vice president of Human Resources for the Flying Food Group -- at an annual Association for Manufacturing Excellence (AME) conference a few years ago, and she recently published a book titled Lean Human Resources: Redesigning HR Processes for a Culture of Continuous Improvement.

I asked Cheryl to succinctly explain just how organizations can achieve greater success by applying what's now called "Lean Human Resources." Here is her response:

"Better performance requires knowing where you are, followed by setting the right goals and then taking effective steps to achieve them. Your goal achievement process works best when business managers and HR Managers partner together to involve everyone in the workplace -- which for many of us is a significant challenge. Many (if not most) attempts to improve results fail when your management team tries to go it alone. Applying Lean to the Human Resources (HR)function can provide a roadmap for how your organization can avoid the common mistake of leaving HR on the sidelines while you develop and execute your strategies. Building performance based strategies into all your people-related processes, such as recruitment, training, performance management and rewards, is not only the best way you can achieve new levels of success, but it prevents failure from leaving the HR out of the equation.

In addition, the positive impact of involving employees in the daily goals of your organization and understanding the needs of your customers generates noticeably more motivated employees. This enthusiasm creates a positive momentum that generates even more productivity and better customer service on all levels. In addition, more involved employees are great candidates for enlarging their job content to include more of their skills, such as teamwork, problem solving, and process improvement (which are often left untapped). Lean HR provides methods for putting more into job responsibilities in a step-by-step manner, including what processes must be changed to allow employees to participate more fully on a daily basis.

Lean HR is not a program to run through your organization, but a whole new way to utilize the talents inside your organization. Your customers will be quickly able to see that your organization is one where everyone is involved and on the same page about 'the customer comes first.' The results will also reflect satisfied customers who are willing to pay more for products and services from an organization that accesses their people more effectively."

Do any of you work in organization in which the Lean initiative has Incorporated the Human Resources department? Were there any initial barriers? Did it ultimately enhance success?

The Improvement "Trap"

During the past few years, I've attended many insightful presentations given by Michael Bremer while participating in conferences focused on Lean initiatives and performance improvement (most notably at the Association for Manufacturing Excellence's annual conference). Michael has currently authored a book (along with Brian McKibben) titled Escape the Improvement Trap: Five Ingredients Missing in Most Improvement Recipes. I recently met with him, and during our conversation, I asked him to explain just what is the "improvement trap" and how can companies escape it. I'm reproducing his reply here:

"For the most part, companies typically approach the business of improvement in very much the same way their competitors do. They appoint some smart person to lead the effort, and that person finds areas to improve, typically using improvement teams to attack waste and remove obvious non-value adding activities. Meanwhile, the organization conducts its business in the same manner it always has. Performance and efficiency might get better, but they get better in the competitor’s company also, so as a result, nothing much changes. That is the trap.

If an organization wants to break out of that trap, it must look for levers that can truly differentiate the organization from the competition. People laud and strive to emulate the Toyota Production (or Thinking) System (TPS). And it is indeed very powerful -- one of the best improvement methodologies of all time. But when did Toyota start to make lots of money? It was not after 20 years of TPS, although that did provide a solid foundation. Toyota started making the big dollars when they launched Lexus and redefined the customer buying experience for purchasing a luxury car. New value creation rarely gets talked about in improvement programs, yet is one of the most important areas an organization can develop."

Have you worked for a company that has invested much time and capital into an improvement initiative only to ultimately retain (or lose a bit of) the established market share? What do you think of Michael Bremer's point about the importance of new value creation?

True Cost Versus Piece Price in the Supply Chain

Chris Harris is one of the authors of a new book titled Lean Supplier Development: Establishing Partnerships and True Costs Throughout the Supply Chain, and I recently asked him the following questions in an email: "Why shouldn't the decision of where to source a purchased component be made on piece price alone? And, just what is 'true cost' and why should it be considered?

Here is Chris Harris' concise reply:

"The piece price of an component -- the comparison of one supplier’s piece price to another’s -- is typically the driving factor for selection of one supplier over another. But unfortunately, piece price only tells us a fraction of the cost that is actually borne by your organization when sourcing a component. The piece price only takes into account the price for which the supplier is willing to sell the item -- it usually includes the supplier’s manufacturing costs and overhead costs and profit, but it may or may not include factors such as the cost to you, the customer, for transportation of the component to your location and many other concealed costs.

When you evaluate a supplier’s cost, I believe you should always use a true cost methodology. The true cost methodology does indeed consider the piece price as a part of the equation but also takes into account other costs that fall into one of three categories: change costs (the cost of switching from one supplier to another), risk costs (the cost that you can reasonably predict could occur in the course of doing business with a supplier), and ongoing costs (the costs you'll bear during the duration of time that the new supplier is providing you with product)."

What are your considerations when purchasing parts or components? Do you use any type of "true cost" model?

Is Target Cost Management Important?

I recently had a conversation with Jim Rains, author of a new book titled Target Cost Management: The Ladder to Global Survival and Success. I must admit, I began our conversation in quite a blunt fashion by asking him right up front: "Why is target costing even important?" Here is his direct response:

"Target costing is important for a very simple reason. When it is performed properly in any major corporation it sets the stage for constant, consistent, acceptable and predictable levels of profitability. Predictable infers that there is a profit plan; a long term profit plan. All companies need to make money to stay in business, but only the best are able to sustain it forever. Making money must be the bottom line measure for any company’s success, but the real difference in companies that excel in target costing is that they achieve long term profits over a period of many years, literally decades, as opposed to a short term profit horizon.

The main activities of comprehensive target costing are:

• Planning for target cost and target profit.
• Confirmation of the target cost and profit and allocation to main portions of the product.
• Assisting and promoting the activities of target cost and profit and managing them in product planning, development, design and manufacturing preparation stages.
• Achieving the target cost and profit by the activities of all areas of the business.
• Evaluating target costing activities for continuous improvement."

I surely appreciated his response, but it then begged the question: "If target costing is so effective, why aren’t more companies implementing it?" Jim replied:

"This answer is more complicated but in short target costing is not easy. It is almost never easy to be the best at anything. The best athletes in the world at their sport work endless hours to separate themselves from their competition. Long term profitability that is constant, consistent, acceptable and predictable takes a fully dedicated leadership team that knows, follows and embraces the proper corporate strategy for target costing to flourish."

Do work with or know of any corporations that use target costing for long-term profits? Have these corporations been successful?

Lean Doing and Lean Thinking

A recent article over on the ThomasNet news site, authored by David R. Butcher, confirms what a lot of Lean champions have been declaring for many years -- Behavior profoundly changes an organization, not tools.

Capgemini Consulting recently released a report titled Lean for the Long Haul, which surveyed more than 150 executives responsible for leading Lean initiatives, and concluded that behavioral changes are what sustain an effective Lean transformation. What ultimately derails the Lean journey? Resistance to change and a lack of focus/commitment.

Placing a strong emphasis on the implementation of tools and the deployment of specific techniques does have a galvanizing effect as they do get all associates involved and encourage enthusiasm. In addition, tangible results are immediately revealed through waste-reduction efforts. After a year or so, however, sustainability becomes a major issue if routine "Lean doing" supersedes "Lean thinking." Without behavioral change, the initiative will ultimately wither.

Lean initiatives that survive the in the long term focus on:

• Leadership.
• Recognition.
• Strategic Alignment.
• Performance Management.

Has any readers of this blog ever been involved in a Lean initiative that has hit the "plateau" stage because some of the crucial Lean thinkers failed to create the correct culture and have moved on after instituting only the effective techniques?