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How One Company is Using Lean Fundamentals When Facing Disruption

by Michael Ballé
March 27, 2020

How One Company is Using Lean Fundamentals When Facing Disruption

by Michael Ballé
March 27, 2020 | Comments (11)

Companies that have been built using lean principles are turning to these core ideals when confronting the unique challenges caused by today’s pandemic.

When lockdown appeared inevitable, Nicolas Chartier, the CEO of AramisAuto.com and co-author of The Lean Sensei asked his executive committee to draw a Quality Function Deployment matrix to distinguish, in each service the company does (they sell cars), what 1) could be done 100% remotely, 2) required getting out of one’s home and 3) required face-to-face interaction.

Although AramisAuto.com is a successful Internet-based company, purchasing a car still includes some transactions, such as paperwork signatures and delivery, that require face-to-face contact. Who would want to buy a car when the whole country is in lockdown,  some executives asked. Shouldn’t we just shut down the company for the duration?

The discussion led to a different question: who needs to buy a car even though the country is in lockdown? And we determined that the answer was yes. For example, office workers are working from home – but some people still need to go out there and do the job of running society: healthcare professionals, to start with and – as we’re about to discover in a rude awakening – anyone working in basic necessities supply chains, such as soap, food, toilet paper, all the items that have now disappeared from the shelves.

The executive committee is now working hard to figure out safe delivery solutions for customers who need a car in the current crisis – and for ensuring that staff are safe in doing this job.

But the QFD matrix also pointed out another aspect of the crisis. All of our confined customers are still customers. They drive cars for necessities. They were in the process of purchasing a car and have questions. They are worried or scared about unrelated topics – nothing to do with cars. They are our customers.

Likewise, our staff remain our staff – albeit at home. They need to work. They need to see that their work means something, and they need to better understand their future with the company in the current meltdown. Normal supply chain activities may have stopped, but supply chains still need to be maintained. Suppliers are freaking out. Automakers are shutting down. No one knows what will happen, but all employees need to know that AramisAuto is still here – and will be here when things turn around.

We can look to history for some guidance. From the very start, at Toyota in the early 1950s, the point of lean thinking has always been to increase operational flexibility to deal with new unexpected challenges. Toyota executives had lived through the military’s take-over of their operations during WWII and seen firsthand the enormous waste the mix of rigid command-and-control and absurd administration created in the value-creation process. Orders and counterorders, knee-jerk reactions, unrealistic solutions all ranging from SNAFU (Situation Normal All Fouled Up) to FUBAR (Fouled Up Beyond Reason). (See the excellent book The Birth of Lean for more on this.)

The COVID19 pandemic is the mother of all challenges because it challenges us both practically (how do we stop the global spread of a deadly virus) and, simultaneously, emotionally: what can possibly be more terrifying than an airborne disease that can be transmitted just by standing next to a positive person who doesn’t even know yet they’ve been contaminated? So our natural human response is to retreat into absolutes first, trying to continue as if nothing had changed, and then shutting down all activities completely as many companies are now doing.

Then at some point you get out of your funk and realize, as Nicolas’ exec team has, that although operations have changed, fundamentals have not:

  1. The business is its customer base, and taking care of customers means being present in bad times as in good times: how do we better care for customers right now, in these impossible times?
  2. Employees make the company and though they be confined at home, they need to feel that the fundamental bond of trust with the firm is solid and that they are still part of a reactive engaged community: how do we keep social involvement when physical interaction needs to be avoided?
  3. Supply chains need to be reconfigured in novel ways. New, unexpected interactions are happening. For instance, in healthcare, there is a link between testing people (a key part of the solution) and protective masks (a supply chain failure) because the test makes people cough and the tester needs protection. In our business we look for similar connections to discover new problems to solve.
  4. A robust chain of help is the best way to discover new problems early: by listening to frontline people’s opinions and difficulties we can both help them out and discover early how problems are shifting and moving and where we need to secure new kinds of resources.

The core of lean thinking is to focus on understanding and agreeing on problems before jumping to solutions. In a crisis of this magnitude, it’s easy to feel “forget that, let’s jump to a solution right now!” But then as days pass, we will be seeing the terrifying consequences of early mistakes that have compounded the problem rather than saved us all.

Customers are still here, and they have new problems. Staff are still with us and they have new difficulties. Supply chains are more necessary than ever have new operational constraints. More than ever we need to build a strong sense of community and mutual trust to pull through this together.

Lean thinking companies like Nicolas’ are building on fundamentals by focusing on the new. They’re using the lean tools to ask specific questions such as:

  • What new problems do our customers express we can help with?
  • What new difficulties our employees experience both in having to perform on location tasks and keeping safe, and in working from home?
  • How do we need to re-direct supply chains and deal with continuity interruptions risks everywhere?
  • How can we use new communication tools smartly to maintain the kaizen spirit and sense of teamwork and community?

Lean thinking is more relevant than ever because it is the only management approach based on accepting challenges and figuring out new safe ways to respond, built from what customers, staff and suppliers experience in real life. This is no time for authoritarian best practices (how do we know what’s best). This is a time for figuring out smart and sensible responses with our customers and staff right here, right now.

When the panic subsides we can see the fundamentals haven’t changed – operational problems have. If we focus on the new problems one by one and keep the fundamentals in change we will pull through together – not unscathed or unchanged, but hopefully better at what we do and how we serve society.

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11 Comments | Post a Comment
John Shook March 27, 2020
2 People AGREE with this comment

Thanks for this example of a company taking positive, concrete action, Michael. We need more such examples. Surely companies who tackle current problems in this way will learn and come out stronger in the end.

In fact, I was one who needed to purchase a car earlier this week (after several years with no personal vehicle) and had a – RARE – wonderful experience buying a car! First, I scanned the local area (SE Michigan) on the net (perusing used cars – I enjoy the hunt). Identifying a few candidates, I reached out to a few dealers who asked when I could come to their showroom. Wouldn’t you know it, the Ann Arbor Toyota dealer (Dunning Toyota - I have no affiliation!) was able to do the entire transaction remotely (with a little chat-based haggling over price), delivered the vehicle to my house where we signed a few papers, wearing gloves while keeping a safe distance between us. It was my best car-buying experience ever, ending with me the proud owner of a 2007 FJ Cruiser. We knew that the governor of the state had ordered all all non-essential businesses, including vehicle sales operations, to cease operations later that same day, so both seller and buyer were motivated to make something happen. Nothing like necessity to create the motivation to find solutions.



Reply »

Nicolas Chartier March 27, 2020
2 People AGREE with this reply

Dear John,

Thank you for your comment.

With the full lockdown we are wondering : do we have to deliver all our customers, of course with a specific protocole to protect our people, or should we just deliver the priority ones (medicals for example) ? Do you know what does this Toyota Dealer ? What do you think ?

Best regards, Nicolas



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John Shook March 27, 2020

Hello, Nicolas. I will reply as best I can. The dealers with whom I have spoken are confused and concerned. In Michigan, the governor issued an Executive Order 2020-21 (COVID-19) stating that auto sales are prohibited, while the dealership may stay open and may service vehicles. They are not allowed to sell vehicles even via the process I described. I understand the Michigan Dealers Association is lobbying to have auto sales activity be classified as an "critical infrastructure work" (auto repair is so classified) which would allow sales to restart. Note also that every state of these United States (when I comes to business, we might well call ourselves the Not-Quite-United States) is independent regarding these matters.  My understanding based on discussions with a few dealers earlier this week and reading the governor's executive order. 

Delivering my vehicle was the last work my salesman was able to perform before filing for unemployment compensation from the state. 

Best wishes working through the current crisis. Thank you for telling your story to Micheal so he could share it with us. 



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Michael Ballé March 27, 2020
1 Person AGREES with this reply

Thank you John, hope you're keeping well. Indeed, Nicolas' team has been astonishing in their use of lean tools as the crisis unfolded! And yes, customers still need cars, even in these crazy times.



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John Shook March 27, 2020

This is easy for me, Michael. I stay home, read (French guy named Camus, maybe you know him), sit at my computer (maybe too much, like now), walk around trying to stay physically active, start my new car, play my guitar (a LOT - can't complain about that...), and etc. But, toward the end of a LONG career (I could retire, but I won't), I'm experiencing no real financial hardship. Unlike the young man who sold me my car and so many others. Kudos again to Nikolas for using lean thinking to work through this. I hope you can share more of his story and it unfolds.  



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Andrew Bishop March 27, 2020

Your post makes me think of another question that we should address through our lean lens:  What about the request (demand, actually) that G.M. “retool” a plant to produce ventilators?

Sounds like a lot more than retooling to me!

An approach much more likely to succeed might be to take an established value stream and expand it, accelerate it, duplicate it, or all of these, given the customer knowledge, standards, processes, employees, training, supply chains, etc., etc., that are already in place in the ventilator value stream. 

Going from cars to bombers for a longer period (the ventilator demand peak will probably be pretty short) in wartime seems like much less of a stretch, especially back in WWII when avionics were not what they are today.

With all respect due to the manufacturing capabilities of G.M., this is NOT their customer base, NOT their supply chains, NOT their regulatory standards, etc.  Your “four fundamentals” seem to argue for a different approach.

What do you think?



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Michael Ballé March 27, 2020

Hi Andrew,

Tha k you for your comment. You're assuming that the demand peakll for ventilators will be short - to be honest, I have no idea, I fear we're all sailing on the unknown, but several people around me I would not have guessed are on ventilators right now.

Production flexibility is a key part of the problem, and people I know in Taiwan, for instance, have told me how fast some factories have retooled to produce the vast quantities of masks we're going to need to get through this.

Clearly, this makes much more sense if this happens on a voluntary basis. I can't quite see how ordering a plant to retool can end well. But this is also a time for miracles.



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John Shook March 27, 2020

You raise a valid concern, Andrew. The companies I know of so far, however, are 1) producing items close to their existing capability, and 2) doing it in partnership at some level with medical equipment supply chain suppliers. For example, Ford's TDM (a tool & die division) is making face shields and working WITH GE Healthcare and 3M to expand system capacity. I'm trying to learn more and will share as I learn. As you suggest, surely we'll be better off if we try to be smart about this.  



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Andrew Bishop March 29, 2020

It sounds as though Philips has the design and development work done for simpler, cheaper ventilators (hopefully easier to manufacture as well!  LPPD?), they just need to reckon with a different takt time than they had planned, i.e., get on the ball:

https://www.nytimes.com/2020/03/29/business/coronavirus-us-ventilator-shortage.html

Begs the question of why we are now forcing G.M. into manufacturing ventilators.  



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Andrew Bishop March 31, 2020

Jeff Liker's LinkedIn post (with associated Bloomberg News link) addressed my questions and concerns nicely.  Deep collaboration with an established producer of innovative ventilators.

https://www.bloomberg.com/news/articles/2020-03-30/inside-gm-s-four-week-sprint-to-build-emergency-ventilators

Sorry, can't link to Liker's post here due to format restriction.



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sid joynson March 31, 2020

I posted the comments below on various threads on the Coronavirus war

We have been here before. We are at war with the Coronavirus. If ventilators are one of the main weapons in this battle, we need to apply mass production methods to a standardised simplified design. This system won the production battles in the Second World War. The design must be driven by customer needs, not wants. The goal is to produce the maximum quantity in the shortest time. We need to use it again. Like the last war our future could depend upon it, & it does. We need a team of mature production engineers who understand the methodologies of mass production. Between the existing manufactures they have all the designs, moulds & tooling to produce their present ranges. That is the starting point. We must now create a Skunk Works; a co-located team of users, designers, developers to create, develop & set up a production capability.

We must replicate the effort of American industry after their entry into the war. In comparison the ventilator is a toy. Here we are on the spacecraft called Earth, & as they did on Apollo 13, we must find a solution to our challenges, NOW! We just need leaders who have the vision, understanding and determination to make this happen.

 Mark, a central principle of mass production is simultaneous multipart manufacture & operations. A central principle of lean is one piece flow. Very different mind-sets, both effective in their way. The Lean movement has not given sufficient attention the writings of Shigeo Shingo. “Mr Shingo had a real knack at taking what we were doing & stating it in very logical terms. “Isao Kato. Toyota.

In TPS Shingo said it was important to understand the P-D balance.

  1. Production lead time. D. Customer required delivery.

If P is longer than D, stock must be carried. If P is shorter than D, no stock is required.

There is an additional element when there is a massive increase in demand that significantly exceeds existing production capacity, & an increase in ongoing demand that could also exceeds it.

We are in a similar position to that at the start of WW11. We need a massive & fast surge in the production of the essential weapons to fight the war on Coronavirus. In both wars this unpreparedness was paid for in lives.

For a future repeat, we must have stock to cover the initial ramp up time; & a shorter ramp time. We should see this stock as the standard work to enable the higher flow rate of the medical activities to defeat the attacking virus.

 Necessity is the mother of invention. Plato. The key to the power of this process is to put passion into the necessity. When lives depend upon people's inventiveness, they can achieve amazing things.

 

5000 face shields is a good start. But we need a quantum increase in volume. To achieve this we must use more traditional mass-production methods and produce hundreds of thousands.

 Great result and one key element is their claimed ability to conduct 50,000 tests/day. We need to replicate this capability across the world ASAP. For humankind to win this war, we must be victorious in battles across the globe. We must start to act as if this is a world war. For any one nation to win, all nations must win.

 Remember, impossible is only an opinion; and will be changed by time and action.

 

 

.



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