Signs of Progress
Dear Gemba Coach,
Q: We've been doing lean for several years now, and the program has had its ups and downs. What are the signs that one should look for that indicate progress on lean work?
A: This is a very good question, and not so easy to answer because lean happens at many different levels, and it's important to learn how to see progress through a lean lens. There are times when apparent signs of success are in fact misleading, and there can be red herrings that seem to count for much yet which turn out to be false clues.
Having said that, I will state that there are simple measures that do reveal progress. One straightforward measure of lean progress is the proportion of your managers who "get it." By this I mean individuals who buy into the lean ideal, understand how the tools work, encourage kaizen every day, and are clearly getting their hands dirty with the work with every worker every day. The greater proportion of converts, the better you are doing, plain and simple. Another marker of individual buy-in would be the rate at which folks return to lean practice after time off. For example, this week workers are returning to factories after Labor Day in the U.S., and holiday in Europe. Even in the places that "get it" the lean systems have almost certainly been down for a stretch. Experience has shown me that in organizations where managers understand the lean tools and work with them diligently, lean systems will be up and running again very quickly. Think of it as someone returning to daily exercise after a short break - the more fit and mentally prepared you are, the quicker you pick up where you left off. Remember that lean systems are by nature fragile: they're designed to stop whenever there's a problem. Resuming true practice requires an enormous amount of managerial will to get back in just-in-time conditions whenever the system goes down, for whatever reason.
There is a deeper question here: what exactly is lean progress? It depends on what you are measuring. The relationship between performance and process is at the heart of lean thinking. Sustainable results are obtained by stable, smart processes. In lean implementation, curiously, people find it hard to focus on both. In some companies there is a huge effort to make sure that processes and tools are in place (I've come across some guys who check whether the production analysis boards are exactly at the prescribed dimension in factories around the world - does wonders for lean cred as you can imagine), and others which are much more business driven, and find it hard to let go of the idea that whatever works, as long as it works. Lean is in a difficult mental space where both process and performance matters. Any way to measure lean progress should somehow take these two aspects in mind. In this respect, I strongly recommend reading Toyota Kata, where Mike Rother does a splendid job of explaining this aspect of lean in a way that could transform how you approach the job.
Consider the case of a medium sized company that works on large projects. The CEO started doing lean in earnest about a year and a half ago. Because this is not repetitive work, and because there are many project managers working on deals in parallel, he's found it difficult to install lean processes as we usually think of them: pull systems, shop stocks, kanban, etc. In this case, he focused on safety and 5S and on "confirmation" - checking every day what was accomplished by the frontline teams the day before, identifying defectives (anything that needs rework), fixing it right away, and then picking one problem after the other to do a root cause analysis and find a fundamental countermeasure (in project work, the difficulties one encounters change during the life of the project, so, again it's not so simple). In order to do these two things, he's implemented a few basic tools such as a safety/5S board, a list of daily problems on a paperboard, a Pareto of problems and a few other paper formats.
Now, a year and-a-half later, progress would seem disastrous because he's not succeeded in getting those very simple tools to stick - they're up one day, down the next, even with the "good guys." Is he failing?
Well, in the same period he's also recovered from a very bad profitability situation and in the disaster year we're in since 2008, his order book is full and his margin has increased by five points. So he's clearly getting something right. In the spirit of hansei, we keep analyzing the data to try to figure out what is happening. The one clear-cut action this CEO has taken is Gemba visits: he visits every project regularly and challenges his project managers on what they do, the decisions they make and how they solve problems. Doing that has clearly refocused his own top management in solving problems before they fester - and it turns out that some of these problems have expensive consequences down the road. Clearly the top managers are upset about this approach because they feel their authority is undermined. But on the other hand, everybody is a lot more focused on delivering projects on time, keeping to the cost targets, and, well, in his terms – for lack of being brilliant let's make money by taking care of our customers.
So. My own personal performance measures are following two charts over time:
- inventories go down as delivery goes up
- quality goes up (and, hopefully sales) while costs go down
My father, Freddy, has his own rule-of-thumb assessment of plant managers: the number of accidents in the plant and the level of stock. Some performance measures are the same in any case, such as customer complaints, defective parts per million, on time delivery in full, etc. But the key indicators should reflect the firm's business model - so there is a real PDCA exercise to start from the usual measures and craft them carefully so that they reflect what we most need to get right. But certainly the company can come up with its own key performance measures. On the process level, Freddy uses the red bins and the pull system as indicators of lean progress: what percentage of area managers really look into the red bins daily and what is the percentage of lines are in full pull (from heijunka box to component flat storage) in the plant.
I've also seen many companies do detailed "lean systems" audits. However, and this seems to be the heart of the matter, I've yet to see a credible hardnosed relationship between success at the audit and financial performance. Mind you I'm not saying that some sites that apply the tools very well don’t make greater profits - certainly, the best lean plants also apply the tools in the smartest way. But there are also many plants out there that apply the tools well enough to get audit points without showing any improvement in their business performance. One of my favorite quotes is Hajime Ohba's throwaway comment: "What [they] are doing is creating a Buddha image and forgetting to inject soul in it."
And there's the rub: how do you evaluate progress of the lean "soul"? On the Gemba, what I personally look for is signs of the kaizen spirit. Again, this is hard to describe because it's both (1) a (demonstrated) belief in adhering to standards and (2) visible attempts to change things and improve frequently. I'd be hard put to quantify or measure it, but even when the tools are down in the site for whatever reason (I recently visited a good factory which had been the recipient of a massive uncontrolled parts transfer - everything was gone, and everything was back within two months), you can still see in the way people work that they're careful and thoughtful in what they do, and they follow standards - but also that they're not shy of trying things frequently to shave off muda. So: go to the shop and look for four things: (1) does the management go and see often? (2) does the visual management actually reveal problems? (3) can you see signs of kaizen spirit and (4) are operators making suggestions? And see where you think you are on the lean journey.