Why do we hear less and less about lean in manufacturing?
Dear Gemba Coach,
Why do we hear less and less about lean in manufacturing? Is it that most companies have implemented lean successfully or at least elements of lean?
Very good question. No it hasn’t been implemented or sustained successfully at most or even that many manufacturers, based on my recent visits to shop floors. No, far from it. If anything we’ve lost that battle. So what is going on? I’m not sure. First, what do I mean by a losing battle? I take away four deep learning points from my experience of working closely with CEOs that turnaround their companies with lean.
First, you increase sales by engaging customers by solving their every quality issue. To many executives, this sounds costly, as some quality problems are either rare or really difficult to track, and it’s assumed that, overall, customers will live with them – you can’t please everybody all the time. You can’t, that’s a fact, but you sure can try harder. Most managers are convinced that sales are driven by macro features, such as price, distribution, marketing positioning, etc. That is certainly true, but they often miss out on the huge benefits of burnishing the company’s reputation and ultimately increasing sales-- by responding to every customer that is upset enough to actually talk to you. What Toyota taught us here is to think in terms of sales per customer, rather than sales per product (or worse, division). But the way the accounts are set up makes it hard to budge, and, overall, we’ve lost that battle
Second, you make money from the precision of logistics. A pull system reduces the increments at which every step of the chain delivers to 15 to 30 minutes. In doing so, it puts tremendous tension in chunking work (and reducing batch size) and delivering precisely on time, all the time. This has four spectacular large-scale effects:
- Your on-time delivery shoots up, by something like 20 points, it’s amazing.
- Your inventory goes down, by something like 10% per year, which means that cash comes in.
- All the nonsense the company does is revealed and progressively reduced, which affects costs to the extent of doubling margins over a couple of years.
- People are engaged on getting it right, all day, every time, which gives them a reason to be there and to learn to do things better, which, in turn generates ideas and initiatives.
Toyota taught us to break away from Ford’s idea that all parts should be on hand whenever needed, and thus, held in bins on shelves, and learn to see components as part of an ever moving circuit, like the blood running through the body. Sure, there is inventory, but it’s in trucks, in preparation areas, on internal delivery trains, dynamic racks at the operator, and so on. Unfortunately, most companies have bought into computerizing stock handling through MRPs and ERPs, and the mission of these systems is to always hold an optimal quantity of components in stock (Production Demand = Spot Real Demand – What’s in Inventory + Safety Stock). As long as the MRP runs the business, making money from more precise logistics simply can’t happen: the MRP can’t learn.
Jidoka Engages People
Third, productivity comes from people’s ability to get it right first time, which means engaging every employee in their own self-development; no easy challenge. Stop-at-defect and reacting quickly to examine the problem with the person doing the work is how lean engages team members in their own training. When a problem arises, people naturally get interested in knowing more and learning how to do it right next time.
That’s the time for someone who knows the standards better to look at the problem with the person doing the work. Jidoka is a very powerful training mechanism.
Unfortunately, the ideology of creating flat organizations (in the hope of saving money on reduced supervisory levels) goes dead against building the team-based organization needed to show up at every employee’s side as soon as they hit a problem. Very, very few organizations I come across have started on jidoka, even on the rudimentary level of writing down issues as we encounter them and discuss them hourly (which would be Stone Age andon, with a very long lead-time). The unspoken ideal of many managers remains to automate the process to the extent that people are interchangeable.
What Toyota has shown us is that individual intelligence matters – the company’s future is determined by the sum of PDCAs everywhere. However, asking people for ideas without asking the very specific questions about work and outcomes that show up in andon calls, means opening the door to useless debates that distract from better serving customers. In my experience, coaching and problem-solving programs without basic andon where value is added is worse than a waste of time because they find problems where there are none in order to ignore the really difficult technical issues no one wants to face head on.
Fourth, creating a dynamic in the company rests on kaizen at all levels – both problem based training by solving daily performance issues, but also involving teams and cross-functional groups in kaizen. As Art Smalley and Isao Kato have described in their great workbook Toyota’s Kaizen Methods, this involves getting people to see the improvement potential in their routine work, study their own work methods, come up with original ideas, plan how to get the organization to accept a new way of working, trial and test it and evaluate the new method.
Complex organization mostly run by IT scheduling and reporting systems are, in fact, very rigid, and real kaizen initiatives run afoul of this rule or that, this process or that, this Highest P aid Person’s Opinion or that. Toyota has taught us that by getting work teams to contribute to the improvement and running of their own workspaces you involve them more deeply with the company and it’s destiny, building both morale and mutual trust as you do so. This has tremendous economic value, as any economist will tell you, but that is largely ignored by many managers who are content to survive from one day to the next and hit their numbers rather than building the human and social capital needed to succeed today and tomorrow, so, believe me, we’re losing that battle as well.
Take the Hard Road
Hard things are hard, that’s what it comes down to. There’s a high road of, every day, solving one more customer issue, tightening lead-times, responding faster to operator problems, involving teams deeper in thinking about their own work and listening to their suggestions. There’s also a path of least resistance of organizing programs to create workgroups, to tackle spot issues here and there with no intent to challenge the company as a whole to change. In taking the high road, the CEO creates a dynamic environment by getting his management team to work together and get interested in the details of work on the gemba with the customer always in mind – of course that pays. With the path of least resistance, the program is an alibi not to challenge the status quo between senior VPs or not to challenge the company to improve in a set direction, but somehow try to get buy-in from teams across the business.
What I also see is that by taking the hard road you take a political chance. Taking the hard road means telling your bosses you don’t see their direction or disagreeing with mission creep and all the “fires” that happen daily. Taking the hard road means promising results by facing hard problems now, in the face of all the other powerful guys who’ll throw sand in your gears and shoot you when you stumble. In requires not just clear vision, but also courage and a pragmatic outlook (you’ll win some, but you’ll lose some, trust me). And persistence above all.
On the other hand, human nature is such that many executives are not about to threaten their cushy position in order to make the company better. Their mindset is pretty simple: fight at all costs to maintain your department’s privileges by 1) always looking smart, 2) never looking dumb, and 3) showing up that you’re doing your job and if global results are not there, it’s somebody’s fault (yeah, go ahead, blame the market, the culture, lack of teamwork and leadership, you know the drill).
This, I believe, is more or less what happened to us in manufacturing. We fought all these battles, and well, lost them. None the less, it’s not over until it’s over and I still meet every year manufacturing guys who want to get it right, in earnest. Many of these do turn their business around (unless they lose on the political board). It might sound discouraging that we’re still there 20 years down the line, but the upside is that, as lean practitioners we know far better why, how and what to do when asked. The puzzle remains why, considering the spectacular financial success we can achieve through business-level lean (have you read Art Byrne’s brilliant The Lean Turnaround?), why do so few people try?
How can there be standards -- or kaizen -- in a service job when no two instances are the same?
Dear Gemba Coach,
I’m in a service job and I struggle with the idea of standards. I read that there can be no kaizen without standards but how can you have standards when no two instances are the same?
I don’t get kanban -- I don’t work in production so how would it apply to one-off work?
Dear Gemba Coach,
I feel that I still don’t get kanban. I don’t work in production, and I fail to see how stock replenishment would apply to one-off work.
Can lean be used to turn around a company?
Dear Gemba Coach,
Can lean be used in a turnaround situation? Does a burning platform make it easier or harder?