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Why implement lean when it fails so often?

9/16/2019
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Dear Gemba Coach,

Is it true that lean often fails? What’s the point then?

Is it? Lean programs often fail – first they gather low-hanging fruit, count them as savings, hit resistance, and then go away in two to four years, yes. Frequently. But I have yet to see lean practiced correctly fail. Lean is a path to success. The journey is your own, and very much depends on both what happens in your industry and how you interpret lean. On the Gemba, when you look at lean, you can try to peek into the minds of the people practicing it by, well, looking.

First question: are they in this to succeed? Or just to stay in the game? I was on the Gemba recently of a companyThis was this a good plant. Were they “doing lean”? They thought they were. Had they adopted lean thinking? Not by a long shot. Success or failure? making detection equipment for cargo ships. As with other industries, the tech has evolved from products to systems. The machines are linked by increasingly intricate software to create full systems. One of the key issues in detection equipment is the reliability of the message: make sure it detects anomalies but also reduces the number of false alarms the crew must check out or tricky maintenance it must perform. Takt time is in hours or days, not minutes.

The shop floor is well cared for, clean and well organized. The components warehouse is right next to the production hall to avoid unnecessary movement. They are well versed in lean and have done several value-stream mapping exercises to improve their flow. All good? If you stand a little longer, you see:

  • No special focus on quality: There are lots of tests – as you can imagine, faulty detectors are a no-no – and then rework. Operators have computer screens with assembly instructions. No immediate feedback in case of a problem. No particular attention to rework.
  • No continuous flow cells: Operators work on stations close to each other, but separated by an inventory of parts, each working on his or her workload independently of upstream or downstream.
  • No visualization of lead-times in the warehouse: In the adjacent warehouse, carboard boxes sit on shelves addressed by the computer with no special care for how long they’ve been there (some for quite a bit) or using the physical flow as an indicator of supply-chain issues.

Overall, this looks like a good place to work – good factory, technical products, clear and airy. But when you let it sink in, the spot productivity is terrible – at least two people talking or walking around for every person actually adding value – and so is the capital productivity – inventories and low pace of production through the hall. It’s not that it’s a bad plant, not at all. But there is no intention to make it a good one.

The plant is a division of an American group. It has survived the endless waves of consolidation and delocalization to Asia because it sits close to the shipyards, so it makes sense as a sales point. They hardly ever mention customers. They have a lot to say about dealing with corporate and headquarters. They’re not in this to win – what is there to win? They’re in this to stay in the game so they don’t get shut down and their production sent elsewhere, which is the looming fate of all these kinds of plants.

No Kaizen Spirit

The second hard question is: are they ready to change? Or are they looking for alibi activities in order not to have to change? They are well conversant with the language of lean. The company has a corporate lean office, with a lean officer that comes regularly to lead value-stream projects and look for “waste” to eliminate, and savings from lean six sigma projects. They have morning briefs (team huddles) to start the shift in which they discuss issues and signal problems for management to solve. They’re in fact doing what any Western company has been doing for a hundred years: productivity projects from better organization, daily organization of workers. No kanban, no andon, no Kaizen.

The radical change of lean is the Kaizen spirit: developing Kaizen awareness and Kaizen initiative. Kaizen awareness is creating a visual space with kanban and andon so that problems are revealed and people spontaneously spot issues and take upon themselves to solve them. Kaizen initiative is creating space to think; blocks of time to do this and the psychological safety of “bad news first” and “try it and see,” so that operators themselves find problems and come up with solutions.

The radical managerial change of lean is the change in management relationships where managers create the environment of Kaizen by challenging what is and supporting ideas. The chain of command becomes a chain of help. Executives come to the Gemba to learn from operators' problems in detail and so improve their information model of their company system. Western companies have always been obsessed with the flow of materials, no change there. But the innovation of lean is the flow of information:

  • Customer service information that flows back to assembly and design;
  • Assembly information that flows back to design;
  • Supplier information (discovered at assembly) that flows back to purchasing and design.

By changing the relationship executives have with their frontline teams, they learn to enrich their information model, and thus change their own policies and decisions to eliminate the conditions of waste, not just fight one fire after another. The entry ticket for this entirely different room is 1/ developing the Kaizen spirit on the shop floor and 2/ seeking to continuously enrich, update, adapt one’s information model of the business to make it more exact and seek competitive advantage.

What Did You Mean by "Lean"?

Back to your question. On the Gemba: was this a good plant. Yes, absolutely. Were they “doing lean”? They thought they were, no doubts about it. Had they adopted lean thinking? Not by a long shot. Success or failure?

Like so many of these companies I’ve visited, they had a successful lean program but were failing at lean. A successful lean site is something completely different: the CEO is there to grow the business (double it every five years) while reducing her total cost base by obsessing with customer satisfaction and learning for herself the lean Gemba techniques of kanban, andon and Kaizen in order to bring her frontline people into solving problems and looking for improvements: all people all the time. These companies feel very different.

The extent of the financial results a lean company gets also depends on its competitive situation. For instance, construction goes through terrible cycles. One company I know well grew fast and profitably with lean and then hit a terrible industry downturn. They persevered with lean. Where competitors took on negative margins on projects to maintain volume, they reduced production, they did all they could to reduce headquarters costs, they kept everyone motivated on quality in a very bad business climate.

So for four years, they worked very hard at just keeping out of the red. Now the industry swings to the upside and same-sized competitors have died. Projects have a two-year horizon, so although prices have gone up, many of their larger competitors are still saddled with projects they took with negative margins and are going to continue to bleed for another couple of years. The company has recaptured its previous turnover, and is fully profitable again, without losing money a single year. Did lean work in the lean years? I think so. I truly believe that with the industry crisis they had to live through, they would simply have run out of cash, like their competitors did. Was it the kind of lean success they wanted? Clearly not, they’d hoped to continue their earlier growth curve, but industry cycles are a reality.

As I said, I have yet to see lean fail. But the lean I’m talking about is rare: the CEO intends to grow sustainably and profitably and improve their response to industry situation, so they are willing to change how they run the business in order to adopt just-in-time, built-in quality, and develop the Kaizen spirit of their frontline teams. This is a far cry from having no real success goals other than maintaining the share price or keeping corporate off our backs and running a lean project program to save costs. What kind of lean are you talking about?

Lean is a known, well documented, oft proven path to success. But to succeed you first have to want to, and thus have defined success. And second, you have to be ready to change yourself to adopt lean thinking as opposed to call whatever jump-to-solutions improvement program you learn “lean.” Hmm?

3 Comments | Post a Comment
Bob Emiliani September 16, 2019

There short answers are: Yes, it is true, Lean transformations fail often. The point then is, learn from others' failures so you don't suffer the same fate.

Raphael Garcia September 18, 2019

From every thing I read in the post, I never saw daily employee coaching nor saying that Kaizen is about transmitting skills and ownership to employees. As long as we target methods, formulas, quick and dirty savings and the p&l from the CEO, ...we will be doing lean, that’s how it is applied world wide. However, when it becomes the Toyota , the Valeo, the Alcoa, the DAMAWAY...production system, you start to build a culture, not TPS (tps like though) not lean, but the company system. Good start for pride and long term focus on people. Humble opinion 

David Apple September 20, 2019

Perhaps the most critical factor is leadership succession.  That is a hallmark of Toyota.  I also look to Cummins as a good example.  I've been reading a little bit about the Boeing 737 MAX.  Boeing has been highlighted in the past as an excellent example of lean transformation.  However, the board of directors and the new executive leadership seemed to change course, taking their eyes off "creating value for the customer" and looking only at finances.

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