Well, if you see lean management as just a cost reduction program (i.e., you are not that serious about adopting lean thinking and practices), then you don’t need a KPO.
But if you are serious about it, you will find a KPO critical to your success. In fact, you will probably need more than one since every facility should have a KPO to focus on eliminating the waste from that location. The “learn by doing” aspect of lean practice requires experienced people to help organize and supervise the doing.
Above all, your KPO will serve as the internal source of the knowledge necessary to transition to lean management. I firmly believe that a company should hire a consultant (trainer) to get started on its lean journey. When I was a group executive at The Danaher Corporation and CEO of The Wiremold Company, we used the Shingijutsu Company out of Nagoya, Japan, to help us.
These consultants all helped create lean practices at Toyota as executives and then taught them to Toyota’s first-tier suppliers. They taught us how to think differently about how we should run our companies. They brought a set of keen “lean eyes” that exposed our waste when we could not see it. They taught us how to organize and run a kaizen event. They challenged us frequently by saying about our practices: “This is no good.” And most importantly, they helped us understand our flawed practices and how to fix them.
To transition to lean management, you must do kaizen improvement activities every week — not just when the outside consultants are present.
While Shingijutsu was crucial in our move to lean management, they could only be with us for one week every month. So how did we drive lean thinking and practice the other three weeks of the month? We accomplished this with the help of our KPO, who effectively became our in-house consultants providing lean expertise and guidance when Shingijutsu could not be with us. I can’t stress enough how vital their continual presence was. To transition to lean management, you must do kaizen improvement activities every week — not just when the outside consultants are present.
How Does Your KPO Staff Develop Lean Knowledge?
At Danaher and Wiremold, we had to train our KPO staff from scratch. We did this by attaching them to the Shingijutsu consultants when they were in town. Their job was to stick with the consultants for the week, ask questions, and understand the methods they used to discover — and critically eliminate — the waste. (Did I mention that we had a lot of waste?) Then, we asked them to organize and run kaizen events during the weeks the consultants were away. That is, to oversee more learning by doing.
We executives directed the consultants and KPO staff toward the areas or value streams we wanted to improve. As CEO, for example, I picked almost every process needing improvement at Wiremold for the first two years. The KPO would get the facts about the current situation, organize a team, choose a team leader and sub-leader, and set the goals for the week. I participated in the goal-setting to ensure they were all stretch goals.
The KPO staff would then function as consultants to the kaizen team for the week, keeping them on track and suggesting improvement opportunities. We almost always achieved our stretch goals during the kaizen week and then assigned follow-up steps to complete the improvements. The KPO was responsible for ensuring completion and would monitor how well we stayed on track with the results going forward. Sustaining the improved process was probably the most challenging job for the KPO staff because human nature invariably wants to regress to old habits and ways of working.
How Should I Staff the KPO?
When we started, we didn’t have the option of hiring outside expertise to staff the KPO. While this might be an option today, you should still be vigilant about who you select. Few companies today are doing lean management the right way, and as a result, many people claiming to be “lean experts” have only superficial knowledge. You can probably do just as well by promoting promising individuals from within and training them with the help of your outside consultant. Oh, and don’t add any headcount when you staff up the KPO.
We focused on selecting high-potential talent — people who were naturally inquisitive, hardworking, and eager to learn.
Because your KPO will focus on the shop floor, at least initially, you may think you need to staff it with engineers. That is not necessary. We focused on selecting high-potential talent — people who were naturally inquisitive, hardworking, and eager to learn. Their educational or work background didn’t matter. Whether they were hourly or salaried didn’t matter either. The key thing that mattered to us was whether we believed they could advance at least two more levels within the company.
We saw the KPO as a full-time assignment. Its role was to organize, implement, and follow up on kaizen activities every day. It was a great development opportunity because we tried to promote people out of the KPO into more significant management roles after two years there. Perhaps they could become a team leader or plant manager. We knew these folks would always apply their new knowledge to attack problems using lean thinking and help us create an overall continuous improvement culture.
Where Should the KPO Report and How Active Should It Be?
While there is no rule about where the KPO should report, I believe it should have a strong dotted-line relationship to the CEO. The KPO also should be sufficiently high in the organizational structure to ensure everyone pays attention to what it teaches. At Wiremold, for example, the KPO was at the same level as our value-stream leaders, who were one step below our senior staff. The office reported to our VP of Operations, although, as CEO, I was very involved. At the plant level, the KPO may report to the plant manager, with perhaps a strong dotted line to the overall corporate KPO leader. As for the size of the KPO, I would suggest 1% to 2% of your hourly workforce.
The KPO should be sufficiently high in the organizational structure to ensure everyone pays attention to what it teaches.
Because you will be doing kaizen every day, the KPO positions will be full-time. Also, you might want to establish a good (though aggressive) target of completing two week-long kaizens per week per facility, on average. I admit that achieving this goal is challenging and that we couldn’t always keep up. Still, this is the kind of target you should set because doing one kaizen every six weeks won’t get you anywhere.
Empower and Trust Your KPO Team
To become lean, you will need a high-level lean consultant and a strong KPO to teach lean knowledge and push everyone to make the lean transition. Organized properly, the KPO can be a great training ground for your future leaders and a key driver of your lean transformation.
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