By Ade Asefeso MCIPS MBA

Copyright 2014 by Ade Asefeso MCIPS MBA

All rights reserved.

ISBN-13: 978-1499508314

ISBN-10: 149950831X

Publisher: AA Global Sourcing Ltd

Website: http://www.aaglobalsourcing.com

Disclaimer

This publication is designed to provide competent and reliable information regarding the subject matter covered. However, it is sold with the understanding that the author and publisher are not engaged in rendering professional advice. The authors and publishers specifically disclaim any liability that is incurred from the use or application of contents of this book.

If you purchased this book without a cover you should be aware that this book may have been stolen property and reported as “unsold and destroyed” to the publisher. In this case neither the author nor the publisher has received any payment for this “stripped book.”

Dedication

To my family and friends who seems to have been sent here to teach me something about who I am supposed to be. They have nurtured me, challenged me, and even opposed me…. But at every juncture has taught me!

This book is dedicated to my lovely boys, Thomas, Michael and Karl. Teaching them to manage their finance will give them the lives they deserve. They have taught me more about life, presence, and energy management than anything I have done in my life.

Chapter 1: Introduction

What is Lean Management?

If someone tells you that “lean management is this” and not something else, if someone puts it in a box and ties a bow around it and presents it in a neat package with four walls around it, then that someone knows not of what they speak. Why? Because it is in motion and not a framed picture hanging on the wall. It is a melody, a rhythm, and not a single note!

Lean management is generally derived from the Toyota Production System as developed by Taiichi Ohno, Shigeo Shingo and others over a forty year period. It began with efforts to reduce die change time on the stamping press which then allowed for a reduction of in-process inventory and this became just-in-time inventory management. This resulted in the need for less warehouse space, fewer forklifts, unnecessary space, etc. Once the flow of work can be interruption free and free of materials sitting, waste is eliminated. Lean is the elimination of waste. But, more importantly, lean is continuous improvement in all work processes.

In order to improve the work of the die press and reduce waste Shingo did not instruct the workers. He asked the workers to think. He challenged them to innovate and find ways to speed the process by eliminating unnecessary activities. The workers who operated the press and changed dies worked as a team and together they solved problems and sought improvement. It was the front line workers, who were on-the-spot, and who were truly the world’s greatest experts in their work, who experimented, watched the data, and learned from the facts.

This model of improving the work process by those who do the work, by those who are on-the-spot, is the essence of lean management. The model of Shingo asking the work team to think, to experiment, and to learn from the data, is the model of lean management. It is management that is humble and not arrogant. It is management that observes, encourages, challenges, and learns. It is management that gathers the facts, encourages experimentation, and spreads best practices. It is management that practices what they preach to others.

This model was quickly copied by Honda and other Japanese companies and has now become the standard of world class manufacturing and, it has become the standard for management in all types of work settings.

Lean is a moving target because, at its heart, lean is a process of learning and improvement. It cannot be defined as something that is standing still or fixed. It is not simply mimicking what happened at Toyota or anywhere else and, most importantly, it is not a kaizen event, a project, or something done by a consultant. It is best captured as a philosophy rather than a particular method or technique. If you don’t have the philosophy, you don’t get it.

Here are some ways of describing lean philosophy or culture

Lean is a culture of continuous improvement practiced at every level of the organization and by every team.

Lean is the application of the scientific method of experimentation and study of work processes and systems to find improvements.

Lean is respect for people. It is respect for the voice of the customer and it is respect for those who do the work, who are “on-the-spot” and are, therefore, the “world’s greatest experts” in their work.

Lean is the elimination of waste in all its forms. Lean is the ability to distinguish between work that actually adds value to your customers and work that does not. By eliminating waste, you free resources to devote to value-adding activity that serves your customers.

Lean is a work environment that assures the quality and safety of all work for both customers and staff.

Lean is a focus on improving the work process and not on blaming people or creating fear.

Lean is a culture of teamwork, shared responsibility and ownership that cuts through organization walls or silos.

Lean is a culture that returns the joy to work. Honda speaks of the three joys of buying, selling and making the product. We do our best work when we have joy in our work.

Lean is flow. Lean is an interruption free process that flows from beginning to end without interruption.

There are many aspects to the technical side of improving the work flow. These may include Kanbans, Poke-A-Yoke, continuous line flow, the arrangement of suppliers to customers, etc This book’s primary focus is on the culture and management practices that result in continuous improvement, whether in manufacturing, health care, or any other type of work.

Your job is to incorporate these lessons within your own management system and to seek improvement continuously. My job is to help you.

I sometimes wonder if we should bother making a distinction between management, and “lean management.” The late Peter Drucker is our foremost authority so far on “management,” and he tells us, “The essence of management is not techniques and procedures. The essence of management is to make knowledge productive.” Pretty good place to start, I did say, and a definition that probably covers “lean management” as well as any management. But if lean thinking means a different approach to business, then it must also imply a different approach to managing by the people striving to operate in a “lean” way.

My own view of management comes from a little more than 20 years experience working within manufacturing sector, combined with over 5 years of working with many of you to try to understand and use those principles and practices. I am not sure which experience has taught me more - learning directly on the job, or trying to help others learn what I learned on the job.

In short, lean management is very much about asking questions and trying things, or encouraging others to try things. Lean management itself is not much about providing the right answer but it is very much about asking the right question.

Chapter 2: Lean Management Principles

Lean management is an important part of lean thinking. As we implement lean in any organization the traditional way of managing does not guarantee right focus nor help sustaining lean initiatives. If no action is taken to change the way we manage process, people and products we are likely to see failure of lean implementations. Many people on lean journey fail to apply lean in a holistic manner. Usually they start with applying tools without proper guidance and leadership the company cannot move to the next level. Thus a management system that specifically meets the needs of a transforming organization is very much essential.

So what is traditional management and why does it fail to sustain Lean?

One of the main characteristic of traditional management is that it is resulted oriented.

Is it good or bad to be result oriented?

It is not bad to have goals but once people stop caring about how to get there rather and only focus on end result that is when we have a problem. This leads malpractices like expediting orders, over production, and excess inventory. You must be wondering how management leads to these problems. If you are in any manufacturing organization you will be able to relate to this problem better. Here are few examples:

How many times have you expedited the order by doing overtime just because you had to meet the same day delivery goal?

Have you kept producing even when there was no demand just because you needed to show better utilization of the operators?

Do you keep excess inventory to hide the inefficiencies related to your process or machine breakdowns?

These are just few but are common problems that will help you relate to the problem created by mismanagement. The problems are so easily accepted as a part of our daily life, that we hardly question these practices. Only with right mindset and proper management you can facilitate the change.

What is lean Management?

Lean is all about customer focus. Value is defined by the customer and we develop and maintain processes to provide this value. Processes are run by people. Only support and proper leadership and guidance you can drive your people to continuously improve the processes that add value to the customer. The management system that helps you to achieve this is a Lean Management system. Lean Management system uses various tools to connect the purpose (Providing value to customer) to the process and people. Some of the lean management tools which are commonly used are Leader standard work, visual control boards, and daily accountability. The tools itself are not effective unless used with right mindset.

There is a lot of work needed to be done at individual level for the mangers to become lean managers. To start with lean management we have to start developing managers in to “Lean Managers”.

What are you doing to become a lean manager?

You don’t have to answer this question yet; however you should be clearer in your understanding of Lean by the time you finish reading this book; then you can answer the question above.

Lean is set of principles and practices that help a company, manager or a team create more customer value, faster, with the same resource.

Savvy start-ups are all reading my book “Lean Start-up (Key to a Better Chance of Successful Start-up)” and using the practices and principles in the book to build and launch their product to real users quickly and then to measure their customers' response to the product and learn about how to develop it further to make it more successful.

Moving through this cycle as quickly and as efficiently as possible, so you learn what your customers want and how best to respond, is what gives you competitive advantage. And to move through the cycle quickly, you need to be lean.

These practices are just as important for enterprises who are looking to innovate beyond their core products, so managers who are responsible for innovation, should learn them.

All major organisations dreamt up a product or service that they thought people might be interested in, started small and tested it out.

Feedback was good. They optimised and tested some more, listened intently to what their audience thought about it, and at some point, it took off in a big way! They couldn't keep up with demand. But they responded quickly and grew fast. No one could believe how fast they grew.

They became the young, fresh-faced darlings of their industry. These hugely talented and determined individuals inspired their burgeoning workforce to still bigger and greater things and their company became big. Really big. One of the leaders in its sector.

Brilliant stuff!

So why on earth do so many of these companies, all these years later, have to put up with people questioning their management style, their processes, their siloed structures, even the quality of the food in their canteen (doesn't matter how good your canteen is, people will tell their friends it's terrible you can't say your canteen is good, don't ask me why, you just can't).

"Actually," I hear you say, "I have a thing or two to say about our company! It is frustrating when my team and I have to wade through policy, when we have to help other teams with their work while they have no regard for ours, when it's so hard to get time or investment to try out our AMAZING new idea.

But, I had a delicious enchilada in the canteen yesterday and told everyone it was too dry. Why did i DO that?

Well, fact is, there was a time when no-one questioned the way your company worked.

Everyone who worked there loved it.

There was an excitement in the air as people felt they were on their way to achieving a shared vision. They understood and believed in this vision. They trusted it. And they trusted each other.

"So what happened to that then?” you ask.

Well, fast growth requires more people. More people, requires some level of bureaucratic structure and a standardisation of roles, responsibilities and processes. 'Bureaucratic structure' and ‘standardisation’ don't sound like phrases that go with 'clear vision' and 'trusting each other' do they.

They don't.

Standardisation is good when you've finished innovating and want some maintenance and protection. But, taking that away and relying on a shared vision and some trust; well that's what's required when you really want to innovate again. So in big companies, you need standardisation for the bits that need protecting, but you need to relax it and go lean for the bits that need innovating.

We are here to talk about being lean and innovating. So here are five principles big companies need to relearn:

1: Motivate with a Vision

Your company will have a vision that is written down. Don't scoff at it (if you are scoffing at it, what are you doing there!). If you think it needs improvement, then improve it. You don't need to get it changed officially. The point is to ensure you have something you truly believe in, that makes sense and sounds inspiring.

Got one? Now put it on the walls. Talk to everyone about it. Your team, your colleagues, your mum, your mum's bingo friends. Everyone.

2: Set Objectives Objectively

If there is one process you need everyone to know about it is a robust objective setting process. Less guessing, less copying the shiny thing your competitor is doing, more understanding what your strategic gaps are, and setting objectives to fill them.

Know exactly the journey you want your customers to take from the point they become aware of your product, to the point they become lifelong devotees, buying the product again and again, even if they don't need it anymore, tattooing your logo on their right arm and frightening their friends into acting in the same insane way.

Once you know all those points in a customer's journey where they can decide to behave the way you want them to or not, measure them to see how you are getting on. Make sure you cover how you are doing in terms of customer acquisition, retention and monetisation.

Right, once you have done that (and only once you have done that), you can you set some objectives. How can you know what you need to get better at if you don't know what you are not good at? So set the objectives and then prioritise them. Pick the top three (though one or two would be better).

Now tell everyone again.

3: Measure Conversion

This bit should be easy because you are now measuring the right things. And you are using the data for identifying gaps and setting objectives. Not for showing off once a month in a report.

The measures specific to your current objectives are your Key Performance Indicators (KPIs), and these should be %s rather than volume numbers. Wherever possible, you are measuring the conversion rate of customers doing whatever it is you need them to do for your revenue model to work.

Once you have your KPIs – Tell everyone.

4: Experimental Product Development

First of all, why are you developing a new product? You work in a company that has had a lot of success with previous products, what is the new one for? Who is it for? Are you sure they want it?

You might well think you are the next Steve Jobs, identifying products you know people want before they even know themselves, without any need for testing early versions out on them. Um. No. You are not. (But just in case you are, any chance my wife and I can get a discount for whatever it is you are developing?)

First of all, are you positive that this new product is the only way you can hit that objective and fill that strategic gap?

Let's just make doubly sure you can't hit that objective with the products you already have. Are these products performing as well as they could be? Are you measuring them properly to know you are not missing the fact that some optimisation and some tweaking, or a little bit of reorganising, might not just bring it back to life in terms of a nice healthy growth trajectory?

In the digital world, there are now products (Optimizely and Visual Website Optimiser are good examples) that will let you test dozens of variations of your product on a daily basis, without having to bother a single developer. This is true. These tools are really that good. So why on earth aren't we all obsessively testing, tweaking and optimising our way to much better products without much effort?

Actually, lots of companies are doing it. In fact, you know those online companies you admire so much; Amazon, eBay, Facebook? They are doing it. All of them and with great results so if you are not, well just get on with it. There is no debate to be had here. You should just get started tomorrow!

Dave McClure, who runs the big silicon valley VC, 500 Hats, and was one of the founders of PayPal, believes only 20% of our efforts should be in development, and 80% in optimisation. Watch him yell about this along with some of these other lean topics. He is pretty convincing and he is done pretty well for himself.

Anyway back to that shiny new product you have that grand design for. Ok, I am with you now, let's do it.

20% of it. Sorry, yes. Just 20% of it. And then let's launch it.

I don't mean launching a shoddy product, I mean launching a product with only the absolute core features incorporated into it. Come on now, you know you have thrown everything and the kitchen sink at it. I know what you were thinking; you want to make sure it works, right? So you didn't want to leave anything out, right?

Leave most of it out! Be ruthless and pare back the design to its purest form and launch it and then run tests with Optimizely and use the results to optimise it.

If you have a hundred days to build a product, launch it on day 20 and spend 80 days optimising it. You will end up with the product your customers actually want, rather than the one you assume they want and I don't want to finish this bit on a downer, but if you find out they don't actually want it at all, then you have only invested 20% of the time you would have done otherwise.

5: Team in a Room

The clincher! Get everyone who will contribute to this visionary product of yours, into a room. The same room at the same time together.

I don't mean adding them to some 'collaboration software', I mean face to face. (Collaboration software has a place later, when you have some momentum, but not yet). If you can't be in the same room then set up video conferencing, but make sure everyone can see the whites of each other’s eyes.

This group of people will be cross-functional. You are breaking down the company's bureaucratic structure and laying it out to fit your new product lifecycle. Everyone who you need to care should be there. Now then make them care! 'Team in a Room' will speed up your product development too.

Tell them everything! Vision. Objectives. Measures. Product Process and tell them that right now, right there in that room, is all the knowledge and skill required to get this product from vision to glorious reality. As long as they keep talking, face to face.

Tell them they don't need to write reports for each other anymore, not on your project anyway because you know what, they are all going to just trust each other.

Chapter 3: Exploring the World of Lean

There are a lot of great ideas to explore in lean. So where should you begin?

The Big Idea – Lean has a very extensive collection of tools and concepts. Surveying the most important of these, understanding both what they are and how they can help is an excellent way to getting started. One way to start is to survey the most important lean tools, with a brief description and short explanation of how each tool can improve your operations.

If a tool captures your interest or resonates with you in some way; explore it further to decide if it is something to pursue now or later. Many of these tools can be successfully used in isolation, which makes it much easier to get started. On the other hand, the benefits will compound as more tools are used, as they do support and reinforce each other.

Essential Lean Tools

The following is a collection of essential lean tools. Each tool is distilled into a simple description of what it is and how it helps.

5s: Organize the work area:

Sort (eliminate that which is not needed)

Set In Order (organize remaining items)

Shine (clean and inspect work area)

Standardize (write standards for above)

Sustain (regularly apply the standards)

It eliminates waste that results from a poorly organized work area (e.g. wasting time looking for a tool).

Andon

Visual feedback system for the shop floor that indicates production status alerts when assistance is needed, and empowers operators to stop the production process.

It acts as a real-time communication tool for the shop floor that brings immediate attention to problems as they occur so they can be instantly addressed.

Bottleneck Analysis

Identify which part of the manufacturing process limits the overall throughput and improve the performance of that part of the process.

It improves throughput by strengthening the weakest link in the manufacturing process.

Continuous Flow

Manufacturing where work-in-process smoothly flows through production with minimal (or no) buffers between steps of the manufacturing process.

It eliminates many forms of waste (e.g. inventory, waiting time, and transport).

Gemba (The Real Place)

A philosophy that reminds us to get out of our offices and spend time on the shop floor; the place where real action occurs.

It promotes a deep and thorough understanding of real-world manufacturing issues by first-hand observation and by talking with shop floor employees.

Heijunka (Level Scheduling)

A form of production scheduling that purposely manufactures in much smaller batches by sequencing (mixing) product variants within the same process.

It reduces lead times (since each product or variant is manufactured more frequently) and inventory (since batches are smaller).

Hoshin Kanri (Policy Deployment)

Align the goals of the company (Strategy), with the plans of middle management (Tactics) and the work performed on the shop floor (Action).

It ensures that progress towards strategic goals is consistent and thorough; it eliminating the waste that comes from poor communication and inconsistent direction.

Jidoka (Autonomation)

Design equipment to partially automate the manufacturing process (partial automation is typically much less expensive than full automation) and to automatically stop when defects are detected.

After Jidoka, workers can frequently monitor multiple stations (reducing labour costs) and many quality issues can be detected immediately (improving quality).

Just-In-Time (JIT)

Pull parts through production based on customer demand instead of pushing parts through production based on projected demand. It relies on many lean tools, such as Continuous Flow, Heijunka, Kanban, Standardized Work and Takt Time.

It is highly effective in reducing inventory levels. Improves cash flow and reduces space requirements.

Kaizen (Continuous Improvement)

A strategy where employees work together proactively to achieve regular, incremental improvements in the manufacturing process.

It combines the collective talents of a company to create an engine for continually eliminating waste from manufacturing processes.

Kanban (Pull System)

A method of regulating the flow of goods both within the factory and with outside suppliers and customers. Based on automatic replenishment through signal cards that indicate when more goods are needed.

It eliminates waste from inventory and overproduction. Can eliminate the need for physical inventories (instead relying on signal cards to indicate when more goods need to be ordered).

KPI (Key Performance Indicator)

Metrics designed to track and encourage progress towards critical goals of the organization. Strongly promoted KPIs can be extremely powerful drivers of behaviour so it is important to carefully select KPIs that will drive desired behaviour.

The best KPIs:

Are aligned with top-level strategic goals (thus helping to achieve those goals)

Are effective at exposing and quantifying waste (OEE is a good example)

Are readily influenced by shop floor employees (so they can drive results)

Muda (Waste)

Anything in the manufacturing process that does not add value from the customer’s perspective.

Eliminating muda (waste) is the primary focus of lean.

Overall Equipment Effectiveness (OEE)

Framework for measuring productivity loss for a given manufacturing process. Three categories of loss are tracked:

Availability (e.g. down time)

Performance (e.g. slow cycles)

Quality (e.g. rejects)

It provides a benchmark/baseline and a means to track progress in eliminating waste from a manufacturing process. 100% OEE means perfect production (manufacturing only good parts, as fast as possible, with no down time).

PDCA (Plan, Do, Check, Act)

An iterative methodology for implementing improvements:

Plan (establish plan and expected results)

Do (implement plan)

Check (verify expected results achieved)

Act (review and assess; do it again)

Applies a scientific approach to making improvements:

Plan (develop a hypothesis)

Do (run experiment)

Check (evaluate results)

Act (refine your experiment; try again)

Poka-Yoke (Error Proofing)

Design error detection and prevention into production processes with the goal of achieving zero defects.

It is difficult (and expensive) to find all defects through inspection, and correcting defects typically gets significantly more expensive at each stage of production.

Root Cause Analysis

A problem solving methodology that focuses on resolving the underlying problem instead of applying quick fixes that only treat immediate symptoms of the problem. A common approach is to ask why five times; each time moving a step closer to discovering the true underlying problem.

It helps to ensure that a problem is truly eliminated by applying corrective action to the “root cause” of the problem.

Single Minute Exchange of Die (SMED)

Reduce setup (changeover) time to less than 10 minutes. Techniques include:

Convert setup steps to be external (performed while the process is running).

Simplify internal setup (e.g. replace bolts with knobs and levers).

Eliminate non-essential operations.

Create standardized work instructions.

Enables manufacturing in smaller lots, reduces inventory, and improves customer responsiveness.

Six Big Losses

Six categories of productivity loss that are almost universally experienced in manufacturing:

Breakdowns

Setup/Adjustments

Small Stops

Reduced Speed

Start-up Rejects

Production Rejects

It provides a framework for attacking the most common causes of waste in manufacturing.

SMART Goals

Goals that are: Specific, Measurable, Attainable, Relevant, and Time-Specific.

It helps to ensure that goals are effective.

Standardized Work

Documented procedures for manufacturing that capture best practices (including the time to complete each task). Must be “living” documentation that is easy to change.

It eliminates waste by consistently applying best practices. Forms a baseline for future improvement activities.

Takt Time

The pace of production (e.g. manufacturing one piece every 34 seconds) that aligns production with customer demand. Calculated as Planned Production Time / Customer Demand.

It provides a simple, consistent and intuitive method of pacing production. Is easily extended to provide an efficiency goal for the shop floor (Actual Pieces / Target Pieces).

Total Productive Maintenance (TPM)

A holistic approach to maintenance that focuses on proactive and preventative maintenance to maximize the operational time of equipment. TPM blurs the distinction between maintenance and production by placing a strong emphasis on empowering operators to help maintain their equipment.

It creates a shared responsibility for equipment that encourages greater involvement by shop floor workers. In the right environment this can be very effective in improving productivity (increasing up time, reducing cycle times, and eliminating defects).

Value Stream Mapping

A tool used to visually map the flow of production. Shows the current and future state of processes in a way that highlights opportunities for improvement.

It exposes waste in the current processes and provides a roadmap for improvement through the future state.

Visual Factory

Visual indicators, displays and controls used throughout manufacturing plants to improve communication of information.

It makes the state and condition of manufacturing processes easily accessible and very clear to everyone.

Chapter 4: Lean Tools and Lean Management

I have been thinking about the challenge of lean transformation for over 20 years now, that is a long time and during this period I have watched lean thinking progress through a series of stages.

In the early years much of the focus was on sorting out what was specific to a culture. Could anyone outside of Japan embrace lean thinking? Could anyone outside of Toyota? And there was much confusion about the elements of a lean business system. Was it just in the factory? Or did it apply to every aspect of an organization, including product development, supply chain management, customer relations, and general management? In all of my lean books I always made an effective case that lean thinking can be applied by any company anywhere in the world but that the full power of the system is only realized when it is applied to all elements of the enterprise.

As this view became accepted, the focus turned to how organizations everywhere could transform themselves from mass producers into lean exemplars. Given the magnitude of the task and its many dimensions it is understandable that lean tools came to the foreground; 5s, setup reduction, the five whys, target costing, simultaneous and concurrent engineering, value-stream maps, kanban, kaizen. Indeed, I think of the period from the early 1990s up to the present as the Tool Age of the lean movement.

The attraction of tools is that they can be employed at many points within an organization, often by staff improvement teams or external consultants. Even better, they can be applied in isolation without tackling the difficult task of changing the organization and the fundamental approach to management. I often say that managers will try anything easy that doesn’t work before they will try anything hard that does, and this may be a fair summary of what happened in the Tool Age.

In the past 15 years, we all learned about a lot of lean tools. We also learned how to apply them and we had some modest success. But we are yet to come close to creating a second Toyota, much less a third, fourth or fifth! By contrast, the previously dominant mass production approach to management as perfected by Alfred Sloan at General Motors in the 1920s was widely and successfully copied within a short period of demonstrating its superiority. Fortunately, I now see signs that the lean movement is finally tackling the fundamental issues of lean management.

I have recently had a number of conversations in a number of countries the US, UK, UAE, China and India with senior managers who realize that they need to think more about lean management before thinking further about lean tools.

What do I mean by “lean management”? Let me start with some general observations about organization and management. All value created in any organization is the end result of a lengthy sequence of steps a value stream. These steps must be conducted properly in the proper sequence at the proper time. Getting the right value to the customer at the right time with the right cost to the organization is the key to survival and prosperity.

The flow of value toward the customer is horizontal, across the organization. All organizations – including Toyota – are organized vertically by department (engineering, purchasing, production, sales, etc.) They always will be because this is the best way to create and store knowledge and the most practical way to channel careers.

Someone needs to see, manage, and improve the entire process of horizontal value creation on behalf of the customer, from concept to launch, from order through production to delivery, and from delivery through the product life cycle.

In most organizations no one is actually responsible for the horizontal flow of value by product family, whatever senior managers may think. The product is an organizational orphan. In most organizations managers at every level are being graded on whether they make their department-specific numbers. These are the metrics usually financial set by high-level managers as they attempt to fully utilize assets and “control” the organization.

Improvements to value streams are managed by staff experts (or consultants) who usually don’t see the whole flow of value, the most pressing needs of the customer, and the most urgent business needs of the organization. They use the tools they feel most comfortable with to solve the problems that seem easiest.

How can “lean management” help? Here are three simple elements of lean management worthy of experimentation:

Make sure every value stream has someone responsible for overseeing the whole flow of value and continually improving every aspect of the process in light of the needs of the customer and the business. The question for this value-stream manager to ask is, “How can I make customers happy while making money by engaging the full energies of our people to improve this value stream?”

Note that the value-stream manager doesn’t need a large staff or authority over employees touching the value stream. Instead, the value-stream manager needs to negotiate with the department heads about the needs of the product and resolve any differences by appeal to the most senior managers.

Similarly, no employee should have more than one boss. A good system of value-stream management gives every lower-level employee a boss in his or her department who has determined in conversation with the value-stream manager what that department needs to do to support the value stream. This avoids complex matrices in which employees have two (or more) bosses.

Instead of developing complex metrics, ask value-stream managers how they will improve the value creating process they are overseeing.

If managers focus on their process, the performance metrics will come right; but if managers focus on their numbers, the process is likely never to improve and note that most metrics are nothing more than end-of-the-line quality inspection. At the end of the quarter or the end of the year everyone looks to see what happened, at a point long after the mistakes have been made.

3. Teach all managers to ask questions about their value streams (rather than giving answers and orders from higher levels.) Turn these questions into experiments using Plan-Do-Check-Act.

Only management by science through constant experimentation to answer questions can produce sustainable improvements in value streams. (Toyota’s A3 is a wonderful management tool for putting science to work.

Please understand the fact that Lean tools are great. We all need to master and deploy them so that our efforts of the last 25 years to do so are not wasted. But just as a carpenter needs a vision of what to build in order to get the full benefit of a hammer, we need a clear vision of our organizational objectives and better management methods before we pick up our lean tools.

Lean management is the key to doing this. We don’t yet know all the elements but discovering and deploying them is the challenge we all need to tackle in the next chapters of this book.

Chapter 5: Myths About Lean and Agile Projects

Lean is commonly taken to imply practices inspired by the Toyota Production System and its relatives like Total Productivity Maintenance. These practices were being used in automobile manufacturing long before software gave them formal stature among its practices.

We have been interacting with a construction firm here in the UK that is one of many firms worldwide doing Lean construction: homes, highways, office buildings and the like. These principles are broad, and are commonly and broadly applied in an integrated way.

What are some of the common misperceptions about Lean/Agile project management?

1. People feel that Lean and Agile are about project management. Lean is about processes for producing product. Project management is usually focused on time and money management, and usually derives from a fixed budget with an eye to delivering a project in the long term. Good Agile development focuses on small bites of incremental delivery, and Lean focuses on value.

2. People feel that Lean and Agile are about loosening constraints, but for most people they entail a higher level of discipline than holds for other techniques. Time boxing without overtime is a key feature of Agile: it takes guts and discipline to do that. Delivering a Done product in Scrum takes immense discipline even in parts of development that are usually invisible to the business such as refactoring code.

3. People feel that Agile means fast. Sometimes you need to be fast to keep pace with suppliers and the market, but both Agile and Lean are more about synchronisation and rhythm than they are about speed. In the Toyota Way it’s commonly called takt (from the German word taktzeit, which translates to ‘cycle time’).

4. People feel that Agile and Lean give them productivity. Productivity links closely to overproduction, which the Toyota Way views as the number one cause of waste. Productivity is why we have so many unreviewed requirements and such masses of code that are never executed.

5. People feel that Agile and Waterfall are antonyms. In fact, the main problems of Waterfall are that it gathers all requirements up front, and that it tends to organise people in stovepipes. That means people touch a product only for a slice of its development rather than following it cradle to grave. Most people think that the evil of Waterfall is its phases of analysis, design, implementation/test, yet we find these in Scrum.

6. People feel that Agile is about not doing upfront architecture, a concept borne of the XP (extreme programming) idea that “you are not going to need it”. That is kind of a naive application of the Toyota ideas of ‘just-in-time’. XP and Agile are much about doing, usually always together with the computer; writing code (in pairs), testing code, interacting with other, getting the software to work, collaborating with customers, and so forth. Doing, doing, and doing. There is little thinking in Agile.

The Toyota Way, on the other hand, is all about planning. It’s not about following the plan, but as Dwight D Eisenhower said: “I find that when going into battle, plans are useless. Planning, however, I find to be indispensable.”

7. People often confuse the practices of the Toyota Production System with its essence. The practices include just-in-time, reduced inventory, and minimised waste. The contemporary meaning of Lean corresponds largely to the assembly of these practices. The Toyota Production System, at its heart, is about people and about continuous improvement, commonly called kaizen. Very few Western companies that claim to be doing Lean are doing anything close to The Toyota Way.

8. People think of kaizen as a high-energy exercise analogous to a team that is on an emotional high, ready to take on the opponent. In fact, kaizen starts with introspection and what the Japanese call hansei: a deep, personal sense of regret for having missed an opportunity to do better.

9. People call Scrum a methodology. In fact, the whole concept of Agile is that no method can work: we have emergence that calls for continuing change. There is no method that can regularly prevail over informed self-organisation in a complex adaptive field like software development. Methods work on simple and complicated problems; software development is complex, a level more difficult than complicated problems.

10. People feel that PMI and Scrum are compatible, or that PRINCE2 and Scrum are compatible, and so forth. I see far too many hand-waving explanations about how to make these combinations work but only at a mechanical level.

However, the underlying worldviews and value systems are radically different in spite of the apparent compatibility at the level of the superficial interfaces. This misunderstanding leads to some of the most disastrous failures for so-called Agile adoptions.

What are some of the clear benefits of using a Lean/Agile approach to project management?

Lean focuses on reducing waste, smoothing out flow along the value stream, and having an integrated view of the process and product. Agile is about self-organisation and feedback. Project management, in the broad sense, neither encourages nor disallows these. Perhaps that implies that Lean and Agile provide more focused and contextualised values, structures, and principles for development than project management does. You certainly would find that if you compared, for example, Scrum with PRINCE2.

Chapter 6: Effective Tool for Project Managers

Lean Principles have moved off the factory floor and evolved into an effective tool for project managers to streamline the project cycle from the top down.

Identify Value is the first step. It is incredibly important as it addresses the question of whether or not the project should be undertaken; does it add value to the customer? And, will it deliver value for the business? ‘Map the Value Stream’ is fairly self-explanatory; figure out what steps need to be taken and eliminate those that don’t. Creating flow means mapping out those steps so that the product flows efficiently toward the customer at each step. ‘Establish Pull’ refers to the act of involving the customer in the process and allowing them to decide what is or isn’t valuable. Finally, use the customer input to iterate to ‘Seek Perfection’. So, that’s the methodology in a nutshell. Evidence shows it to be incredibly successful at ‘eliminating waste’ in terms of production, but it is also a philosophy that can be applied to managing people to produce an enjoyable and efficient work environment.

Practicing Lean Project Management

It’s a common misconception that when people think of project managers, they think project managers manage projects. They don’t; they manage people. Applying the ‘Lean’ methodology to project management to teams of people rather than products may seem a little inhumane but in actuality it has been shown to empower employees. The difference between a modern practitioner of lean project management and early project planners is a focus on the well-being of every member of the team. Lean Project Management eliminates waste (in terms of time and resource not people) by adhering to the same basic principles laid out by Jones and Womack, but it also draws on the values inherent in lean methodology to improve professional development. This is how the Lean Methodology can be applied to project management.

Identify Value: Carefully break down projects to determine what elements are extraneous and can be eliminated.

Map the Value Stream: Look at teams and carefully map out the entire project to see what teams are essential to the project at which time to improve handovers and prevent bottlenecks.

Create Flow: Break down projects into small manageable tasks (similar to Agile methodology). Measure everything and watch to see how teams or individuals perform best in certain situations to know how to assign tasks that play to their strengths.

Establish Pull: Don’t commit to one course of action until project sponsors have agreed to a finite list of desired outcomes. Decide late, deliver fast.

Seek Perfection: Empower teams with decision making responsibilities and accountability. Promote the idea of continual improvement by communicating clearly what the team has learned from a failed project.

By following this holistic approach to the Lean methodology and creating a seamless flow, project managers will not only be able ‘cut the crap’ that slows projects down and creates a stressful, unproductive work environment, they will also be able to positively impact their business and the lives of everyone they work with.

Chapter 7: Lean Project Management

Is project management an area worth applying Lean?

According to a recent study, only one project in four is completed on time and within budget and achieves the expected quality.

So there is room for improvement, especially in a fast-changing world that needs to adjust quickly to ever-changing environments with more and more strategic projects to take care of.

In this chapter we will first try to identify the root causes of the high failure rate then we will explain Lean thinking and determine to what extent this mindset or rather the philosophy behind the principles developed by Toyota for their production systems can be applied to project management in order to address the failure modes.

The main part of this chapter will demonstrate how this can be implemented, building a link to the Lean principles and giving concrete advice as well as highlighting points to watch when setting up a Lean project.

The Challenge of Project Management

Many companies fully or partially live in a project world, yet most of them either do not realise it or they simply do not act like project-driven companies.

A project is a temporary endeavour to create a unique product, service or result.

Even if companies realise that they are in a classic project situation, they do not always use the right project management techniques to properly govern it, although these techniques have reached a good level of maturity and are proven to increase the chances of completing a project in time, cost and quality.

Why is this the case?

Project management is the application of knowledge, skills, tools and techniques to meet project requirements. This includes:

Identifying requirements.

Defining clear and achievable objectives.

Balancing the competing demands for scope, cost, quality and timing.

Adapting the approach to the concerns and expectations of the various stakeholders

Parallels between Project Management and Total Quality Management

In the early to mid-1980s, quality control in any production environment consisted of no more than a few heroic people fighting windmills. At that time, companies did not yet see the benefit in spending money to improve their processes. Prevention was an unknown concept; dedicated inspectors would perform random sample checks at operations known or rather felt to be critical.

To protect the customer, all key deliverables were finally inspected just before they were sent out and any defects would be reworked i.e. corrected using all the tricks of the trade (neither documented nor approved) to make them work. Operators were not involved in the quality process. When asked about ‘quality‘, their answer would always be; ‘Not my job. That‘s what the Quality guys do!

If a process repeatedly produced a defect, any remedial action was mainly aimed at the symptom, functioning like a Band-Aid. No analytical tools were used to determine the root cause and eliminate future failures. The concept of using statistical data to qualify a process mathematically, showing that it either was capable of achieving the specification or not, was yet unknown.

Therefore, the Quality and Process Engineering departments (if they existed at all) were in constant fire-fighting mode to do their best to stay on top of the situation and prevent catastrophes. Nobody logged the defects, which made keeping a trend analysis impossible; nobody cared about continuous improvement.

The production processes were neither designed nor optimised to ensure or even enable good quality; the only criterion by which a production supervisor was judged was output. Planning for quality was considered impossible, which meant it was hardly ever tried. The cost of quality was not measured, let alone tracked.

Total Quality Management (TQM), originally a concept refined by some gurus in the US and first applied in Japan as part of the Toyota Production System in 1956 came to Europe in the early 1980s. At first, it was the car manufacturing companies that forced their suppliers to use it in order to reduce the price for purchased parts. It quickly became a must for any supplier.

The idea is simple. The cheapest defect is the one you do not produce. Therefore, do not hide the symptoms by sticking Band-Aids on them; find the root cause and eliminate it so that the defect will not occur again.

Companies quickly found that investing in quality assurance was worthwhile. Scrapping fewer parts and eliminating rework yielded a fast payback for the investment made in prevention and because the process rejected fewer parts, it was cheaper and safer to just scrap them instead of reworking them. Prevention became more important than detection and suddenly, quality became the responsibility of every single employee.

The inspectors disappeared to make room for visual boards in each production line; the reality was no longer masked. Controlling the process by facts and statistical data was now commonly accepted.

Lean management is a system for organising and managing all aspects of a business function by creating principles, practices and tools in order to develop goods and services with higher quality and fewer defects. The general outcome is to do this by using less effort, space, capital and time.

How to Manage Projects in a Lean Way

Lean and the Toyota Way In the early 1950s, Toyota and other manufacturing companies with the support of the Marshall Plan decided to produce goods in Japan for the Asia-Pacific market. Looking at how US manufacturers especially car builders did it; they found that the Ford and GM method of mass production were not adaptable to their market situation. In the aftermath of World War II, Japan who had to import nearly everything was not popular with its neighbours and suppliers and therefore was forced to pay premium prices up front. On top of that, there was not a lot of land surface available to the industry (only 40% of the land mass of Japan can be used for housing, agriculture and manufacturing). Most of the young and skilled workforce had either died in the war, were permanently disabled or still retained as Prisoner of War.

The only way to success for a manufacturing company therefore was to accelerate the run-through times in order to keep the period between paying for the raw materials and receiving payment for the finished goods from customers as short as possible;

For the same reason, to keep only a minimum of stocks, raw materials, finished goods, as well as work in process.

Not to produce any scrap.

To use a minimum of space.

To simplify the work to suit an unskilled workforce.

This was the beginning of the idea of Lean manufacturing, trying to eliminate waste wherever possible to a common mindset, later known as the ‘Toyota Way’. It can be summarised in a set of 14 principles.

The Toyota (Lean) Principles

Principle 1: Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

Principle 2: Create a continuous process flow to bring problems to the surface.

Principle 3: Use ‘pull’ systems to avoid overproduction.

Principle 4: Level out the workload.

Principle 5: Build a culture of stopping to fix problems, to get quality right the first time.

Principle 6: Standardised tasks and processes are the foundation for continuous improvement and employee empowerment.

Principle 7: Use visual control so no problems are hidden.

Principle 8: Use only reliable, thoroughly tested technology that serves your people and processes.

Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Principle 10: Develop exceptional people and teams who follow your company’s philosophy.

Principle 11: Respect your extended network of partners and suppliers by challenging them and helping them to improve.

Principle 12: Go and see for yourself to thoroughly understand the situation.

Principle 13: Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.

Principle 14: Become a learning organisation through relentless reflection and continuous improvement.

After proving their success in the manufacturing industry, these methods slowly moved into non-productive areas again, first in the producing companies themselves to eventually reach the service providers.

Today, Lean management principles and TPS basics can be found in the business processes of most of the ‘Fortune 500’ companies.

Applying Lean to Services

It is important to understand that the Toyota Way and Lean are not the same: TPS is much more than just the application of tools; it is a philosophy that should drive every decision in a company or any other endeavour.

This is why it is much better suited when trying to improve service and support processes, as it is quite sophisticated and its holistic approach, which strongly emphasises the central role of the people, is key to the success of implementation.

Chapter 8: How to Increase Waste

Imagine you “buy” something for £500-£800 for delivery on a specific date and you start to arrange other parts of your life around it, only to be told later “you can’t have it on that day, you will have to choose another” how wasteful is that and how would you feel as the customer?

Last week I booked my car in for its’ annual service. I booked it in with a national company and used their on-line booking service; I could have used the free phone number to contact the call centre, called the service workshop directly or even called at the garage in as I often pass by once a week.

Nonetheless I used the on-line service and I was curious when it didn’t give me a time for the service but asked me to bring the car at 8.30am and that I did be told what time to pick it up then.

I feared I would be part of some large batch of customers all signing their cars in at 8.30 and early on this morning I wasn’t disappointed! I wasn’t surprised either when they couldn’t tell me when the car would be ready.

However when I booked on the Internet I specified what needed doing, the mileage, the registration etc and this was all on a nice neat form in the office.

The gentleman booking in my car then had to transfer the details from the Internet booking systems on to a single sheet they use when carrying out the service, so I enquired why? He didn’t need any more details than I had provided.

Apparently the Internet system would not print out the sheets they needed, it never had done and so time was wasted transferring details to the sheets they actually use during the service.

I commented on how wasteful that must be every morning, at which point you may recognise the story; particularly if you are a Lean practitioner, you start to get all the other problems. I was lucky! the Internet service and the call centre can’t see the diary for the garage so they have a set number of slots to book each day and give each one an 8.30am booking.

The branch staff however are busy servicing cars during the day, as well as booking in the direct phone-ins and the walk-in customers, only when they get a chance to go back to the office do they book in the Internet and the call centre customers for their slots in future days. Many times they find that the Internet and call centre have accepted customers for which there are no slots left and so the garage staff have to waste time ringing up customers who need to spend £500-£800 with them to move them to another date. You can imagine how that is met by some customers!

So to test this I was told in the garage their next available MOT (compulsory annual vehicle check in the UK) is next Thursday the 20th August. So I go online at midday today (12th August) and the internet will let me ”book” an MOT on Monday the 17th August – why? There are no spaces left, the garage staff told me and how many potential customers will go on-line to make a booking for Monday to Wednesday next week and have to receive a phone call telling them they can’t have the date the internet part of the business said was free.

Why do companies let this happen?

Why do they let the waste of repeated form filling occur?

Why do they let the customers’ waste time booking appointments that they can’t keep?

Why do they let the first conversation between the service staff and the customers, start off”I’m sorry but……”

Maybe in this case, the car servicing companies feel that in this current recession, with car sales still depressed, many of us are electing to run cars for longer and therefore the need (not desire) for car servicing will grow.

They and their competitors will increase the volume of work and the revenues the longer I keep my car the more expensive the servicing gets, I find they collect, they will prosper and they can just pass the costs of the hidden wastes on to the consumers.

Was my original internet booking date changed? No but it could have been.

Was I annoyed by the delay at 8.30? No I expected a batching queue.

Was I disappointed to find that they didn’t know what time my car would be ready? No I expected it.

I did planned my day around dropping the car off and being in my office sometime after 9am and that I should get my car back sometime after 5pm, I just lowered my expectations of the level of customer service.

Can I go anywhere and get better service? Sadly experience means I’m not sure.

Chapter 9: Implementing Lean

I thought it would be a good idea to define organizational structure, so that everyone is on the same page when we discuss this in context to other lean management tool and principles as we have done in previous chapters and will be doing in the later chapters. This will also help us identify if there are better ways that I am not aware of at this moment.

This structure is just the top level general structure you will see in a lean company, it basically consists of.

Top level

Middle Level

Line Managers

Top Level: Consists of CEO, Owners, VP, Directors etc. They are involved in strategy deployment.

Middle Managers: These are the managers who are involved in solving problems. They form an important link connecting strategy to the day to day management of the company.

Line Managers: These may be the Supervisors, Team leaders who ensure standard work is followed and continuous improvement by Kaizen. They are responsible for the processes that provide value to the customer.

We will now move forward to the formula of starting lean transformation. This methodology I am going to discuss is effective and proven.

Find a change agent (how about you?)

Find a sensei – a teacher whose learning you can borrow.

Seize (or create) a crisis to motivate action across your firm.

Map the entire value stream for all your product families.

Pick something important and get started removing waste quickly.

Why is it then that fewer than 20% of companies who embark on the lean journey succeed at their efforts and can truly be said to be “Lean Thinkers” five years later?

The reason is simple. A great start does not make a great finish. To finish well, a company needs to transform their culture. Paying attention to these 10 lessons will maximize your opportunity to finish well.

Motivated Management:

Without demand from top management, lean efforts will fail. It isn’t enough for the management team to support the lean initiative; they must demand success and demonstrate repeatedly that there will be no tolerance for lacklustre performance. This motivation must come from the top, because in most cases middle managers do not have the influence to change the culture.

A Case from my files: A few months after commencement of a lean deployment at a plant which provides products for the healthcare industry, it was becoming obvious that the lean effort was already stagnating. We had done everything per the formula laid out by Lean experts, but still progress was faltering. The normal excuses were rampant; our business is too complex, engineering isn’t supporting the effort, poor suppliers, terrible maintenance, and so on.

In a weekly review with the CEO, I told him of my concerns and of our lacklustre performance. Fortunately, he is a man of action. During the following day’s work session with the facility’s management team, everything changed. The meeting began in typical fashion, but then the CEO turned to the production manager, pointed at him with both hands and said “The success or failure of this project is your responsibility, and if it fails, you will be gone from this company.” Pointing to the support staff in the meeting with us, he continued “If any of these people fails to support you, let me know, and they’ll be gone”. He didn’t have to say it twice, everyone understood.

Without motivated management, lean efforts will fail. Too often the commitment is half-hearted and everyone knows that there will be no real consequences. The demand maker need not be the CEO or President. If you are the production manager, you can be the demand maker for your facility.

Expert Guidance:

Find someone who has been through lean deployments before. Most of the lean concepts aren’t difficult to grasp. We can easily understand that waste is the enemy we need to seek and destroy. Even the more advanced tools like value stream mapping, replenishment systems and load levelling systems, and process family analysis can be taught quickly and comprehended by most associates and managers. The roadblocks to lean are cultural, not intellectual or technical.

For example, during a shop floor intervention at a major manufacturer, a production manager was challenged on why he had not yet accomplished the changes to one of his work cells as promised. After the normal excuses were exhausted, we finally arrived at the truth. “Ade”, he said, “I want to make sure I get it exactly right. I don’t want to have to change anything again, so I am taking it slow.” Suddenly, it was obvious that he wanted to do his best, but his thinking after working for this firm for 23 years had been affected by the culture that mistakes were not tolerated.

Without experience in lean efforts, his logic could be hard to discount. However, with many such workshops behind me, I quickly responded “Dave, even if you make it great, we are going to change it. Stop worrying about making it perfect, just make it better.”

When someone has been working in an area for a long time, it can be difficult to for them to accept the obvious solutions that the lean methodologies reveal.

Full Time Lean:

Form a lean implementation team to build a lean culture and you will see immediate results and long term improvements. While lean concepts are not complex, the work is not easy. A well conducted lean workshop can take hours to prepare. Developing the schedules, planning the training, procuring the resources and materials takes time. Find someone within your organization to send to lean conferences or training sessions. If there isn’t anyone who can be trained, then hire someone who already has the experience. There must be someone unencumbered by the day to day fires of running the shop to focus on lean.

The chances of success are seriously jeopardized when the lean manager starts doubling as the safety coordinator, the environmental specialist, or the manufacturing engineering manager. The direct responsibilities of these positions will take preference over the lean initiatives, and lean workshops will cease, or at least cease to be effective. It is better to share a lean coordinator with sister facilities than to split the duties of the lean manager.

Just-In-Time Training:

Incrementally change the culture of the organization. Training for lean need not be a burden. It is true that there are new concepts that need to be taught and new tools that need to be adapted by associates. But lean manufacturing disciplines are more cultural than technical, so training needs to be delivered in short bursts immediately followed by a workshop. Don’t teach about 5s in a classroom; show operators how to do 5s in the work cell. If they have questions, answer them on the spot. The event becomes the training, the learning means. When it is time to do a paper kaizen event, explain the fundamentals, then do the event. The principle is the same; teach by doing, learn by practicing.

Initial training in lean principles can be easily taught in less than four hours. Subsequent training on specific tools and techniques can be conducted in short sessions of 30 minutes to one hour each. Training in this fashion will minimize the investment, while increasing the likelihood of success. It is hard to forget something you learned 15 minutes ago it is hard to practice something you learned two months ago and haven’t used since.

This Just-In-Time training doesn’t replace the need to bring awareness of the lean effort to the entire organization. It is still critical to success to get everyone tuned into the upcoming efforts and the reasons why the lean journey is being taken.

Move decision making to the production floor:

Management can’t make all the decisions. The amount of change seen today in the management ranks of most midsized companies is extraordinary. Even within my clientele, there are examples where operations directors have had eight or more bosses over the past five or six years. This management turnover has left the balance of knowledge within companies strongly tilted towards the workers.

The production lines are staffed with skilled workers with years or even decades of experience working in our culture and on the products we sell. Indeed, after talking with these production workers, it is normal to discover they have a deeper and broader understanding of the issues than the current management team. To disenfranchise these experts by leaving them out of the decision making process is counterproductive.

However, they are likely to be disillusioned because of chaotic management. They are frustrated and burned out because each new management team brings new changes and demands. They know that if they just wait out the current crop of managers, whatever “fixes” are put in place today will be reversed tomorrow.

This distrust must be addressed during the lean deployment. A manager must take the time to listen and truly discuss the issues with employees. Only then will gains be quickly made, trust built and relationships formed. Yes, there still will be conflict, and occasions that individual employees will find it difficult or impossible to accept the changes coming from the lean deployment. But the changes will be smoother and more sustainable.

Don’t demand perfection. Remember that lean is the pursuit of perfection, not achieving it. Even when you “know” the right way to change a process or implement a new system, allow those who have the experience to “fix” your solutions; who knows, they might even make it work.

Don’t wait too long to establish a Total Productive Maintenance System

Lean manufacturing is designed to eliminate waste. Three of these wastes are the waste of excessive inventory, the waste of overproduction, and the waste of waiting. Much effort is expended to identify solutions, determine a course of action, and then make changes to eliminate these wastes.

But there are reasons why the wastes exist. In nearly every case, the wastes are a “band-aid” for serious, unresolved issues. Equipment that is poorly maintained cannot be relied upon for the just-in-time delivery of parts. Production planners and managers compensate by overproducing or by building inventory.

Without justified confidence that the equipment will run properly, the efforts of the teams will be short-lived. Otherwise when machines break down and production lines or work cells stop, the wastes of over-production and excess inventory that were so painstakingly eliminated will return. The associates won’t soon forget this failure, and the next time a lean deployment is attempted, comments like “that 5s thing”, or “Just-In-Time doesn’t work here” will echo in the plant.

You need to start now. Total Productive Maintenance implementation is a big effort, and will undoubtedly be one of the hardest elements of your lean deployment. Here are some hints for a quick start:

Clearly identify each piece of equipment.

Document the historical performance of the equipment.

Observe the equipment while operating; you can learn by watching and listening.

Identify any chronic failures or problems with each piece of equipment.

Obtain full information about problem equipment.

Establish realistic budgets to return the equipment to reliability.

Don’t just go through the motions – take this very seriously.

Get rid of the “Concrete Heads”; especially those in management

People feel threatened by the changes brought about by lean. As waste and bureaucracy are eliminated, some will find that little of what they have been doing is adding value. The anxiety they feel is normal and expected. Supervisors may spend much of their day expediting parts and deciding which flare up to extinguish first. If this is how they define their job, they are sure to feel some distress; maybe to the point of withholding information they may believe makes them invaluable.

To counteract this, it is critical that people are shown how the concept of work needs to change. The advantages of sharing knowledge and responsibilities with the production operators should be constantly reinforced. Most people will adjust to the new expectations within a few weeks and adapt their work habits.

But in every lean deployment, there will be a few who refuse to adopt the lean principles. Here is how to recognize them:

They stand back, usually with their arms crossed, saying almost nothing. They usually don’t take notes, and seldom ask questions.

They don’t offer suggestions, only criticisms. They remind the group subtly of past programs that have failed.

They constantly look for problems, not solutions. They won’t add to an idea, only subtract from the energy of the team.

Once identified, concrete heads need to be confronted. They need to understand the seriousness and permanence of the lean changes. Make sure they understand that their obstinacies are viewed as their desire to cease employment at your firm, but give them a chance to consider their options. If this doesn’t work, they have to go.

A Case from my files: Several years ago, while serving as the Acting Production Director for a UK Medical Device company, the Production Manager at our facility took issue with our lean manufacturing program. In short he was a concrete head. After several weeks and growing frustration on my part, I had the opportunity to meet with him during one of my routine shop floor work about. As we toured the facility discussing what was happening at the plant, we eventually reached the key point. “Ade”, he said, “I just don’t think this lean stuff is the way to go here. It will never work.” Stopping for a moment, I looked him in the eye and simply said “That is not your choice. It is mine. Your choice is whether you are going to implement lean here, or force me to find someone who will.” He decided on the spot that he wanted to be a lean practitioner, and he remained one of the best managers we had until he moved on.

Establish a Lean Deployment Team (Steering Committee)

The deployment of a lean initiative at any company is a significant and stressful process. It is not a simple matter, it is not short-term or just a production thing; it is complex and cross functional. Everyone within the company, from the executive team to the workers on floor will be affected.

In order to be successful at executing the transformation of the company and its culture, it is necessary to have good oversight. Typically, the oversight team is composed of managers and executives of the various functions, and is designated as the Lean Steering Committee, although my preference is “Lean Deployment Team”.

The Lean Deployment Team provides the primary mechanism for the management of the lean effort, and they are to ensure that lean techniques and values are displayed and supported in each functional department. For example; Purchasing develops supply relationships so that long lead times can be reduced, quality enhanced, and value enhancements can be realized. They are to play the key role in deploying target pricing methodologies in the development process.

Engineering ensures that customer requirements are clearly identified. Engineers must work closely with production personnel to guarantee products and components are designed for easy manufacturing and assembly, including specific efforts to reduce part proliferation.

Operations have the responsibility to lead the lean implementation effort by improving quality, productivity and throughput so that issues are more easily identified. They need to provide the vision of where the company needs to go.

Quality is required to provide leadership on problem solving efforts; including identifying specific customer concerns to focus on and provide real time feedback on the effort to improve the quality performance of the facility.

Finally, in order to be effective, the team must have the authority to make tough decisions. If they are second guessed or ignored by the executive team, they will struggle in their efforts.

Follow Up:

Lean only begins when the project is “complete”. Continuous improvement workshops (Kaizen or Kaizen blitz) are the most often practiced methodology for the implementation of lean manufacturing. But don’t make the mistake of thinking that the events, value mapping exercises, or paper kaizens ensure that you will be successful in your lean deployment. Lean success comes from how we think about our business and how we act when improvement opportunities are confronted.

Many kaizen workshops conclude with action items undone. Maybe a machine was discovered to have maintenance issues, or tools for completing the job are inadequate. If these issues are not promptly resolved, the message you send will be that nothing has really changed. They need to see that the lean philosophy has changed operational practices.

Remember these 4 follow-up rules, and your lean deployment will improve;

Success depends upon ongoing, two way communications with the operators.

Operators are the customers of the lean projects.

Follow up on action items immediately following projects is how culture change is affected.

Follow up builds confidence towards the lean deployment.

Shift the activity to the shop floor:

Now! While a great start does not make a great finish, you must start in order to finish. So apply these lessons and follow our suggested formula.

Find a change agent (how about you?)

Find a sensei – a teacher whose learning you can borrow

Seize (or create) a crisis to motivate action across your firm

Map the entire value stream for all your product families

Pick something important and get started removing waste quickly

Move to the production floor today and see how quickly something can be improved. Remember that lean disciplines are not an extra burden on production, manufacturing or engineering, but are instead tools to assist them in accomplishing goals.

Chapter 10: A Lean Approach to Change Management

Applying lean management techniques to managing change can reduce waste, increase efficiency and ensure that momentum is maintained toward successful transformation.

A lean approach to change management framework for a successful transformation change can be problematic in any corporate scenario. Companies that downsize during a recession, for example, may be cautious about hiring as the economy begins to improve. Thus, when they need to initiate transformation programs, they lack sufficient human resources both in terms of quantity and skills just when that talent is needed to manage a successful transformation. In the end, mistakes are made, momentum is lost and true change is hindered.

On the other hand, some larger firms may have retained the resources they need to manage change but cannot sustain the momentum. They put too much early effort into planning for change, and once they reach execution, the project team is tired of change and reluctant to devote resources to change-related activities. In short, managing change at the wrong time often leads to little if any change at all.

When it comes to large-scale change management, several questions may be keeping you up at night:

How do we manage and measure this transformation?

Who is empowered to make this change happen?

What should we measure and how?

How do we structure change management to deliver the right activities at the right time?

Answering these questions best requires rethinking traditional change management models.

For years, companies have applied lean management techniques to manufacturing and operations, with the goal of improving quality and efficiency by reducing waste, whether in human assets or physical materials.

Difficult economic times demand a new way of conducting business. The pressure is intense, both for small companies forced to downsize and for larger ones that still have plenty of resources but lack the expertise to streamline their operations.

Planning can be a challenge, but even greater challenges lie ahead when it is time to implement a transformative plan. This is when the effective use of resources is most needed and where lean change management proves most beneficial.

How can lean principles apply to change management?

First, it helps identify the necessary changes; what decisions must be made and what management milestones must be created.

Second, these milestones are divided into stages to reduce the number of marginally useful activities performed at the wrong time.

Planning should start in a top-down fashion and focus on key mile-stones, particularly at the executive level. Too often, minutely detailed transformation plans are created at headquarters and immediately sent out to leaders in remote locations, causing remote managers to lose sight of the overarching goals. Similar to an efficient manufacturing process where parts arrive at the factory just before they are installed, just-in-time change management ensures that the right things are done at the right time. With this in mind, our lean change management model in this chapter addresses the challenges of corporate transformation.

I recently had the opportunity to spend some time with the change management and organizational effectiveness people at a FTSE 100 company and we talked about challenges they have with managing change programs. I was surprised at the similarities this Organizational Effectiveness team had with teams from small companies I have been part of. They focused on capability and competence development. This was surprising and refreshing. It was surprising because in my experience Change Management/Organizational Effectiveness groups typically feel responsible for creating and pushing change plans more than anything else. Missing the opportunity to adapt!

I boiled down their challenges to a root cause, that while not being a solitary root cause, contributes to the creation of most of the obstacles they face. Some of the issues we talked about were:

Stakeholders financing people working on the change project need to plan and create business cases the same way they do with all other projects without this the project is not considered justified.

Stakeholders want to see detailed plans, regardless of the high-degree of uncertainty about future events. The unpredictability of how people will react to certain initiatives within the Change project makes creating a plan really hard, and through the pressure to present a detailed plan the Change team feels compelled to invent possible future events and initiatives without knowing if they are relevant.

The constant focus on outcome measures and ‘ensuring’ success even when both are extremely difficult to predict. Talking about outcome measures or the definition of success are both very valuable. The problems start when by focusing on those topics we ignore actionable short term actions, and associated feedback (i.e. the experiments we need to run). In one such case; where we spent most of the time discussing outcome measures; the Change team felt they had learned very little about the actions they should take and listed as an objective “ensure a complete understanding of Lean Change Management” at the end of the session. Later, when I asked the audience for feedback, the result was poor; most of them felt that had learned very little about the Change project itself and the actions they needed to take.

We find assurance in defining tangible outcomes, and this happens because our brains do not like uncertainty.

When we feel uncertain about something, chemicals in our brain cause the “flight or fight” response which explains one of the reasons why stakeholders want to see detailed plans.

Often we discuss the lack of trust as being the main reason why detailed plans are requested. Although that may be the case, it is often the need for certainty not lack of trust that is a major contributor for the request to create long-term detailed plans.

When a very assertive leader feels the need for certainty he may put the hammer down and request these long-term detailed plans, causing a culture of command-and-control and fear. This culture is counterproductive to the change he wishes to implement. No amount of beating that leader with the Agile stick will improve the organization, and worse, it can be at odds with the way work gets done which can be more damaging. A new approach is needed; we need to adapt our Change strategy and this is what Lean Change Management is about.

Although the process I propose may not solve all the problems listed above, I do know that by adding tools to Change practitioners toolkits will help people create the right conditions that allow positive and meaningful change to evolve organically in organizations. I have seen it happen. I have seen great people in organizations understand when change was not possible and leave better places. I have seen people who violently oppose change end up becoming the strongest supporters of it once they learn a different approach to working and managing their work.

Chapter 11: Getting More from Lean

When Toyota created its lean production system in the late 1950s drawing on the thinking of Henry Ford and W. Edwards Deming the Japanese company revolutionized auto manufacturing. Since then, lean techniques have moved far beyond the shop floor. Still, the principles of lean production remain the same: an integrated, end-to-end process viewpoint that combines the concepts of waste elimination, just-in-time inventory management, built-in quality, and worker involvement supported by a cultural focus on problem solving and the use of tools such as kaizen (continuous improvement), kanban (ongoing replenishment), poka-yoke (error proofing), 5s (workplace organization), and value-stream mapping.

Despite the ongoing popularity of lean tools and techniques, however, we have seen a variety of outcomes in our work with major companies around the world. Toyota’s success with lean is, of course, legendary. But what types of results are other companies getting from their lean initiatives? And what are companies with the best outcomes doing differently than their less successful peers?

To find the answers, The AA Global Sourcing conducted interviews with executives at a wide range of companies with varying degrees of lean experience. We then combined the insights gained with our observations helping clients succeed in their lean initiatives.

We found that most companies’ first initiatives were in manufacturing but that lean projects tended to spread to other areas, such as human resources, finance, research, sales, order fulfilment, and logistics. As one executive noted, “Our original expectation was that the lean program would be expanded to manufacturing operations world-wide. As time has gone on, it’s been expanded into call centres. I am starting to think about how to implement it for a sales process.”

Different Definitions and Evolving Goals

The executives we spoke with defined lean in various ways; as continuous improvement, as a way to drive out waste or increase process efficiency, and as a means to better understand client needs. Underscoring this lack of consistency, one interviewee summed up the issue as follows:

“The organization doesn’t define lean because it doesn’t understand lean.”

In many cases, cost was the primary catalyst of lean efforts. But other drivers included the desire to increase productivity or efficiency, stimulate cultural change, achieve greater agility or flexibility, improve quality, and shorten cycle times.

Goals tended to be narrower. Many pointed to cultural change as the key outcome. One executive explained that “lean has to become part of our DNA, part of our daily activity.” Others defined goals in terms of efficiency. Another executive noted, “Success is defined not by the amount of waste taken out of the system but by whether it is enabled researchers to do their jobs better.” Few defined success in terms of cost savings alone.

Goals for lean initiatives have evolved, however. Today the primary focus is continuous improvement of processes and corporate capabilities, which leads to improved competitiveness and business results.

It’s Tough to Do Well

Most of the executives we spoke with said that lean programs are difficult or very difficult to implement. The reasons they gave varied. Some executives cited cultural resistance, lack of skills, or leadership issues. Others noted that their companies’ processes are not well understood or that their employees have trouble absorbing new strategies and methods. “People forget that their job is to serve the customer,” observed one executive.

But despite initial difficulties, once a lean program has been successfully executed in one facility, rollouts to other facilities are generally successful as well; especially if word of mouth has been positive success in one area can generate interest in other areas. Having a well-documented methodology and a process for sharing knowledge also helps pave the way for subsequent lean projects.

That said, our experience indicates that lean has not reached critical mass at many companies. Comments such as the following from the executives we interviewed make this very clear:

“It’s not embedded in the culture yet. Maybe it never will be, but it certainly isn’t yet.”

“It gets more difficult each and every month, because people just pick the low-hanging fruit.”

“It’s still too early. Toyota has been doing lean for over 50 years, and they think they have just got it right now.”

“It’s still in its infancy within the company. We’ve got a long way to go.”

This inability to truly embed lean and its principles may owe partly to the fact that few companies are making the necessary organizational changes in roles and responsibilities, management structure, and teams.

Seven Key Success Factors

Although some companies met their lean targets, others reported mixed results. So what are the companies that achieve the greatest success doing right?

As a starting point they focus on the customer, clearly defining the goals of the lean effort that add value or address specific customer needs. These goals are closely aligned with the business strategy, with an eye toward improving cost, quality, service, and speed. To this end, successful companies then map out their core processes in order to fully understand how they operate. This detailed analysis often reveals unexpected inefficiencies and complexities and significant opportunities to improve performance by simplifying and standardizing work flows. Successful companies also plan their lean projects carefully, taking the time up front to design an effort that is of substantial value but achievable, rather than shooting for the stars.

Successful companies follow up their strong project designs with rigorous program management to keep teams focused on the end goal. But they also recognize the critical importance of the people side of the equation. They use proven change management techniques to engage employees and ensure that changes become embedded within the organization and are therefore lasting. And they are persistent; they keep on trying until they get it right.

Specifically, our research revealed seven critical keys to success.

Choose strategic, customer-centred projects.

Vague productivity or cost-cutting targets do not energize the hearts and minds of employees. But initiatives that are aligned with overall corporate strategy and focused on important issues related to customers can mobilize line management and cross-functional lean teams to work together more effectively. An executive we interviewed explained the dynamic: “One of the big ‘aha’ moments is when the sales and production groups realize that if they interact and work together better, it will be a better process that makes a real difference to customers.”

Moreover, there is a critical need to clarify and align the links among corporate strategy, annual operating objectives and incentives, and lean projects. Improved production efficiency or other incentive targets, for example, should not promote overproduction that leads to inventory pileups. Rather, incentives should reinforce the notion that production will take place only when parts are demanded by the next process (and, ultimately, by a customer). Instead of evaluating capital expenditures as standalone purchases, investment policies should consider the impact of equipment on batch size and production flow. Product design and procurement should consider the impact of each design choice on production complexity and time frame. Policies and objectives in these important areas often conflict with lean requirements ultimately leading to failed lean initiatives.

It is also important for the people working on lean projects to realize that their efforts and the outcome matter. Moreover, making strategic, customer-based targets the focus of lean initiatives reinforces the message that understanding, satisfying, and retaining customers are the top priorities. One interviewee noted, “It’s the whole philosophy about being customer focused, about getting that ingrained into the organization.”

Think big, but start small.

Lean programs must be ambitious and far-reaching in order to drive real change. Think about the total value that the initiative can unlock. For instance, aim to transform your entire production system rather than settling for spot improvements. But start with small test projects that focus on the highest priority areas. Use these pilots to refine new ways of working before rolling them out to the organization at large. To be clear, small simply means manageable in scope not limited in terms of strategic importance or potential solutions. Don’t be afraid to shake up the status quo. Consider making major changes to processes, roles, and incentives or even completely eliminating some activities. Project teams must comprise the right mix of people who can put big issues on the table and pursue truly break through improvements.

Besides being more feasible and manageable, smaller efforts are more focused, have clearer start and finish points, and allow teams to own a problem and optimize its solution. One executive explained, “I would strongly recommend that you start from a manageable scale and make it work. You have to be ready to stop, make it work in one location, then start again revising it.” Success at smaller projects also builds momentum and positive word of mouth. As another interviewee noted, “It is good to break things down so people can see success actually happening in a shorter period of time.” After such early wins, teams can roll out successful lean initiatives enterprise-wide.

Involve everyone from top managers to line workers.

Managing change by involving people at all levels of the organization is critical to the success of any lean initiative. The direct involvement of everyone, from line management to supervisors to shop-floor workers, makes available a great deal of knowledge and insight, creates companywide enthusiasm and buy-in, and embeds lean principles and capabilities throughout the ranks. But many companies fall short in this critical area, as these comments from our respondents show: “There is a lot of talk about change management but no action.” “It’s too much management-led and not enough floor-people-led.”

Although some lean initiatives are seen as too driven from the top, the reverse can also be true; lean is perceived as just a shop-floor initiative with limited relevance for the rest of the organization and no buy-in from senior management. However, delivering value and results in one part of an organization can attract interest in lean initiatives and encourage their adoption elsewhere. At a financial services company in the United Kingdom, the CEO and corporate centre adopted lean techniques after seeing them work day to day on the frontline.

Tailor your approach to your culture.

Lean programs can succeed in a wide range of businesses, industries, and functions, but be aware of the challenges that different cultures present and customize your approach accordingly. For instance, people in an entrepreneurial culture that rewards individual initiative don’t always welcome enterprise-wide programs and generic communications. In these environments, a better approach is to use a “cascading” process in which managers tailor lean messaging and metrics to their groups. This increases buy-in and better addresses the specific objectives at different levels of the organization.

Similarly, a culture that prizes skilled individual contributors may not welcome team-based structures, yet teams are a basic tenet of the lean philosophy. This type of culture demands an employee-led, bottom-up approach that doesn’t dampen creativity; a top-down mandate would likely backfire.

Then there are companies marked by a strongly hierarchical culture and independent fiefdoms, with little standardization or sharing of knowledge. To succeed in this type of organization, lean programs must focus on breaking down silos and empowering employees. The first step is to promote cross-functional and cross-organizational understanding so that people begin to think more broadly.

The key is for companies to strike a balance among employee empowerment, top-down mandates, and centralized execution and tracking and the right balance depends on your culture.

Assign dedicated, experienced resources.

Many companies short change their lean efforts by failing to assign full-time people with deep knowledge of and expertise in lean principles, tools, and techniques. For instance, a large manufacturer set up a corporate lean team but assigned only part-time and junior people to the task. As a result, the company achieved only a modest 4 percent reduction in the cost of goods sold. Best-in-class companies routinely achieve twice that amount.

By assigning dedicated and experienced full-time employees to lean programs, company leaders send a clear message throughout the organization that lean is a priority. That commitment greatly increases the odds of success. With these resources, lean programs gain traction more quickly and show results sooner, which helps build momentum and enthusiasm. But the full-time team members must include people who understand lean principles and tools and can share their knowledge while rolling up their sleeves and working in the trenches with the team. These experienced people can take on the important role of teacher and coach during the ramp-up period and thereafter.

Although a centralized cadre of dedicated resources should kick-start a lean initiative, the ultimate goal must be to build lean capabilities in the work force so that continuous improvement can happen without an outside catalyst. Over time, companies should migrate to line ownership of lean efforts. This will typically mean changing job descriptions and incentive systems.

Use metrics to drive progress.

It’s been said that if you can’t measure it, you can’t fix it. As a starting point, make sure that all metrics are tied to the overall strategic goals of the organization. The right set of metrics will help your lean teams focus on the right things and measure their progress. As one executive summed up, “If you don’t track metrics you are only practicing.” Unfortunately, too many companies either don’t measure the results of their lean efforts or use the wrong set of metrics.

A European industrial-goods company used the 5s tool to create a cleaner, safer, more orderly production facility following the principles of sort, simplify, shine, standardize, and sustain. The improved work space should have led to productivity improvements, but whether it did or not may never be known for sure. The company failed to link its 5s activities to specific bottom-line targets. Absent the expectation of higher production rates, the operators may simply be taking longer coffee breaks now that their tasks take less time to complete.

AA Global Sourcing’s research shows that time, financial impact and behaviour are the three factors that drive successful implementation. The best set of metrics tracks all three. Set specific milestones to keep your lean programs on track, ensure that they deliver the expected bottom-line impact, and identify risks early. Cost metrics are most commonly used, but on-time delivery, process speed, quality, safety, and moral can also be measured. Besides operational and financial measures linked to your program objectives, consider tracking behaviours as well especially those that support new ways of working. The wrong behaviours, or falling back into old ways of doing things, can sabotage results.

Communicate, communicate, communicate.

A strong and ongoing communication plan speeds the adoption of lean principles, techniques, and tools. It is also important for top management to maintain its visibility and create a continuous feedback loop. Be sure to tailor, monitor, assess, and adjust communications as needed. Face-to-face gatherings such as town hall, breakfast, and lunchtime meetings are especially effective. Performance scorecards are another good way to emphasize lean goals and demonstrate progress. Written communications such as newsletters and e-mails are also good channels for sharing information and updates. It is especially important to celebrate and reward success. As one interviewee explained, “When a project is completed, you will see a headline on the intranet with a story and pictures. People think, ‘Wow, they did that. I can do it, too!”

Despite the enduring popularity of lean principles, tools, and techniques, few organizations have come close to achieving the success of Toyota and its lean production system. For most companies, the ideal of an unwaveringly customer-focused and engaged workforce aligned around common principles and practices is just that an ideal, and an elusive one at that. But by following these seven guidelines while building and sharing knowledge over time, companies can capitalize on the truly transformational power of lean.

Chapter 12: Lean Culture Enablers

When you decide to embark on a Lean transformation, you must make sure that the right enablers of a successful deployment are in place. Despite all the hard work I have seen companies put in to making their Lean transformations’ thrive, many of them fail because of a lack of these key enablers within the companies’ business infrastructure.

But first, what is a Lean transformation?

A Lean transformation typically impacts the strategic business objectives and outcomes of a company and usually takes three to six months to complete. Sponsored by a member of the top management team and delivered by a high powered cross-functional team, this transformation is typically fast paced, holistic, integrative and involves a large number of employees across hierarchies. The successful execution of a Lean transformation requires delivery of a large number of diagnostics, Lean breakthroughs (kaizen events), and short duration projects (15 to 30 days projects).

Below are typical list of enablers for a successful Lean transformation:

An engaged sponsor

A charismatic leader

A diverse team

An inspiring vision

A set of accomplished Lean change agents

A supportive Lean office

An impeccable change management plan

A well crafted roadmap and project management architecture

A well defined risk mitigation plan

An assorted set of structured reviews

A robust awareness and capability development plan

A good rewards, recognition and communication plan

A bold plan that helps in sustaining the gains

Lean management is usually fully realized in the final state of lean transformation. If you are trying to implement tools of lean management and do not have a culture that support lean thinking, your success may be very limited.

What are some of the cultural enablers that help you build the foundation for lean transformation and ultimately lead to lean management?

Leaders should show humility and respect their subordinates and peers.

Senior leadership should be willing to accept lean as a philosophy and not just another project for cost cutting.

Managers be trained and committed to solving problems.

People in the organization should feel secure about their job.

Daily informal/formal feedback should be facilitated at team and individual level to align the performance.

Suggestion system for all employees to provide feedback and ideas for improvement.

All information required to make decision or track performance should be shared with people who need it.

People need to be empowered to make decisions and solve their problems.

Training should not be done only once but should be conducted on regular basis.

Senior leaders needs to be trained for mentoring young and future leaders.

People need to be trained to use visual controls.

Leaders need to be trained to use Gemba walks as mentoring / training tool and also as a tool to find waste and problems related with flow of materials and information

Many Lean initiatives start by applying tools, such as Value Stream Mapping, resulting in a quick change of the factory layout. However, that is like building Lean on sand. Often, after a few years, the whole ‘project’ will be no more; then a vague recollection. What is the secret of everlasting Lean-companies, improving steadily on a foundation like a rock?

In such a real Lean environment, everything is focused on stimulating and helping people, to achieve increasingly better business results together. To build a culture like that requires a profound transformation.

In this chapter our suggestion will be make people before making products. The company needs to be transformed into a team of people who are working together to make products which correspond increasingly better to customers wishes.

To make any process improvement initiative an everlasting journey, first and above all this question should be answered.

How can I create an environment in which people are challenged enough and feel appreciated enough, so that they will start looking for ways to perform better themselves. In addition, everyone needs to have the necessary skills and resources to do that.

Chapter 13: Qualities of Lean Manager

A Lean Manager is a person who has trained himself at lean thinking by practicing the principles of lean manufacturing. He has developed the right mindset which is essential for the developing and sustaining the lean initiatives of the company.

The Lean Manager is the key for the Lean Management to evolve organically within the organization. Here is a list of Qualities that I think any Lean Manager should have:

Lean Manager is a problem solver; he/she always tries to solve the problem in scientific way.

He/She does not like to sit at his/her desk but when the problem arises he/she goes the source (Gemba) and finds the root cause by asking questions.

A lean manager does not randomly use tools; he chooses the right tool for the means of solving a problem on gemba.

A lean manager always shows respect to all people.

A Lean manager does not treat lean as a project, but as something to be practiced daily in search of perfection.

Lean Manager is not afraid of failure, he treats each solution as an experiment to learn more and get one more step closer to the ideal state.

Lean Manager always questions the status quo, he tries to rethink problems and learn by practicing.

Lean Manger uses Socratic Method to stimulate lean thinking in others.

All of the above can be summarised to four major traits

First, the lean manager eagerly embraces the role of problem solver. This means going to see the actual situation, asking about the performance issue, seeking the root cause, and showing respect for lower-level managers and for colleagues at the same organizational level by asking hard questions until good answers emerge. It is this critical, probing state of mind that permits lean tools to be put to good use as the lean manager applies the right tool for the specific problem and does this in context on the gemba rather than in the abstract in some conference room. Empty ritual is replaced with a rigorous thought process that engages employees and pulls forward their best abilities.

Second, the lean manager realizes that no manager at a higher level can or should solve a problem at a lower level. (And one of the worst abuses of lean tools lies in trying to do just this.) Instead, the higher-level manager can assign responsibility to a manager at a lower level to tackle the problem through a continuing dialogue, both with the higher-level manager and with everyone actually touching the process causing the problem. The lean law of organizational life is that problems can only be solved where they live, in conversation with the people whose current actions are contributing to the problem. But this requires support, encouragement, and, yes, relentless pressure, from the higher-level lean manager.

Third, the lean manager believes that all problem solving is about experimentation by means of Plan Do Check Act. No-one can know the answer before experiments are conducted and the many experiments that fail will yield valuable learning that can be applied to the next round of experiments.

Finally, the lean manager knows that no problem is ever solved forever. Indeed, the introduction of a promising countermeasure is sure to create new problems at some other point in the organization. This is not bad. It is good, provided the critical, probing mind of the lean manager keeps on the case in pursuit of perfection.

In short the traditional manager is usually passive, going through rituals and applying standard remedies to unique problems. By contrast, inside the mind of the lean manager lies a restless desire to continually rethink the organization’s problems, probe their root causes, and lead experiments to find the best currently known countermeasures. When this lean mindset is coupled with the proper lean tools amazing things are continually possible.

Chapter 14: Being Lean Manager

During a recent plant visit I questioned the management style of the operations team. You could say it was a traditional style of management of sort. Unfortunately, they thought they could manage from the office. This passive style left a lack of visibility on the shop floor and no sense of the condition at the Gemba.

It occurred to me that while transitioning from a traditional push factory to a leaner factory that some of the management was not changing. Did they know how to change or even what management in a lean environment means?

Lean leadership is a fundamental element to creating and sustaining Lean Thinking in any organization. To manage in a lean environment you must change your state of mind equal to that of the organization’s cultural transformation. To change our mindset we must focus on these 3 factors:

Method - Specify the desired behaviour pattern.

Practice – People repeatedly apply the method.

Coaching - Guide people in learning the method.

“With practice, training, and above all method, we manage to increase our attention, our memory, our judgment and literally to become more intelligent than we were before.” – Ade Asefeso.

The Toyota Production System’s core management principles are articulated around the twin pillars of Continuous Improvement (relentless elimination of waste) and Respect for People (engagement in long term relationships based on continuous improvement and mutual trust).

In my experience I have learned that the single most important element for success in Lean is the human element.

First and foremost Lean managers have the critical role of motivating and engaging all people to work together toward a common goal. Management must define and explain what that goal is, share a path to achieve it, motivate people to take the journey with them, and assist them by removing obstacles. I believe in the saying “people are the most important asset”, and, for that reason, management must have a shop-floor focus.

Lean managers are taught that all value-added activities start on the shop floor; therefore the job of managers is to support the team members. Production team members will only appreciate management on the shop floor when they can see that they are out there to help them do their jobs, not as part of a command structure, bent on telling them what to do.

“Respect for People” is about building mutual trust and human development. Lean managers must take responsibility for other people reaching the objectives they set. They seek to develop and engage individuals through their contribution to team performance.

The Lean manager must be a problem solver, an essential skill in continuous improvement. It is not necessarily about making decisions but more about encouraging and empowering your workforce to solve problems. Lean managers embrace experimentation through scientific method of PDCA (Plan-Do-Check-Act).

Lean managers understand that not all countermeasures will be successful. This is part of Kaizen and they make failure acceptable in a way that encourages employees to continue resolving the problem with a new countermeasure.

Lean managers must be customer focused. They need to ensure that all team members and all departments realize their dual role; they are at once the customers of the previous operation and the suppliers to the next operation downstream.

The challenge of Lean managers is to lead as if they have no power. In other words, shape the organization not through the power of will or dictate, but rather through example, through coaching and through understanding and helping others to achieve their goals.

Lean Leaders essentially have three basic responsibilities:

1. Support operations.

2. Promote the system

3. Lead change

The only place I know to do these is at the source or the Gemba where the actual work takes place.

Lean management is an art one should perfect with time and with the understanding about lean manufacturing. Lean leaders will be the most important asset to any organization in its lean journey.

Chapter 15: Lean Leadership

Although the official percentage is debatable, on average well over 60% of lean transformation efforts fail. With so many resources available today, how could this be? Many would say inadequate training, limited internal resources, lack of understanding of the tools associated with lean, not enough time, or inadequate funding, among other reasons. While each of these is valid, many years of experience in driving lean initiatives and observing first-hand the pitfalls, learnings and the "dos and don'ts," of many lean journeys, I believe it comes down to one key element that must be present above all others; strong leadership.

What do I mean by strong leadership within a lean organization?

In an organization attempting to transform itself into a true lean enterprise, this means strong, passionate leaders at the top of the organization who either innately possess or have learned a series of foundational behaviours and values, and who role model these every day.

So what are these values and behaviours, and how does a leader go about teaching and applying them to the broader organization?

Key Qualities of a Lean Leader

Although great leaders possess a host of values and qualities that set them apart, leaders within an organization striving to become lean display a series of very specific and necessary qualities. Among these, discipline and humility form the foundation. Why discipline (and by this I really mean personal or self-discipline)? Because lean transformations and change management efforts are difficult, draining, often thankless undertakings. While the rewards pay off for years to come, a very regimented, highly disciplined approach to daily work is required to reinforce the focus on standardization and to ensure the organization remains optimistic about the future.

The most powerful yet often overlooked aspect of a lean enterprise is standardization. The key to building a learning organization. If the people within the organization are being asked to structure and standardize their activities to learn and improve, it must start with the leader’s own work and business processes. In addition, the only way to drive improvement is through a methodical application of the scientific method/Plan-Do-Check-Act (PDCA) process to problems and opportunities. Thus, due to the ongoing, daily focus on standardization and application of PDCA by "everyone, everywhere, every day, long-term efforts are destined to fail without a strong sense of personal discipline from the leaders of the organization. If leaders role model discipline, others closely follow from sheer example.

When we think of strong leaders, we often think of tough, dynamic, assertive, command-and-control-type of people. Yet, why is it important for leaders within a lean organization to be humble? Before we answer this, let's start with another question: What is the ultimate goal or "holy grail" of a lean enterprise? Opinions vary, but in its most simple form, the ultimate destination is to become a learning organization; that is, the emphasis shifts from a pure results orientation to constantly asking the question, in both good and bad outcomes, "What did we learn from this?" This then leads to the question, "What can we change or improve next time?"

So how does humility play into this concept of a learning organization? We can probably answer this ourselves by reflecting back on our own experiences with no-so-humble leaders. Is an arrogant or proud leader open-minded and in a position to learn from his or her successes and mistakes? Unlikely. A humble person is in a much better position to be open to new ways, new ideas, and improvements. The dangers of becoming too proud or satisfied with our current performance can be noted through many examples - the Roman and British empires, the Soviet Union, not to mention GM, IBM, Delphi, and Enron, to name a few. But for a lean organization, the greatest threat of all is the re-emergence of waste. One of the most significant benefits of going lean is the reduction of waste. Complacency and a state of satisfaction are completely contrary to what we are trying to build within a lean enterprise because they allow waste to creep back into the system. It's much easier to maintain low levels of waste than to remove it all over again. Hence, humility is an essential quality of a leader and forms the foundation for developing a learning organization.

Key Roles of a Lean Leader

Although leaders at the top of the organization wear many hats and are required to fulfil countless duties, within a lean enterprise, only four are critical to making the new culture stick.

Removing ambiguity by teaching the organization to structure and standardize its activities.

Reinforcing and working on the system by helping people identify and solve problems.

Constantly setting the vision and ideal state which creates healthy tension in the system.

Practicing new learnings through application, application, application.

Let's explore removing ambiguity. Ambiguity creates an enormous amount of waste and makes it virtually impossible to identify and solve problems. How much more effective and efficient could the entire organization be if the leaders spent a majority of their time teaching and helping associates to remove ambiguity? This is the kind of work that generates step-function level improvement, not just incremental. The way to remove ambiguity in daily tasks and activities is to structure and standardize those activities. Leaders must insist that every level of the organization be very clear about the inputs, connections, flows, requirements and outputs of their work. This is a long, arduous process, and it can take years to achieve what we would consider a reasonable level of standardization. However, since this is the most difficult of all the elements to attain, leaders need to remain resolute about driving the focus on removing ambiguity within the enterprise.

The next critical role leaders’ play within the organization is working on the system, and specifically, ensuring people are constantly finding ways to make problems evident and then applying the right tools and methods to address those problems. If you boil down the Toyota Production System (TPS) into its purest form, literally everything is designed to do two things; identify problems and solve problems. (Of course, lean purists don't consider problems ever to be truly solved but rather countermeasures are put in place to address the root causes of those problems.) 5s, process mapping, A3s, kanban, andons, etc., are all simply tools to help people make problems evident and solve them rapidly to keep the organization moving forward.

The role of a leader within a lean enterprise is to reinforce these practices and ensure the people have the resources necessary to do their daily work. A single problem is often the result of a series of related problems, so what may initially appear as a simple issue is often a symptom of deeper, underlying issues that are occurring within the system around the various activities, connections and flows of goods, people and information. While it's easy to fall into the trap of working "in" the system, leaders should resist this temptation and instead look at the bigger issues and work "on" the system. These actions help the organization much more in the long run. In addition, as problems are identified, what does a leader do in response to the andon cord "pulls" and other calls for help? Very simply, go to the point of activity, where the problems are, and ask, "What's the problem and how can I help?" These two embedded questions will help uncover what's broken in the system and direct leaders to work on removing roadblocks and broader levels of waste within the organization.

Once we understand this role, there is a very straightforward process that leaders can utilize to help further build a learning organization.

Thirdly, one of the greatest reasons so many change management efforts fail is the lack of a clear vision. As the enterprise embarks on a long-term lean journey, it is essential for leaders to continually paint a picture of where the organization is headed. People need to know where they are going and what the ideal state of their enterprise looks like. A major reason for this is to build healthy tension in the system. A "healthy tension" means building that state of dissatisfaction with where you are at versus where you are trying to go. If we know a substantial gap exists between where we are and what ideal looks like, then we know we need to stay disciplined, focused and resilient in working on our processes.

Before communicating to the masses about your lean journey and why it is essential to the organization's survival, it is important to first be very clear about where you are going. If you can't convey the vision or ideal state in the form of an "elevator speech," then you are not ready to launch the transformation. Generally, the ideal state needs to include not just what but how it looks. For example, "To be the best widget factory in the world by delivering exactly what the customer wants, exactly when they want it at the price they want with zero waste and everyone safe. Having a vision of being the best factory in the world doesn't help people internalize what that means and how they are supposed to get there. By including elements of what the business needs to deliver removes that ambiguity.

Application

Finally, we arrive at one of the most challenging roles a leader plays, because it is often very uncomfortable and reveals our vulnerability and this is the daily application of our learnings. Just as real estate people say the most important aspect of a property's value is "location, location, location," the most important part of developing a lean enterprise is application, application, application!

The barrier to shifting people's way of thinking about their work is not cognitive; that is, we can read a book on lean, and say "Oh, I get it," and certainly the concepts and theories behind what we read may be obvious. But we will never fundamentally change the way we see the world and how we behave until we start applying those concepts to our own work on a regular basis and take the time to reflect on what we learn from those applications. This is why I personally emphasize as little training as possible in lean transformation efforts and focus instead on applying the concepts to our daily work.

Let's face it; adults are difficult beasts not only to teach but also to get to change their behaviours. We like doing things "our way" and are comfortable doing things the way we have always done them. Hence, the only way to get us to open up our minds to seeing things differently is by using our "hands," if you will, through application. For example, how would we go about getting a small group to implement a 5s program? Start with a little overview of what 5s is via some reading and perhaps a brief class on the topic, but then go to the point of activity and start doing 5s. This is the application piece. If we simply read a book on 5s, take a class and then "check the box," we have not changed anything about our work and our behaviours. This can only be done by applying the concepts and in fact implementing the necessary steps to develop a neat and tidy workplace (the basic outcome of 5s).

In summary, one could cite many reasons why lean journeys fail, but it's important to ensure strong leadership isn't to blame. The fundamental qualities of a successful lean leader are discipline and humility, which go hand-in-hand. Once these qualities are embraced and internalized, the four critical roles of lean leadership can more easily be learned and applied to all levels of the developing lean enterprise.

Chapter 16: The Middle Manager Problem

It is common to hear senior managers say that the company’s Lean transformation efforts have been slowed by middle managers. They usually attribute this to resistance to Lean or a fear of change. Senior managers have perceived a problem (an effect) and identified two causes. Unfortunately, they have not identified the real problem and are guessing at the causes, which will surely lead to guessing solutions such as: “We don’t have the right people in these key positions” or “We need new managers.” These will not correct the problem.

If we look at this problem from middle managers’ perspective, we would see more than just two causes that contribute to the problem perceived by senior managers. Middle managers would say:

I don’t understand Lean management.

I don’t know what to do.

My boss does not support Lean.

My boss does not practice Lean.

Lean is for operations people; I’m not in operations.

There are no rewards or recognition for doing Lean.

Lean is just another demand placed upon me. It’s a burden.

There is nothing in it for me.

I am afraid of losing my job.

I fix things; continuous improvement is continuous re-work.

I don’t like rapid change.

I am worried about failing and the consequences.

Top management wants “flawless execution” and says “failure is not an option.”

I fear being blamed for bad outcomes.

My job description has not changed.

I don’t have time for Lean.

I keep forgetting what to do.

My boss holds me accountable for results.

My peers are not doing Lean and they still get rewarded.

Annual performance appraisal criteria have not changed.

Promotion criteria have not changed.

I am held accountable to the same old metrics.

There is much more going on here than just resistance or fear of change. Lean transformations that go too slowly suffer from structural problems, not from a middle manager problem.

It is clear that the problem is an absence of problem-solving by senior managers. They must clarify the perceived problem because it is different from the actual problem(s). The actual problem correlates better with senior managers not having done the work necessary to set middle managers up to succeed.

Senior managers need to do an A3 report for this problem to understand root causes, and also to eliminate blame. If they did so, they would find numerous causes for the narrow effect that they perceive, and nearly every cause they find would require a corrective action – all of which would be relatively simple. Three things stand out with respect to slow Lean transformations.

Senior management inconsistency.

Lack of specificity regarding new roles, responsibilities, and daily activities.

Poor understanding of Lean principles and practices by senior managers, which impedes their ability to explain and teach Lean management to middle managers.

In most Lean transformations, senior managers do not do the things they expect middle managers to do. Senior managers support Lean, but they do not act as role models by applying Lean principles and practices to their own work and other work activities (by participating in kaizen). To say Lean is important and then personally do nothing says it all. “Lean is for lower-level people to do, not me.” It also says that Lean management is not that important. Senior managers willingly throw away a great opportunity to lead by example. This is an obvious leadership problem that must be corrected.

Senior managers must be explicit regarding what middle managers should do differently day-to-day. That means, in part, addenda to all job descriptions that include (as a starting point):

Eliminate waste, unevenness, and unreasonableness.

Use problem-solving tools (i.e. A3 reports).

Create visual controls.

Improve flow, then improve it again and again.

Respect people: employees, suppliers, customer, investors, and communities.

Of course, senior managers must do these same things in their own work activities if they expect middle managers to do them in theirs. The expectation should be established that middle managers will describe these new activities at least weekly at the gemba (not in a conference room), and that senior managers will show evidence of their efforts to solve problems and improve processes to all employees (seeing, after all, is believing). Expectations, of course, must be followed up with concrete actions.

Senior managers must also be able to explain how Lean management makes middle manager’s job better and easier. If middle managers perceive Lean to make their job more difficult or worse, then one cannot expect them to embrace Lean management. Senior managers frequently pile requirements onto middle managers with no indication of what activities can be eliminated. This leaves middle managers to decide what is important and what is not important. In most cases, middle managers will continue to do only what they are used to doing especially if anti-Lean metrics remain in place.

What I have tried to illustrate here is that senior managers have a lot of work to do. They cannot simply proclaim the adoption of Lean management and then walk away from it or pretend to be interested during monthly reviews. Senior managers have to be part of it. They have to recognize that non-zero-sum (win-win) Lean is not a minor change to what they already know about people, work, organization, management, and leadership. It’s back to school. If that is too big a challenge for them, then they should not adopt Lean management.

Chapter 17: Top Management Doesn’t Get 5s

Senior management does not understanding 5s. These are all real-world examples. I have just added a little flair.

1. “Let’s do a 5s project just before the corporate visit from the Big Guy in December.” We will use 5s to clean up this hellhole and get our house in order for when the bigwig comes over from across the pond. That way we can kill two birds with one stone. We get a brand-new sparkling look, and we get credit for “doing lean.” It doesn’t matter what we are really doing; it only matters what we call it.

2. “We will shut down the line for 30 minutes and do a massive SORT all at one time.” I will show true management commitment by taking the financial hit for a 30-minute line shutdown and then, have every person in the company SORT out the junk that is not needed on the line “once and for all.” It will be batch processing of waste elimination at its finest! Even though it’s just a SORT, we will still call it 5s. (This approach is also known as “half S.”)

3. “We will just do the first three S’s first.” I mean really, who wants to do the last two S’s anyway? The first three are the most fun and show the most dramatic results. You can’t even see the last two S’s because it is just paperwork and audits anyway. If things revert back to the way they were, then we can always do another 5s project sometime in the future, perhaps when another bigwig stops by.

4. “Let’s make sure we do a 5s project in each area, once a year!” That is what 5s is all about: project management and to show our management commitment, we will do a 5s project in each area, once a year. I know that things eventually revert to the old ways. To prevent that from happening and things getting too bad, we will show the troops that we are serious and do 5s projects everywhere annually. Talk about sustaining!

5. “Let’s review the 5s results each month at the leadership meeting.” Yeah, that is the perfect time to review the 5s results because I think 5s has to do with housekeeping and organization, which might have a little bit to do with productivity, safety, and quality. Let’s discuss the results in the large conference room away from operations and the noise. We can decide whom to point the finger at. That ought to drive competition among the supervisors.

6. If we add up the results from each area and list the totals by each supervisor, the results will drive their behaviour.” Of course, I would never say it like this to my staff, but I love using metrics as a beating stick to drive results. I want them to do whatever is necessary to accomplish their targets and create the desire to top the other supervisors. We need to show corporate there is improvement, and posting the scores always worked before. If we can show significantly higher scores to corporate, they will leave us alone until this whole 5s thing blows over.

7. “I will review the 5s audits once a month by having my supervisors email me the audit results.” That will show them I am serious. Supervisors need to email me their 5s audit results each month, and then I can see if they are really doing an audit to sustain the results. That is management commitment and involvement at its finest! I can do this all in my office, between meetings, so it doesn’t look bad to the rest of the troops, like I am checking up on my supervisors or something. Besides, it would take me too long to walk around and see the results. I am a busy guy and don’t have time for that.

8. “We will train only our floor supervisors and team leaders. We can train our professional staff supervisors in office-type things.” Productivity, safety, and quality are only floor requirements because that is where our products and services are created. 5s certainly has nothing to do with office and professional-type work. I am sure everyone working in the offices are well-organized and as productive as possible. 5s would be beneath them, anyway, because it is so easy to understand. No matter what anyone says, I know 5s would not be applicable in such areas as our network, the array of software programs we have, electronic in-boxes, the IT hardware room, the training room, laboratories, the copy room, bathrooms, conference rooms, common work areas, offices, or even the organization structure itself, for heaven’s sake. We have more important stuff to do.

9. “It’s April. Time for a little spring cleaning.” We will do 5s once a year, just like we do at home; every spring when it starts to get warm and the smell of baseball is in the air. It will be the “feel good” moment of the year, just like I feel after I clean out my garage. Spring is our slow season, anyway. We will take a Friday afternoon and shut down operations, clean up everyone’s area, and then eat pizza. We will call it “5s for Pizza Day” and then I will give a nice motivational speech.

10. I will support the 5s process by allowing those involved to spend time on 5s and get trained. Otherwise, it does not affect me.” I don’t know what that lean consultant meant when he said my involvement was vital to address the root causes for why we have so much inventory, and to stop disorganization from happening again. Yeah, I reward my buyers for buying extra stuff if they get a quantity discount. I have the policy: If you don’t spend your budget this year, you will lose it this year. So what? Just because I have policies in place to buy stuff now or more than what is needed to save a buck or two, that doesn’t mean that we will become less productive and more disorganized. Yeah, people hoard stuff; it is human nature. It has nothing to do with people not trusting our systems. Forget the consultants!

Chapter 18: Transforming Suppliers into Powerful Lean Differentiators

Mention the phrase “strategic sourcing” and a number of thoughts, concepts and disciplines come to mind including supplier selection strategies, supplier performance improvement, purchased price reductions and streamlined buyer-supplier transactions management. While each of the preceding tactics can play an important role in supply chain optimization, they all fail to capture one of the single biggest advantages supply chain operations confer on any manufacturer by providing a tailor-made vehicle for driving Lean outside of the organization’s four walls and upstream into the supplier community. By using supply chain management as a driver of enterprise-wide Lean transformation, savvy manufacturers can successfully capitalize on the next strategic phase of supplier management and dramatically enhance the use of Lean as a true competitive weapon:

Without question, Lean disciplines, methodologies and practices have all yielded significant benefits to manufacturers willing to systematically drive out waste and transform their organizations into highly flexible, low-cost machines dedicated to providing leading-edge customer service performance. Despite these “in the four walls” successes, the true benefits of Lean can never be realized (along with the maximization of customer service performance) until Lean disciplines are exported across the global supply chain into the supplier community. Simply put, unless manufacturers place the same emphasis driving Lean disciplines across the extended enterprise as they do within their own four walls, the complete transformative effects of Lean will never be realized. To that end, Lean creates a seamless integration of proven strategic sourcing capabilities such as fact-based negotiations and cross-functional sourcing teams with core Lean tools such as Value Stream Map enhancement through waste removal.

Lower total delivered cost, supplier rationalization; compressed order-to-delivery lead times and global capacity planning are all realistic goals and necessary supply management tactics when trying to optimize the buyer-supplier relationship. Rather than focusing on individual tactics, smart manufactures would do well to build a Lean supply chain capability designed to create total supply chain transparency and use Lean as a differentiator when selecting and integrating members of their supplier community. In order to achieve success, manufacturers must be willing to adopt three key features associated with Lean supply base management concepts.

Shift your focus away from purchase price to Value Stream Map (VSM) integration and global capacity management.

Transform the Request for Proposal (RFP) process into an information-sharing exercise where Lean concepts drive supplier selection and integration.

Build, deploy and promote supplier “university” educational platforms where Lean best practices and joint waste removal opportunities are not only exploited, but are contractually mandated.

The adoption of Lean is never a short or simple journey, and the decision to move beyond the four walls of your own operation should never be taken lightly. However, if Lean is providing the flexibility and waste-free culture it was designed to produce within your business, moving Lean upstream to your supplier community is your next logical step.

Value Stream Mapping Revisited: The Priority of Integration over Low Prices

Far too often, strategic sourcing efforts are undertaken to lower the purchase price of the goods or materials in question without regard for the ultimate impact on total supply chain performance and, ultimately, customer service. Key decisions such as low-cost country sourcing can produce significantly lower purchase costs while creating havoc in terms of decreased flexibility, expanded lead times and higher-cost operations through increased buffer stock investments. While lower costs are a natural component of any sourcing operation, lower costs, as an overriding objective, will obscure the ultimate goal of creating a synchronized supply chain where the supplier’s value stream map (how they create what is purchased) is wholly integrated with the buyer’s value stream map (how the purchased item is transformed into a customer deliverable) to form one seamless supply chain servicing the customer.

While cost management should remain a key component of the sourcing process, the shift to value stream analysis prevents imbedded waste from escaping detection and artificially inflating supply chain costs and diminishing service performance. Key buyer-supplier processes such as order management, inventory deployment, manufacturing processes, transportation and distribution operations must all be captured by the mutual value stream maps of both parties for obvious reasons.

“Hidden” waste within the supplier’s VSM will inflate the actual purchase cost.

Institutionalized waste within the buyer’s operation can cast significant doubt on the buyer’s Lean commitment (more on that in the next section).

Waste on both sides reduces global supply chain flexibility and will eventually result in a sub-optimal customer service solution.

Reduced supply chain flexibility, as described in the third observation above, is perhaps the single most overlooked advantage that can be captured in the Lean sourcing process. As is often the case, the potential supplier pool may offer the requisite parts, components or materials required by the buyer, but at a negative delivered cost or flexibility impact. Through joint buyer-supplier VSM ownership and improvement efforts, savvy manufacturers can build global Lean supplier improvement programs by isolating VSM-based waste thereby expanding the availability of low-cost supplier capacity. Buy pushing waste eliminate strategies upstream through such proven concepts as demand-driven operations planning, kanban materials flow and level-pull scheduling techniques, Lean manufacturers can create new “flexibility bands” within their supplier communities where Lean disciplines drive improved capacity utilization and allocation based on true end-customer demand:

The ultimate question remains: Is the goal of your strategic sourcing efforts designed to secure new suppliers who provide a lower purchase price, or are your efforts driving the selection and integration of suppliers who will drive quantifiable improvements in supply chain flexibility and service performance? Only the buyer-supplier value stream map can tell.

The Request for Proposal (RFP): Your Personalized Lean Go-To-Market Messaging Platform

RFP’s are highly useful tools to evaluate potential suppliers, test the availability of required parts or materials, and convey the buyer’s key business and engineering requirements. For those buyers willing to aggressively migrate Lean thinking upstream, RFP’s become highly focused tools espousing the buyer’s Lean commitment and their desire to align themselves with like-minded suppliers. Far beyond mere communication vehicles outlining mundane specifications or delivery requirements, Lean-oriented RFP’s actively showcase the buyer’s Lean journey and the rationale for utilizing Lean as a marketplace differentiator.

While knowledge of Lean as a theory may be scattered across the potential supplier community, the buyer has a powerful opportunity to clearly articulate their personal Lean journey including the adoption of Lean as an operating platform, the transformative effects Lean generates through waste removal and the complete benefits snapshot Lean has conferred upon the buyer. If the spotlight on Lean appears bright, consider the open questions across the supplier community that the buyer might be faced with should the RFP lack a strong Lean emphasis.

Is Waste removal subordinate to simply obtaining a lower purchase price?

Is Lean even a priority with the buyer? Is Lean even a core supplier requirement?

Is Lean a factor in the eventual RFP scoring and supplier selection process?

When the environment is created where these questions are even a remote possibility, buyers will have missed their first, best opportunity to differentiate themselves to the supplier community in terms of their Lean commitment and how Lean tools and disciplines will be contractually deployed to the buyer-supplier relationship in order to reduce total delivered costs year-over-year. By crafting a detailed, Lean journey-based RFP, suppliers can immediately dispel the notion that the go-to-market strategy is based around capturing the lowest purchase price; instead, buyers can demonstrate how joint ownership of the merged buyer-supplier VSM can produce a relationship where year-over-year waste reductions through joint Lean events can produce a superior supply chain model. In addition, buyers can also provide the compelling argument necessary for suppliers to understand how their participation in the extended supply chain will reinforce the buyer’s Lean vision and enhance (or even accelerate) the combined Lean Journey:

By carefully articulating the buyers’ overall Lean program, pre-Lean environment, Lean waste reduction achievements and future Lean goals, aggressive suppliers who embrace even the most basic Lean disciplines will clearly identify their “fit” in the existing supply chain and how their presence will further optimize extended supply chain operations and add incremental value to the end customer. In so doing, Buyers can create exciting new opportunities to on-board new suppliers or enhance existing relationships through the Lean RFP process.

Selecting new suppliers that can bring new Lean tools and capabilities to the buyer.

Identifying new supply sources where the combined Lean experiences can radically transform existing supply chain capabilities.

Provide a window for existing suppliers to adopt buyer-based exported Lean disciplines and practices and create a completely new value proposition for the buyer (and, further downstream, for the end customer).

While the first two clearly point to the selection and integration of new suppliers, the third comment highlights a very subtle opportunity many buyers have. Through the RFP process, which creates a highly visible level playing field for all participating suppliers (and therefore eliminates the corrosive environment that often results from incumbent supplier preferences), buyers can offer incumbent suppliers a new engagement model where the supplier can develop and offer a new value proposition based on the adoption of Lean practices. To that end, incumbent suppliers who might otherwise face replacement because of their diminishing value-added capabilities can embrace the RFP process to challenge themselves and develop new offerings that can maximize the total value delivered to the end customer.

After The RFP, Then What? Using Supplier Universities to Maximize Waste Reductions

Far too often, methodical supplier identification, selection and integration efforts produce a very successful “first year” relationship where lower purchase prices and new supplier capabilities combine to produce a compelling value proposition for the end customer. Tragically, buyers and suppliers frequently allow the relationship to lapse into a year-over-year “repeat” of the first-year gains where continuous improvement and an ever-increasing end-customer value proposition become footnotes on the invoice. If the benefits of outside-the-four-walls Lean are to be truly captured, buyers must take the lead in developing and implementing programs designed to maximize, for each year of the contractual relationship, the value offered to the customer through the systematic elimination of waste across the supply chain.

Discussed above, the originating RFP provides the necessary signal to the supplier community regarding the buyer’s commitment to Lean and how Lean disciplines will function as an integral component of the buyer-supplier relationship. Once the relationship is consummated and the supplier becomes integrated into the extended supply chain, the relationship must then be subjected to a robust process that mandates year-over-year waste reductions within the merged buyer-supplier VSM. In many cases, the relationship is considered complete once the transactional processes are in place and the buyer successfully receives the first shipment of materials or components that meet the contractual specifications. In the Lean supply chain, the initial integration process is nothing more than the first step to a developing relationship where the buyer and supplier assume joint contractual responsibility for eliminating waste each year under the contract.

During the RFP process, buyer-initiated on-site supplier Lean assessments will generally uncover waste reduction opportunities that, once accomplished, will provide lower future delivered costs.

Like all Lean improvements, buyer-supplier VSM enhancements are part of a consistent journey and must be investigated and captured at the appropriate time in the journey.

By institutionalizing a common vehicle for performance management, waste identification and waste removal, buyers create an environment where they can be considered the “buyer of choice” when suppliers determine where to allocate their limited capacity.

Especially for those suppliers who are new to lean and just beginning their journey, highly experienced Lean buyers have an obligation to such suppliers to clearly articulate Lean strategies and provide access to proven in-house Lean tools in order to maximize the value new suppliers can provide early in the relationship. As a vehicle for institutionalizing Lean principles across the supply chain and ruthlessly attacking waste, supplier universities are quickly gaining the recognition they deserve as a key component of any Lean strategy.

Articulated in the originating RFP, supplier universities are structured programs designed to closely monitor the buyer-supplier relationship against contractual delivered-cost reductions to ensure that buyers and suppliers jointly assume responsibility for eliminating waste to continually enhance the customer value proposition. Far more than a simple knowledge transfer process, supplier universities provide customized Lean journey programs for each supplier and develop detailed supply chain Lean best practices for dissemination to all suppliers during annual or semi-annual buyer-supplier VSM improvement events.

Based on the conceptual model above, it should be readily apparent that a supplier university (or, a supplier integration university denoting the fact that Lean improvements never cease) should be comprised of four fundamental capabilities.

The university model should require the buyer to consolidate their Lean capabilities, tools and practices and build a buyer-specific Lean best practices guidebook.

Contractual obligations of the buyer and supplier should be codified and transformed into a published joint event schedule to enact contractual total delivered cost reductions through continual waste elimination.

Annual or semi-annual events should focus on achieved benefits, known shortfalls, and place equal emphasis on the buyer’s and supplier’s role in continually augmenting the end-customer value proposition.

The buyer has the primary responsibility for disseminating Lean best practices across the supplier community to further reinforce the dedication to Lean practices.

Considered a mandatory event for suppliers (again, clearly articulated in the RFP), supplier university annual or semi-annual events provide a powerful, highly visible platform for suppliers to showcase their own internal Lean successes, waste removal efforts, and joint improvement programs with downstream suppliers. Such improvements can then be balanced against the contractual requirements to determine if the buyer and supplier have met their respective obligations to enhance the existing VSM. In the end, the originating RFP, backed by the contractual responsibilities of both parties, combine to create “first year” results for every year of the relationship.

How Strong Is Your Sourcing Filter?

Lean, if properly used to drive supply chain performance beyond the four walls of the buyer, becomes a powerful filter through which a level playing field is created providing the most accurate method for identifying, selecting and integrating those suppliers capable of the highest value proposition to end customers.

By inserting the Lean filter into the strategic sourcing process, savvy buyers have a unique opportunity to create and field unique market offerings for end customers based on the highest match of supplier capabilities to business requirements, the lowest possible total delivered cost model, and the power of continual waste reductions triggered by Lean disciplines and practices.

Is your sourcing filter ready?

Chapter 19: Lean for Service

Improve customer service, cut costs and grow business is often the mantra of improvement professionals though examples can sometimes be difficult to find.

There are lots of examples of cost cutting and reduction exercises. Few though which talk of growing a business and costs being reduced as a function of better service.

It is good to see a company saying that improving customer service has allowed it to reduce the demand on its contact and service centres. The company don’t share whether this a Lean Call Centre project, it does seem as though they have identified what was driving demand on these call centres and reduced this demand. They have found the causes of waste and are doing something about it.

Indeed the company state “fewer complaints, more calls being resolved first time and improving customer service. There is more work to do but we are confident that the measures we have put in place are paying dividends.”

From this we know they have achieved two things; Fewer complaints; they have stopped customers complaining in the first place. They don’t share whether this is by improving their service or by making customers more informed of what the service is and how to best access it.

Improving first call resolution; reducing the duplication waste of handling a customer query twice. Our free Lean Call Centre guide highlights these and other typical areas of waste in a Customer Contact Centre.

The company in question closes two call centres, creates 450 jobs shares how they have been able to close two call centres because they have improved overall service to customers and reduced demand on these centres.

The second story is the evidence as well that did reduced the number of complaints by 25-33%. Now that is a great performance but just to give it some more context they still have more complaints (per thousand customers) than their competitors.

They also appear to be committing to re-deploy the staff to other parts of the organisation. Demonstrating that improving the service to customers can lead to reduced costs and yet the organisation becomes more competitive and needs more staff as they grow.

Now the additional staff may require different skills or experience or roles may be in new locations and therefore some individuals may still be affected negatively by the changes so the news may not be positive for all.

As companies simultaneously identify waste, cut it out and identify value adding services for customers they will require new skills and expertise and this will challenge existing HR and staffing requirements.

Does your improvement program reflect on the HR changes and the effect on individuals?

A couple of weeks back one of our team was in a bar and got chatting to a lawyer. During the conversation, the lawyer picked up a pen and started making notes about what they were talking about.

Our team member asked the lawyer "Why bother acquiring another law firm to achieve ‘economies of scale’ when these can’t be known without operating a capacity planning model yourself?"

This sparked a long and fruitful debate.

Why would we say this though?

We all know that work flows, one week is busy, the next quieter, those end of the month or quarters that suddenly seem to loom large on us (particularly for those of us dealing with non-legal commercially focussed third parties) workloads often fluctuate.

What does a capacity planning model give you?

It helps you to see the maximum amount of work that can be completed, under normal operating conditions (8-5 Mon-Fri?), with the resources you have.

Plugging in details about a case into such a model will help to identify when the actual activities will hit; whether these be in 6 days, 2 weeks, 3 months or a combination of dates. Helping you to see if these coincide with other cases you have on the books; identifying whether individual or team workload suddenly rise, only to fall again.

Will you need short term help to get through the peak of work? When could you release staff for training, authorise more holidays, take time to look for other improvements, Conduct business development activities?

If you still manage the sharing of files in your departments in the following ways;

Senior partner giving work out to the next person on the "list" or asking who wants the case, or looking at the number of files each person currently has

You are managing by the input of file numbers, creating all work as equal with similar inputs, assuming similar timelines for activities. You are failing to identify the activities generated or the resource demand that is being created and when it will hit.

In this case we often find departments under staffed at key times of work overload, with the potential for failings to occur. On occasions though we find firms over staffed for most of the time (ready for the peak) with staff constantly in fear they need to generate more work and a different type of stress and less sharing of business development techniques.

Our final word for our lawyer friend is to put two teams together that are under staffed at key times and see what happens?

Chapter 20: Conclusion

Lean Management is a whole lot more than a set of tools and methods. The people and the culture of the company are the foundations of the success of any Lean transformation. Employees at all levels of the organisation have to be trained and empowered to make the important decisions necessary to identify and resolve issues, and continually improve processes and ways of working. They share a culture of responsibility and accountability in an environment supporting teamwork, two-way communication, and personal development.

The leadership has the responsibility of ensuring that Lean Management is part of the way they do things in the organisation. Lean business planning is an integrated process incorporating all functions and all levels of the organisation. Leaders and managers are problem-solvers and teachers, capable of identifying the right issues to be addressed and of using Lean tools and techniques to support their teams in identifying root causes and implementing sustainable improvements.

Process-thinking and problem-solving are key to Lean success. Products and services are delivered through well-defined value streams cutting across functional organisations, and for which responsibility for performance is clear. Problem-solving skills and an understanding of how do I contribute have to be integrated into support functions and extended out to key customers and suppliers.

The fact that the Lean Transformation has extended outside of the four walls of the factory, service centre, office, hospital or administration centre (yes, Lean Management is applicable just about everywhere) is all important. Customers and suppliers should be closely integrated into operations, and a spirit of cooperation and confidence exists between all parties.

A Lean success story does not happen by itself; it cannot happen without dedicated leadership on the one hand, and a coherent, aligned strategy on the other.

However, a manager does not become a Lean leader overnight. In fact, some managers may not even have heard of Lean the day they are told to “just do it”!

AA Global Sourcing supports leaders and managers in adopting a Lean style of management.

AA Global Sourcing provides education and coaching to executives and their management teams, both in the basics of Lean Management, and in the managerial approach that needs to be adopted.

AA Global Sourcing organise management seminars to plot your Lean journey whilst at the same time building cohesion into your executive team. A key part of our approach is the use of creativity methods (and, yes, we are not ashamed to say it, we do also like to have fun!) to bring out the best in your individual team members and enhance team dynamics.

AA Global Sourcing supports the development and deployment of your Lean business strategy.

Finally, and not least importantly, we help you define the right metrics, whether it be the way you set up your Lean Accounting system, or simply structuring a Balanced Scorecard to ensure that the right things are measured, and that they are measured right.

AA Global Sourcing firmly believes that it is the interaction between evolving Lean leaders and managers and their skilled and empowered workforces that is the key to success of any Lean project or programme, and we have the experience to ensure that your whole company is moving in the same direction.

People and Culture

The wisdom of many, not the knowledge of one the people and the culture of a company form the foundations of all Lean transformations. If you cannot get all levels of the organisation mobilised and efficiently organised, the chances of real success are nil.

AA Global Sourcing firmly places the emphasis on working with the people; directors, middle managers, and shop floor or office workers of an organisation to build a successful transformation. We support you in the development of your people through.

Providing classroom and, more importantly, workplace-based training in the use of Lean principles and methods.

Accompanying groups and individuals in the appropriation and implementation of new ways of working. We cannot do the implementation in your place, but we can ensure that you learn and adopt the basics of how to, work with you during the implementation, and leave you with the skills to ensure that the improvements you make carry on long after our contribution has ended through teamwork and solidarity.

Helping you build the project or programme infrastructure and change processes necessary to accompany any form of major improvement activities.

AA Global Sourcing will also support your managers and workforce in using the tools and methods available to develop a Lean culture. These will include visual controls, standard work, daily planning, and in general changing the way an operation or service is managed.

Processes and Problem-Solving

Although a Lean transformation cannot succeed without a change in management styles and the implication and motivation of employees, the physical gains of Lean Management come from more efficient processes, or value streams. Whether in a manufacturing, administrative or service environment, the basic approach to Lean improvements is the same.

Specify value in the eyes of your customers.

Identify the value stream and eliminate waste and variation.

Make the value flow at the pull of the customer.

Lean tools and methods contribute to more efficient processes. AA Global Sourcing can accompany you in all aspects of the more technical side of a Value Stream Transformation, from the initial Value Stream Mapping analyses through to the use of Lean tools and methods to systematically eliminate waste from your processes. We can also introduce certain Six Sigma techniques to help resolve problems and eliminate variability to further improve the performance of your processes.

Along with our close proximity support to your management and shop-floor or office teams, this provide a powerful combination to drive efficiencies and take time and cost out of your processes, enabling you to better provide the value that your customers are looking for.

Supply Chain Partners

Bringing the best out of your supply chain partners

Your company can be internally as lean as it will ever be, but you may still not be seeing improved delivery performance or reduced lead-times and inventories.

Customers and suppliers can have a massive impact on your internal operations, and it is imperative that your combined ways of working enhance rather than cancel out the benefits of the internal lean transformation.

Driving towards a Lean Supply Chain involves building strategic business alignment, common and agreed measures, effective communication, and a commitment to systematically eliminate waste with all other supply chain partners, with the goal of reducing the total cost of providing good and services for all.

A Lean Supply Chain is configured to anticipate the characteristics of the markets and product demand profiles and this may require a specific configuration for particular customers or products. Both inbound and outbound logistics are prime areas for the application of Lean Thinking.

A Lean Supply Chain is characterized by a systematic attention to risk management. AA Global Sourcing will support you and your supply chain partners in bringing all of this together.

Contact AA Global Sourcing now at info@aaglobalsourcing.com to discuss how we can best help you with your Lean Management and Supply Chain Objectives. Or visit our website: http://www.aaglobalsourcing.com

Lean Applications

Kanban-type processes can also apply to offices. Although the origins of Lean Management are to be found in manufacturing, the principles, methods and tools are applicable just about anywhere. And that includes in the home for more details get a copy of my book 5s Home!

Lean in the office and in support functions is an obvious area for warring against waste. One piece flow, Kanban, and elimination of activities not adding value are all manufacturing approaches which are equally applicable to paper or systems-based processes. Healthcare can profit enormously from Lean Management.

In manufacturing, we are processing essentially products. In support and office functions, it is more generally information. But lean management can possibly have its greatest impact.

In hospitals and medical centres, for example to improve the circulation of outpatients and visitors and the time they spend in the building, but also to improve the problem-solving skills of the staff, for example, Call centres and all administration functions are ripe for Lean Management.

In local government and administration centres, to reduce queuing time, improve response times in the back office, and generally enhance teamwork between the different services.

Basically, in any form of service centre, whether it be a call centre, a garage servicing your vehicle, and why not even a hairdressers!

Lean Assessment

Lean Assessment provides an external focus on your company.

You have embarked on a Lean Value Stream Transformation, or you are planning on doing so. How well are you doing? What is the potential for further progress? Or where should you envisage getting started?

AA Global Sourcing’s two-day Lean Assessment analysis is a structured approach to provide you with guidance on how best to allocate resources as you start off or continue on your Lean journey. It gives you a third-party expert evaluation of your company’s ability to execute those tasks that are most important to your customers, quickly and reliably.

Covering all aspects of Lean Management, and making use of our own experience, our assessment delivers:

A facilitated discussion on the lean strengths and weaknesses of your organisation.

A preliminary identification of key processes needing changes or improvements.

Suggestions for short-term, immediate improvements.

A solid base for planning further change initiatives.

We use on-site interviews, facility tours, data analysis and basic observation to develop our preliminary recommendations. Our typical approach is to:

Conduct an overview of your business and understand the critical issues facing your company and the industry.

Walk and observe an entire Value Stream to see the flow and any obvious interruptions.

Discuss activities with appropriate representatives from each area.

Compare our analysis and your own analysis of what is Value and what is Waste.

Develop an understanding of the company’s culture and the readiness of your employees.

Summarize the current state and present it back to you.

Develop a tentative outline of potential next steps.

AA Global Sourcing will provide both immediate and written feedback on our recommendations and attempt to answer the questions “where do we start”, or “where do we go next”? To set up a meeting, please contact us at info@aaglobalsourcing.com

Keep Improving!!