Lean Quality Thoughts

The evolution of current lean applications is interesting. Though first started on the shop floor in manufacturing companies, very rapidly lean migrated to non-manufacturing environments. This obviously is due to the need in service situations for the same objectives as on the shop floor: cost and time reduction, value adding and waste elimination.

In the past few years, lean has been fully embraced by office support functions in manufacturing companies (e.g., design & development, sales, purchasing, human resources, etc.) as well as in pure service organizations such as banks, the military, logistics, government, etc. Lean in healthcare is also very much in demand, and is a very special case. In non-manufacturing environments, we typically process information rather than a tangible product. Accuracy and completeness of inputs is key here.  Wherever there is waste, delay and over-processing (duplicate reviews and approvals, for example), lean finds application.

Lean accounting, lean in I.T., lean in the broader supply chain, and lean in the full transactional order-to-cash cycle are other beneficial lean applications much in vogue today.

Many organizations have now combined their six sigma efforts with their lean transformation. Centers of Excellence at many firms now have lean experts and value stream managers. Master Black Belts are given training and certification in lean techniques, and lead Kaizen events. DMAIC (six sigma) and PDCA (lean) cycles are both used as appropriate. Besides the statistical, quality and graphical tools generally used in six sigma, lean/Kaizen building blocks are also integrated into the process improvement efforts at many organizations.

In many cases, to transform from “traditional” to a “Lean” environment, implementing a pilot projects first, in a Kaizen mode, gets immediate buy-in from skeptics. The success achieved from these quick hitters can then be migrated to other areas in a planned approach. Ultimately, lean has to become the daily work habit or operating philosophy of the whole firm to be sustainable. To identify which lean project to choose as the pilot Kaizen event, many firms start with a Value Stream Mapping of the relevant product/process family.

Starting the lean process is comparatively easy; but sustaining it over the long haul takes robust planning, discipline, commitment, patience, an environment that tolerates some risk or mistakes, a good reward and recognition program and peoples’ receptivity to change and growth. It can not be emphasized enough that the “human” side of lean needs more attention than any other technical Building Block.

Many managers have found the three of the essential ingredients for successful lean implementation are:

• Sustained, hands-on, long-term commitment from senior management.

• Training for all employees in the lean building blocks. These days, webinars are a great medium to teach employees about lean. Both “live” and archived on-line courses are available- the archived webinars have the advantage of self-paced learning, on-demand. Then, implement lean using the Kaizen Plan-Do-Check-Act methodology in “train-do” cycles.

• Good cultural change management during the transformation from the traditional push to the lean pull mentality.

Presented below are some important concepts that will be useful to keep in mind while preparing for the Lean transformation.

• Creativity before capital: In Lean, instead of spending large sums of money on capital expenditures, team brainstorming of ideas and solutions is emphasized. People working

in the process are brought together to tap into their experiences, skills and brainpower to generate the plan for reducing wastes and for process improvements.

• A solution that is not-so-perfect implemented today, is better than a perfect solution that is late. “Just do it now!”
• Inventory is not an asset, but a cost/waste.
• Use the proven Plan-Do-Check-Act methodology for deploying improvements- both incremental and breakthrough.
• Once started, Lean is a philosophy on a never-ending journey.
• Typically, 95% of lead-time is not value added. Collapsing the lead time closer to the actual processing time by squeezing out non-value added time and tasks results in both cost and cycle time reductions. Henry Ford knew this in 1926, when he said “One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost”.

As managers, we know that we can not stand still in the face of global competition because our rivals are not standing pat, but improving their processes and systems to catch up with us. If we  do not improve also, sooner or later they will overtake us. We lose market share, our margins deteriorate, sales revenue and profitability suffer. So if we know that we need to improve, the question then becomes: Why don’t we?

Proper planning and implementation management is the key in obtaining enduring success with Lean deployment. Lean is not a quick fix; we are kidding ourselves if we think that Lean implementation is easy. Success requires not only good change management practices, but also the integration of Lean into the overall business strategy. “Flavor of the week” syndrome should be avoided.

Complete implementation of Lean might not be for everybody; so a well thought out master plan based on cost-benefit analysis is a useful preliminary step. Great benefits from Lean implementation are derived by first focusing on what processes we have, the product families we make, the environment we operate in, and the competitive situation we face and using the right technique at the right time. For example, a firm producing parts to customer orders rather than to stock will face different challenges.

Some of the factors in the success of Lean implementation are due to the senior executives active  role in:

• A planned approach to Lean implementation, rather than point solutions
• Providing the needed resources
• Appointing Lean champions
• Empowered and involved employees; emphasis on teamwork and co-operation
• Good communication channels- both top down as well as bottom up
• Managing expectations: e.g. fear of loss of jobs

• Everybody understanding the need for change, as well as their new roles as change is implemented
• Creating an atmosphere of experimentation: risk taking environment, safety net for trial and error
• Good rewards and recognition programs, suggestion systems, gain sharing
• Making everybody understand the competitive reasons why, and benefits of, Lean for the Company as well as for themselves personally
• Creating a “vision” of the Future State after the change
• Introducing a performance measurement system based on meeting company goals
• Analysis and sharing of costs vs. benefits
• Emphasizing accountability of everyone

In many cases, implementing pilot projects first, perhaps in a Kaizen Blitz mode, gets immediate buy-in from skeptics. The success achieved from these quick hitters can then be migrated to other areas in a planned approach.  Ultimately, Lean has to become the daily work habit or operating philosophy of the whole firm to be sustainable.

Starting the Lean process is comparatively easy; but sustaining it over the long haul takes robust planning, discipline, commitment, patience, an environment of tolerating some risk/mistakes, good reward and recognition program and peoples’ receptivity to change and grow. Many managers have found that the three essential ingredients for successful Lean implementation are:  (1) sustained, hands-on, long term commitment from Senior management, (2) training in the Lean building blocks for all employees, and (3) good “cultural” change management in the transformation from the traditional “push” to the Lean “pull” mentality.

How to Sustain Lean?

The starting point of Lean initiatives could be any one of the following:

(1)    Value Stream Mapping (VSM):  VSM studies the set of specific actions required to bring a product family from raw material to finished goods per customer demand concentrating on information management and physical transformation tasks.  The outputs of a VSM are (1) Current State Map, (2) Future State Map and (3) an Implementation Plan to get from the Current to the Future State. Using VSM, we can drastically reduce the lead time closer and closer to the actual value-added processing time, by attacking the identified bottlenecks and constraints. The Implementation Plan (typically in a short duration such as 12 months) acts as the guide for doing so. Bottlenecks addressed could be long set-up times, unreliable equipment, unacceptable first-pass-yield, high work in process inventories, etc.

(2)    Lean base-line assessment:  using interviews, informal flow-charting, process observations and analysis of reliable data an “as-is” situational report can be generated from which would flow the Lean improvement plan based on the identified “gaps”.

(3)    Start by providing “massive” training in Lean to a critical mass of employees in “teach-do” cycles. Lean implementation should continue immediately after the training.

(4)    Begin by implementing the “basic” building blocks first:  5S, Visual Controls, Streamlined Layout, Point of Use Storage, Standardized Work, etc. Then build on with the higher level tools and techniques, finally achieving flow production based on customer “pull”.

(5)    Pilot Project:  Choose a bottleneck or constraint area to do breakthrough Lean improvement (use the Kaizen Blitz approach); then with the lessons learned migrate Lean implementation to other areas.

(6)    Change Management:  align the company’s strategies and employee’s goals, then change the culture from the traditional “push” production to Lean “pull”.  This should result eventually in a philosophical change in peoples’ daily work life.

(7)    Start by analyzing the internal Overall Equipment Effectiveness (OEE) and the OEE losses; a Pareto of these losses will identify the “biggest bang for the buck” to indicate where to start the Lean journey.