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Begin at the End: A Good Lean Strategy Starts with Defining Your Ultimate Goal
Lean Enterprise is also known as :
Lean Enterprise,
Lean Management,
Lean Manufacturing Techniques,
Lean Manufacturing Concepts,
Lean Manufacturing Epic Data,
Lean Manufacturing Guide,
Lean Manufacturing Optimization ,
Lean Manufacturing Principles ,

Lean Manufacturing Solutions ,
Lean Manufacturing Strategy,
Lean Manufacturing Systems,
Lean Manufacturing Tools,
Lean Process Design,
Lean Product Development,
Lean Strategy,
Lean Strategy ,
Lean Tools,
Value Stream Mapping,
Value Stream Simulation
Table Of Contents
- The Lean Paradox
- Traditional Approaches to Lean
- 5S
- Kanbans
- Kaizens
- Value-Stream Maping
- A Better Approach
- Summary
The Lean Paradox
You already know the statistics'lean can allow you to become
very profitable and competitive. It will shorten your lead-times,
reduce inventories, cut operating costs, free up resources,
and more. But, countless surveys have confirmed that most
lean initiatives are abandoned outright or fail to deliver expected
and needed results. One well-known lean business consultant
estimates that the failure rate is 98% (as measured by little
impact to the bottom line),1 and we have found little reason to
doubt these findings. What is it the 2% of companies know that
the others do not? Are these successes confined to a restricted
list of industry sectors, or even narrower list of company types?
Are only "lean experts" capable of leading an organization
through a successful implementation? Our own studies suggest that lean CAN apply to
any business'to any manufacturer, service company, educational institution, etc. We
find no data to indicate that employing lean principles cannot be a very effective business
model for practically any organization. Furthermore, we find the failures alarming'
the benefits of lean are too important to allow poorly defined lean strategies or
ineffective execution to continue to be the norm.
The benefits of lean
are too important to
allow poorly defined
Lean strategies or
ineffective execution
to continue to be the
norm.
Traditional Approaches To Lean
Upon review of some of the more disappointing experiences with lean, we identified
several "generic" complaints, excuses, and issues. Following is
the typical list given as pitfalls or reasons for lean failure:
- Lack of management support
- Poor metrics
- Not enough training
- Resistance to change
- Ineffective communications
- Not able to sustain initial efforts
- No buy-in from supervision
- Not expanding improvement from the initial efforts to other departments
- No buy-in from workforce
There are two significant observations with the above list. First, it could apply to any
strategic initiative'from a business merger, to putting in place a new information
system, and anything in between. Second, these aren't very specific'they tend to be
symptoms of more deep-seated issues. Our research indicates that many of these are
the result of an inadequate lean strategic plan. In order to help put these into context,
let's review some of the more traditional approaches to starting a lean implementation.
5S
5S. Many companies begin lean by employing a technique called 5S, or Workplace
Organization. The "5" and "S" come from the five Japanese words; seiri, seiton, seiso,
seiketsu, and shitsuke. The English equivalents (keeping the "5S" theme in mind) are:
sort, set, shine, standardize, and sustain. Essentially, this is a process to organize a
work area, focused on improving efficiency, safety, layout, and flow. 5S produces some
immediate and obvious results. Workplaces are indeed better organized. Tools and
materials are maintained in well-defined locations. Operators notice that their jobs
become somewhat easier. Supervisors find that it's simpler to visually identify problems'
inefficiencies, excess inventory, misplaced equipment, etc. And, there may even
be a marginal increase in productivity. But, the benefits are difficult to sustain,
improvements tend to be isolated, and impacts are difficult to quantify.
Kanbans
Kanbans. The word kanban means visible record in Japanese. In lean lexicon, it is
essentially a signal to produce or move product. A kanban may be an electronic signal,
an empty bin, a card, a pallet, or a defined area to hold inventory. Kanbans are used to
manage inventory'quantify and flow. In the ideal lean world, product is "pulled"
towards the customer, through the factory, from the supplier in quantities of ONE'
hence the term one-piece-flow. However, in many circumstances, it's impractical to
produce and move product one piece at a time. So, kanbans become a compromise;
allowing the company to move small, controlled batches of material in a pull environment.
The use of kanbans can dramatically reduce total inventory. And, since lead-time
is almost directly proportional to work-in-process inventory (WIP), well-defined kanbans
can provide a significant improvement in lead-time. But, there can be problems. Using
kanbans without other coordinated improvements (such as reducing equipment
changeover times) can back-fire, resulting in degradation in equipment utilization and
even problems with on-time delivery. Also note that since kanbans are a compromise to
true one-piece-flow, companies that have effective kanban systems sometimes become
complacent and do not address the root causes that created the need to maintain
inventory; long changeover times, imbalanced processes, long distances between work
centers, quality problems, lack of operator cross-training, etc.
Kaizens
Kaizens. Also known as kaizen blitz. This may be the most common starting point for a
lean initiative in US manufacturing companies. Kaizen is the Japanese word for continuous
improvement. This approach involves empowering work teams to rapidly (hence,
the word blitz) improve specific problems within their areas of responsibility. On the
surface, this seems like a very good idea, and it can generate immediate and measurable
benefits. The use of kaizens, especially if championed by management, finally
proves to the workforce that the company is interested in listening to and supporting
their improvement suggestions. Some of the more common targets for kaizens include;
solving an equipment downtime problem, combining two or more machines into a work
cell, setting up a kanban, reducing equipment changeover time, implementing pointof-
use storage for supplies (maintaining storage where the supplies are actually used),
etc. But, this program can fall prey to a phenomenon known as "drive-by kaizens"'
improvements are implemented stand-alone, without prioritization, and without understanding
how changes in one part of the facility might impact negatively other functions.
Other critical problems with this approach are that; (1) it tends to overlook consensus,
and (2) there is little time taken to actually identify and eliminate root causes'
there is more focus on speed than there is on planning.
Value Stream Mapping
Value-Stream Mapping. The value stream is defined as all activities and events (both
value-added and non-value-added) that a product or service passes through on its way
from supplier to customer. In a manufacturing facility, this includes shipping, waiting
(in inventory, in a queue to be processed, or even in an oven waiting for adhesives to
cure), packaging, inspection, rework, and both manual and automated processing.
When we map the value stream, we map both the product and information flows. The
primary purpose of a value-stream map, specifically a "current state map," is to highlight
areas where one-piece-flow breaks down'these points suggest opportunities for
improvement (i.e., kaizens). Other purposes of mapping include; measuring the total
cycle time, identifying inventory locations, and determining points in the process where
signals to produce arise. Once a current state map is created, one or more "future
state maps" are developed from it, showing where various kaizen events might eliminate
root causes for stoppages in flow. The two reasons for creating alternative future
state maps are; (1) certain improvements might be logistically, technologically, or cost
prohibitive, and (2) there is no single correct future state. The VSM approach is significantly
more effective than the aforementioned approaches because it prioritizes the
improvement efforts. But, it still has drawbacks.
One issue is that it involves those who will be impacted by the change much later in
the improvement cycle than the 5S and Kaizen techniques'this late involvement of
stakeholders tends to foster resistance to change.
Perhaps the most important point is that of "competing value streams" and impacted
support functions. In most organizations there exists more than one value stream'
more than one product line, or one product line that produces two or more different
items.
These different value streams frequently compete for resources; equipment, people,
materials, etc. Additionally, all organizations have departments that support the operations
or production department'accounting, purchasing, quality, maintenance, engineering,
etc. If we change one value stream without understanding how it impacts a
competing value stream or a support function, we may negatively impact the overall
organization. It's important to note that focusing on the value stream is a relatively
recent addition to the slate of lean tools and techniques. This concept was introduced
by Toyota Motor Company in the 1980's. The result is that we now treat individual
processes within this value stream as a system. But, until now, we haven't applied this
systems approach to the entire organization.
A Better Approach
Those companies that have been successful with lean have managed to overcome most
of the pitfalls noted in the section Traditional Approaches to Lean and resolve those
issues listed in each specific approach. Based upon our research and experiences, we
tend to consolidate all these into a more focused list, as follows:
- Not involving stakeholders in the planning process (primary
cause for resistance to change)
- Not considering the entire organization as a system
- Not treating each company and each lean initiative
as unique
- Not understanding the real purposes for the initiative
This new list becomes the founding strategic principles upon
which to build your lean implementation. The point is, lean works'it's probably the
most effective business model in use today. So, let's do it, but let's find a way to exploit
it for maximum advantage, benefit, and sustainability.
Every organization's approach to lean must be different'must be uniquely designed.
According to Dr. Gerald Nadler, it's impractical to believe that two companies will share
the same set of conditions'the combination of market, industry, financial health,
technology, geography, culture, etc., are very different from company to company.
Therefore, any cookie-cutter approach will not be as effective as a customized
approach.
You need to know
WHY you are implementing
lean... What
is it you're trying to
accomplish?
Another important principle to keep in mind is that of "purposes."
Those of you familiar with Goldratt's "Theory of
Constraints" know that he talks about the GOAL of an organization.
3 You need to know WHY you are implementing lean. And,
this purpose will come from the people who benefit from your
products and services'your customers'better yet, your competitor's
customers.
Specifically, what is it that will make the industry sit up and take notice of you? Is the
driving force in your industry lead-time, price, quality, product features, responsiveness,
on-time delivery, time to market, or some specific combination of the above? Why
do you really want a lean enterprise? What is it you're trying to accomplish?
No department in your organization stands alone. Each single step in your manufacturing
process is either dependent upon an upstream step or impacts a downstream step.
Your lean strategy must integrate all the variables within the organization'business
functions, suppliers, information, equipment, and people. A traditional
lean value stream comes close, but frequently different
value streams share resources (equipment, facilities, and
people). Improving one value stream might negatively impact
another value stream. Even more, when you envision your overall
future business state, some of your current lower level value
streams might even disappear. Text-book examples of valuestream
mapping show a single, simple value stream with a single
product or with a few very similar products. In the real
world, in a real manufacturing environment, there are multiple
value streams, all competing with internal (and sometimes
external) resources.
Your lean strategy
must integrate all the
variables within the
organization'business
functions,
suppliers information,
equipment, and
people.
If we improve or change one value stream, this will impact other value streams, and
maybe in a negative way. So, before we create one simple value stream map, we need
to identify ALL the value streams and their interconnectivities.
Everyone resists change at some level. And, this resistance can derail a lean implementation.
Moving from a traditional business to a lean enterprise requires very significant
and personal changes by many people in the organization (and, some outside the
organization). But, notice in any change effort those individuals
who do NOT resist change'it's those on the core strategy
and implementation team. Why?
Because we involve them in defining the vision for the new system.
And, we involve them in designing the implementation
plans. So, before you begin the effort, you need to identify
stakeholders'those who will be involved, those who will be
needed for support, and those who will be impacted by the
change. If it's impractical to involve all stakeholders in planning
the change, at least involve representatives of each group
of stakeholders.
Where you begin with lean might be some combination of the
aforementioned traditional approaches. But, each will be modified
or customized using these four principles. Indeed, your
overall strategy must be based upon these principles.
Remember the discussion above of value stream mapping. Consider the systems principle
and identify if there really are competing value streams. Instead of a basic value
stream map, remember that you need to look at ALL values streams simultaneously,
showing how the competing value streams interconnect and interact. And, this value
system will need to expand outward to your suppliers, transportation partners, service
providers, and customers. And, don't forget to consider your information system, cash
reserves, and internal support functions'anything that impacts the total system cycle
time'the delivery of your product or service from concept to customer.
We've been talking about systems and interconnectivity. To manage a complex lean
enterprise, we need a fully integrated ERP system. We need real-time information.
Information flow and the management of information must be integrated with your
improvement efforts. And, it's not enough that your ERP system NOT conflict with your
lean enterprise'your ERP system must fully integrate with and COMPLEMENT your
lean initiative.
To manage a complex
lean enterprise, we
need a fully integrated
ERP system. It's
not enough that your
ERP system NOT conflict
with your lean
enterprise'your ERP
system must fully
integrate with and
COMPLEMENT your
lean initiative.
Another important point is that these interacting value streams
we discussed can be quite complex, as you might imagine.
You will need to identify tools to create these models'a traditional
pen & paper value stream map probably won't suffice,
unless you have only one product line and manufacture two or
three very similar products. You will probably need a modeling
tool to really understand the subtleties and interconnectivity
points of this entire value system.
Put in place a lean scorecard to monitor both your results and
progress towards your lean indicators. Lean has a goal of perfection'
eliminating all waste, variation, and uncertainty within
the entire value system. Until lead-times are instantaneous,
until WIP is 0, until defects are 0, until changeover times are 0,
until margins are the best in your industry, there are opportunities
for improvement.
Summary
Let's summarize by presenting a recommended lean implementation strategy.
Lean Executive Overview: Send the executive team and core implementation team to a
lean executive overview workshop. The workshop should provide attendees with a background
in lean and introduce them to basic principles in one-piece-flow, kanbans, and
pull systems.
Lean Skills Training: Train the core implementation team in the more common lean
tools; value stream mapping, 5S, kaizens, mistake-proofing, kanbans, cellular layout,
total productive maintenance, lean metrics, and rapid changeover.
Identify Value Streams: At the point, a traditional implementation would involve the
creation of current state maps. In this system-wide approach, identify all value
streams and business functions that will impact and be impacted by any value stream.
Also, identify where these streams connect AND the nature of these interconnections.
Ideal Future State: To identify your ideal future state, use the purposes principle to
envision how you might address your customers' needs three or four years from now.
If you're having difficulty grasping this concept, make the assumption that you've
already taken your organization to the next level.
Until lead'times are
instantaneous, until
WIP is 0, until defects
are 0, until
changeover times are
0, until margins are
the best in your industry,
there are opportunities
for improvement.
Summary
Let's summarize by presenting a recommended lean implementation strategy.
Lean Executive Overview: Send the executive team and core implementation team to a
lean executive overview workshop. The workshop should provide attendees with a background
in lean and introduce them to basic principles in one-piece-flow, kanbans, and
pull systems.
Lean Skills Training: Train the core implementation team in the more common lean
tools; value stream mapping, 5S, kaizens, mistake-proofing, kanbans, cellular layout,
total productive maintenance, lean metrics, and rapid changeover.
Identify Value Streams: At the point, a traditional implementation would involve the
creation of current state maps. In this system-wide approach, identify all value
streams and business functions that will impact and be impacted by any value stream.
Also, identify where these streams connect AND the nature of these interconnections.
Ideal Future State: To identify your ideal future state, use the purposes principle to
envision how you might address your customers' needs three or four years from now.
If you're having difficulty grasping this concept, make the assumption that you've
already taken your organization to the next level.
Now, picture the solution that your most significant competitor used to leap frog what
you've just done! This could be your ideal future state. From this ideal state you may
note that some of your current value streams, business functions,
or interconnection points disappear. Use this map to
prioritize your improvement opportunities. As your improvement
starting point, select the value stream from the ideal
future state that has the most impact on the entire organization.
At your improvement
starting point, select
the value stream from
the ideal future state
that has the most
impact on the entire
organization.
Current State Map: Map the prioritized value stream.
Future State Map: Convert the current state map to a future
state map, per your value stream mapping training. The difference
or gap between these two maps will be a list of kaizen events. But, remember to
note how and where this specific value stream connects with other value streams and
business functions'your kaizens might impact these. Put in place actions plans or
risk mitigation plans to address these.
Implement Kaizens: Create an implementation plan'the kaizens (actions) identified
on the above map, who will be involved, how will improvements be measured, what
resources will be needed, what barriers will need to be overcome, and a timeline.
Execute the plan.
Repeat the above for each value stream.
Use 5S, process capability, point-of-use storage, kanbans, mistake-proofing, total productive
maintenance, etc. throughout the organization'including the front office,
engineering, maintenance, R&D, etc.
Congratulations! By this point, you will have just scratched the surface, but you will
have made measurable and sustainable impacts! You will have begun to understand
what a lean enterprise really is'and why a comprehensive lean strategy is the key to
a successful initiative.