SOME people think lean manufacturing is a trendy management fad. Others think it's a quick-fix process of cutting out excess.
It's neither, according to Drew Locher, managing director of Change Management Associates, which provides various business consulting and organizational development services to industrial and service organizations.
Locher, in his “Lean Manufacturing: Getting Lean Started” presentation at the National Association of Trailer Manufacturers Convention earlier this year, said a lean enterprise is “an organization that applies concepts in a systematic way. There's no haphazard approach. It's a step-by-step approach, trying to eliminate anything that does not add value in the eyes of your external customer. A company does many things every day that do not add value in the eyes of the external customer.”
And what is lean?
“The efficiency by which we convert customer interest into customer satisfaction,” he said. “Whether you make things or whether you deliver services — or both — that's what it's all about. We want to do so in the most efficient way possible.”
He said the best description he has ever heard about lean manufacturing is “common sense.” Several years ago, one of the companies he was working with objected to the term “lean” and decided it was going to call itself “Common Sense Enterprises.”
“But business is very complicated these days, isn't it?” he said. “There are tremendous competitive pressures in the trailer industry. A company in Delaware that we were working with had 50 competitors in a 250-mile radius. One thing about competition is that it drives common sense in a lot of ways, which is a good thing.”
He said there are four pillars of lean:
“That's why customers come to you. You can do things they can't do.”
“You need to improve flow. Time has been pressing all businesses in all industries. The customer wants shorter lead times. There is a lot of pressure on companies that maybe set up their approach and their business system in years past. Circumstances have changed, but they never changed the fundamental way they go about running their business. People are working very hard. Too hard. We need to work smarter.”
“Giving the customer what they want when they want it. Is that easy to do? No. Customers are getting more demanding. They want lower price, better service, better quality. They want it all.”
“Will we ever achieve perfection? Probably not. That's the continuous improvement part of all of this.”
Locher said the concepts of “lean” actually have been around for over 80 years, but the term did not become widespread until the 1990 book, The Machine That Changed the World, by James P Womack, which documents, among other things, the Toyota production system.
“Toyota got concepts from the Henry Ford system of the 1920s,” Locher said. “Henry Ford's breakthrough was not the automotive assembly line. It was bringing very dissimilar processes together in a near-continuous-flow system — taking the foundry operation into the casting operation and then the machine operation and assembly operation, and then integrating that into the assembly line. One downside to the Henry Ford system: It couldn't handle variation.
“Toyota has taken it to the next level. They figured out how to be diversified in production. You go to their Georgetown, Kentucky, plant. They make not just one model car — with different options and colors — but they make two. They can change over from one model to another in 20 minutes. That's a big breakthrough, because there are still a couple hundred employees in that line. In the past, automobile vehicle assembly plants were tooled to do one thing. It took weeks to re-tool.
“In a lot of other industries, people are looking at that model and saying, ‘Hey, can we do it here?’ The answer is, ‘Yes.’ Common sense applies anywhere. How you go about doing it is the hard part. You have to adapt the concepts to meet your needs. But the underlying concepts all apply.”
Efficient problem solving
Locher said companies need to reduce the time they spend on problem solving (“designing a solution involving engineering and design”), information (“processing orders and getting customer information”), and business transformations (“converting raw material into the physical product the customer buys”).
“We want to make sure our time is spent wisely,” he said. “We have to make sure we're working on the right things at the right time. Get the raw material and put a stick-it note on it with the time and date the material ended up as a product to the customer. That's the total lead time. Then ask yourself, ‘What is the value-added time?’ We're actually physically transporting material. You'll find that on the average, 95% of total lead time is non-value-added.
“Things are waiting. What does the material wait for? You're waiting on a machine to be changed over, maybe waiting for the materials to arrive. If it's not flowing, the meter's running, the clock's ticking. Ka-ching! Ka-ching! The cost is going up. Does inspecting a product add value? I could look at it all day, and it does not add value. If we get into a competitive situation in most industries, don't we have to find the best creative ways so we're spending our valuable, limited time on the right things at the right time?”
Locher said when a change is made, people want to know why. Companies must provide a purpose, identify the key change drivers, and develop a mission that people can rally around. Tell them what's in it for them.
“Do you share what is going on with all employees, or do you just assume that people know these things?” he asked. “That's a bad assumption. One of the biggest complaints we hear about the work environment is that there's not enough communication: ‘I don't know what's going on. You don't tell me anything.’
“We should be communicating why we need to change the way we go about business, because most humans think they're doing the best job they possibly can. So we're just trying to get them to re-look at how they go about doing things and seeing there are better and easier ways. Companies have to provide that purpose. They have to keep putting that out there.”
He said people want to get involved, have a say in things, make a difference. Companies must provide opportunities for involvement — meaning responsibility, control, and authority — and commitment comes through that involvement.
“They don't want to be told what to do,” he said. “They want to be involved. That's an investment of time. It can happen quicker than people realize.”
He said people are afraid to change, so companies must proactively address the fear and anxiety associated with change. That means making a commitment to retain existing employees — qualifying the commitment as necessary — and ensuring them a part in the “new” organization.
“There's an old comic strip that went something like this: The certainty of misery is better than the misery of uncertainty,” he said. “People like to complain. That's good. It means they care. When you start talking about change, it generates a lot of fear and anxiety. So how do you overcome that? Involvement. Give them a safety net so they can affect change without these perceived repercussions if it doesn't work. With the companies we work with, we say, ‘No one will lose their jobs.’ Otherwise, you'll be hearing, ‘Lean is mean. Lean is cheap.’ If we don't make that commitment, what's the likelihood of people getting involved? Zero.”
Locher said outcomes matter to most people. Companies must identify the desired outcomes and expectations by developing measurement processes — a scoreboard — to monitor progress and by considering providing employees with a “piece of the action”.
“You get behaviors based on what you hold people accountable for,” he said. “We need to measure the process. It has to be simple. When rules change and people are doing things differently, they're saying this is the worst thing they ever saw. You need to be able to give them the facts: ‘You produced 33% more in the same period of time.’”
Then establish the “Lean Team” — the organization's key change agents — by carefully considering its membership and looking beyond the “office” and the “management.” Members must possess a passion for the mission, strong leadership abilities, and excellent interpersonal skills.
He said a critical foundation is provided by offering education in the objectives and concepts, which can address much of the anxiety and fear (and fear of the unknown is the greatest fear of all). Experiential-based learning can provide necessary skills that will make application of lean concepts easier in the future.
He said the education should include other forums beyond the “classroom” — simulations, company tours.
“People's expectations will have been substantially raised,” he said. “We have to be able to fulfill those expectations because people are looking for signs of weakness. The first chance they get, ‘See, I told you they weren't serious about it.’ We need to set a reasonable time frame. For small and medium-sized companies — 500 employees or less is the US Commerce Department's definition — it will take two or three years. In larger companies, five to 10 years. It takes time.”
Value Stream Mapping
The next step is to develop a road map — a reasonable transformation plan. Value Stream Mapping is the assessment and planning tool of choice.
Emerging from the 1988 book, Learning to See, by Mike Rother and John Shook, a Value Stream Map is a visual depiction of the material and information flow within a business. It helps to visualize the overall system flow easier than a single-process level map, helps to identify the “root causes” of waste, and provides a common language for the organization.
The process identifies product/service “families” — a context in which to assess the organization. The company maps the current state (the way things operate presently), develops a future state (a vision of what can be achieved in a year or so), and develops an implementation plan (a “road map” to achieve the future state).
“With small companies, we can do it in two days,” Locher said. “A Value Stream analysis can help with paralysis by analysis. What's driving your business that you've got to change? How are you going to get the people in the organization involved? Then do the Value Stream Map — generated by teams of six to eight people. Someone knows the purchasing side, but not sales; product but not the office. At the end of the exercise, everyone will understand the way you conduct the business.”
The map consists of information flow (weekly orders, six-month forecast, suppliers, monthly shipments) and material flow (data boxes, assembly, inspection, inventory, shipping, changeovers).
“Without it, we probably would have mapped out the material flow separate from the information flow, and we would have missed the important link,” he said. “Information flow is the fuel that drives production flow. People in the shop are just doing what they're being told. Who's telling them what to do? People up in the office? How are we processing information?
“From that, we can start asking where our priorities lie. What do we need to address in order to meet these change drivers? If the market wants a shorter lead time, we'll focus on time.”
He said product families need to be identified by doing a complete family product analysis, including the number of product families (which will help to determine the scope of the implementation) and shared resource issues.
“The fact that you make lots of different stuff makes lean more valuable,” he said.
The initial data needs the average changeover/set-up times, unplanned downtime percentage, lead time vs customer required lead time, process time vs demand rate (takt, the German word for interval of time), quality yield percentage, number of suppliers and their lead times, batch/lot sizes and related processes, and the number of employees and their available time.
“We're looking for impediments to flow, and the opportunity for improving on it,” he said. “Where are we generating waste? In lean, we want to drive time down, down, down. We know from experience that it reduces costs. If we can reduce lead time with information processing and material processing, are we better able to service the customer?”
Locher said the map should use seven “prescriptive” questions to create that tie between lean concepts and techniques, answering what tools should be applied and where. It provides a visualized representation of where the company is going, and it can be shared with the entire organization.
“It provides a means to project the benefits,” he said. “Project what they will be: ‘We can cut lead time by 50%. We can cut process time by 40%. We can improve quality by 80%.’
He said the implementation plan must break the future state into “loops”, establish priorities for the transformation, assign responsibilities, develop a timeline, and identify a Value Stream manager to fulfill a project management role, at the very least.
Guidelines to determine the right strategy: Workplace Organization/5 S to start (or integrate with other efforts); standardized work and quality at source (or integrate with other efforts); Total Production Maintenance before Quick Changeover and cellular/flow; and pull/Kanban (internal) after Quality Changeover; pull/Kanban (internal) before or after cellular; pull/Kanban (external) with suppliers; and lay in visual systems last (or integrate throughout).
(Kanban is a Japanese term meaning “signal”. It signals a cycle of replenishment for production and materials, maintains an orderly and efficient flow of materials throughout the entire manufacturing process, and is usually a printed card that contains specific information such as part name, description, quantity.)
“Pull systems are visual systems driven by actual consumption, as opposed to forecasting,” he said. “How many people get the order and make the product? That's pull. You want to do more of it. That's common sense.”
He said companies should start with lower risk, but highly visual efforts. The approach should be on focused and intensive improvement efforts such as Kaizen Blitz, which could be defined as “a sudden overpowering effort to take something apart and put it back together in a better way.”
“It's hard to find time, so we put some time aside and we work like crazy to apply the concept,” he said. “We can get a lot done in a day or two days. But you have to devote the time, plan for it, put it aside and work with it. That's what we mean by a Kaizen Blitz — a very focused improvement effort. Kaizen means continuous improvement. Anybody ever been to a blitz?
“I recommend you take a step back from your company. It's remarkable what you see. Start asking questions.”