Leaning In: the Why and How of Lean Management
Understanding the fundamental processes and tools of lean management is a way to greatly reduce inefficiency, engage the workforce, and cut unnecessary costs.
Jerry S. Sikula
We have all read numerous articles about Lean, Lean Six Sigma, Operational Excellence, TPS, TPM… and the list goes on and on. The reason, is that we all are trying to figure out how to be the best of the best in our industry. For some of us this is very true, and for others it may be a sign of the times or a flavor of the month. But what I am hoping if you are reading this that you fall into yet another category; that of continuous improvement, continuous learning. Lean management today does take an approach that the tools come from structure and foundation, however, the landscape is constantly changing. We must evolve as managers and leaders to not only continue to improve our department/site/company, but continue our learning and training to share best practices within our lean community.
Getting started in lean
There are a number of questions we need to ask before we can begin implementing lean. What does lean look like? Why do we do it? Lastly, how do we do it and find gains and ways to sustain the improvements?
Our objective here is to:
1. Identify key aspects/tools of a successful lean initiative
2. Understand elements of defining a value stream and business case for lean
3. Evaluate your progress on the lean journey to world class performance
We should be focused on the bottom line, and as we move towards world class or best in class performance, we earn greater profits while spending less. As we reduce and eliminate waste we affect the bottom line.
I want to start off by saying that what I am about to outline in this article is from an operational/manufacturing perspective for a lean initiative. We all know that the tools of lean that have been used extensively in manufacturing across the world are now also finding their way into the service sector and health care industry, not to mention countless other industries. I will also focus on more of a general approach to lean and not dive into the statistical complexity of Six Sigma. My hope is that this quick review and highlight of success will help kick off your start to lean thinking.
The lean journey typically starts with the need to cut or reduce costs or to increase revenue. If we diligently go after removing and eliminating waste in our value stream we should also see a reduction in cost. Increasing revenue can take on many variables but in some cases if we can increase our efficiency, and thereby increase our capacity to produce more of our product/service, we can effectively increase the revenue stream and add to the bottom line profits of the company.
As lean champions, our path for making our business case or the start of the lean journey looks, initially, like this:
1. Current Situation: Describe the situation in terms of high-level processes, performance gaps, business drivers, and the sense of urgency.
2. Trends/Best Practices: Describe trends and best practices such as performance benchmark data for competitors.
3. Statement of Need: Describe the gap between current state and future state. Address the risks associated with not closing the gap.
4. Scope: Describe the project boundaries with included and excluded components.
5. Benefits/Objectives: Describe the benefits with a direct link to business strategies, objectives, and measurements.
6. Cost/Resources: Describe the time-phased costs of the project. This is best broken into specific phases with milestones, deliverables, and specific resources.
7. Justification: Provide the benefit and cost analysis consistent with standard company practice such as return on investment (ROI) and/or payback period.
8. Success Factors: Describe the specific commitments required for success & additional assumptions.
We need to start with the business case so that we can ensure buy-in from all levels, especially from the top management. As we go through the exercise of preparing the case, we have the opportunity to focus on our key issues and following this structure will ensure that nothing is left out. Many times I have seen projects, goals, and improvements fail or fall short due to very poor planning or lack of structure. There is a discipline and diligence around all aspects of lean, from the planning stage, to use of the tools themselves, to sustainability and lean success.
Waste reduction is central to all the tools of lean. Learning to identify waste forces you to question and improve the process along the way.
Today we will summarise the five fundamentals that take any organisation to world class operations. The five principles of lean:
1. Specify value in the eyes of the customer.
2. Identify the value stream (eliminate waste and variation).
3. Make value flow at the pull of the customer.
4. Involve, align and empower employees.
5. Seek perfection (continuous improvement cycle).
These are specific in activity and sequence. These can and should be done with suppliers and customers – not in a vacuum.
Let’s start with the value proposition:
Value must be defined in terms of specific products, at specific prices, at specific times.
The customer must perceive/recognise the value and be willing to pay for it.
For it to be truly value added – it must be done correctly the first time.
The cost of producing the product/service waste-free should help to define the target cost.
If the value stream is properly mapped out then we can ensure that we have identified all wasteful activity. We must map the current state (finding all the waste) and then move into mapping the future state (lean state). We use the tools within lean but we must challenge the team at this point to move towards lean thinking, moving away from the assumption that we intimately know our process to questioning everything along the way. All value streams have internal (departments or plants) and external (vendors, suppliers and even customers) components that must be correctly identified.
It is imperative to remember that in a lean organisation the value and value stream are determined solely by the customer. If we can truly be lean and eliminate waste, we have the ability to allow the customer to pull the value and allow it flow in a timely fashion (just in time) as much as possible. The best or optimal flow/pull system will have the shortest cycle time, no defects, no waste, and little to no inventory or work in progress.
The one crucial factor that I cannot emphasise enough in a lean start up is the engagement and empowering of all employees. Once there is a plan and a vision from top management and the alignment that comes from the idea that there will be a shift in culture, then we must work on the entire team. Make no mistake about it, the shift that has to happen in the organisation will require buy-in from all levels. My experience has been that as we include employees in decision making and problem solving activities, we enable a motivated and committed workforce around continuous improvement and lean activities. Another bonus that I have found is the morale of employees on all levels increase as job satisfaction increases.
Initially, the start of the lean journey may be a rough one, wrought with significant change, but as we emerge and come out the other side the lean enterprise is much easier to manage at all levels. We are shifting from “the way we have always done things” to a lean thinking culture that strives to question everything. The zenith of empowerment allows for all employees to be part of the process and also requires that they have a voice in bringing solutions to the table. The essence of any lean enterprise is that all employees at all levels work together to identify and solve problems – engagement through total employee involvement.
Where do you begin? How do you determine what is needed and which tools are too complicated to begin with?
I would like to focus on a few simple tools. By simple, I only mean that they can be implemented relatively quickly without a lot of investment or extensive training. My principle is to create a structure and foundation of simpler tools before building on to them as the lean enterprise grows and becomes more successful. There is a fair amount of diligence, rigor, and discipline that go along with using these tools on a daily basis, but there is also the long term sustainability and favorable results that come with them.
Here are a few tools for quick wins to help build momentum in lean implementation:
• 5S/6S: An organised workplace is one without waste.
• Value Stream Maps: Current state vs future State, gap analysis.
• Problem Solving: Pareto charts, 5-Why, PDCA, A3.
• GEMBA: Get to the shop floor and observe and engage.
• Visual Management: Daily management around KPIs.
Each one of these tools is part of the foundation of lean. I am not going to go into great detail (each of these subjects has massive amounts data and literature available), however, I will address why they are important and have merit.
To start our quest for eliminating waste what could be better than workplace organisation. What is 5S? Sort, straighten, scrub, standardise, and sustain. You could also add a sixth “S”: safety. This tool is fundamental because it requires a culture committed to continuous improvement. The basis of lean is standardisation and stability, and 5S is key in standardisation and stability. 5S is not merely about cleaning up, it instills discipline and allows us to easily spot variation from standard operating conditions.
Value Stream Mapping/Flow Charts
Value stream mapping and flow charts are useful tools in identifying waste in our value stream. Through analysis we have the ability to identify hidden “factories” or processes that jump out at us; otherwise known as waste. This value stream map helps to point out our gaps and misses and is the basis for our improvement efforts. Remember the value stream includes all value added activities (the ones the customer want) and the non-value add (waste and other activities) that is part of our product/service to the customer. If we focus our flow geared towards the customer requirements, we end up with an optimal flow with minimal waste.
Problem Solving Activities and Tools
To borrow from the lean tools of Six Sigma, a good approach to lean as a whole is DMAIC.
Define the problem
Measure the baseline performance
Analyse for significant root cause
Improve the process
Control product improvements and changes
In the DMAIC process the ‘analyse’ stage is the critical one for success, since if we do not get to root causation we only fix symptoms and not true problems. I have found that the use of an accurate Pareto chart will bring about a clear path to some quick wins. Accuracy of the data going into the Pareto chart is crucial and employees need to understand their role in this process. Using root cause analysis to fix the top issues on the Pareto chart, one or two at a time, will move the needle in a hurry on the path to world class. Many like to skip over analysis and get to the improve stage, mainly because they feel like they already know what is wrong and want to get to the business of improving quickly. The foundation and structure in A-3 Reporting as well as 5-Why and Fishbone problem solving will help to ensure the root cause is the focus of the improvement or fix. The PDCA cycle (plan, do, check, act) is a very structured and scientific method to root cause analysis and problem solving. The discipline and rigor that goes into Deming’s PDCA cycle is yet another reason that this a foundation and building block to success.
Some may not be overly familiar with this term but the idea is that we go to the shop floor (or wherever the work is done) and observe. It has been called “management by wandering around” as well as a “waste walk”. It involves being on the continuous search for wasteful activities and ways to make improvements. This tool, coupled with empowerment, will provide tremendous strides in employee engagement and hopefully additional buy-in from numerous levels. As a manager or leader, the more time we spend on the floor with our core management team the more opportunity there is for our shop floor employees to be part of the improvement process as we solicit input on issues and concerns. This is a daily practice that coupled with problem solving activities (PDCA) and other lean tools is a very effective method.
Visual Daily Management
This tool wraps everything together so that everyone within the department or facility can see the improvements over the course of days, weeks, and months. Visual daily management is a systematic, fact-based, goal oriented, active style of leadership to manage operational performance. Again, coupled with the PDCA cycle, this stage brings about structure and aligns the entire team (labor and management) in continuous improvement. It must include clear goals and should also be linked to corporate strategy and KPIs (Key Performance Indicators). The leadership group should be able to drive improvement and plan daily activity around the data collected here, while employees know the process and can help with problem solving. This becomes a dashboard for accomplishment and helps keep a process in place for daily accountability. The daily management should effectively link the vision with execution by tracking its actualisation in response to the plan, and keeping the team aligned and on track.
The benefits of implementation and using lean tools for continuous improvements are considerable. However, I do want to reinforce the idea that lean is first and foremost a shift in the culture. We must keep in mind that lean is more than tools in a tool box. It is a mindset. It is total new system approach. And as lean thinking is embraced, the culture of the organization shifts. Lean implementation must be an integral part of the organisation’s strategy, and successful implementation requires commitment and involvement across all levels.