Lean Applied to Non-Manufacturing Areas

I am assuming that most management employees have heard of Lean concepts as applied to manufacturing.  At the same time, in my experience, most outside of manufacturing will say that Lean does not apply to them. 

In nearly 40 years of professional life, I have found that some of the largest gains brought about by Lean are in the support areas of manufacturing, not in manufacturing itself.  Manufacturing cannot be Lean without its support functions also being lean.  Lean principles applied to IT, HR, Sales, Engineering and Logistics have a snowball effect on manufacturing and a business as a whole.

COPQ and COW

Let me introduce you to the Cost of Poor Quality (COPQ) and the Cost of Waste (COW).  They are similar in scope and evaluated in the same way.  COPQ leads to COW.  Basically, to measure either, simply ask “What would change in the facility’s financial performance if everything was done perfectly correct?”

Consider the following within the context of the cost of poor quality:

• What would the financial result be if we never had unplanned mechanical down time?
• What would the financial result be if we never had unplanned IT related communication down time?
• What would the financial result be if communication between Engineering and Operations was so tight that Engineering was able to always anticipate Operational problems before they happen?
• What of Sales and Operation never miss-communicated?
• What if we never hired the wrong person?

Before anyone gets defensive, understand that each of the considerations mentioned above involves cross functional communication, cooperation and accountability. This brings me to the most important step in the Lean journey to reaching our potential as an organization.  The elimination of silos.

Silo

Silos divide an organization into independent operating groups with their own goals and objectives, that may or may not be in alignment with other operating groups.  Silos sub-optimize an organization by creating competing objectives, poor interdepartmental communication, and interdepartmental conflict.

If you identify more with your department than the organization that contains the department, you are silo’ed.  Where you are meeting your own departmental target metrics, you are probably not meeting the organization’s target metrics.

Things you hear and experience from a silo’ed organization:

• That’s not my job, or that is someone else’s job.
• It works fine, or looks fine here. (It is never fine, by the way, if it doesn’t work fine on the production floor.)
• You have to go door to door (department to department) to get help.
• Lack of a sense of urgency when the customer is at risk. (a customer can also be another department)

High Performance Teams

There is a adage that you hear in highly successful businesses, “When the ship sinks, everyone gets wet, even if it isn’t their fault.”  High Performance teams have the following characteristics:

• When things go wrong, or when the team thinks things might go wrong, everyone “runs to the fire” to see if they can help.
• There is a sense of urgency to do better.
• Individual and departments see their success as being intimately tied to the success of the organization as a whole.
• It is easy to hold each other accountable, because it is about performance not personality.
• Every individual in the organization can tell you where the organization is going and how their department and their own efforts are helping the organization be its best.

Be Your Best

Questions you need to answer to be the best you can be. 

• What kind of organization do you want to work for, the Silo’ed organization or the High Performance Team? 
• How well aligned are your objectives, your department’s objectives and the organizations objectives?
• What can you do to facilitate needed change?

I know what I want and I believe that it is not that different from what you want.