Tag Archives: lean

Does Lean Apply to You?

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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.

Lean Value Proposition

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Lean Value Proposition by Walter McIntyre

The basic Lean and business value proposition in looks like this:

Profit = Perceived Value – Inherent Value

Lean process improvement projects address the Inherent Value piece of this equation. The idea is to reduce the inherent cost of production and delivery of the product or service. A common mistake that teams make is to assume that inherent value issues are not customer driven. This is a case of being inwardly focused instead of a more balanced focus (inward and customer driven).

The trick is for the Lean team to investigate the down stream and upstream impacts of any proposed changes to the business process(s). Then check those expected impacts against critical to quality concerns of the various process customers.

Remember that all processes in a business touch each other in some way.  If a change is made in one, there will be impacts elsewhere. Don’t be a victim of sub-optimization, by way of process improvement.

Lean Marketing & Product Development

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Lean Marketing and Product Development by Walter McIntyre

Lean principles apply to any process based operation. I cannot think of any process that does not have non-value added components in it that create the opportunity for waste production.  In fact, by definition, a non-value added component in a process is waste.

Let’s take marketing for example and do something called lean marketing. Please remember that in a post of this size, I am leaving a lot to the imagination. Some businesses have marketing programs that start with the product/service and move outward to the customer. They call this customer focused because they do eventually think about the customer. This is not all bad because the customer is a part of the equation. The problem with this approach is that it is self-limiting.  In effect, it allows the product/service to define the target customers and, as a result, becomes growth limited by this boundary. This is the waste of missed opportunity

To balance the marketing equation, the business needs to also think in the opposite direction. That is, starting with potential customers and moving to the product/service. In this approach the potential customers defines the product/service and, as a result, is not limited by an artificial customer segment boundary.

In more detailed terms, in the product first scenario, the business defines the product/service, the price, and how it will be delivered.  Once these definitions are made, the business promotes the product or service to a targeted customer segment. As you can see, the product/service is defining the targeted customer. In a lean marketing program this is phase two, not phase one.

In the customer first scenario, the business connects with potential customers across multiple segments and establishes what the customer’s value (are willing to pay for), customer cost (price they are willing to pay), and how they expect the product/service to be delivered. Here the potential customer is defining the product. In lean marketing, we would now go the product/service side of the equation and build out to the customer.

Additionally, every business needs to realize that with the internet and social media, potential customers can easily compare products and services across multiple suppliers. This means that they can easily find the product or service that best fits their wants/needs. By using the product/service to define the customer, the business self-eliminates from non-targeted potential customers.

If instead, the business first allows potential customers to define the product/service (phase one), the product/service can be tailored to fit different customer segments (phase two).  This in turn allows the marketing program to be tailored to target multiple customer segments. This tailoring takes advantage of the internet and social media by addressing the specific needs of different customer segments.

I look at this as an application of Deming’s “Plan-Do-Check-Adjust” cycle. Define the potential customer’s needs, apply what you learned to the product/service, evaluate market effectiveness, and use the evaluation to find improvement ideas. This process is like a wheel that continually turns over and over again throughout a product/service life cycle. The result is better performance and a longer product/service life cycle by way of waste reduction.

As a final note, this approach is synchronized to the development process. The PDCA cycle, focusing on the customer first, will help to prevent misunderstandings (waste) and missed targets (waste) because the customer becomes a key part of the development process. The more times the PDCA wheel is turned in a development project, the more input the customer will have, the less likely the development team will miss the target. The target in this case is the right product/service being delivered to the customer at the targeted project cost and profit margin.

Rolling Out Lean Principles in a Business or Organization

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A brief outline of the steps to rolling out Lean in the work place. Bear in mind that I believe success depends upon leadership and mentoring instead of supervision.
First, listen and teach. Set up brief training sessions using classroom time, Gemba walks, 5S, and identifying waste. Teach the group to use Lean tools to recognize opportunities while walking their work space. Frame what you teach in terms of the listeners’ value proposition. This is to gain trust. As a leader, you should be selling instead of telling. Teach basic tools they can use right now. Have the group document a list of opportunities.
Second, lead the group into a baby step project.  If they haven’t done so already, have the team create a list of opportunities and chose which they want to tackle as a project. At this point they become a team instead of a group of individuals. Teach them tools for use in their chosen project and go out and get it done. As others see the team’s activities, you may see the number of individuals interested in participating increase. Allow this to happen. You may have to create more than one team depending business circumstances.
Third, after a successful project, have the team re-evaluate the list they created earlier. It will change based upon what they have learned. Tackle another project from the list. Get some momentum from successful projects. This increases trust. Encourage the team to take on smaller projects in their own work space. Act as a facilitator and a supplier of resources. Lead instead of supervising. Again, as others see the team’s activities, you may see the number of individuals interested in participating increase. Allow this to happen. You may have to create more than one team depending business circumstances.
Forth, you are now in the midst of a Lean rollout. You may want to christen the rollout with a name that is unique to the team or teams. Be careful about asking the team to follow you in the Lean implementation on a larger scale. You don’t want the team(s) to see the process as a “program” they are doing for someone else. They need to see it as something they are doing for themselves (remember the value proposition they started with). The team(s) need to “own” the initiative. There will come a time for them to see it on a larger scale.
Fifth, you don’t have to use special names for tools and projects. This can create pushback. Listen to the people you are working with and they will indicate when, if ever, it is appropriate to start adding special names. The main thing is to keep in alignment with the overall value proposition of the business and in alignment with the team’s value proposition.
Sixth, “keep the main thing the main thing” by not allowing the effort to become personally yours. The effort belongs to the group and the business as a whole. As much as possible, stay in a leadership mode instead of a supervisory mode.

Change Leadership

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All management strategies and paradigms, from old school to Lean, have one element that is the same. That element is people. People are not pawns on a game board, they are not machines and they don’t always follow management’s vision.

In fact, the people side of management is never clear cut, and is nearly always messy. Everyone has their motives for doing the the things they do. Not everyone has the same goals in mind.
Failure to address the human element will undermine any effort that management may take to change the culture in a business. The reason is that culture is all about the human element. You can’t dictate attitudes and motives, nor can you just ask for change.
Here is the secret. All change, all improvement, Lean or otherwise, must be lead. It is experienced together with others. Let me give you an example. Years ago, when hurricane Hugo came through South Carolina, I was managerially responsible for an industrial waste treatment facility. All retention ponds were filling and the plant could not keep up.  The state had given me permission to by-pass the rain water directly to the river in order to keep other contaminated water contained.  This required the re-routing of a 12 inch fiber cast pipe while the hurricane was in full swing. I had a staff of 5 technicians on duty that night. All had families in the storm’s path and all were worried.
This was a time for action, so I  said what needed to be done, grabbed my tool bag, and headed out the door into the weather. I didn’t ask anyone else to go, but everyone followed me into the storm. We fought the weather for more than two hours and got the job done.
After that night, I had a minimum of 15 to 20 workers from around the company volunteering to work with me on a daily basis. We had a reputation for action and a “can do” attitude. In this case strong leadership resulted in strong follow ship. The culture began to change because the employees saw the management team change.
My point is this. If you want to change the culture in your work space, let the change begin with you. If you want to implement a Lean movement, let the change begin with you. Exercise strong leadership and you will get strong follow ship.
Strong follow ship leads to a shared vision. A shared vision leads to less resistance to change.

Lean Marketing

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Lean principles apply to any process based operation. I cannot think of any process that does not have non-value added components in it that create the opportunity for waste production.  In fact, by definition, a non-value added component in a process is waste.

Let’s take marketing for example and do something called lean marketing. Please remember that in a post of this size, I am leaving a lot to the imagination. Some businesses have marketing programs that start with the product/service and move outward to the customer. They call this customer focused because they do eventually think about the customer. This is not all bad because the customer is a part of the equation. The problem with this approach is that it is self-limiting.  In effect, it allows the product/service to define the target customers and, as a result, becomes growth limited by this boundary. This is the waste of missed opportunity

To balance the marketing equation, the business needs to also think in the opposite direction. That is, starting with potential customers and moving to the product/service. In this approach the potential customers defines the product/service and, as a result, is not limited by an artificial customer segment boundary.

In more detailed terms, in the product first scenario, the business defines the product/service, the price, and how it will be delivered.  Once these definitions are made, the business promotes the product or service to a targeted customer segment. As you can see, the product/service is defining the targeted customer. In a lean marketing program this is phase two, not phase one.

In the customer first scenario, the business connects with potential customers across multiple segments and establishes what the customer’s value (are willing to pay for), customer cost (price they are willing to pay), and how they expect the product/service to be delivered. Here the potential customer is defining the product. In lean marketing, we would now go the product/service side of the equation and build out to the customer.

Additionally, every business needs to realize that with the internet and social media, potential customers can easily compare products and services across multiple suppliers. This means that they can easily find the product or service that best fits their wants/needs. By using the product/service to define the customer, the business self-eliminates from non-targeted potential customers.

If instead, the business first allows potential customers to define the product/service (phase one), the product/service can be tailored to fit different customer segments (phase two).  This in turn allows the marketing program to be tailored to target multiple customer segments. This tailoring takes advantage of the internet and social media by addressing the specific needs of different customer segments.

I look at this as an application of Deming’s “Plan-Do-Check-Adjust” cycle. Define the potential customer’s needs, apply what you learned to the product/service, evaluate market effectiveness, and use the evaluation to find improvement ideas. This process is like a wheel that continually turns over and over again throughout a product/service life cycle. The result is better performance and a longer product/service life cycle by way of waste reduction.

As a final note, this same approach can be applied to a development process. The PDCA cycle, focusing on the customer first, will help to prevent misunderstandings (waste) and missed targets (waste) because the customer becomes a key part of the development process. The more times the PDCA wheel is turned in a development project, the more input the customer will have, the less likely the development team will miss the target. The target in this case is the right product/service being delivered to the customer at the targeted project cost and profit margin.

Designing a Business

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I have been starting up a new business division in our company.  Nationwide Parts Distributors has been an inside sales business with connections dating back to 1992.  Now with the advent of Automotive Electronic Solutions, we are also a remanufacturer.

This is a completely different business model for Nationwide Parts Distributors.  We designed the work flow, defined the core competencies for each position, set up infrastructure, hired employees, and opened for business.  The ROI for the business turned out to be less than one month.

We did all of this in a new business format and performed well enough to maintain the highest possible rating with the Better Business Bureau. This is remarkable in that we avoided the typical start-up quality issues of a new business venture.

We are now in our third month of operation and have raised enough working capital to begin the process of purchasing the building we are operating in.  This will increase our valuation in the market place and reduces our monthly cost of operation.

It has been hard work managing  the changing design of the organization as we went through a steep growth curve. Even with a flexible, lean, organizational design, we have doubled the number of employees in the new business to accommodate the increase in throughput that our customers demand.

I am very proud of the team of professionals that work here at Nationwide Parts Distributors and Automotive Electronic Solutions. Their belief in the vision, and commitment to achieving it, has made it all possible.

Listening Strategies

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We spend our lives being taught how to read, how to write, and how to speak. We generally have very little training on how to listen. This is big problem since listening is a top-level skill in a world where the spoken word is so important.
To understand the skills involved with listening, we need first to understand that our minds provide us with 128 bandwidth window to the universe. Any information from the outside world must enter through this window. The problem is that part of that bandwidth is used up with process functions things like I’m hot, I’m cold, I’m hungry, I need to go to the restroom. Do you remember how hard it is to pay attention to someone when you have to go to the restroom really bad?
The remaining bandwidth is used up with all of your other senses. What you see, what you smell, what you feel with your fingers. The practice of good listening involves moving these other senses to a subordinate mind function so that they are out of the way of incoming sound.
Good listening is not a simple function, although it is instinctual. Our ancestors on the savannah thousands of years ago relied on listening skills to survive. Movement in the brush could mean dinner had arrived or you were about to become dinner.
This began to change as language functions developed. The change was specific to what was being listened for: movement in the brush or fundamental language components or both. When you consider that language components also include the evaluation of emotion, the complexity of listening becomes evident. It is no longer just what is said, but how it is said.
The importance of contextual information, such as emotion, can be seen in the modern day court room. Lawyers and judges are relying more and more on reading court room transcripts to evaluate what was said and make life changing decisions. The problem is manifested in what is lost in a transcript. A transcript cannot tell you anything about tone of voice, voice inflection or emotion. To understand this problem, consider how many ways that you can say the words “shut up” and how the meaning changes with how you say it.
Listening involves several sub processes. There is the physical aspect of hearing, which is a physical process of sound waves hitting the ear drum. Listening also involves the processing of language and critically analyzing the received information. Lastly it involves formulating action. This can be a verbal response or maybe even a mechanical response such as “fight or flight”.
There are four basic listening strategies. These are “not listening”, “listening for reinforcement”, “listening with the intent to reply” and “listening with the intent to understand”.
The first strategy is “not listening”. Not listening is the process of tuning out sound coming into your brain. This is the most used listening strategy in humans. It involves tuning out one noise source in favor of another. An example might be listening to someone speak while sitting in the food court of your local shopping mall. You are selectively tuning out the noise coming from other people around you in order to selectively hear the voice of the person that you are communicating with. Not listening may seem to be a bad thing, it is actually essential to communication.
The next strategy is “listening for reinforcement”. This involves listening with little to no critical analysis. This is how you listen when you are being told what you want to hear. An example might be listening to political opinion or spin makers. Sometimes this is a listening strategy we apply when we are sitting in church. Its overriding characteristic is the lack of critical analysis. In other words, this strategy’s weakness is it failure to challenge the information that is coming into your brain in order to interpret its correctness or truthfulness. Does this sound familiar in your culture?
The third listening strategy is “listening with the intent to reply”. This is how you listen when you are emotional or in an interesting discussion. We utilize this strategy anytime we feel that what we want to say is more important than what anybody around is saying. An example of this type of listening skill would be a situation where you are arguing or you are listening defensively. You wind up subordinating the words of the people speaking to you in favor of the words you are formulating in your mind. The critical analysis applied here is not applied to the words you hear. It is applied instead to the words you want to say. This makes it very difficult to accurately get the other person’s meaning. Have you heard a person ask a question and receive an answer to a completely different question? If so, you probably witnessed someone listening with intent to reply instead of with the intent to understand.
The fourth listening strategy is “listening with the intent to understand”. Specifically, this is listening with the intent to understand more than the spoken words. This is how you listen when you watch television. Visualize how you feel when you are watching a program you are interested in on television and right at the moment that you are paying the most attention someone comes in and begins to speak to you. How does that make you feel? It probably makes you feel uncomfortable, stressed and maybe even angry.
This listening strategy involves listening between the words for meaning, truthfulness and motive. When using this strategy you are able to critically analyze the information coming into your mind. This allows you to get the speakers story, to fully understand their angle, their motivation and what their true needs and wants might be. In consultative sales for example, this type of listening is critical. You have to understand what the shopper needs, what they are afraid of, and what their potential objections are. Without this information, the sales person is not likely to close the sale.
The point to this discussion is this. Just like our ancestors on the savannah needed good listening skills to survive, we too must have good listen skills to survive. The specific strategy may have changed over the past millions of years, but the results of poor listening have not. Our ancestors might get killed by a predator if they listened poorly, we on the other hand will be used up by lies, missed opportunities and a general failure to recognize the predators in our culture.
I cannot finish this discussion without giving you a couple of ways to improve your listening skills. Here is a practice strategy that works for me. I practice evaluating what listening strategy I am using anytime I am involved in communication with another human being. Once determined, I will consciously switch to listening with the intent to understand. The idea is to understand the person speaking to me at a deeper level than they understand me. That places me in a more informed and powerful position than the other person. It also means that I am in a better position to help that person, explain my opinion or defend myself.
Another practice strategy is to go to a social function and learn as much about the people you talk to as possible, while reveling as little as possible about yourself. This exercise involves asking open ended questions that get others to talking while you listen with the intent to understand. People like to talk about themselves and you can learn a great deal about someone both by what they say and what they don’t say.
My last point. Do not misunderstand my motivation in writing this piece. The object is not to become a person who uses words to subvert others, to become a predator. Instead it comes from my desire to make a contribution to the culture in which I live. Imagine how the world would change if everyone began listening with the intent to understand.

Collecting Data

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Collecting data for analysis is more than a statistical process. All of the math in the world will not compensate for not understanding the behavior of the process you are trying to measure.  Not everything is settled in numbers.  Some things will be discovered in context.  For example, “We really have problems when it is raining.”

 As a result, data collection plans embody four qualities of collected data that are essential to optimize its usefulness. These qualities have to do with the data’s ability to represent the process’ performance.

 

  • There must be sufficient data to see the process’ behavior.
  • The data must be relevant.
  • The data must be representative of the process’ normal operating conditions.
  • The data must be contextual.

 

Sufficient

There must be sufficient observations to see patterns of variation and shifting central tendency in the process’ output. As part of building a data collection plan, the team will seek to understand the process’ history so that all expected sources of variation are captured.

Consideration must also be give to the size of the performance gap that the team is trying to measure. As the size of the gap gets smaller, the number of samples needed to measure the gap, with statistical confidence, increases.

 Relevant

 The data must be relevant to the problem that is being investigated. For example, if a process associated with back injuries is being analyzed, data regarding the availability of safety glasses will likely not be relevant. The central question or objective behind the data collection plan will be to point to what data needs collected.

 The data must also be relevant to an important business metric. Since data collection is an expensive process, the project team should give due diligence to verifying the relevance of the data that they want to collect. The buy-in of stakeholders and process owners will waver if they discover that the team’s focus has drifted away from the central core of the project.

 Representative

 The data must represent the entire range of actual operating conditions of the process. For example, if checkout cycle times are being studied, data must representative of all levels of customer loading.

 Operating conditions can include a multitude of factors. Some examples are the time of day, sales or promotions, experience of employees, changes in process inputs, and so forth. The smart project team will brainstorm a list of the potential factors that must be considered when building the data collection plan.

 Contextual

 Contextual information pertains to conditions that surround, but are not part of, the process and can affect its performance. By collecting this information, we add relevance to the data. For example, if the checkout cycle time was longer than usual on a given day, you may also wish to know how many cashiers were on duty, what the customers were buying, and weather conditions. This sheds light on how the process behaves under various conditions.

 Summary

 To keep cost down and improve the story telling ability of data, a comprehensive data collection plan will be needed. Process owner participation will improve the quality of the plan. Owners of peripheral processes will also make a valuable contribution since they are not directly involved in the process improvement effort (forest or trees effect).

Standardizing Processes

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When working to improve a process, it is not enough to implement a solution and stop. Without a plan to maintain the gains, at the first sign of trouble, systems will revert to what has been comfortable in the past. That usually means a return to some past operating procedure. To prevent this, there must be a linkage of the improvement to the management system. This involves monitoring important metrics, documenting methods and procedures, and providing a strategy for dealing with problems in the future.

 This is the purpose of the Control Phase of a Six Sigma Project. It involves a plan to maintain the gains from the new process, and building that plan into the management system. This will provide for on going accountability. Considering that process improvement projects will typically cross functional boundaries, the various process owners, and what they are accountable for, will be need to be specified, and included in the plan, in order to insure long-term success.

 The result is consistent customer satisfaction, a linkage between quality initiatives and strategic objectives, direction for future improvement activities, and a reliance on data by the process owners. These are the ingredients of successful improvement projects

 Discipline (Standardization)

 Discipline, in this case, applies to the adherence to standardization. Just as a disciplined athlete adheres to a standard practice routine to reach the highest level of their performance, a business must have the discipline to adhere to proven methods of doing work. This is standardization.

 Standardization is about making sure that important elements of a process are performed the same way every time, as prescribed by the standardized process. A lack of consistency will cause the process to generate defects and compromise safety. Standardization also provides predictability, which allows the process owners to prevent problems before they affect the customer.

 In a process improvement project, the improvement team can use the PDCA (Plan, Do, Check, Act) cycle to find the best way to do the work. The data collected in the PDCA cycle becomes the basis for changing a process, or for leaving it as is. Eventually, when no further improvement is mandated, a standard work practice is developed.

 When a process or practice is standardized, changes are made only when data shows a need to change. This prevents individuals from doing the work the way that seems best to them, thus compromising quality and negatively affecting the customer. The objective is to maintain consistent quality over time in spite of environmental changes.

 Documentation is an underlying principle in standardization. Making sure documentation is up to date and utilized encourages the ongoing use of standardized methods. In addition, documentation provides the information necessary to anticipate problems and to see where potential improvements can be made.

 If managed properly, standardized work establishes a relationship between people and their work processes. This relationship can enhance ownership and pride in the quality of work performed. From the customer’s perspective, standardized work keeps processes in control so that the highest quality products and services are provided. From the service or product provider’s perspective, standardized work improves safety, improves employee morale, controls production costs, and provides business longevity by returning satisfied customers.

 Standardization has three components: elimination of waste, workplace simplification (5-S philosophy), and work process analysis. All three of these components are necessary. If work is standardized without waste elimination, waste production becomes standardized. If work is standardized without workplace simplification, complexity becomes standardized. If a process is not being measured, it is not being managed.

 The place to do all of this documentation is in a work process analysis document. This tool documents how work is done. It is convenient to look at work process analysis as a detailed description of the process’ process map. It can also be a documentation of workflow through an area of space (e.g., a factory floor). The restraints of this article prevent me from including a Work Process Analysis template.  You can get this, though, by visiting my website at leanmeanprocessimprovement.com.

 The work process analysis tool also makes an excellent training tool. The process steps are detailed and the expected cycle time is given. This becomes a target for the process operators. The process diagram can also be the floor layout of the workflow. The exact content is dependent upon the needs of the process owners.