21st Century: Continuous Improvement (and the Philosophy of “Lean”)

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Chapter 1 Excerpted from Geoffrey L. Mika’s New Book

Most business executives have heard all the buzzwords describing new methodologies that refer to the latest “Flavor-of-the-month” improvement scheme. Many of these same companies relegate the use of these “New Techniques,” or “Schemes” to a small portion of the business, to be tried-out, investigated and to see, when thrown against the wall, what sticks?

The whole concept of “Lean” is not a flavor-of-the-month, nor is it something that can be relegated to only a portion of a business. “Lean” is a new philosophy, one based on worker participation and involvement in the decision-making process. “Lean” is “By the People, For the People, and With the People.” The workers own the process and are accountable for their results.

“Lean,” a term coined by James P. Womack, author of, “The Machine that Changed the World,” “Lean Thinking” and “Lean Solutions,” explains that “Lean” means doing less and getting more. It is the methodology Toyota has perfected which is known as the Toyota Production System, which has set the world standard for being the most efficient company possibly in the world! When referring to “Lean,” people automatically link “Lean” with the elements of the Toyota Production System.

Unfortunately, most executives forget that “Lean” is 85% philosophic and 15% physical change. Too many ‘experts’ are teaching the unknowing only the physical aspects of “Lean,” telling us that Kaizen events are the main tool, that by employing 5S, Kanban and developing a Pull System, reduce WIP, employ TPM, SMED, and Jidoka, we can emulate the Japanese successes. What we haven’t heard though is that there must be a paradigm shift in the way we run a business. This change, which represents the 85% of the “Lean” transformation, consists of involving the workers in decision-making with Participative Management, Kaizen Suggestion programs, by teaching the value of time, how to eliminate waste, develop the sense of urgency, the importance of dedication and the total commitment needed. For many getting “Lean” is a destination; in reality, it is a continuous journey to perfection.

The preliminary understanding of “Lean” focuses on the elements of the Toyota Production System from the psychological view first. The experts from Toyota remind us that only after a worker understands what the Toyota Production System is, as a methodology based on the elimination of non-value added activities and the total commitment to do away with all waste, then only can he make the logical-physical moves to shape a workplace into a “Lean” mechanism that does more with less and continues to evolve into a leaner state the longer it survives. It is like a muscle; the more you use it, the stronger it gets. If you don’t use it, it atrophies.

Today there is a universal understanding that the Toyota Production System is the best example of Lean Manufacturing. They compiled and refined a system to eliminate waste in all areas of a business. Although it was designed for a manufacturing operation over the last 50 years, it has been proven to work just as well in non-traditional businesses. Anywhere there is a waste; the Toyota Production System will work. The goal of TPS is to eliminate waste and reduce the amount of time all activities take.

In order for a new methodology to succeed there has to be a new set of operating rules and controls. The way we measure progress has to change to reflect new metrics, which guide the journey towards perfection.

There are Many Ways to Fail:

Reason #1:   Lack of top-down management support with no strategic plan

Reason #2:   Lack of middle management/supervisor buy-in

Reason #3:   Lack of communication, everywhere

Reason #4:   Not understanding that this is about all the people and 85% of lean is a

Culture change, 15% is application of the physical tools

Reason #5:   Lack of customer focus, internal and cash buying

Reason #6:   Lack of process improvement measures and tracking

Reason #7:   Lack of dedicated and properly trained lean leadership

Reason #8:   People measures not aligned with lean goals and metrics

Reason #9:   Using kaizen events as the sole improvement measurement & misusing Six-

sigma or Lean-sigma

Reason #10: Performance-pay systems where the measure is company profitability

“Lean” is 85% philosophic and 15% physical change

The cultural aspect of implementing “Lean” must be learned first; that workers whom co-author change will champion change because it is what they believe in, not what was mandated to them.

The mid-management must realize that their job’s requirements have changed; They are mentors, trainers, teachers, counselors, that don’t tell people what to do but instead offer the tools necessary for the workers to figure out what is the correct answer, based on the tools and training they receive.

The idea is to be able to solve problems at the lowest level, closest to where they originate, by the people most familiar with the everyday operation. Waste no time asking your supervisor what to do. Instead, we train the workers to be able to make the same decision as the supervisor, give them training that qualifies them to do what the supervisor used to have to do to make the decision.

Once the cultural aspects of Participative Management and Teaming are understood and adopted, then  the physical aspects of “Lean” can be taught. Before the “Lean” initiatives can be started, there has to be a complete acceptance by upper management to fully support this endeavor. They must support it like the pig that gives us bacon for breakfast, not like the chicken that gives us the eggs. 

In order to be competitive in the 21st century, businesses must change. Three key personal qualities must be emphasized:

  1. People must be committed. All must believe the new philosophies of TPS in 100%. No exceptions, and no reluctant participants.
  1. The value of Time must be understood and appreciated. Time is our most valuable element of the business. The sense of urgency must be appreciated, and the importance stressed.
  1. Each person must practice Internal Discipline. This is a person’s character. This is what drives a person to complete a task, to stay on course, to not give up.

– External discipline is the laws and rules, which exert public pressure to conform.   – When you don’t have internal discipline, then there must be external discipline. 

Gain Management Commitment 

In order to gain upper management’s commitment, they must first know what “Lean” is. By learning what the Toyota Production System is, they can then understand how the psychological aspects of “Lean” are important to the success. For years, manufacturers have created products in anticipation of having a market for them. Operations have been driven by sales forecasts and maximizing production efficiency at each level of the operation. Companies buffered inventories just in case there might be an upward fluctuation in demand.

Contrastingly, lean manufacturing is based on the premise that production can and should be driven by actual customer demand. Instead of pushing product through the factory, waiting to be sold, it is ‘pulled’ through a system designed to be immediately responsive to the customer’s needs.

Lean organizations are able to produce quality products more economically, in lower volumes, quicker than the competition. Lean management is about running a business the most efficient and economical way possible, thus maximizing ROI.

World Class lean businesses know that “Lean” is a corporate vision, an important element of the company’s strategic plan that affects everyone in the company. Although “Lean” starts with the production shop floor and is understood to be a production tool, it works equally well anywhere in the organization to eliminate waste and streamline all processes, from the front office to suppliers, to all the support activities within a business. There is waste everywhere! The “Lean” philosophy requires a major paradigm shift in the way people think about business processes.

The “Lean” philosophy is all about eliminating waste, in any of its ten forms, from anywhere it may hide. Any action that does not add value in the eyes of the customer is waste.  Looking back on the top ten ways for a Lean implementation to fail, the number one way to fail is to not have 100% total commitment to the “Lean” transformation by top management; and totally embrace the psychological culture of a “lean” organization. 

Develop a Lean Strategic Plan 

In the development of a “Lean” strategic plan, the benefits of Lean must be understood, and the method for attaining the goals and objectives of the company is understood.

What are we as a company trying to achieve in the future, say 15 or 20 years from now? In order to achieve those strategic plans, where do we have to be in ten years, in five and where will we have to be next year?

If we want to achieve the goals and objectives of the strategic plan, what is the operating plan? This operations plan will consist of developing the cultural side of “Lean” by corporate management developing a strategic plan where the policies for the entire operation are developed.

The policy development then is handed over to the operational management people where a Culturestructure © is created which are based on the cultural, psychological aspects of “Lean.” This becomes the policy deployment methodology.

The policy deployment methodology is handed over to the workplace for execution where the policies of the strategic plan, molded into a working Culturestructure © are then implemented in the workplace. Thus the strategic plan is: By the People, For the People, and With the People.

The strategic plan facilitates how to attain goals and objectives relating to:

  • Company priorities
  • Profit: Now and future
  • Customers: Now and future
  • Potentials: growth & acquisition, new markets etc.
  • Quality and cost of quality
  • Costs:( labor, material, burden, taxes, etc.)
  • Delivery

 – Effectiveness

 – Cost

 – Voice of the customer

  • Assumptions

– What will it be like in the near and distant future?

– Economy, financial

– Country at war or at peace

– Taxes and regulations

– Raw materials cost and availability

– Manpower availability and cost,

– Transportation & logistics

– Capacities of our factories and workforce

– Markets

– Machines and equipment, condition and capacity

– Technology and expertise available and what is a need

  • Budgets and cash flow
  • Community, public relations
  • Current Conditions
  • Company fringe benefit and legacy costs
  • Lean Deployment follows a structured top-down approach
  • Overseas relocation options with costs vs. benefits

Corporate establishes the long-range plans for growth and improved profit. Within the Strategic Plan, certain facts and conditions must be analyzed, (see figure 1-1).

The strategic plan develops the policies by which the company will be run. These policies are passed down to the Operational Management team of the company and are responsible for the Policy Deployment and create the Culturestructure©. The Culturestructure© is developed in detail and handed off to the shop floor for Policy Implementation where the workforce executes the details and builds the Lean structure.

There must be a constant analysis of where to locate the manufacturing and service operations? Will it be competitive to seek a low wage low tax off-shore location? Or can enough improvements be made to existing facilities to justify staying put?

Some companies that moved operations off-shore have found that the initial low labor rate was offset by higher quality and shipping costs plus the time needed to deliver to the customer is sometimes adversely affected. Countries that had attractive low labor rates now have escalating labor costs that reduce the labor savings reasons for originally moving there. China is a good example.

Many times the quality of products made in overseas facilities suffers because the management within these factories pushes quantity over quality. The low labor cost promotes volume and supervisors are evaluated on the amounts they produce, hoping that the quality is acceptable and that the process engineers have done their job in setting up processes to give a good product.

Not enough time and effort are spent refining processes and adopting a culture of quality where a process can be stopped and corrected and by embracing a Continuous Improvement culture.

Once the production numbers are satisfactory, then companies go back to addressing the ‘quality’ issues; unfortunately many times too late!

The policy should be to make one perfect part first then learn how to make many perfect parts; parts that are no good are worthless and prevent growth. A perfect process is the first goal, not volume.

 

(Figure 1-1)

Culture is our way of life. It comprises the traditions and paradigms we learn from our parents, our friends, school and church and those in our personal family society. These are the principles and beliefs that we live by.

The culture of an organization is an accumulation of individual customs and beliefs that influence the course of the business. These cultures support and define strategic business plans, so the employees or members all work to the same goals and objectives. These are additionally guided by laws, rules and other ethical business customs.

A business or organization is therefore only as good as its members; it is thus; By the People, For the People and With the People that determine success or failure. They carry-out the company culture and improve it as times change. Making sure it keeps an organization true to its long-range goals and objectives.

It is like the Constitution of the United States of America, except it is for the purpose of growing and staying profitable by focusing on the strategic plan not the immediate profitability issues at hand. Stay the Course!

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