MADE IN LEAN ITALY
Arnaldo Camuffo, professor of management at Milan’s Bocconi University and scientific director of the Lean Enterprise Center of Italy, CUOA Foundation, introduces this country special talking about the status of lean in Italy.
The principles of lean thinking aren’t new to Italian firms. Companies like Snia Viscosa experimented with quality circles in the mid-1970s, and Fiat started implementing its own version of the Toyota Production System in the early 1990s.
That was the first “lean wave” in Italy, which mostly involved larger groups or the Italian subsidiaries of multinational corporations (like Electrolux-Zanussi, Pirelli, SKF, Alenia and others). Its effects were sizable, especially for the diffusion of lean practices among suppliers, but did not really permeate the structure of the Italian industrial sector, which is dominated by small and micro firms often embedded in local clusters.
In the second half of the last decade, however, the Italian lean movement has regained strength, focusing on SMEs and services. The competitive pressure caused by globalisation and the changes in the structure of mature industrial sectors (such as textiles, apparel and furniture) brought Italian SMEs to understand the need to change their operations and management systems. The adoption of lean has become a powerful competitive weapon that has driven dramatic changes in the way these firms are managed. This is the second wave of the lean movement and it promises to be more structural and longer lasting than the first one.
Last year, we conducted an extensive research, Made in leanitaly: how Italian firms are undertaking lean transformations to survive and thrive, to assess the status of lean in Italy.
We observed that large Italian groups, as well as the Italian subsidiaries of multinationals in Italy, have revamped their lean efforts. Moreover, Italian medium sized enterprises, the most solid component of the Italian industrial sector, have taken lean seriously, promoting change and achieving significant results in their industries and market niches. Furthermore, a selected number of small firms, led by visionary entrepreneurs and solidly converted to the lean gospel, have also become benchmarks in their local business communities.
The research shows a lively lean movement, with many initiatives in place (including conferences and training centres), numerous experimentations going on, but few serious, committed and sustained efforts towards lean transformations.
Apart from the lack of knowledge and culture (no Toyota plant in Italy) and the scars left by some wrong lean applications in the past, the major factors hindering further positive developments are: a) the small size of firms, which often makes investment in lean prohibitive; b) the role of the unions, which often impede lean experimentations; c) the industrial clusters in which Italian firms are embedded, which require, in order to get sustainable improvements, the involvement of several companies across supply chains thus making lean transformations more complex.
Within this scenario, the emergence of Lean Clubs, local groups of firms engaged in collaborative learning about lean practices, is probably the most innovative and interesting phenomenon.
The future challenge for the Italian lean movement is to keep the experimentations going, to help firms interested in lean transformations to find the financial support needed to embrace or continue their efforts, to promote lean education and to start implementing lean systematically in services and, more urgently, in healthcare and the public sector.
Maria Teresa Mechi is a senior executive in the health department of Tuscany’s regional government. Here she explains the lean journey Florence’s local health trust is taking, and the plan the region has to promote the expansion of this model.
In 2007, we set off on our lean journey at the ASL (Azienda Sanitaria Locale, a local health trust) in Florence, starting by reviewing our processes. In 2010, the regional government saw the results we achieved in Florence and asked me to join the board to try to apply to other local health trusts those same principles.
In Florence, with the help of the Lean Enterprise Academy, we undertook a six-month educational programme. In 2011 we were ready to expand and involved three more ASLs (in Prato, Lucca and Pisa), all under the same project, Net-VisualDEA. The aim was to remove obstacles to flow and ensure alignment in all processes, from radiology to transportation within the end-to-end cycle of the patient.
The difficulty to access funding in Italy convinced us of the necessity to save by reducing waste rather than simply asking for more money: we are at a very early stage, but we have already started managing replenishment using kanbans and reorganising nurse stations using 5S. We are supported by a very engaged regional councillor, Daniela Scaramuccia.
The regional government has now launched a Tuscany-wide programme to optimise patients flow in hospitals by adopting lean thinking. It will award incentives to trusts that decide to embrace Net-VisualDEA, and it will support them as they take their first steps in training their medical directors and operations professionals.
In Florence, we have concentrated on redesigning processes, identifying the value stream in both emergency and elective surgeries. We have achieved a 20% increase in capacity keeping in mind the different types of operations. By analysing the work of nurses and identifying waste we halved the length of transfers, doubling the time in which a patient receives direct care.
To improve the flow of patients from the ER to the wards, we looked at the schedules of both and noticed that most discharges took place between 2 and 4pm, just because this was the most convenient time for people in the wards. We realised, however, that this created huge bottlenecks in the ER. After intercepting the issues, we applied PDCA to free up beds. We tried to plan our work rather than acting on a day-by-day approach. By looking at what we plan and what we actually achieve we can correct the gap. We have seen a 10 to 20% reduction in the percentage of patients waiting in the ER.
Of course you need to have strong support from government. With roles coming and going, the risk is to have new councillors who are not as engaged. These projects require long-term support. The staff are also definitely on board. After overcoming some initial resistance, we have seen everybody very appreciative of the value of this new way of managing work. Doctors are usually more difficult to convince than nurses, but we eventually have buy-in from them as well, when they realise that, if anything, this is a way to solve problems that are vecchi come il tempo (as old as time).
Fiat and its subsidiary brands, including Alfa Romeo, have certainly not enjoyed the strongest reputation in the European car market. Some perceive the company as a dinosaur of a car maker that is no longer competitive. But Fiat’s profits and global presence are growing, and lean is playing a role in its renaissance, says LMJ’s editor Roberto Priolo.
Perhaps the most iconic of Italian companies, Turin-based car manufacturer Fiat has operations in 61 countries and 223,000 employees. It owns brands like Alfa Romeo, Lancia and Maserati, and a 90% stake in supercar powerhouse Ferrari.
Under the leadership of Sergio Marchionne, the company has pursued new markets, become majority shareholder of Chrysler and dramatically changed its structure and culture, which is leading to growing profits.
Marchionne is often viewed as an “Americanised” boss that doesn’t care much about the group’s Italian operations. His promise to invest in the Pomigliano plant in exchange for worse working conditions like longer hours and shorter breaks was commonly regarded as blackmail. In December 2011, a new contract with the unions (except Fiom-CGIL, Italy’s largest) extended the “Pomigliano model” to all Fiat sites in the country (86,000 employees in total): it changes work structure, allowing for more overtime, shorter breaks and a different rhythm on the production lines, but also prevents unions that haven’t signed the contract from being represented in the company. The decision to close the Termini Imerese plant, which made over 1,000 people redundant, didn’t help Marchionne’s image either. Although in a recent face-saving development at the site, Fiat has agreed to sell the plant to fellow auto manufacturer, Dr Motor, who will invest €110m and employ 1,312 staff, many of whom will be former Fiat workers.
Despite the conflicting relationship with the unions and several difficult decisions, Fiat is doing well, thanks to its acquisition of Chrysler, its agriculture and construction equipment unit Case New Holland, truck manufacturer Iveco and Fiat Powertrain Technologies – the 2011 Engine of the Year was awarded to Fiat for the 875cc Fiat TwinAir powertrain.
And these successes have been supported by the company’s continuous improvement programme. Launched two years ago in three plants (Melfi, in Italy; Tychy, in Poland; and Bursa, in Turkey), the Fiat Advanced Production System is based on Total Industrial Engineering, Total Quality Control, Total Productive Maintenance and Just in Time, and it’s already reporting progress according to World Class Manufacturing criteria.
Like Toyota, Fiat employees are trained to do several jobs rather than sticking to one task. All aspects of work are measured through cost deployment, in order to identify root causes, tackle inefficiencies and reduce waste. Chrysler has adopted the system as well, which is further proof of the consistency with which Fiat implements its CI programme. In 2010, a year after the introduction of the FAPS, Chrysler recorded a 10% increase in productivity, an 8% reduction in costs and a 30% reduction in injuries.
Giacomo Pica, lean manufacturing director for Kimberly-Clark’s Family Care operations in Europe, talks about the transformation at the Alanno plant, which is now a model for the company’s other sites. Passion, a focus on the reasons behind the need for change and discipline are a recipe for success, he says.
Kimberly-Clark is a primary health and hygiene company that has a long history in people care. The consumer division manufactures and sells well-known branded products amongst which Kleenex, Andrex and Huggies.
The North-Atlantic organisation, which Europe belongs to, decided to perform a lean transformation four years ago with the aim to improve the way we do business. I started my lean journey in early 2008, when I was manager of the Alanno plant, in Italy. The facility was selected as one of five North-Atlantic pilot plants.
The journey started with an executive training of the senior managers involved with the first wave of lean: four one-week sessions with the right balance of classroom and on-the-floor activities. The implementation in the plant started immediately after using the same approach. Since the beginning people in each department and function were involved, including unions’ representatives.
The first outcome was the identification of a True North for the plant and four A3’s aimed to improve asset efficiency, energy cost, lead time and people engagement. This last item was the enabler of the other improvements, in our intentions.
The lean journey had a successful start-up, but after a few months the progress slowed down, especially with regards to people engagement. We decided to run a problem solving initiative to address the issue. The root cause was determined: lack of confidence, skills and mind-set of the leadership team to engage people on the floor. The countermeasure we adopted was a very rigid development plan for all leaders. First of all, I personally assessed their capability. I later set a minimum capability level objective for each of them. Then I included a weekly 1:1 development meeting for all leaders in my own standard work. These meetings were mandatory.
I used a simple notebook to track progress and record agreed next steps. Every month I did a capability assessment of each leader by means of a simple spread-sheet that was posted in the office hall, so it was a public document. This approach worked very well: leaders quickly improved their capability and, more importantly, changed their approach to problems. They abandoned the mindset of a super-expert that knows the solution to embrace the concept that a good leader is first of all a good teacher. As leaders started to ask proper questions to the floor people, these started to feel valued and become key contributors to the plant’s success. They now come to work not only with their mind, but also with their heart.
If you come and visit Alanno these days you will find a different mill compared to 2008. Production flow is smooth, assets are like brand new, all materials are managed with kanban system, inventories are low, lead-time is shorter. Alanno is now a lean model within Kimberly-Clark. We achieved important financial results, but these are the consequences of how our people are engaged. Our leaders are better people, and this is what I am more proud of.
Modulblok is a logistics specialist based near Udine, in Northeast Italy. It provides solutions, like the magazzini automatici (automated warehouses), to companies ranging from shoe manufacturer and retailer Geox to refrigerator maker Incold Italy. Here operating director of logistics Fulvio Fregonese and plant manager Mario di Nucci share an intimate portrait of the company’s lean journey.
In 2008, lean entered the agenda of Modulblok’s operations management, and it soon became part of our every day vocabulary. We didn’t start because we had to, but because we realised the status quo wasn’t acceptable anymore. We questioned our structure and identified opportunities we hadn’t seen before. Three years down the line, we are already reaping benefits.
We immediately realised that anything can be questioned in the name of change, but too often personal views prevailed over holistic ones. Communicating to our workforce the importance of acting with improvement in our minds is something that sits at the core of our mission as an enterprise. The main difficulty we have is creating a selfsupporting business where everybody at every level understands that their actions must be part of a system where improvement is the norm, where data becomes information and where there is nothing more than what is needed.
Lean has helped Modulblok accelerate and simplify the movement of goods and documents, but also to define what the next steps should be.
On our journey, we have been supported by a consultancy: on the first year, we worked with TPM, SMED and 5S. In the second year, we concentrated on flow and activities integrating lean with ergonomics. Finally, in 2011, we concentrated on order management.
We haven’t taught our men many Japanese words, but we have encouraged them to use words in their own language with courage, trying to promote concepts like “We can do this” and “I’m on it”. It hasn’t been easy and took a lot of time and effort. We have tried to be hard on issues and soft on employees and as a result have instilled a great deal of trust in our staff which has resulted in a marked increase in employee engagement and loyalty.
We haven’t brought a Japanese revolution within Modulblok, but instead we have focussed first on the team and secondly on the techniques.
PROFESSIONAL DANIEL JONES OF THE LEAN ENTERPRISE ACADEMY COMMENTS ON THIS SPECIAL ON LEAN IN ITALY
It is 25 years since we presented the first lean benchmarking results to the board of Fiat Auto. They and other large Italian companies have had many different lean programmes since then as the competitive challenges got harder. The spread of lean in Italy has been region by region as pioneering organisations have embraced this methodology as a survival strategy and shared their learning with neighbouring organisations.
The lean hospitals cluster that began with the oldest hospital in Europe, in Florence, is a remarkable but typical example. This was triggered by Luigi Marroni, a former Fiat executive who became the hospital CEO. He was determined to use lean to significantly improve the performance of the hospitals while renovating their ancient buildings into an ultra-modern hospital. Maria Teresa Mechi has gone on to spread lean to other hospitals in Tuscany.
This regional focus is not a surprise to anyone who knows the importance of regional and extended family networks in Italy. Rebuilding new lean organisations out of old family-owned small and medium sized businesses is the next challenge as so called “low cost” sourcing come back from China to Europe. As always the spread of lean depends on both having the vision of what is possible and the courage to do it in practice.