Peter Walsh, Founder and President of Lean Enterprise Australia, guides LMJ through the evolution of lean thinking down under, and explains how the perception of lean is changing there.
The first incarnation of lean – outside Toyota – in Australia was the just-in-time approach, pioneered in the mid-1980s by Ivan Deveson, supply director of General Motors Holden. The company introduced the concept to a few of his suppliers in Melbourne and Adelaide.
Soon after Toyota established its new assembly and engine facility at Altona, its supplier development activities started, with TPS being taught to a selected number of firms. In those early days, Taiichi Ohno visited Australia to speak at two seminars.
In the late 1980s, through an arrangement with Kawasaki Heavy Industries (which had learned from Toyota), practical knowledge of TPS was brought to some non-automotive manufacturing companies.
The emphasis during these experiments was on continuous improvement specialists making improvements. Most of these efforts were not sustained.
One of the exceptions, a first-tier automotive supplier, advanced in applying lean and a winner of the Toyota Supplier of the Year award, was recently closed down by its European parent due to corporate rationalisation of international supply! Luckily, managers from that company have applied their lean expertise in other businesses, including Vistaprint, one of the case studies in this special.
Lean received a shot in the arm with the publication of Womack and Jones’ Lean Thinking, which opened the eyes of many and confirmed to those who had been persevering that they were on the right track. In 2003, Lean Enterprise Australia was established, and Jim Womack conducted the first lean conference down under, with Toyota Australia as a sponsor (Jim will be a keynote speaker at the 9h annual LEA summit, in May this year).
Since that time a number of small specialist lean consulting companies have appeared, and many conferences and training workshops have been held.
Today, aspects of lean can be seen in many manufacturing companies, mining, some service organisations and a number of hospitals; and in local government too, as the case study on the City of Melbourne illustrates.
The movement of experienced leaders between organisations has helped spreading lean, for example from manufacturing to banks, from hospitals to local government.
Of particular note has been the spread of lean in healthcare. Arising from the pioneering work started in 2012 at Flinders Medical Centre, described in this special, and in association with LEA, the Australasian Lean Healthcare Network was established to promote lean thinking and practice within the hospital sector (its 9th annual summit, too, is in May this year).
With notable exceptions, the prevailing view of CEOs is that lean removes waste from processes, produces results, and is something to be delegated to others in the organisation. A view that there is more to lean than this, however, is just beginning to emerge, among a few; a view that by developing problem solvers in an organisation, improvement capacity will be enormously increased; that the emphasis on purpose, process, people and PDCA will lead to a real and lasting lean transformation, to the benefit of all stakeholders.
People in Australia are starting to understand the difference, in Orre Fiume’s words, between “doing” lean and “becoming” lean.
In just a couple of years, lean has brought marketing material supplier Vistaprint Australia great results. Gareth Brown, Plant Director, explains how a continuous improvement culture and a proprietary IT system help keep things on track in a plant that is growing by 30% every year.
Lean in Vistaprint Australia was introduced at the same time as Plant Launch, in mid 2010. Many of the changes we brought in as part of the implementation of the Vistaprint Production System came from what we had deployed at Autoliv, a Lean benchmark seatbelt and airbag manufacturer myself and used to work for. We used their systems as strong reference points, and improved on them at the same time.
Provided leaders know what they want, a newly opened plant is the ideal location for lean: with no established culture, you can get a lot done very quickly.
Deer Park opened in mid 2010 to respond to increasing demand from the Asia-Pacific region (Vistaprint insourced manufacturing in 2004, opening a facility in Holland), and has experience 30 to 40% growth year on year ever since. Having established a culture of continuous improvement allows us to keep this extraordinary growth under control by, on one side, developing people who are willing to embrace change and can therefore respond quickly to it and, on the other, by taking sub-optimal processes and iterating them two, three, sometimes even four times.
Cross-functional training and workforce flexibility are extremely important to us, which becomes particularly evident in November every year, when we experience our peak in demand. Because every job is a custom job, we don’t carry any finished good (the only stock we keep is raw material) and it is therefore critical that our people are trained to perform a number of different jobs, to fill a gap wherever and whenever needed, especially in very busy situations.
Hoshin Kanri is at the core of our business. Global objectives are turned into plant objectives, which in turn are cascaded down to departments, processes, individuals. We report on our improvements and targets, as a cross-functional team, every month. As a process, it requires discipline, and is very thorough, touching on every business area.
Management and indirect staff gemba presence is a key philosophy of ours. We have twice weekly management gemba walks and management joins all kaizen activities. Additionally, all indirect staff spend one day per quarter working as shop floor operators.
To make sure people have a clear idea of where we are against our KPIs at all times we have also introduced Vistawiki, a Wikipedia-like system with over 1,000 pages of information.
Our crown jewel, however, is a one-of-a-kind automated scheduling system. Tens of thousands of jobs come in every day and this IT system feeds them to the plant in the most cost-effective sequence (i.e. not first in, first out). For example, it will try to arrange for two items to arrive to the plant at the same time if they are for the same customer, in order to minimise processing cost.
Vistaprint at a glance
- Brought manufacturing in house in 2004, opening plants in Holland and Canada
- Australian plant opened in 2010 near Melbourne
- Issues: all orders are unique; customers often demand next-day delivery
- Some results: 25% YoY direct labour productivity improvement; 60% throughput time reduction (6 hours “Rip to Ship” – time between printing item and shipping it); On-Time-Shipment consistently above 99%; Nil lost time injuries; 45-60 Kaizen projects per year; 14 completed suggestions per employee per year; 20% customer complaint, 30% delivery complaint and 25% reprint reduction YoY
Coopers is a 150-yearold family-owned brewery in South Australia. Nick Sterenberg, Operations Manager, looks back at the company’s ten-year lean journey.
The biggest success in our lean journey is not having given up: it’s been almost ten years since we launched TPM3 and we are still going. We didn’t know anything when we first started with the lean implementation – we didn’t have a failed system to revolutionise.
What first gave us the input to start our journey of continuous improvement was moving to a new facility, in Regency Park (near Adelaide), after leaving our historic location. We had lots of opportunity to make improvement and engage the workforce at the same time.
At first, we concentrated our efforts on the packaging side of the business, which is essentially an assembly process. We studied Toyota’s manufacturing philosophy, and realised they could apply to beer too, apart from the fact that to build a car you bring in thousands of components while you only need a few ingredients to make beer. We had to change the way some of the lean tools were used to fit an FMCG model.
We don’t go lean on the final product, because we make beer based on a sales forecast rather than on customer orders. In essence, we are lean on the input (glass bottles are delivered to us every two hours) and fat on finished goods. The reason for this is that Toyota wouldn’t make a car if it wasn’t sure to sell it, whereas we know someone will be drinking a carton of beer next week.
Some of the improvements we have achieved over time include an increased Ale/Stouts OEE (from 68 to 77%), a higher number of cartons processed every hour (from 1,873 to 2,127 – a 13% increase) within 12 weeks, increased packer speed and 40% reduction in the amount of glue used for each carton.
Additionally, we have conducted experiments to further reduce loss of glass and can waste – although Cooper’s performance in this sense is already higher than its competitors’.
The process areas are suited to the application of six sigma. We collect large amounts of data through the SCADA system and can use Minitab to conduct a design of experiments on a number of process variables. We have made improvements over the past two years in such areas as yield and cycle time, which we would have not achieved any other way. Every 1% of yield is for us $100,000.
The brewing and fermentation processes presented us with other challenges: it proved more difficult for traditional lean tools to be applied to them. They are very seldom broken, but they are also very seldom optimised. To improve them we used a combination of six sigma experiments (I wanted my guys to take the hardest of six sigma qualifications, for which we travelled all the way to the States) and A3s and root cause analysis. We were eventually able to solve long-lasting, chronic problems in the brewery.
What we have found is that the harder we work, the better the quality of the problems gets.
Coopers at a glance
- Established in 1862 4% of the Australian market
- Location: Regency Park, Adelaide, South Australia
- Employees on site: 130
- Markets 7 million cartons of beer around Australia and internationally
- Implementing lean six sigma for 10 years
- Glass bottles delivered every two hours: lean on the input
- KPIs: OEE losses and yields and cost
As the first hospital to deploy lean down under, Flinders Medical Centre has learned many lessons over the years. David Ben-Tovim, Head of Clinical Epidemiology and Redesigning Care, takes LMJ through the nature of the hospital’s approach to lean.
Australia is a can-do place. Back in 2002, after coming across process mapping on the internet and realising it might be a away to understand what was going on in our incredibly congested ER, we brought 25 people from every level of staff in the department together and started to analyse our processes.
We looked at what happens from the time a patient walked in to the time they exited the ER. It was a revelation. Mapping each of our jobs over the course of three sessions helped us to realise that a big part of the problem was self-created. And then, after a visit to a number UK emergency rooms, we read Lean Thinking.
We reorganised the way patients move in the ER, identifying two value streams. A “magic” line was drawn in the middle of the room, with people who are going home on one side and those who are coming into the hospital on the other.
We had a week to prepare staff to the new system, which we launched at 9am on a Tuesday.
By 5pm the crisis was over; congestion eased, and we could start on the long road of really getting the place in order.
There was definitely something to lean, something we can use to devise a new governance structure linking a process redesign team with the CEO.
Relationships between practitioners and managers are complicated in healthcare. We needed to ensure collaboration, but to do it we had to distinguish between authorisation and permission. A leader can authorise you to adopt a change, but without people’s permission you won’t go very far. A hospital has to work 24/7 and an institution of this kind can’t simply depend upon a CEO – it needs to have disseminated leadership.
In order to start a programme we had to understand what we were doing, and we couldn’t have done that without an engaged and supportive senior management. But as we got more experienced, that kind of support became less important. A modern general hospital is among the most complicated human institutions, and applying lean to it requires a different perspective: in a factory the work is brought to the worker, whereas in a hospital the workers go to the work. It’s complicated to know what everybody has to do. So it’s the people on the ground who have to lead.
The necessity to clarify roles and who was doing what led to the introduction of a visual management tool (a white board ruled as a grid with names of patients and disciplines/tasks clearly marked) that has become the communication tool everybody uses. It shows what tasks are outstanding at any given time, and – if kept up to date religiously – it is spectacularly useful. These boards are spread all around Australia, even though not everyone knows where they came from.
Our story is one of a small and engaged group of people who have kept going even after the institution lost the CEO that had first been an advocate of lean.
Through lean we saw two main results: the number of people seeking litigation against Flinders halved in the second year of implementation and ER mortality fell dramatically. There has also been a 6% increase in productivity across the organisation.
Flinders Medical Centre at a glance
- Location: Adelaide, South Australia
- Part of SA Health
- Number of beds: 580
- Staff: 3,500
- First hospital to deploy lean in Australia
- Results: number of litigations reduced by 50% on the first year; productivity up 6%; mortality rate in ER dramatically lower.
Denise Bennett, Manager of Corporate Planning and Lea(r)ning at the City of Melbourne, explains why the Australian city is now well on its way to achieve its mantra “CoMLean – it’s the way we work around here.”
The City of Melbourne (CoM) delivers a diverse range of services to the community, from libraries and recreation to infrastructure development and regulatory and compliance, including parking and traffic.
In 2008, Dr Kathy Alexander commenced her tenure as CEO on the back of an organisational “efficiency review” undertaken by external consultants, which resulted in a significant restructure and more than 50 redundancies.
Morale in the organisation was low and demand for services continued to increase with a growing population, but there were less staff to do the work. The new CEO was determined to improve both morale and efficiency and believed lean was the way.
External support was enlisted to commence building capability and undertake three value stream projects.
Two of these projects were very successful. A series of improvements to processes connected with parking meters returned $800K within eight months. In addition, calls to the city about faulty parking meters were reduced by 30%, releasing one staff member for other work. The other project removed focused on the right people doing the right work and improved the flow of executive correspondence. This released time for the CEO and senior executives and delivered faster response time to customers.
By mid 2009, the number of projects was extended to 10 to test the method in other areas of the council. These additional projects proved that despite initial scepticism from many, lean could be applied anywhere across the council.
By consistently spending time understanding the processes and the work and not making changes until data and facts were analysed, the improvements were usually obvious and often as simple as implementing a standardised procedure or a visual tool.
Over the past three years, value stream work and visual management have spread like wildfire. Since the programme commenced over three million dollars has been realised from improvements and over 14,000 hours of staff time have been released.
This time is used to deliver more value added services for customers, who have experienced reduced waiting time, easier access to services and methods of payment.
By 2011, lean was accepted as CoM’s improvement method. Leadership is aware of its potential as a people system – the methodology has already changed the way the organisation works and provided a common language across functional silos.
City of Melbourne at a glance
- Local government
- Serves inner Melbourne, a municipality of 37.6 square kilometres and 100,000 inhabitants
- Staff: 1,300
- Some results: $3 million realised from improvements; 14,000 hours of staff time freed up; processing time for permits for construction zones from 200 to 28 days; applications for arts grants processed in 3 weeks, from previous 11