The European Regions for Innovative Productivity project was established to develop a lean change and implementation methodology that is suitable for small and medium size organisations, which often find it difficult to implement lean tools and sustain results. A team of researchers from Norway and the UK describes this “bitesize” approach to lean thinking by presenting two case studies.
A recent European Commission report identified that 99% of Europe’s non-financial companies are small and medium size enterprises (SMEs), which account for 67% of employment in the European Union.
However, SMEs have lower labour productivity and lower profitability than their large counterparts. The aim of the EU-funded European Regions for Innovative Productivity (ERIP) project was to develop and test a methodology to help SMEs improve their competitiveness through lean change and implementation.
The ERIP project includes collaborators from six countries from the North Sea region of Europe. Two of the regions (Norway and the UK) modified this methodology to make the use of staff time more manageable. Here are the authors of the piece: Daryl John Powell (Institute of Production and Quality Engineering, Norwegian University of Science and Technology, Trondheim, Norway); Chris Hicks, Tom McGovern, Adrian Small (Newcastle University Business School, United Kingdom).
The initiative, which was funded through the Interreg North Sea Region Programme, was undertaken in the period 2008-2011. Collaborators came from Belgium, Germany, Holland, Norway, Sweden and the UK. There was an Innovative Productivity Centre (IPC) created in each country, which comprised an exemplar company, a regional development agency and an academic partner. Each IPC provided knowledge, training support and networking opportunities within its region. The overall project provided a mechanism for transnational collaboration. The method was applied in 24 companies.
THE ‘BITESIZE’ LEAN CHANGE METHODOLOGY
In 1996, the UK Department of Trade and Industry supported the establishment of the Industry Forum by the Society of Motor Manufacturers and Traders. This was supported by the major automotive manufacturers. They seconded “Master Engineers” who were experts in lean production and who trained staff from large companies in best practice manufacturing tools and techniques.
Each Master Class provided a team with 15 days of shop floor-based, hands-on training in lean. The “common approach toolkit” included: the “building blocks” (5S, 7 wastes, standardised work and visual management); and supporting tools (data analysis, problem solving, set-up improvement and line balance). The objective was to enable companies to make significant improvements in quality, cost and delivery.
SMEs lack the resources required for such an improvement programme. The ERIP methodology was developed to provide similar training in a format that met their requirements (see Figure 1). It placed an emphasis on sharing knowledge of lean practices amongst the SMEs in each IPC region. This approach promoted networking between the companies that empowered internal change agents to train each other rather than having to rely on external change agents. This methodology was tested in 24 SMEs throughout the North Sea region.
However, in both the Norwegian and UK SMEs, the ERIP methodology proved difficult to apply. The key problem was freeing staff to participate in the training. As a consequence, the workshops within the ERIP lean change methodology were spread over a longer time period to produce a “BiteSize” approach. Both the ERIP LCM and the BiteSize methodology were based on the IF Master Class, which uses the PDCA cycle and comprises pre-diagnostic, diagnostic and improvement workshops.
However, the BiteSize workshops in the UK (see Figure 2) were delivered in half-day sessions rather than as a 15-day block as used by Master Classes and the LCM. The Norwegian IPC’s BiteSize approach comprised a half-day pre-diagnostic workshop, a two-day diagnostic workshop and three one-day improvement workshops. This variation was necessary to meet the requirements of the SMEs in both countries.
Pre-diagnostic workshop (UK 1 day, Norway ½ day)
The pre-diagnostic phase included an initial meeting with company management. A standard presentation outlined the lean philosophy and the potential benefits of continuous improvement. The owner/general manager was required to demonstrate commitment to the project by signing a contract and by identifying a change agent(s) to lead the improvement activity.
Diagnostic workshop (UK 3 x ½ days, Norway 2 x ½ days)
The next step was to determine the area for improvement and to identify appropriate KPIs to measure success. These were selected from the seven UK DTI measures (floor space utilisation, value added per part, stock turns, OEE, not-right-first-time, schedule achievement and operator productivity). However, in many of the 24 ERIP SMEs, these fundamental KPIs were not being collected or used. Therefore, in some case these were replaced with other measures that were being routinely collected. The overall objective of the diagnostic workshop was to devise a plan for the subsequent improvement activities.
Improvement workshop (UK 4 x ½ days, Norway 4 x ½ days)
Lean tools, such as 5S, waste reduction, process mapping and layout reorganisation, were applied within a PDCA cycle. These activities focused on the implementation of lean practices that acted as countermeasures to the problems identified during the diagnosis. For example, standard work was applied to reduce and eliminate variation in processes, or the single-minute exchange of dies (SMED) system was applied to reduce set-up and changeover times to improve flow.
CASE STUDY ONE: HAGEN TREINDUSTRI, NORWAY
Hagen is a producer of residential staircases and produces a broad spectrum of customised solutions. It was established in 1934. It has approximately 100 employees and an annual turnover of £11 million (2010). The organisation serves the domestic Norwegian market, but also exports to Sweden. Its strategy is to combine high technology with craftsmanship. It has recently introduced robotics, CNC and automatic guided vehicles within its factory. This lean intervention was led by the technology and process development manager at Hagen and researchers from the Norwegian University of Science and Technology and SINTEF.
Pre-Diagnostic Meeting (½ day)
An initial half-day meeting was held in order to identify current challenges and problem areas on the shop floor. Having gained the interest and commitment of the management, a formal agreement was made between the company and the research team. Primary issues for improvement were identified, which were mainly related to quality.
Diagnostic Phase (2 x ½ days)
A two-day diagnostic workshop was carried out to introduce the team to lean and the PDCA cycle. This was subsequently used to identify the root causes of the most prevalent problems. Team members included the production manager, logistics manager and process engineer. Initial measurements of not-right-first-time were 31%. By using the PDCA cycle, it was quickly identified that the quality problems were due to the unavailability and poor conditions of tooling.
Improvement Workshop (4 x ½ days)
The organisation implemented 5S and visual management to eliminate several of the root causes of the quality problems. A pilot area was selected for an implementation, which was followed by a full-scale deployment throughout the factory. Hagen also developed a simple visual control board that was used daily to highlight and solve problems. Since the introduction of lean, NRFT improved by 10%, to 21%, while OEE increased by 25%.
CASE STUDY TWO: SHOECO, UK
ShoeCo, established in 1947, is a family owned and controlled firm that produces orthotic equipment for the healthcare sector. The organisation delivers services and equipment to the NHS and the private sector on a national scale. It employed 167 direct and 60 indirect employees and had a turnover of £12.5m in 2010. The lean implementation here was led by an external change agent from the Manufacturing Advisory Service (MAS) and researchers from NUBS.
Pre-Diagnostic Meeting (1 day)
The MAS engineer met the management team to outline the ERIP project and its potential benefits. He toured the factory and had discussions with shop floor employees about their work and the problems and the constraints that they faced. This was followed by a productivity needs analysis (PNA), which identified key performance measures, a manufacturing needs analysis (MNA) to evaluate plant processes and identify appropriate lean tools and metrics, and a training needs analysis (TNA) to identify staff development requirements.
The MAS engineer analysed the outcomes after the pre-diagnostic meeting and shortlisted a number of areas where improvements could be made: inventory management, purchasing of inventory and how the shop floor was organised and run. These issues became the focus of the diagnostic.
Diagnostic Phase (3 x ½ days)
Team members included the production manager (full time), the team leader, the assistant team leader, and a technician. They were taught about lean, particularly the seven wastes. The diagnostic identified that the floor space needed to be utilised more efficiently and that procedures were required to control inventory and its release onto the shop floor. These issues became the focus of the workshop.
Improvement Workshop (4 X ½ days)
The flow of materials was mapped to identify problem areas that would be the focus of the improvement activities that removed excess inventory from the shop floor and streamlined flow. Stores personnel and shop floor employees investigated inventory control and found that releasing inventory as kits per job helped reduce material wastage by 30%. A one day check was then carried out to support the team once the workshop had been completed. A final one-day meeting was held to review the work and to identify the outcomes for the company.
DISCUSSION AND CONCLUSION
The ERIP project developed a methodology based upon the format of the Industry Forum Master Class that satisfied the requirements of SMEs. The ERIP Lean Change Methodology was based upon a networking model in which change agents within each Innovative Productivity Centre trained each other with the support of an external change agent.
However, this methodology proved to be problematic in that the diagnostic workshop was intended to last for three consecutive days and improvement workshops for five consecutive days. The lack of available human resources and time meant that working to the ERIP methodology would have hindered work within these small organisations.
Thus, a BiteSize approach that spread activities over a longer period was developed, which continued to be based on the core three phases (pre-diagnostic, diagnostic and improvement workshops). The ERIP LCM focused on training the change agents so that they would facilitate continuous improvement.
The approach concentrated on achieving improved performance. It proved to be much more effective in deploying lean change in small companies, but the companies did require external support from an IPC or an external change agent to achieve sustainable continuous improvement.