Jerry S. Sikula
We have all read numerous articles about lean, lean six sigma, operational excellence, TPS, TPM… the list goes on and on. The reason, is that we all are trying to figure out how to be the best of the best in our industry. For some of us this is very true, and for others it may be a sign of the times or even a “flavour of the month” from the new guy in charge…. “Everyone is doing it and so should we.” I am hoping that if you are reading this that you fall into another category, “Continuous Improvement, Continuous Learning”. Lean management, today takes an approach that the tools come from structure and foundation, however, the landscape is constantly changing. We must evolve as managers and leaders to not only continue to improve our department/site/company, but that we must continue our learning and training to share best practices within our lean community.
The lean start up….
What does that look like? And why do we do it? Lastly, how do we do it and find gains and ways to sustain the improvements?
Our objective here is to:
- Identify key aspects/tools of a successful world class LEAN initiative
- Understand elements of defining a value stream and business case for LEAN
- The opportunity to evaluate your progress on the LEAN journey to world class performance
We should be focused on the bottom line, and as we move towards world class or best in class performance, we earn greater profits while spending less. As we reduce and eliminate waste….we affect the bottom line.
I want to start off by saying that what I am about to outline in this article is from an operational/manufacturing perspective for a lean initiative. We all know that the tools of lean that have been used extensively in manufacturing across the world are now also finding its way into the service sector and health care industry not to mention countless others. I will also focus on more of a general approach to lean and not dive into the statistics of six sigma. My hope is that this quick review and highlight of success will help kick off your start to lean thinking. The lean journey typically begins due to the need to cut or reduce costs or to increase revenue. If we diligently go after removing and eliminating waste in our value stream we should hope to reduce cost. Increasing revenue can take on many variables…but in some cases if we can increase our efficiency and thereby increase our capacity to produce more of our product/service (at the reduced cost); we can effectively increase some of the revenue stream and add to the bottom line profits of the company.
As lean champions our path for making our business case or the start of the lean journey looks initially like this:
1.) Current Situation: Describe the situation in terms of high-level processes, performance gaps, business drivers, & the sense of urgency.
2.) Trends/Best Practices: Describe trends & best practices such as performance benchmark data for competitors.
3.) Statement of Need: Describe the gap between current state & future state. Address the risks associated with not closing the gap.
4.) Scope: Describe the project boundaries with included and excluded components.
5.) Benefits/Objectives: Describe the benefits with a direct link to business strategies, objectives, & measurements.
6.) Cost/Resources: Describe the time-phased costs of the project & is best broken into specific phases with milestones, deliverables, & specific resources.
7.) Justification: Provide the benefit & cost analysis consistent with standard company practice such as return on investment (ROI) and/or payback period.
8.) Success Factors: Describe the specific commitments required for success & additional assumptions.
We need to start with the business case so that we can ensure buy-in from all levels, especially from the top management. As we go through this exercise around preparing the case, we have the opportunity to focus on our key issues and following this structure will ensure that nothing is left out. Many times I have seen projects, goals, and improvements fail or fall short due to very poor planning or lack of structure. There is a discipline and diligence around all aspects of lean from the planning stage, to use of the tools themselves, to the sustainability and lean success.
FOCUS ON VALUE ADDED
Value Added: Activities necessary for meeting customer requirements.
Waste: Activities that consume resources but do not add value.
Waste reduction is central to all the tools of Lean. Learning to identify waste forces you to question and improve the process along the way.
Today we will summarise the 5 fundamentals that take any organisation to World Class operations… The 5 principles of lean:
- Specify value in the eyes of the customer
- Identify the value stream: eliminate waste and variation
- Make value flow at the pull of the customer
- Involve, align and empower employees
- Seek perfection….continuous improvement cycle
These are specific in activity and sequence. These can and should be done with suppliers and customers – not in a vacuum.
Let’s start with the value proposition:
- Value must be defined in terms of specific products at specific prices at specific times
- The customer must perceive/recognise the value and be willing to pay for it
- For it to be truly value added – it must done correctly the first time
- The cost of producing the product waste free should reflect help to define the target cost
If the value stream is properly mapped out then we can ensure that we have identified all wasteful activity.
Waste likes to hide in plain sight and disguise itself as work and value.
We map the current state (finding all the waste) and then move into mapping the future state (lean state). We use the tools within lean but we must challenge the team at this point to move towards lean thinking….moving away from the assumption that we intimately know our process to questioning everything along the way. All value streams have internal (departments or plants) and external components (vendors, suppliers and even customers) that must be correctly identified.
It is imperative to remember that, in a lean organisation, the value and value stream are determined solely by the customer. If we can truly be lean and eliminate waste, we have the ability to allow the customer to pull the value and allow it flow in a timely fashion (Just-in-time) as much as possible. The best or optimal flow/pull system will reflect: shortest cycle time, no defects, no waste, and little to no inventory or work in progress.
The one crucial factor that I cannot emphasise enough in a lean start up is the engagement and empowering of all employees. Once there is a plan and a vision from top management and the alignment that comes from the idea that there will be a shift in culture, then we must work on the entire team. Make no mistake about it, the shift that has to happen in the organisation will require buy-in from all levels. My experience has been that as we include employees in decision making and problem solving activities, we enable a motivated and committed work force around continuous improvement and lean activities. Another bonus that I have found is the morale of all levels of employees increase as job satisfaction increases. Initially the start of the lean journey may be a rough one wrought with significant change, but as we emerge and come out the other side, the lean enterprise is much easier to manage at all levels. We are shifting from “the way we have always done things” to a lean thinking culture that strives to question everything. The zenith of empowerment allows for all employees to be part of the process and also requires that they have a voice in bringing solutions to the table. The essence of any lean enterprise is that all employees at all levels work together to identify and solve problems, engagement through total employee involvement.
Where do you begin? How do you determine what is needed and which tools are too complicated at the start?
I would like to focus on a few simple ones and by simple; I mean that they can be implemented relatively quickly without a lot of investment or extensive training. The goal here is the “Lean Start-Up”, so starting down the path although has planning and a vision, we want to get rolling and find some quick wins and build momentum into building and shifting the culture. My principle is following structure and foundation of simpler tools and building onto that as the lean enterprise grows and becomes more successful. There is a fair amount of diligence, rigor, and discipline that go along with using these tools daily, but also the long term sustainability and favorable results that come with them.
The recipe for some quick wins and successful start:
- 5S/6S – An organised workplace is one without waste
- Value Stream Maps – Current State vs. Future State, gap analysis
- Problem Solving – Pareto Charts, 5-Why, PDCA, A3
- GEMBA – Get to the shop floor and observe and engage
- Visual Management – Daily management around KPI’s
Each one of these tools is part of the foundation of lean. I am not going to go into great detail (each of these subjects has massive amounts data and literature available) however, I will address why they are important and have merit.
To start our quest for eliminating waste, what could be better than workplace organisation. What is 5S? In short, a place for everything and everything in its place. Sort, Straighten, Scrub, Standardise, and Sustain….and the movement to the sixth “S” would be around Safety. This tool is fundamental because it requires a culture committed to continuous improvement. The basis of lean is standardisation and stability, and 5S is key in standardisation and stability. 5S is not merely about cleaning up, it instills discipline and allows us to easily spot variation from standard operating conditions.
Value Stream Mapping/Flow Charts
The theme continues in identifying waste in our value stream with flow charts and value stream mapping. In working our way through the current state, we have the ability in this stage to identify hidden “factories” or processes that jump out at us, otherwise known as waste. This value stream map helps to point out our gaps and misses and is the basis for our improvement efforts. Remember the value stream includes all value added activities (the ones the customer wants) and the non-value add (waste and other activities) that is part of our product/service to the customer. If we focus our flow geared towards the customer requirements, we end up with an optimal flow with minimal waste.
Problem Solving Activities and Tools
To borrow from the lean tools of six sigma, a good approach to lean as a whole is DMAIC.
Define the problem – clear problem statement
Measure – baseline performance
Analyse – significant root cause analysis
Improve – the plan to fix (elimination of top causes/gaps)
Control – permanent process/product improvements and changes
In the DMAIC process the analyse phase or step is the critical one to success since if we do not get to root causation, we only fix symptoms and not true problems. I have found that the use of an accurate Pareto Chart will bring about a clear path to some quick wins. Accuracy of the data going into the Pareto Chart is crucial and employees need to understand their role in this process. Using root cause analysis to fix the top issues on the Pareto Chart one or two at a time will move the needle in a hurry on the path to World Class. Many like to skip over analysis and get to the improve stage, mainly because they feel like they already know what is wrong and want to get to the business of improving quickly. The foundation and structure in A-3 Reporting as well as 5-Why and Fishbone problem solving will help to ensure the root cause is the focus of the improvement or fix. The PDCA cycle (plan-do-check-act) is a very structured and scientific method to root cause analysis and problem solving. The discipline and rigor that goes into Deming’s PDCA cycle is yet another reason that this is a foundation and building block to success.
Some may not be overly familiar with this term, but the idea is that we go to the shop floor (or wherever the work is done, “the real place”) and observe. It has been called “Management by wandering around” as well as a “Waste Walk”, whereby we are on the continuous search for wasteful activities and ways to make improvements. This tool coupled with empowerment will provide tremendous strides in employee engagement and hopefully additional buy-in from numerous levels. As a manager or leader, the more time we spend on the floor with our core management team, the more opportunity there is for our shop floor employees to be part of the improvement process as we solicit input on issues and concerns. This is a daily practice that coupled with problem solving activities (PDCA) and other lean tools is a very effective method.
Visual Daily Management
This tool wraps everything together so that all within the department or facility can see the improvements over the course of days/weeks/months. Visual Daily Management is a systematic, fact-based, goal oriented, active style of leadership to manage operational performance. Again, coupled with the PDCA cycle is one that brings about structure and aligns the entire team (labour and management) in continuous improvement. It must include clear goals and should also be linked to corporate strategy and KPI’s (Key Performance Indicators). The leadership group should be able to drive improvement and plan daily activity around the data collected here, while employees know the process and can help with problem solving. This becomes a dashboard for accomplishment and helps keep a process in place for daily accountability. The daily management should effectively link the vision with execution by tracking actual vs. plan and keep the team on track and aligned.
The benefits of implementation and using lean tools for continuous improvements are considerable, however, I do want to reinforce the idea that, lean is a shift in culture as well. We must keep in mind that lean is more than tools in a toolbox, it is a mindset, it is total system approach, and as lean thinking is embraced, the culture of the organisation shifts. Lean implementation must be an integral part of the organisation’s strategy, and successful implementation requires commitment and involvement across all levels.