Data Gathering–How Lean Companies Create Control

In the previous blogs on this topic, I showed how traditional companies try to create control in their processes. They use “big data” with complex data gathering and storage in ERP and other systems. Lean companies do the opposite. They have people who – using “small data” – work to understand the root causes of the chaos and eliminate them.

Lean also has a good deal of control built into it.

There are many things about lean thinking that create control and simplify the data tracking.

  • Small batches – If you process small batches of product or service, then the job is completed in hours instead of days and weeks. Short tasks are much easier to control.
  • Build quality in – If you build quality into the process instead of end-of-line inspection, the process is under much better control.
  • Track the process closely – If you track the process by hand every hour, then it will be under much better control.
  • Empower the workers – If you give people the authority to “stop the line,” or the administrative  process, or the urgent care procedure, etc. and quickly solve a problem by themselves then the process will be under much better control.
  • Standard work – If our processes have standardized work, carefully developed by the people who do the work, then the process will be under much better control.
  • Get out of the office and into the gemba! – If the company’s supervisors and leaders are frequently in the workplace, understand the work, and help to solve and improve the process, the process will be under better control.

It’s really very simple.Empowered_people-diagramwbsm

  1. Bring processes under control by applying good lean methods.
  2. Empower the people in the process to monitor and improve the process constantly.

When these things are in place, then you don’t need a secondary, transactional control system. The processes are under excellent control. Control is built into the processes themselves. You can switch off many the old systems. Of course, you can’t do this over night. Like almost all things lean, there is continuous improvement. The wasteful “big data” ERP system is whittled down over time as you eliminate the need for it.

An Example of This

For most companies there is a need for an Accounts Payable process that does a three-way match between purchase order, the receiving document, and the supplier invoice before payments can be made. Why? Because there are loads of problems and issues that come up in this regular and relatively simple process of purchasing materials needed to our work.

I recently did a “crowd sourced” list of what goes wrong with A/P. Read it here:

The typical “big data” company will use the 3-way match process for years and decades, but not resolve the underlying reasons for the mismatches! They will also get “economies of scale” by centralizing this into a shared-service department that is often physically located many miles and even time-zones away. This divorces the payables process from the people who have knowledge about the purchase, the receiving, and (most importantly) the supplier.

The lean company will do the opposite. They will understand that process problems can be eliminated for the majority of their routine material and component purchases. They create very close, mutually beneficial relationships with their suppliers. They work to eliminate purchase orders by creating long term contracts with the suppliers. This is accompanied by joint kaizen (continuous improvement) done regularly with suppliers so as to create simpler and better processes. They set up a pull system for the materials purchased from “certified” suppliers. They control this pull system by some kind of kanban. Once this is in place and working, there is no need for an invoice. The materials are paid for based on the receiving transaction and the contract.

Of course, there are many variations of this process from one company to another. But lean companies doing this have eliminated millions of transactions and months of work each year. How? By solving the root cause of their problems. By eliminating chaos using standardized work. By “error proofing” the processes.

The Bottom Line

If you want to simplify and control your processes, you need humans using their intelligence, innovation, and data gathering to understand the process and eliminate the chaos and the waste. You need “small data” and not “big data.”

Two Additional Comments.

  1. Please do not read this blog as being anti-ERP. ERP systems are a very helpful and important aspect of modern business. Our focus needs to be on using the computer systems for what they are good at doing: Arithmetic; Transmitting data over long distances; Analysis of large amounts of data.Use people for the things that people are good at doing: Taking responsibility; Tracking a process visually; Understand problems and issues (both routine ones and the unexpected;) Solving problems; Creating relationships; Making decisions.It is an empowered and well trained people that can do the continuous improvement that builds and sustains a lean process.
  2. Please do not think that this blog is criticizing statistical analysis. There is an important place in lean companies for this kind of analysis. In fact, statistical analysis is much more helpful to lean companies than traditional companies because they already have taken the clutter out of their processes and are much better able to see the statistical forest rather than the trees.

Control and improvement of business processes is a human task requiring local, detailed, hands-on, and brains-on work. Not a computer system and “big data”.

10 Data Gathering Table