Staying on Track and Solving Problems – Lean Accounting for NPD Blog #7

Staying on Track and Solving Problems

Lean Accounting for NPD Blog #7

There are some basic lean approaches that apply very well to new product development.

In a production process, the cell operators track the process every hour or more. In NPD processes it is usual to track the process once per day. The NPD team meets at the end of each day and reviews their work. The results are shown on an “In-Process Tracking Board” that displays the daily measurements, any defects or problems, and the corrective actions. When the teams are working on major projects, then there will be a tracking board for each project. When the people are working on multiple small projects, then the board includes all of the projects.

The purpose of the tracking board and the daily meeting is to enable the five issues shown above:

1. The team members meet to control their own processes.

The people attending the daily meeting will include the team that are working on the design projects shown on the board. There may also be a lead engineer or a supervisor. There may a purchasing person, a quality person, and other specialists. But primarily this is a short meeting for the team-members to understand the performance of the their process today, identify defects in the process, and solve these problems.

The meeting is short, has a tight agenda, and stays on-point. A typical agenda will be a 10-15 minute meeting:

  • Review today’s work.
  • Identify what was completed today, and what was not completed that should have been.
  • Work out how to get back on track.
  • Initiate short improvement projects to prevent the same problems occurring again.

2. They continually track their process.

The team will continually track at least two issues. Did we get our work completed on-time today? And was the quality of our work good today? In some organizations they will also track issues related to safety.

Here’s an example of an In-Process Tracking Board:The top left chart shows the days of the month. When there is a day with no problems, the day is marked up in GREEN to show a good day. When there are problems, the day is marked with a RED. This gives a simple visual report on the status of the project or the process.

On the top right there is the weekly plan. The 6 people working on this project plan their work once a week and select who will be working on which tasks, and which day these tasks are to be completed. We recognize that (unlike manufacturing) we do not expect a design project to be highly predictable. There is a great deal of (often) good variability in the completion of these processes. We have nonetheless decided when we plan to complete these tasks, and when they fall behind a customer’s delivery date may be missed – then we need to identify the problem and take action to catch up.

The chart on the bottom left shows the problems that have occurred throughout the project. The chart also shows the dates these problems occurred and the segmented circles to the right of the chart show the progress in solving these problems. The two spaces on the bottom right of the board are where the team members document the actions they are taking to solve the problems and where they record their insights and learnings as the project proceeds. There are many different ways to visually present this kind of information. And – as you can see – these boards can sometimes be quite informal.

When the team-members are working on more than one project, it is common to have a single problems and solutions chart. This way the issues that occur in more than one project are not addressed separately, but together across the multiple projects.

3. They stop and fix: Andon.

Not all problems are created equal. There are some problems that are irritants and need to be solved, but there are other problems that could jeopardize the project, lead to bad design, or cause physical accidents for the designers or the customers. Obviously these more serious problems must be addressed quickly and fixed immediately. In lean parlance, this is called Andon. When a significant problem occurs, we stop the process and solve the problem. We do not move ahead any further until that problem is resolved either by a long term solution or a short-term “fix” that will prevent it from occurring again within this project.

The word Andon just means a signal or a notification. But the thinking behind this is that the very best way to resolve quality and safety issues is to stop the process and find a practical solution before the problem can re-occur. This focus on quality is paramount in lean thinking and it has been proven in thousands of companies that it is better and less costly to stop the process and solve the problem, than to let it continue and try to solve it later.

4. Problem solving is done by the people working in the process.

Ideally the problems can be solved by the people who are working in the process. They are the people with the most hands-on knowledge and the ability to make the changes required to either fix the problem, or create a long term permanent solution. In reality this is not always the case. In some instances the team will need to bring in experts or specialists from other disciplines. They may need a specialist on the equipment or software they are using. They may need the people responsible for the facilities. Or it may be someone who is a technical specialist in the topics they are researching. The project team is still responsible for solving the problem even when the work is completed by someone else.

The reason for having the people on the project solve their own problems is because they are the people suffering the most from the problem; they are the ones with the most knowledge of the problem; they are the ones that can most readily experiment with solutions, and they are most likely to understand and implement changes they have invented themselves. The team members are best suited for getting the problem solved quickly and effectively.

5. Decisions are made at the lowest possible level.

In Lean NPD (and lean in general) we need to have decisions made at the right level of the organization. We do not want to have all decisions to be funneled up to senior managers, or to stage-gate design reviews. There are of course some decisions where a senior manager is the right level, but the majority of day-to-day decision can be taken by the team working on the design of the product and the production process. This requires that good customer, operational, and financial information is made available to the design team. This is done through the daily and weekly measurements, through the Box Scores (operational box score and life-cycle box score), and other data and reports.

Some of you are asking what all this has to do with Lean Accounting? There is nothing in this blog about accounting or finance. The answer is that the In-Process Tracking Board and the Daily Team Meeting is creating excellent control of the process. When a process is under control, there is no need for a complicated and wasteful financial “control” system. The control has moved into the operation itself. This is the low waste way. It is also most controlled way. That’s lean. Better control and much less work & waste !!

In blog#8 we will take a look at Target Costing and how we understand the cost of the product.