If you want to lose weight by eating organic, low calorie food but…. you deep-fry everything, you will not only stay overweight, you will become sick. However, most American manufacturers do just this with regard to lean. They want to become lean organizations but they do not want to change the way they manage.
Apparently 60% of American manufacturers claim to be “going lean”†. If this were true it would revolutionize our economy. Lean titan, Art Bynre†† estimates that the number of companies truly embracing lean is 5-7%. Most of the 60% are doing (as per Prof. Bob Emiliani’s term†††) “fake lean”. Emiliani defines “fake lean” as introducing lean tools and methods (the healthy food) without changing the company’s management (the same old fatty diet).
Success with lean can only be achieved by implementing lean principles through-out the entire organization. We must develop a truly Lean Management System so that every aspect of the company is working in unison around lean thinking and actions.
The diagram below is a high-level view of a Lean Management System addressing most of the important processes that must work together to create a thoroughly beneficial lean organization. Today, I will describe an overview of each aspect of the Lean Management System and in future blogs, I will explain how it all fits together.
I would value your stories and opinions. Please send comments to create a discussion around this vital issue.
We always start with thinking; Lean Thinking.
Unlike most companies, lean leaders establish value streams reflecting the work flow to serve the customers. The ideal value stream contains all the tasks required to serve the customers. Sales, marketing, product customization, purchasing, receiving, production, quality, inspection, and shipping; the entire flow.
Traditional companies rely on ERP systems to control their processes. Lean emphasizes continuous process control. Frequent visual measures, standard work, fast problem solving, continuous improvement, weekly financial reports people can easily use, new ways to understand costs, profits, and decision-making. Control is built into the processes.
Lean organization do not place their first priority on stockholder value and/or cost cutting. These issues are very important, but in lean companies they are the outcomes of our work. The root causes of business success include a clear knowledge of how customer value is created, and developing processes that increase this value.
Lean organizations deeply understand the customers’ wants and needs. Before design there is research to capture knowledge. Product development is fast, focused, and frequent. Agile product design moves along effectively; often with parallel designs. Incremental product release so as to further hear the voice of the customer.
Decisions in lean companies are made by the people closest to the issues, rather than higher level managers. Standard decision-making methods using real, relevant data are used; not standard costs and margins. Better decisions, better revenues, lower costs, and higher profits. It also frees up the senior leaders’ time.
A hallmark of lean is continuous improvement. Everyone in the company is engaged in process improvement. There are big breakthrough changes, continuous improvement projects, and frequent, small “just-do-it” improvement, and target costing to bring revenues, costs, and profits in line with strategic needs.
Lean organizations are well planned. They recognize that to achieve effective operations and continuous improvement the value streams need to be very well planned. Good planning leads to excellent results. Good planning enables value streams to be flexible and ready to address unexpected issues.
Administrative work is not only very important but very time consuming. This kind of work is mostly 100% waste. The tasks are important, but add no customer value. The same lean methods of visual flow, waste elimination, and freeing up people’s time so they can work on more strategic activities are used to drive the company forward.
To introduce real lean across an organization requires: Active, culture-changing leadership from senior executives. A long-range vision for the company to become truly lean. A recognition that we do not “implement” lean. Lean is long-term commitment to value, flow,waste elimination, and engaging everybody in continuous improvement.
This has been a quick overview of a Lean Management System. In future blogs we will delve deeper into this vital aspect of lean transformation that is sadly neglected in many organizations.
I welcome any comments, thoughts, and insights you may have about this. There is always more to learn and practice.
†. North America data on 572 discrete manufacturing plants from The IndustryWeek/Manufacturing Performance Institute 2007 Census of Manufacturers; 2007 Canada Manufacturing Study, conducted by Advanced Manufacturing and the Manufacturing Performance Institute; and Estudio De Manufactura Mexico 2007, conducted by the Manufacturing Performance Institute with support of CS Events.
††. “The Lean Turnaround” by Art Byrne, McGraw Hill 2013. Page XX in the Introduction.