Top 10 Most Misunderstood Lean Tools (Part 3)

Lean tools can be leveraged to accelerate your company’s culture and business results in a dramatic way. However, if ineffectively applied, they can decrease hope for sustaining improvement and feed a culture of cynicism. In this 3rd of 3 installments on the Top 10 Most Misunderstood Lean Tools, we’ll dive into Gemba, Total Productive Maintenance (TPM), Leader Standard Work, and Hoshin Kanri (Policy / Strategy Deployment). This article is designed to give leaders a better understanding of their role in a Lean Organization.

#7) Gemba – It’s great to see leaders spending time on the shop floor engaging with the workforce. Leadership should certainly have a regular presence on the value stream where the work happens that the customer is paying for. But even this well-meaning activity can have destructive side effects if the intent is not clearly understood.

The Misunderstanding: Quick question: how much time, energy, and effort do people put into “cleaning up” when the big boss is coming into town? The answer to this question gives you some insight to the organization’s gemba culture. If people are “acting differently” in preparation for and during a leadership visit, then perhaps there’s a misunderstanding of what gemba looks to achieve. To make matters worse, leaders often seek to point out deficiencies in the process, which turn into projects that may or may not be connected to the strategy; but they consume precious resources – just because the boss noticed and called it out during their last visit. Ideally, the plant team should be eager to show their leaders the total truth so that they can engage leaders in a meaningful partnership to achieve superior results. The plant should never get ready, but should stay ready at all times so as to eliminate distractions and elevate the improvement culture.

Why do Gemba? The true intended benefit of Gemba is for people, especially decision makers, who are not naturally exposed to value stream processes, to gain familiarity with the real opportunities, gain deeper understanding of issues, and develop the talent to drive the right pace against their strategic imperatives. Leaders should not be asking “why something is wrong” or “did you notice that problem?”, they should be asking “what is the target condition?” for each person and “what is your plan for closing the gap?”; and even better, “how can I help?”. This drives greater ownership of results to the people doing the work and helps leaders understand how they could make an immediate impact.

#8) Total Productive Maintenance (TPM) -TPM is a canned approach to Lean that includes several tools designed to help achieve, sustain, and improve base condition. Base Condition is a process that is completely free from defects. TPM includes 8 pillars with one of the key pillars being Autonomous Maintenance (AM). In AM, operators become more autonomous from the maintenance function, performing the lesser complex routine maintenance tasks such as cleaning, inspection, lubrication, tightening, and minor repairs. Several other pillars are designed to help achieve and sustain base conditions with the Focused Improvement pillar helping to improve processes beyond base condition.

The Misunderstanding: Many companies approach TPM as a set of standards that they expect the organization to comply to. This is often taken as  more of a command and control approach that fails to develop the true capability to solve the problems that are keeping the company from making strategic progress. Without respect the individual journey of each employee, it becomes near impossible to sustain progress in this environment. As employees become frustrated and leave, the learning curve for a new employee is extremely high and TPM progress gradually trends the wrong way over time.

Why do TPM? No one disagrees that having machines that run at optimal running condition at all times is a really good thing. The question is at what cost? and is it justified by the benefit? This is a question that leaders must ponder to determine how far into the TPM journey they should go, if at all. TPM can drive higher OEE, lower lead time, higher quality, and higher productivity. If your processes are asset-heavy and these things are central to your operating strategy, then perhaps TPM is right for you. However, if your processes are labor-intensive and flexibility / agility is more important, perhaps you would choose an alternative or modified approach.

Click here to calculate your savings opportunity by using Impruver’s transformative Lean Manufacturing Software

#9) Leader Stanhttp://savingsdard Work (LSW) – LSW is a structured review process for leaders up and down the operations chain of command to support in driving process sustainment. Each level sets a frequency of how often they will perform reviews and in which areas. They might assess gaps from the correct use of key lean tools and follow-up on opportunities for improvement.

The Misunderstanding: The effective use of LSW depends greatly on the existing organizational culture. In a command and control culture, leaders will use this as an opportunity to find fault in what operators (or process owners) are doing and seek to take punitive corrective action. This approach only de-values the process owner and discourages a true continuous improvement mindset and culture.

Why do LSW? Use this tool to empower process owners to continuously improve performance in their area. Instead of looking for gaps to a standard, especially for seasoned operators, good leaders will seek to better understand the process for themselves and what they could do to help the process owner to make progress against their target condition. This could mean coaching or training but could also mean helping them influence other functions to take needed action.

#10 Hoshin Kanri (Policy / Strategy Deployment) – This is the process of developing strategies, plans, and tactics at all levels in the organization. Ideally, every employee in the company from the CEO down should be able to quickly draw a connection between their improvement work to the company’s broader strategy.

The Misunderstanding: 90% of strategies never get deployed. Most leaders don’t make the connection between the company strategy and continuous improvement. In fact, they don’t see the execution of strategy as improvement at all, they just see it as addition work that needs to get done. In worse cases, leaders see strategy deployment as a “paper exercise” that they do just to say they did it and throw it into a dark drawer until the next year’s strategy gets rolled out.

Why Do Strategy Deployment? A company’s strategy should paint a clear picture for what needs to be done to win (or keep winning) in the market. It should engage all aspects of the business and all employees. The agreed-upon work is your Continuous Improvement plan. It doesn’t help to have a CI team or program that is working on different things than your company strategy. If so, there will be an internal struggle for limited resources to be applied against the competing agendas. In fact, all departments should remain disciplined to the strategy to drive the greatest momentum and effectiveness.

Lean tools are very powerful because of their ease of use and repeatable results. Leaders should developing an understanding of when and how to most effectively apply the tools to drive superior business results. This post concludes a 3-part series on the most misunderstood lean tools. As you have probably realized by now, implementing the tool is actually the beginning of the journey and not the end. Once implemented, it takes persistence and dedication to stick with it until the desired result is achieved.

Advertisements

Top 10 Most Misunderstood Lean Tools (Part 2)

Top 10 Most Misunderstood Lean Tools (Part 2) - calvinlwilliams.com

Just like any technology, lean tools can create great efficiencies but need to be applied the right way in order to produce positive results. Unfortunately, many view the implementation of some Lean Tools as the end of the Continuous Improvement journey and not the beginning. Let’s explore a few examples of tools that are frequently misunderstood and explain how they could be applied more effectively. In Part 2 of 3 installments of the Top 10 Most Misunderstood Lean tools, we’ll take a look at Standard Work, Centerlines, and Root Cause Analysis.

#4) Standard Work. This is the process of documenting process steps and sometimes timing and watchouts at each step. The best approaches even include pictures of what success looks like at each step. This all sounds good and great, but many don’t realize the true intent of how Standard Work should be used.

The misunderstanding:  Many people develop a standard work document after completing a kaizen event or some other improvement activity. Some skip the improvement activity and jump straight to the standard work document…and that’s not necessarily a bad thing. These documents can serve as a great tool for helping new employees accelerate their learning curve in a new role. They can also help sustain the performance level of a process over time. However, when these documents are created and left unchanged year over year, then they become obsolete and fail to do what they are truly designed to do.

Why do Standard Work? In addition to serving as a document to guide process owners through the steps of a process, the standard work document should be used as a tool that helps indicate when the equipment is no longer in optimal operating condition (or base condition). When the machine is running in base condition, there should be no need for deviation from Standard Work. But when there are defects and other issues, you’ll see operators needing to take steps that are “out of standard” to hit expected targets. This should point to the need to fix the emerging issues that might be plaguing the line. Standard work should also be a living document. It should not be used as a “hard rule” guide, except perhaps to administer people or product safety protocols. Operators or Process Owners need to be given some liberty to improve on the current operating process as to drive their area of ownership toward the company strategy.

#5 Centerlines: These are a form of Visual Management, that can help to quickly set up a line for optimal operating conditions. But you may not realize the critical role that centerlines play in driving the Continuous Improvement process.

The misunderstanding: Centerlines are markers for distance, pressure, speed, and measures used to indicate the ideal operating parameters of a production process. This might include red / yellow / green range markers on gauges, slides, elevators, angles, etc. During a changeover or set-up, the operator could ideally open a guide of centerline settings and quickly set the line up and start running, dramatically decreasing the trial and error needed to dial in the optimal settings. However, the true value from having centerlines is often unknown or misunderstood.

Why do Centerlines? This tool should be applied after and only after the production line has been brought into base condition, or free of performance defects. It certainly helps to have this tool to help ensure rapid set-ups, but the even more significant benefit is to indicate that there are defects developing in the equipment that need to be addressed. Defects cause the line to be set up “out of Centerline” in order to run; however, the state of operation is sub-optimal and performance suffers. Therefore, Centerlines are a tool for sustaining base condition just as much as allowing for quick set-ups. When a line is out-of-Centerline, operators should initiate  root cause analysis to find out why and take steps to prevent process deterioration in the future.

Click here to calculate your savings opportunity by using Impruver’s transformative Lean Manufacturing Software

#6 Root Cause Analysis – This process is a foundation of Continuous Improvement because failure to identify and address the root cause of issues means improvement was not really achieved. RCA is the process of identifying the underlying “root” reason(s) that an observable issues is occurring.

The Misunderstanding: RCA is probably the most commonly practiced tool in the Lean Toolbox. Methods such as the 5 Why’s and Fishbone are extremely versatile and fairly easy to learn. In fact, any 5 year-old understands the value in asking “why” until you have an absolute understanding of something they’re seeing. But just like any parent of a 5-year old, sometimes you just have to answer as best as you can, knowing that more research is needed to get to the truth in some cases.

Why do Root Cause Analysis? RCA is more of a thought exercise than actual Continuous Improvement. The output from RCA is a single or multiple hypothesis of what might be driving the issue. The truth isn’t discovered until those hypothesis are tested and validated to be true or false. This means you have to complete the follow-up actions that are deemed necessary to validate the hypothesis. Only after the work is completed and performance is observed over time, can you say you have truly identified the root cause. If the changes do not affect the result in the desired way, you must go back to the drawing board and repeat the process until it produces the desired result. The key is to not move on until you are getting the result you want. Otherwise, you are not actually getting to the root cause.

We hear numerous case studies of how Lean Tools are being applied to incredible effect. What we don’t realize is that the implementation of most Lean Tools is just the beginning of the Continuous Improvement journey and not the end. Most tools are designed to enable the conditions for improvement. However, the actual improvement happens through painstakingly developing peoples capabilities, attitudes, and actions with the intent to create a more perfect production system and culture. Then doing the work to make the needed changes to the process. Persistence and leadership play a critical role in a sustainable Lean transformation.

Top 10 Most Misunderstood Lean Tools (Part 1)

Top 10 Most Misunderstood Lean Tools (Part 1) - calvinlwilliams.com

Lean tools can be incredible assets to a business. They’re usually fairly simple to understand and can produce some outstanding results. Unfortunately, many Lean tools get used without consideration for what truly brings value to the customer or the broader business strategy. As a result, tools are applied toward short-sighted gains and the true commitment level to sustainment is low. This article lists the first 3 of the top 10 most misunderstood but commonly applied Lean and Continuous Improvement tools.

1) First on the list is 5S (or 6S if you include safety). The 5 S’s stand for sort, set in order, shine, standardize, and sustain. This acronym was originally developed in Japanese, which also used 5 S’s, which you can learn more about here – 5S on Wikipedia.

The misunderstanding: Most people understand 5S to be a good way to organize the workplace so it looks and feels good. 5S is a great way to remove clutter and define a home for each and every item. If you’re really doing it right, 5S also serves to thoroughly clean equipment inside and out and identify defects that need repair. Some even go into 5S expecting an immediate boost in productivity, morale, and some other key metrics. While 5S does enable these and other great results, it’s not the fundamental intent of the methodology as designed.

Why do 5S? The true purpose of 5S is to expose opportunities for improvement – both from a people and process development standpoint. Many leaders expect an immediate ROI after a 5S implementation, but what this method really does is lays the workplace conditions needed to begin the journey of Continuous Improvement – and not the journey itself. For example, during 5S, you must establish a home for each and every item. When an item is found to be out of place, it exposes an opportunity for coaching and possibly process improvement. Leaders and process owners should be asking why the misplaced item so easily wanders from its home? Perhaps its home is not set up in the ideal place. Perhaps there aren’t enough of this particular item in supply for each area and people from other areas keep taking them away. There could be a million reasons, but in observing the process and asking why things are out of compliance, helps drive overall process improvement and people capability development.

2) Overall Equipment Effectiveness (OEE) – This is a metric used to calculate equipment utilization and categorize losses. The metric measures a factory against perfection – meaning 0 losses, which is theoretically impossible, so you should never ever ever see 100% OEE.

The misunderstanding: Many use OEE to show how good their processes are. Some set a target for OEE, even as high as 85%, which is widely regarded as world-class, then expect their teams to show 85% as quickly as possible. Some even go as far as to reprimand or punish their teams for not showing a high enough OEE. Many seek ways to trim out some losses so they can show a higher number such as giving start-up and changeover allowances because these losses are considered “unavoidable”. Another example would be to not consider losses due to supplier or raw material issues because these losses are “out of our control”.

Why use OEE? The real value in OEE is in showcasing your losses and using the information as an input to where you can drive the greatest improvements. The reason OEE compares your process to perfection, or Zero Losses, is because true process perfection is the ultimate objective, although realistically unachievable, and thus is why we call it Continuous Improvement – because it never ends. Implementing OEE is not the end of the journey, its done in the beginning. The journey is in the improvement work done to capture OEE gains, which happens over a long time period – years even. In the process, leaders should be developing the capability within their people to understand OEE losses and lead process improvements. Only when the people capability is developed can sustainable gains be achieved.

Click here to calculate your savings opportunity by using Impruver’s Transformative Lean Manufacturing Software

3) Kaizen. In most Lean  circles, Kaizen is synonymous with Continuous Improvement. It actually stems from the words Kai, for change, and Zen, meaning “good” in Japanese. The literal translation to English is Change for the Good. Change itself is inevitable. The objective of Kaizen is to ensure that things are changing for the better. Organizations should be constantly improving to get or stay in tune with the market.

The misunderstanding: Kaizen is often used to generate some quick business results. Perhaps this means a cost savings or bump in productivity. The expectation is that once the Kaizen event is done, you should be able to continue normal operations and achieve better numbers. It’s also an expectation that the area that was improved was done in isolation of all of the many interconnected parts of the organization such as other production areas, support functions, the customer, sales, logistics, etc. Even the people are expected to be trained on the new process and run out and start generating much better results.

Why do Kaizen? The world within and around your business is constantly changing. In order to stay viable or grow, your business has to change as well. Kaizen describes an approach for making these changes. Kaizen not only helps to continuously engineer a more perfect process, it also helps to build the capability within your people to improve. In other words, it transforms every process owner into somewhat of an engineer, capable of self development, decision-making, and process improvement. The key to making Kazien work is for leaders to focus on building people capability, who in turn, perfect the process. Another critical ingredient is to make sure improvements are aligned to the company strategy. This helps ensure that improvement effort isn’t randomly applied, consuming precious company resources, but instead are working to take the business in the right direction.

By now, you can probably see the pattern in how Lean tools are misunderstood. Many times, the expectation is quick results with a relatively low level of leadership commitment. However, for these tools to drive long term sustainable growth, you need high leadership engagement and a clear strategy. At the heart of your business are your people. Your business results are largely a result of their capability, which is largely the result of your investment in them as their leader.

The Genius Inside PDCA and Why You Can’t Improve Without It

The Genius Inside PDCA - calvinlwilliams.com

If you’re like me, you’ve been seeing, saying, and maybe practicing the method behind the acronym PDCA throughout your entire Continuous Improvement career. Ever done a root cause analysis? A kaizen event? A DMAIC project? Or pretty much any Lean tool for that matter? Yup, you’re in this too! You were probably sucked into a PDCA without even knowing that’s the kind of party you were going to. Either way, there’s a good chance you’re doing it all over the place; and there’s also a damn good chance you could do it bigger, smaller, and just better in general.

What is PDCA?

“Plan-Do-Check-Act”, “Plan-Do-Check-Adjust” or “Please Don’t Call Again”, I think you can go either way on this one. If you bust this method down to its core elements, it’s really just the good ol’ fashion scientific method (it’s still okay to use the word scientific, right? Just checking). Let’s do a quick and dirty side-by-side:

Plan – Form a Hypothesis
Do – Run an Experiment
Check – Validate if the hypothesis is true or false
Act / Adjust – Decide whether or a new experiment is needed and repeat

Yes, I know this is oversimplified and there’s a lot more to running valid experiments and all that – but you see what I’m getting at. Now we have a pretty good idea how this works on a project level. Let’s say we want to fix an issue with a failing motor that’s causing excessive downtime. We may go out and observe (plan), troubleshoot, try something (do) – oops that didn’t work (check) – then try something else (act). Then keep trying until we figure it out and just continue to monitor until we’re comfortable that the dang thing is fixed. This is PDCA in it’s simplest form.

Let’s scale up one level to the kaizen event. Now we have a system of conveyors and machines that is dropping $250k / year worth of product on the floor from various places. We might capture the waste at different points to measure, then quantify losses per leak. Then we might prioritize which leaks to go after and in what order (plan). Then start the root cause analysis process or “where-where-why-why” analysis and then start troubleshooting (do). From there we continue to collect data to validate that losses have in fact been reduced (check). Finally, after learning that losses have actually gone up, we fire the Continuous Improvement leader, reassign someone who knows what they’re doing, and try again (act). Okay, let’s keep the CI guy and give them one more chance but they’re only allowed to 5S the front office.

Now let’s zoom out. Past all the engineers and accountants. Past the 17 levels of middle management. Past the 900 Vice Presidents and baam!…you’re the CEO. Your stock values are down. Wall Street is sending you death threats if you don’t do something quick. You hire a top tier Management Consulting firm to come up with a brilliant strategy (plan). You deploy this strategy throughout the company sparing no beating heart in the company (do). After about 6 months, you patiently watch the stock value barely budge (check). Then you decide the strategy and the consulting firm were bogus, you scrap them both and go with your gut to transform the company (act). Yes…this is also PDCA.

Where PDCA Fails?

Well since there are four letters involved, you guessed it, there are four places where PDCA can fail. Let’s just go in order, shall we?

Plan – You’ve heard the expression – failure to plan is planning to fail. Planning indicates the intent to prosper from an activity or at least avoid unnecessary losses. A good plan should define parameters around who, what, when, where, why, and how. It should also clearly state the hypothesis and how it will be validated. If controls can be put in place to make sure other “issues” don’t skew the result, that’s even better. It’s also good to establish from the onset what “success” looks like and the reaction protocol when (not if) it doesn’t come out as planned the first time around.

Do – This one goes without say. A wonderful plan that never gets executed is nothing more than a wish. You may think this is obvious but consider that 90% of strategies never get deployed. In fact, a whole world of executives will cite poor execution as the biggest reason for failure in business overall.

Check – Believe it or not, many-a-kaizen event are done and wrapped up with no performance tracking mechanism in place to validate if the dang thing even worked. I mean, people will go all out on the celebration after a kaizen event – popping champagne bottles, handing out t-shirts, big smiles for pictures in the newsletter and all that. But if you go back 3 months later and ask if the results have sustained, and you get a bunch of blank stares. Of course this has never happened to you, but take my word for it that it happens.

Act – This is a good barometer for the true Continuous Improvement mindset and culture at your company. You have to have a growth mindset to be any good at this one. You have to be willing and able to accept that perhaps your hypothesis was wrong and that the first go round was a learning exercise. Then be willing to give it another go based on your new knowledge to maybe get it right the next time. And then be willing to do this over and over and over until you get the result you want. If you have a succeed vs failure mindset (as opposed to a growth mindset), you might just write the whole thing off as a failure way too soon and accept the current state as a fact of life. This failure mindset is fatal in Continuous Improvement and should be discouraged at all costs. Do it for the culture. Do it for … the people!

Click here to calculate your savings opportunity by using Impruver’s Lean Manufacturing Software

How to get Better PDCA’s?

Better PDCA’s, by definition, comes with improved quality and increased quantity. You have to be deliberate about making sure each step is executed the right way, every time it’s supposed to be. I watch my 7 year-old son execute PDCA over 100 times to beat a level in Mario Bros. Yes it took him 100 tries but he got it…and for him, it was totally worth it.

Here’s the gameplan:
1) Start with the company’s strategy so everyone is clear on what’s most important to improve
2) Then challenge every employee to improve something important in their area of ownership
3) Use Lean tools such as Root Cause Analysis, Kaizen, 5S, and others to identify needed changes and make them
4) Monitor the results and adjust / respond as needed. It’s best to have strong analytics system in place so tracking data doesn’t seem like added work

The key to success is not quitting until you get it right. In fact, the definition of success is not quitting (paraphrased for your convenience). This works at all levels in the organization so no one is immune. Implement a management system like impruver.com to facilitate this practice and develop this capability throughout the entire company and see a dramatic and permanent shift in culture, capability, and business results.

90% of Strategy Deployments Fail: Here’s How You Beat the Odds

Better Strategy Deployment - calvinlwilliams.com

Breaking News: A stockpile of corporate strategies have been discovered floating near the Bermuda Triangle. They appear to be unused and have clearly never been executed. Some of them are quite beautifully hand-written on parchment paper with shiny gold ink with a quill. Some even show meticulously detailed action plans including names, due dates, and even incentives for early delivery. However as much as 90% of them never saw the light of day. Its clear that we put a lot of thought into strategy; perhaps we should all think harder about strategy deployment.

We spend a lot of time, energy, and political capital developing strategies for our businesses. Some of us put more into its development than its actual implementation. We treat the creation of a strategy like just another task to be completed and not like the path to everlasting prosperity that its meant to be. Something is wrong with this picture. Why are so few strategies actually brought to fruition? Why work so painstakingly hard to build a great strategy, just to fold it up and use it as a coaster for our morning coffee – and get right back to business as usual? And what can you do to increase the success rate of strategy deployment?

What is a Strategy Deployment?

Okay, so you’ve got this brilliant strategy. I mean, this thing is going to revolutionize the way business is done in your industry. You’re going to be the Toyota of food packaging, the Apple of household cleaners, or the Amazon of cosmetics by the time this is over with. You did everything right. Incorporated input from your key stakeholders and got buy-in from direct reports. You even held town hall meetings with the entire company to make sure everyone got the message that we’re more serious than ever about nailing this strategy down.

Then what happens? Not even a month later, a couple of angry customers, an injury, and a bunch of bad product that almost got out to the customer, and very few people can even remember that a strategy ever existed.

Strategy deployment is the process of managing a strategy into fruition. It usually entails engaging people at all levels in the organization to commit to objectives that translate the strategy to their areas of ownership. For example, if a key part of the strategy is to be the lowest cost producer, it would naturally follow that each person along the chain of command from the CEO to Line 2 operator would commit some work against reducing operating cost. However, strategies may have multiple levers, which only means more manpower needs to be involved and the more time it will take to truly deploy.

Why Strategy Deployment Fails

The best strategies deploy themselves, right? Wrong! You can etch your strategy into a golden tablet, but without investing in the support or management system to bring your strategy to fruition, it will just sit there collecting dust. The best strategies originate from the CEO. Some don’t, but hey, we gotta work with what we got.

Most good managers are fully capable of making changes to processes. This can be done relatively quickly and can be quite enjoyable. The challenge comes when the changes needed are in the area of people capability and behaviors. Here is where it helps to be a little bit of a psychologist, which most of us are not qualified for. If we were, perhaps we’d be making a bit more money. This takes time, patience, and some good ol’ coaching.

Most strategies are developed with the intent to make changes to the way the business works. However, the reality is that the business works how the people work. Likewise, the strategy should focus on what people capability and behaviors are needed to move the business closer to its vision. Then comes the painstaking neuroscience of re-wiring people’s brains to think and work differently. This is a deliberate and intentional process. Command and control just isn’t going to cut it. People have to want to get there, or else it won’t sustain. You have to leverage each person’s inner drive and passion. You have to start by issuing them… a challenge. Then put your coaching cap on.

Click here to calculate your savings opportunity for using Impruver’s Transformative Lean Manufacturing Software

How to Increase the Likelihood of Successful Strategy Deployment

Given the choice to work on what pays the bills today versus what’s going to enable a successful future, most people I know would go straight for the short-term gratification. Unfortunately, many company cultures reward short-sightedness and quick wins, even if they are at the expense of long-term success. Fortunately, there are a few ways to leverage this dynamic to drive strategy:

  1. Visual Management System – Any Continuous Improvement coach worth their salt can tell you about the importance of highly visual management systems. There’s some social power in making something visible. No one likes to be publicly humiliated or appear to be failing in their role. In fact, it can make it difficult to lead if you clearly aren’t getting things done. On the same note, everyone likes to shine and appear to be succeeding. Visual Management Systems can be some of the easiest and fairly administered approaches to driving performance, especially when everyone is measured with the same yardstick and resources are equitably distributed.
  2. Strategy Deployment Verification – As a CEO, its hard to tell if the strategy is cascading throughout the organization. Getting buy-in and alignment with direct reports is one thing but getting all the way to the shop floor janitor is almost impossible to do effectively without the right tools. Everyone in your company needs to be able to see what everyone is committed to and how much progress the have (or haven’t) made. This also helps to ensure problems aren’t being kicked from one area of the business to another. This increases accountability and the chances of success.
  3. Strategy Alignment Verification – As the shop floor janitor, its hard to tell what the CEO’s strategy is or if priorities have changed and when. We like to believe that strategies should be set for several years to give the organization time to execute. However, consider that the company that can deploy, adapt, and deploy again on a shorter interval has a major competitive advantage over their slower counterparts. People need to know that they’re working on the right stuff. Their leaders need this confirmation as well.

Low tech strategy deployment methods such like spreadsheets, powerpoint slides, and word-of-mouth just don’t get you where you need to be. This is why leading companies like Toyota have adopted technologies to deploy strategy, ensure alignment, and ensure everyone’s Continuous Improvement efforts can be tied back to the strategy.

Isn’t it interesting that its easier to find out what’s happening in the White House than it is to find out what’s going on in the C Suite of your own company. This is the advantage that technology brings – as leveraged by media organizations, making the world smaller. Leverage technology to make your company smaller and more agile through effective strategy deployment. Your stakeholders will be glad you did.

The Customer Value Bill of Rights and the Lean Manufacturing Justice System

Customer Value Bill of Rights - calvinlwilliams.com

You’ve probably heard the expression that you succeed by helping others to be successful. Well that’s also true for a manufacturing business. Truly putting the customer first and your role as helping them to succeed changes the way you see value and waste, which are the ying and yang of Continuous Improvement. In 1950, it took Toyota a year to make the same amount of cars that Ford and GM made in 3 days. Toyota was on a glide path to failure and needed to make drastic changes for the sake of their own survival. Out of this immense pressure emerged the diamond that we now call Lean Manufacturing and the Toyota Production System, which has become the global benchmark of operational excellence. At the core of this set of management processes were 2 principles:

  1. Value is defined by the customer
  2. Waste is eliminated or controlled by a method we call one-piece-flow

This article stresses the importance of the first principle. The Toyota Production System was born out of an understanding that the customer is at the center of the company’s universe and everything the company does is intended to bring greater value to the customer. With this clear perspective on what it means to “win”, it also becomes clear what “losses” are – which are any activity that does not bring value to the customer. On the same note, Toyota has famously proclaimed that as much as 93% of all of it’s end-to-end supply chain activity is waste. So if you look around and see some opportunities for improvement, you’re certainly not alone.

Each customer defines value differently. Likewise, customer preferences are constantly changing. This is great; it means there’s always opportunity for you to grow and lay claim to whatever your slower moving competitors are leaving on the table. However, there are 6 rights that bring increasingly greater value to every customer. The company that does the best job satisfying those 6 rights every time has a huge competitive advantage over the other guys.

Here is the Customer Value Bill of Rights:

The Right Product

When you think of product, think of a solution that has a certain form, fit, and function. Customers will buy the product that most closely fits their need (or desire). Also, keep in mind that customer needs are always evolving as being driven by new technology, fashion trends, and competitive activity. You win this category by picking up the signals of consumer taste and being first to re-tool and launch products that seize emerging market opportunities. In this category, your weapon of choice is production agility and flexibility.

The Right Place

One simple but powerful Lean tenant is that supplies should be staged near the point of use. Your customers also appreciate the convenience of getting what they need from you without needing to look far and wide for it. Nearly all supply chain operations fall short of the ideal of zero distance from the point of use but Amazon.com is getting us fairly close. Most supply chain models are designed to get the product from the factory to the shelf at the supermarket. We then rely on the customer to come into the store to find and purchase the product. Amazon and a few other close followers have taken this a step further by delivering products directly to the customers doorstep – albeit at least a couple of days later. There is still opportunity here for us all.

The Right Time

Can you imagine everything you need just materializing right in your hand the moment you need it? We don’t live in that world today but I’m sure people would be delighted to fork over a little extra cash if you could figure this one out for them. This sounds a lot like the Lean Manufacturing principle of Just in Time delivery (JIT). As a consumer, the closest thing we have to this is in digital products like movies, music, and other content that can be accessed on demand. The next wave is products on demand in real-time. Imagine a new bottle of dish washing liquid showing up at your door the moment your current bottle reaches the 10% mark with no action needed on your part. Its coming – and if you get there before the other guys do, the spoils are all yours to enjoy.

Click here to calculate your savings opportunity by using Impruver’s Transformative Lean Manufacturing Software

The Right Quantity

I would venture to say that most manufacturers that have been in business for a while do a pretty good job at shipping the right quantities to the customer. Of course some still struggle in this department from time to time but with the help of ERP and Order Management technology, you shouldn’t have much trouble getting production orders filled as needed. The key here is to continue to increase production reliability so that your system delivers the quantities needed with less time and inventory required.

The Right Quality

Quality can be a tricky one because it has a double-meaning; one being to produce with high consistency and low deviation from one unit to the next of the same product; the other referring to the perceived value of materials and methods used in production (consider luxury products as being regarded as high quality). For all intensive purposes, let’s consider quality to mean consistency and reliability of the product itself. Manufacturers win in this space by continuously engineering a more perfect production process where defects are made impossible in the best case and contained prior to shipping in the least so that product defects never reach the customer.

The Right Price

Finally, all of this must be done at the right price to the customer. This implies that conversion and material costs are low enough to leave you with a healthy profit as well. The manufacturer with the lowest direct, indirect, and overhead cost structure has a significant advantage over the competition given all other things equal. To win in this category, continue to drive out the eight wastes while delivering excellence across the Customer Value Bill of Rights.

The days of brand loyalty are quickly becoming a thing of the past. Companies that win in the markets of tomorrow understand the Customer Value Bill of Rights and leverage end-to-end Continuous Improvement to deliver on them more effectively than the competition. Jeff Bezos and the good folks at Amazon.com have made a killing by exploiting the fact that manufacturers do poorly at providing the right product at the right place. However, Amazon is terrified of that manufacturer who figures out how to deliver the right product to the individual customer’s doorstep on demand in the right quantity, quality, and price.

The Ultimate Lean Metric: Are You Really Improving?

The Ultimate Lean Metric - calvinlwilliams.com

So, I have good news – and I got bad news. Which one do you want to hear first? Ok the bad news…you might want to sit down for this. Well the results have come back from the lab and…it turns out that your manufacturing business is only 50% as productive as it could be (maybe this comes to you as good news. If so, we should talk because you need some new friends). The good news is that you can get to 60% just by tracking and reporting the right information. You can get even more productive than that by engaging your workforce in overcoming issues that are hurting your company’s productivity. But let’s tackle first things first. What Lean Metric are you using to show your opportunities for improvement? And how are you measuring productivity?

What is a Lean Metric?

Okay, I have a confession to make. I used the term Lean Metric with an unfair assumption. In my defense, its an assumption that almost everyone makes when they think about Lean or Continuous Improvement. Its the assumption that your company is focused on increasing productivity, reducing cost, freeing up working capital, optimizing throughput, improving quality, and so forth. Before investing another minute of your time or kilo-joule of your energy in Lean or Continuous Improvement, you should know what’s most important for your company to improve. If the answer is none of the items listed above, you might not be looking for the intel I’m about to share with you.

Your Lean Metric is the one that lets you know 2 things:

  1. How much better can you get – notice I didn’t say “how good you already are”. Hey, we all like to look good – but when you’re looking bad, you want to find out before everyone does
  2. Where do you place your improvement effort – hopefully you’ve accepted by now that improvement does require effort and you’ve planned for that, come on people. The next step is sizing up where that effort is most economically placed to produce the greatest return on investment. Not all changes are actually improvements – only changes that actually help are improvements.

Now if I walk into your plant and you tell me that you’re achieving over 100% efficiency, we need to have a serious talk. When you tell me that your performance metrics are no longer green but have reached gold status, let me know in advance so I can bring a good therapist along with me. The global standard for measuring productivity is a metric called Overall Equipment Effectiveness (OEE). I like this metric because it measures your equipment output against perfection, which means you can never achieve 100%. And that’s okay. The first step to recovery is acceptance.

However, even OEE as it’s taught in the textbooks is limited because it lacks the human element. The one that says that a person, or group of people, are responsible for the results. It draws focus to fixing machines but not developing people. A better metric would look overall personal effectiveness, which is similar to OEE (availability x throughput x yield) but at a person level as well. This way you can see who has better processes and capability and can help develop capability in those who need it most. This works well if leader behave more as coaches and adopt a CI mindset instead of seeking to place blame or take punitive action.

Why Your Lean Metric Matters

You may be thinking, wait a minute here. If I show a low efficiency number, its going to hurt morale and demotivate the team. The flipside is that if you show a high number that isn’t deserved, you’ll spoil the troops, which is also demotivating. To foster a Continuous Improvement culture, you need to reward the behaviors that you want to see repeated. The key is to reward behaviors that produce consistently improving results, not the results themselves. Even better if you can catch the behavior in the act and reward, encourage, inspire, etc. Rewarding results is dangerous because you probably don’t know what behaviors were used to produce those results.

Lean Metrics should help drive the right behaviors; those that lead to better and more sustainable results, as indicated (but not proven) by the metrics. Reward steady and gradual improvement, which is achieved by learning and increased engagement in the right behaviors. As a leader, the Lean metric more than likely represents how much you are investing in building the right capability in your people. The capability to overcome challenges, solve problems, and continuously improve processes in their area of ownership.

Click here to calculate your savings opportunity by using Impruver’s Transformative Lean Manufacturing Software

How to Improve Your Lean Metric results?

We all know managers who think they’re “coaching” when they’re actually just “telling and punishing” their employees. They say things like “I told them what to do and they didn’t do it” or “they didn’t listen” or my favorite “they were coached”. This mindset comes from the old command and control management style that just doesn’t work for operational excellence. The reason is because you can command a short-term change in behavior, but if you haven’t built the capability and learning to sustain that behavior, it falls apart under the weight of real life. The key to getting better results in your Lean Metric is by truly coaching people. John Wooden would say that “great coaches can guide the behavior of others without causing resentment”. That’s a powerful skill that every leader should work to master.

Here’s a great way to coach people. You issue them a challenge that excites them or find out what they’re trying passionately to improve. Then engage them in overcoming the challenges between the current and target conditions. Whatever you do, don’t give them the answers – that’s not coaching, that’s commanding. Certainly don’t force them to use certain Lean Tools that you like and expect them to fall in love with the tool like you did; it’s not gonna happen. Let them come to understand that they can’t achieve their goal unless they get the tools or help they need. Once they ask for help, then you provide advice (but not commanding). They must achieve and retain ownership of the process and the improvement. One of my favorite expressions is “the beauty is in the struggle”. Let them struggle, then overcome, and finally be victorious. The Lean Metric will show improvement, then you reward them for all their hard work in overcoming such impossible challenges.