Partner & Managing Director, Paris
The problem with lean at most manufacturing companies is that it’s not lean enough. Just ask the leaders of some of the companies that have implemented one of many lean methodologies in circulation, each one of them more complicated, abstract, and incomprehensible than the last. After implementing their chosen methodology at great cost and with significant disruption to day-to-day business, they wait for measurable results. And wait. And wait some more.
Some benefit may eventually materialize, but more often companies see little or no return on their investments. Consider the pharmaceutical firm that trained 765 employees to attain Six Sigma black-belt status—at a cost of $10,000 per employee. The training produced no discernible operational results, but 765 people were able to embellish their resumés, which certainly helped them find better-paying jobs elsewhere. Then there’s the large industrial firm that has invested five years of relentless, intensive effort in a world-class manufacturing system and is still waiting to see a return on its massive expenditure of money, time, and energy.
Anywhere you look across the industrial landscape you can find similar stories of failure and frustration. In such a scenario, what is the way forward for manufacturing leaders hoping to create tangible gains from the concept of lean without getting overwhelmed by the multitude of available options and investing endless resources? The solution is not to abandon lean. Instead, these leaders must take a deep look at why they launched lean initiatives in the first place, return to basics, and start to apply the principles of lean to the lean effort itself. Underlying those principles is an unending drive for continuous improvement and a day-in, day-out search for increased efficiency.
This simplified approach to lean focuses on problem solving at every level of the organization. Each level takes aim at the three highest-priority problems that prevent an operating unit from achieving its own objectives and, in turn, prevent the next-higher level of the organization from meeting its objectives. This approach is, of course, Strategy Deployment, which cascades strategy and operational objectives through all levels of the organization, starting from the C-suite down to individual work stations on the shop floor.
Each level is expected to meet objectives that are aligned with the organization’s overall strategic goals. The objective of a firm’s industrial director, for example, might be to obtain an overall equipment effectiveness rating of 85% within 12 months. This cascades down to production-line supervisors as an objective to produce 1,200 flawless products per hour. The goal for the quality manager of that area of the plant might be to turn out products that are right the first time 99.9% of the time, and so on.
Once this hierarchy of objectives is in place, the organization is ready to initiate a process of continuous improvement. The idea is to set up a simple mechanism for detecting problems, communicating them, solving them, eliminating their root causes, and ultimately making the improvements sustainable by embedding solutions into standard work and procedures.
Fueling the engine of continuous improvement are six simple mandates that interact to form a coherent and logical system:
This shows the performance indicators relevant to each tier of the organization and compares these to daily targets. The display enables the operating entity to pinpoint exactly where the indicators fall short, trigger standard reactions to address any shortfall, communicate corrective actions to the next-higher level, and define and prioritize the problems that need to be solved to remedy the shortfall.
The second mandate involves defining the method the organizational tier has adopted to solve problems, be it root cause analysis, Quick Response Quality Control, Eight Disciplines, or another method, and ensuring that it is followed. Irrespective of the chosen method, it is crucial to follow two steps. The first step is to discover not just the root cause of a problem, but also why the problem was not detected before it arose. A problem is considered definitively resolved only if the root cause of its occurrence has been eliminated, an effective means of detecting it before it occurs has been realized, and the solution is integrated into standard work processes. The second step is to document, store and share problems and solutions. Companies must have a tool for recording, researching and disseminating each encountered problem and the solution adopted to solve it. By doing so, companies can avoid reinventing the wheel each time the same problem is encountered and thus reduce the time required to find a solution.
This mandate consists of codifying standard procedures that dictate a single, repeatable method of performing each critical operation safely, reliably, and efficiently. Each zone on the manufacturing floor is expected to list its critical operations and illustrate how to perform these using easy-to-follow, explanatory images.
The step of creating displays of standard operating procedures at each workstation in every zone of the shop floor ensures that operations are optimized and that problems can be detected and documented in a highly visible manner.
This next essential mandate is to define the amount of time managers spend with their teams in the field, solving problems and imparting knowledge to their direct reports. Though it might sound onerous at first, this mandate eventually simplifies managers’ work by structuring their time and reducing or eliminating reporting responsibilities and unproductive meetings—in short, by applying lean principles to their own work. As an example, one efficiently run, global industrial firm requires shop-floor supervisors to devote 60% of each work day to interacting with their teams on the ground.
The final mandate is a contract binding on everyone in the organization, including executives, that defines and documents how everyone is expected to contribute to the continuous improvement effort. A plant manager, for example, might commit to solving two problems per month, while an operator undertakes to detect and solve three accident risks every month.
How successfully this engine of continuous improvement is deployed by an organization can be measured by a maturity grid that on one axis plots the extent to which the system is deployed throughout each plant and on the other, the results obtained by adhering to the mandates. The monitoring of maturity serves as an audit of each entity, the results of which can be communicated within the organization to maximize their impact.
Of course, organizations need to balance this bottom-up problem-solving approach with complementary top-down direction. This will drive focus on the difficult, but hugely important cross-functional organization and process issues that allow for transformational changes in the cost structure. These include efficient organization structure, coordination between sales and operations, efficient scheduling, balancing supplier cost with quality and delivery, etc.
Organizations that implement this system can reasonably expect operational improvement along several dimensions. Some real-life examples of operational breakthroughs using this method include increased cash generation by paring wasteful inventory, improved safety leading to fewer and less severe manufacturing floor accidents, significantly reducing the cost associated with defective products, and bringing down the incidence of missed deliveries. In addition, there is a direct positive impact on employee engagement. By moving from firefighting mode to continuous improvement mode, organizations can expect to see a more engaged workforce that has a growing appreciation for the sustainable progress that an effective continuous improvement model can achieve.
Dissatisfaction with lean initiatives must not discredit the principles that underlie the concept. Rather, failures usually highlight a flawed application. By returning to basics and instilling a culture of continuous improvement throughout their operations, manufacturers can finally realize the elusive promise of lean.
Continuous improvement is not just vital at the organizational level. It must also become an exercise for every individual employee. A simple way to do so is to have everyone ask themselves three questions every day: