The Lean Bug!

Whatever you think of when you see the words “Lean Manufacturing” or “Lean Thinking” you cannot get away from the fact it is a set of business principles, which, when applied, deliver exceptional results.

Over my career, I have seen the impact and benefit that Lean Manufacturing brings to any size of business, from an Engineer (in the 90s) working at an Small SME to a Corporate Exec (2009) implementing Lean Strategies.

I personally got the bug for Lean working for a small company called Linread Northbridge (although part of McKechnie Plc). We were making precision fasteners for several sectors but predominately Aerospace. The MD at the time gave me a book to read on “Kaizen” and I was hooked. From then on I have implemented Lean within every business I have worked in to now helping Manufacturing SMEs with short, high impact Interventions to major Lean Programmes and Strategies.

My first Kaizen event in the 90s was facilitating a SMED event on a Header Machine that took a whole shift to change-over from one product to the next, being trained, coached and mentored by a Japanese Sensei. We got the change-over down to 30 minutes. Through using the correct KPIs and driving root cause analysis I’ve increased production output and capacity in manufacturing cells that businesses have said couldn’t be done. I’ve moved 100+ machining centres within 5 days to create flow and as an Exec have put in place Strategies that realised Savings of +£15m within its first year.

Anything is possible if you put your mind to it.

I’ve heard the words “it won’t work here” more times than anything and I can tell you it’s Bu&*s*&t. The smallest improvement can have the biggest impact and everyday day is a day to grow and develop your potential. (Marginal Gains – The doctrine of marginal gains is all about small incremental improvements in any process adding up to a significant improvement when they are all added together.)

The skill is adapting, modifying and re-designing those business principles to ensure you get measurable and sustained business performance, after all in its simplest form all you are doing is looking at a time line from ‘Sales & Marketing through to production, production through to Customer Delivery’ and reducing that time line by removing the Non-Value Added wastes within it. Yes there are loads of tools and techniques that go hand in hand with that, but the biggest one is leveraging the knowledge within your people to drive continuous improvement.
Lean Manufacturing is not merely a set of mutually supporting techniques, it’s a change in the organisation’s culture and thought processes. The benefits to any business (regardless of size) are huge, and are only limited (in my opinion) by your Organisation’s Culture and Leadership Behaviour. Companies that fully commit to Lean dramatically outperform their competitors over time.
So get as close as possible to where the work is being done, lead from the ground up to first find what the real problems are and then face and resolve the underlying challenges.

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Operationalise Your Strategy

Benefits of Policy Deployment

  • Organisations with the capability to consistently execute their plans through the adoption of Strategy Execution outperform the market.
  • Organisational capabilities will be aligned to support the achievement of your company objectives.
  • Resources will be allocated to business processes in priority order (according to the importance/contribution the process makes to your business)
  • Your company can excel in the business/commercial sector in which it operates.

The Policy Deployment process has yielded some unbelievable benefits for me in my career and it’s one of those processes I recommend all businesses leaders introduce, (but I will also state if you are not prepared to apply the rigorous PDCA management process that goes with it, it’s not for you). I’ve been using Policy Deployment for 15+ years across multiple businesses, as an example: £1bn Turnover business, achieving £200m EBITDA across 38 sites globally, including Lean Savings within the first year of £21m. Done well, it works!

Some of you are probably getting to the stage or are currently producing budgets for your coming year. Now wouldn’t it be worthwhile aligning your Strategy and your budget requirements and drive some break through thinking into the process.

The process itself comes from a technique called Hoshin Kanri, which is a method devised to capture and cement strategic goals, well for me it does more that cement goals, it disseminates those goals into tactical projects that are owned, timed bound and measured.

There have been a number of English translations Policy Deployment, Goal Deployment, Hoshin Planning. I prefer Policy Deployment Process or PDP, but as you probably know from me by now, call it what you want just as long as you use it.

So What DOES it do?

  • It forces the clear identification of “How” we move ourselves towards our Strategic objectives.
  • It creates an alignment of all facets of the organisation on the key strategic initiatives (cross-functional teamwork).
  • Fosters a data-oriented, fact-based culture.
  • Reinforces the vision, but also clearly defines how we will get there (Based on “Who” does “What”).

What it DOESN’T do!

  • Achieve results if the management process isn’t changed (Moved to rigorous PDCA).
  • Achieve results if the “How’s” (Improvement Priorities) aren’t the right ones.
  • Achieve results if the “How’s” aren’t clearly defined.
  • Replace the need for solid Business Fundamentals (also known as Daily Management).

The process is intended to help an organisation:

take the Company Vision (desired end state, aspirations, business scope); the Strategy (3-5 Year Strategic gaps/objectives, high level plans for competitive advantage) and creates a One year distillation of these 3-5 year objectives.

It creates improvement priorities and metrics for tracking progress and indicates the resource responsible and accountable for them. A tactical implementation project if you like (you can go further with the process and state which projects need to be completed within each quarter of the year, to add additional focus).

Detailed action plans (A3’s) are produced for each one of the improvement priorities and reviewed on weekly/monthly/quarterly basis through monitoring of the PDP metrics.

These reviews should be held by a cross functional team who challenge each other, learn from each other and drive execution of the improvement priorities.

Typical Strategy Objectives may be:

  • Double Top Line Sales in 5 yrs
  • Double OP % to Sales in 3 yrs
  • Reject PPM Reduction by 90% in 3 yrs
  • Reduce Lead-time by 75
  • On Time Delivery to 100% in 3 yrs

Typical Annual Objectives may be:

  • Grow Top Line Sales by 15%
  • Increase OP by 25%
  • Reject PPM Reduction by 50%
  • Reduce Lead-time by 50%
  • OTD +20%

Improvement Priorities may be:

  • Quality: Create & Implement Rapid Defect Reduction Process, Implement DFSS on Critical Products
  • Delivery: Apply Lean ‘Tools to XYZ to Reduce LT, Implement Back-Office LT Reduction Process
  • Cost: Develop & Implement LCR Sourcing Plan, Launch Productivity Improvement Std Work Series in Assembly

So Why Use it?

97% of Businesses have a Vision
80% have a clear Strategic Plan
52% some Execution/Success
33% Significant Execution Success
Where do you think Policy Deployment is having an Effect?

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Short Term Vs Long Term Results

Now in anybody’s mind the drive for short term results should be aligned with the long term. But why is it we struggle so much to get this balance right, and to add, it’s never been more needed as it is in the current economic way of the world.

One of the more obvious ways I’ve seen it manifest itself is between the overall corporate strategy and the operational behaviour of local teams. Here are just some of the examples I have seen…

First one, Corporate Strategy was to reduce internal costs, based on a Senior Leaders comment regarding a competitor’s costs, an assumption made with some questionable data. Now the local team had done analysis to show profitability in what they were producing and a significant growth improvement too which the corporate focus was fighting against. Which would you have had? Peter Drucker “preparing for tomorrow” springs to mind.

The second, Corporate Strategy to enter new markets with a new service, the local sales teams refusing to follow this as they believe it would be hard to hit their commissions so subsequently paying lip service to it when necessary. Interestingly the price and the margins for the older services were falling drastically, hence the focus on new service.

The third, Private Equity Investors driving the short term results against the Business Leader driving the long term vision, I’ve witnessed on numerous occasions where PE investors introduce a weekly operations call to review KPI’s (key performance indicators) they have introduced (35/week at one business), from Health and Safety, Productivity, On Time In Full, all the good stuff but driven at a behavioural level that can have a negative impact. KPI’s drive behaviour! When managed at a micro level from upon high every week begins to channel the focus on covering the past, we spend most of our time in answering questions that happened last week, not on where are we going, how are we going to achieve, how can I help.

This is one of the more obvious I have witnessed, the pressurised environment of the end of week/month/quarter / year period often creates behaviours that from an outside perspective at least, appear to be utter madness. Of course every business needs to keep the lights on but not to the extent that it sacrifices long-term value.

There has to be a balance between Visionary/Strategic leadership and Managerial Leadership. Managerial leaders are primarily immersed in the day-to-day activities of the organisation and lack an appropriate long-term vision for growth and change. Conversely, visionary leaders are primarily future-oriented, proactive and risk-taking. These leaders base their decisions and actions on their beliefs and values, and try to share their understanding of a desired vision with others in the organisation.

In essence a business needs to have both mind-sets present, a combination of the managerial and visionary styles. Having two leaders like this requires that they trust each other implicitly and are willing to listen to each other, the CEO and COO for example. It is possible to have a singular person with both mind-sets but they are few and far between.

The balance comes in how you “Operationalise that Strategy/Vision” so both styles work hand in hand.

Food for thought as we start to get closer to a new year.

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FEAR, ONE OF OUR BIGGEST HINDRANCES

It’s getting to that time of year again for some of us, when we start to look at our half year performance or even looking to the operational budgets for the year to come.

The economic outlook is being driven by uncertainty (some of it in my opinion is the media plus others talking us into it, you’ve only got to look at the articles in the News to see it’s not all doom and gloom), we have to think positively in order to be successful.

I read an article recently from The Magic of Thinking Big, by David J. Schwartz. (here’s an extract)

Belief and wishful thinking are quite different. Wishful thinking will never spur you to action and as a result, your wishful thought will forever remain a wish. However, when you truly believe you can do it, the how to do it will reveal itself.

Strong belief in something allows your mind to figure out ways to accomplish what you believe. Belief is the driving force behind all great successes. For example, Edison wouldn’t have continued to try and try unless he really believed he could make the electric light bulb. Schwartz discovered that belief in success is the one universal, basic and essential characteristic behind all successful people.

The size of your success is determined by the size of your belief.

The distinguishing difference between a person who is going places and the individual who is struggling is the latter person’s habit of excuses. And one of the biggest hindrances to success is fear, and what do we always see in the papers, news, etc., FEAR!

Thinking dictates action! (David J. Schwartz)

I have witnessed colleagues thinking they are inferior to another and ultimately act like that as well. As David has pointed out, thinking dictates action.

Successful people think big and think creatively.

Creative thinking is nothing more than finding new and improved ways in what you need to achieve. Success is dependent upon using creative thinking to discover these improved ways; and as with most things, it can be learnt.

So whilst looking at your half year performance, your Operational Budgets, and or your Strategy for the coming months, think positively, think big, think what it is you need to achieve and find new ways to do things, learn from others. But definitely don’t FEAR it.

Worth a read: The Magic of Thinking Big, by David J. Schwartz.

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Re-Thinking Being Lean?????

I’ve recently read articles on Lean Manufacturing and in particular how certain businesses have been re-thinking the implementation of Lean.

Now for a bit of background on the articles. All of the business Leaders that started the implementation had been replaced and within 6 months of them being replaced the new Leader had decided to drop the programme. Now most of the stakeholder’s state that their objective is to address the challenges to delivering high-value to the customer, mmmmmm I wonder? By agreeing to drop a programme of business improvement?

Yes, lean takes time, yes lean utilises the front-line workers, yes you have to manage it and believe in it, but Lean is a long term strategy, a set of principles on how you do business, your business DNA. I wonder sometimes with the drive for instant results in a short space of time, particularly from stakeholders, the impatience for money, dividends, investors ultimately see the Leader that introduced the programme removed. This leads me to believe that stakeholders/leaders are either, ignorant, arrogant, none the wiser or have their own interest at heart, on what long term strategy and Implementation actually and physically means. I have been told about the removal of 11 Operations Managers over a 18 month period due to perceived lack of results, you cannot be that wrong in your recruitment process (or perhaps you can but that’s a separate discussion), so leads me to believe it’s the level above that’s the issue.

Now don’t get me wrong, if your haemorrhaging money within operations due to scrap or process variation don’t go and implement a 5S programme. Instead stop the haemorrhaging by attacking the root causes for variation and scrap, get controllable and predictable outputs. 5S may be part of the implementation but it’s not the saviour.

I worked in a number of businesses in my career and still see the same issues regarding short term results oriented thinking that has cost millions (and yes I mean millions in some cases). When I actually know that had the Lean Initiative programme, Operational Excellence, etc. been executed and maintained when it started, those losses wouldn’t have appeared and would have been quite the opposite.

Cost cutting is often a major reason for ditching the latest programme, and Leaders think that through the force of their personality or financial acumen that they are going to be able to fix the business without the aid of every employee in the business, how foolish are they??????

Any Improvement Programme is not going to be easy, but the benefits are massive for everyone, it takes time but ‘time’ is not a reason not to try.

What did make me smile was one of the businesses new Leaders justified the termination of the programme due to that fact that the frontline workers were involved, but in involving them had potentially reduced turnover times by 6.5 mins which equated into £410000/year of increased revenue.

Lean Manufacturing, business Improvement, whatever you call it, is not a short term strategy, but that’s not a reason not to pursue it.

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Manage Time as a Resource

If your managing time in all sectors of the business, from Sales, Product Development and Production it will result in shorter planning and development cycles, as well as less process time in manufacturing.

Whether you’re a manufacturer making computer components, tin cans, widgets or an individual working in a purchasing department producing orders, reports, or budgets you are still producing an output, an output that someone wants.

We all have our processes (inputs) and transform them into something someone wants (outputs).

Time is the key element to control within our processes, for this we use standard work.

The establishment of time based standardised processes is the greatest key to creating consistent performance. Only when the process is stable you can begin the creative process of improvement.

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Improving Performance – Engineering Company Case Study

Increased Delivery, Increased Sales

**No images or Business Name as Customer NDA in place**

Opportunity

This Private Equity owned business was under performing against budget. Particular attention was required within the operational areas with Productivity and On Time Delivery drifting.

The Managing Director required a system to: communicate the strategy, allocate resources, focus and align actions, and control business drift. He wanted to ensure that all key improvement activities had ownership, responsibility, accountability and the relevant training and practitioner support required to increase overall company performance.

Improvement

Working with the Managing Director & Executive Team the decision of implementing Strategy Deployment and A3 Problem Solving was agreed along with hands-on project execution support.

Training was given to all Management and Leaders in what Policy Deployment and A3 Problem Solving is, what benefits and how the process should be structured to enable execution of the business objectives. Key fundamentals were as follows:

  • Identify the few, long term breakthrough objectives that are critical to long term success of the company.
  • Link these objectives with specific action plans throughout the organisation.
  • Focus and align the company’s internal organisations to achieve these long-term objectives.
  • Turn the strategic plan into a year – over – year action plan.
  • Coaches and Mentors others

Workshops were held to ascertain the critical improvement activities to be focused on within the business. Training and Coaching was given to the owners of each A3 Plan on how to manage and communicate through the A3 process. Guidance and training to understand background, current state, problem definition, analysis, actions and follow up.

Management Control Rooms were introduced with regular performance reviews held with all owners and stakeholders present. Ongoing coaching and mentoring in Management Behaviour for the process along with business improvement training and our Lean Coaching Programme to ensure execution and sustainability. Operational Excellence and Process Optimisation workshops/projects were completed covering Sales, Purchasing & Logistics, Operations and Planning.

The company significantly impacted it’s financial position over a 9 month period,

  • Increasing Sales by 20%
  • Delivery by 33%
  • Efficiency by 28%.

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Leadership Standard Work

Now most of us know and understand Standard Work, and hopefully when I say standard work your thinking of Process Capacity Tables (PCT), Standard Work Combination Tables (SWC), Standard Work Layout (SWL) and Standard Operating Procedures (SOP) and NOT just standard operating procedures????.

As a refresher

  • PCT – illustrates the production capacity of each process involved in producing a part.
  • SWC – combines human movement and machines cycle times based on Takt time.
  • SWL – A cell which is able to meet changing Customer requirements, as identified by Takt Time, with any number of Team Members, whilst maintaining productivity, without the waste of waiting.
  • SOP – is the document that details the current best method of operation. It includes quality checks, safety checks and any other activities that are included in the standard operation.

Now standard work also applies to management! Known as Leadership Standard Work.

Not to be confused:

Standard Work = a tool used to provide consistency of outcome

Leadership Standard Work = provides a structure and routine

It follows these three keys to leadership

  • Go See – spend time on the frontlines, be it, manufacturing, service, health sector, finance, etc.
  • Ask Why – use the “Why technique daily”
  • Show Respect – Respect your people

Leadership standard work is about walking the frontlines, seeing the abnormal from normal conditions. What is the work that’s is being done? What is the process? Is it adhered to? Are the business results being achieved? What is the next improvement that has been identified?

Leadership Standard Work in the case of a Production Manager may involve

  • A daily plan
  • A workplace walk across all areas
  • A conversation with a person from each area
  • Checking that Senior Management walks are completed
  • Is the 5S to the agreed standard?
  • Are actions being closed out?
  • Etc.

As we go up the hierarchy the standard work may become weekly, monthly, quarterly, etc.
A Senior Manager or General Manager may do the following:

  • Weekly frontline walk to touch base with associates, supervisors in each area to understand how the plant is running.
  • Spend time in the problem solving meetings, asking why, coaching and mentoring
  • Checking all critical audits are complete?
  • Are standards being adhered to?
  • Etc.

Leadership Standard Work Audit

Frontline associates see things first and we want to let them know what to do and feel at ease in highlighting the abnormal from normal conditions.

Leadership Standard Work is based on walking the frontline, observing waste and abnormalities, asking questions and supporting the improvement process.

By embedding this practice, leaders can begin to create a culture that:

  • Solves problems quickly and permanently.
  • Drives continuous improvement.
  • Develops the next generation of leaders.
  • Make continual gains in performance.
  • Embeds the culture of team working.

My early appreciation and benefit of this practice was implementing it at Unipart early 2000’s. It was implemented throughout the structure, from Team Leader to Managing Director, an example of which is the image above, showing the leadership pyramid/timing and Senior Manager standard work. Due Diligence is key to this practice, not paying it lip service or tick in the box mentality.

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“Performance Rooms” a powerful Visual Management Tool.

Over the last few months I had a number of discussions regarding what I call “Performance Rooms” others call “War Rooms” (never really been keen on that expression but as long as the process is followed what does it matter) or the Japanese term “Obeya Rooms”. I will use Obeya in this article.

These rooms and the disciplined approach to the process behind them helps businesses to reach their strategic/tactical goals and promotes the creation of solutions and actions that can be developed and implemented quickly. The aspect of Managing Performance Improvement for any business undertaking Growth or Lean.

Strategy Room

The following is an overview to understand the theory behind it.

Obeya is based on a simple idea that we dedicate: time, space, the coordination to root cause analysis and problem solving so that organisational barriers are minimised. This ability to maintain a disciplined approach to real-time problem awareness, listening to team members concerns, making discoveries, resolving problems, collaborating and above all developing/mentoring our people is critical to the success of a business.

They promote the coordination and implementation of Strategic and Tactical issues by mobilising and pulling together the intellectual resources of all employees in the service of the firm.

The following are different types of Obeya Rooms (not limited to):

Product Launch; when developing a new product, managers responsible for decision making in design, production engineering, and manufacturing gather in one place to shorten the lead-time through real-time problem resolution.

Business Process Layout: Centralised data collection, prioritising and action planning.

Focused: Project Performance Rooms, SQPDC, A3 Problem Solving, Continuous Improvement rooms.

Observations to consider when looking at Obeya Rooms :

  • Use two colors when tracking status, Red and Green. This avoids ambiguities; the status is ON TARGET or NOT.
  • Define SMART metrics (Specific, Measurable, Attainable, Realistic, Timely), no more than 3-5 focused metrics as more would be impractical for every day review.
  • Problem, Follow-Up and Countermeasure Boards are mandatory, the team must be prompted to solve issues immediately. The deferment/stalling to solving the problem is not allowed.
  • Meeting Discipline – Punctuality, Question and Challenge with dignity and Respect and the meeting should last no more than 30mins.
  • The flow for review takes the shape of Check, Plan, Do, Check, Act instead of the normal PDCA.

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Less Can be More in Report Writing – telling the Story Using an A3 Report.

Some contacts asking about A3 Problem Solving, I thought I would do a quick overview.

Problem solving is about thinking, but writing things down can help thinking as well.

Using the A3 process we can document key information and decisions each step of the way which can then be shared with others, to get input, and make modifications by using that input.

Why A3? Originally it was because much of the communication across Toyota (the various sites and nations) was by fax, and this was the largest size paper that could fit in a fax machine. (Amazing how some things materialise)

A3 Problem Solving Template

The key fundamental about A3 reports is not the format or the finesse with which you fill in the different sections which fancy drawings, charts etc. It’s the COMMUNICATION process. The A3 is fundamental to the process of problem solving and decision-making. It allows the most critical of information to be shared with your business or businesses for others to evaluate on the thought processes used and as a means for requesting support and advice, which in turn aligns everyone in the organisation on how the A3 will move forward.

The above image is a typical layout (not set in stone though, as previously mentioned the format is not the point), but it highlights the different stages and guidelines for completion.

For anyone interested contact me and I’ll send the guide and some examples in PowerPoint format. My personal opinion is use paper and pencil for a start.

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