We often get asked, “What’s beyond Lean?” or meet managers who say “When we started doing Lean we were way ahead of the pack. But now our competitors are doing it too, so how do we get back in front?”
What this tells us, is some people believe just using Lean tools makes them Lean, and if that’s so, then they’ve missed a key point. Initiatives like Lean and Total Quality are slow and steady approaches based on the principle that doing the right thing at the right time will lead to greater value.
The fact is that Lean has been approaching something of a crisis for quite awhile. Operations people continue to drive the effort, but business managers, with responsibility for making profit have lost faith because they can’t see results on the bottom line, and they don’t have the thirty years it took Toyota to beat the competition. They need more money NOW.
Your gut feeling will tell you that reducing waste and saving time have to be good. Right? Shutting the machine off when you’re not using it reduces the utility bill. More automation reduces direct labor cost. So where’s the “disconnect” with profit?
But think about it. Does a lower utility bill really have visibility in the overall cost? Did we shed direct labor when we hired automation engineers to support the new robots? Did that project solve an obvious difficulty that needed to be solved right now? If the answer to questions like these is “no”, then there’s your disconnect.
If we assume a solution, or even pick the Lean tool to solve a problem, before viewing that problem in its business context, then we’re going the wrong way. To avoid disconnect, look for the immediate, accurate match between a business unit goal and your Lean project, and if you can’t find one, forget it.
The good news is, that if you laser target an explicit business objective with every Lean initiative, every time, you will see the bottom line results, and fast. But if you haven’t established that direct relationship between your project and that objective, then you shouldn’t be doing it.
It turns out that running your business by rules of thumb like, “more efficiency means less spending” or, “lower inventory means increased cash flow”, is just plain dangerous. Because if you’re not addressing the most pressing issues facing the business right now, then you’re the one wasting time and resources.
Making that connection consistently is a talent we must add to our skills list with a matter of urgency.
Oh, Lean has a future all right, but only if we to do it with the “paranoia” of making sure that every project has that one-to-one match with the achievement of a clearly stated business objective.
James O’Sullivan
Saturday, November 17, 2007
Is There a Future for Lean?
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3 comments:
"With the right Management there can be a future for Lean"
For me the crisis of the lean management is understandable. The basic idea is good. BUT too many managers have massively exaggerated this system. First of all they didn't seem to care for any of their people and know-how but only of the money which they can save on a short term. They have started to fire people without thinking what that means for their future. Buying machines and thinking that those machines can fully replace the menpower cannot be correct. It is necessary to strike a balance between menpower and machines - everything else can kill a company. Lean is certainly good for a forward-looking management.
Managements reduce staff - and it is certainly necessary to reduce staff but unfortunately they reduced the wrong one which leads into a situation that good people have to leave and bad and lazy ones can stay because of their personal situation. Good people will always find good new jobs but as the know-how of a company is leaving with the good people then the whole lean management will not work.
If we take for example Germany and what "Quality made in Germany" meant in the past and how this good reputation decreased because of wrong management decisions and by firing important staff who knew how to solve problems in production and by not investing in new jobs and in young people (apprenticeships). This cost saving has brought us now to a point that German managements are desperately looking for experienced staff. With the trend to stop apprenticeships especially in production there are no people who can take over the jobs and know-how from the old ones. By decreasing the quality this way they have lost customers which is the result of misinterprated lean management.
Now managements slowly wake up from this long deep sleep and need to discover that it's almost too late.
For me a good management is a management who knows how important it is to keep know-how in a company and to get new know-how from outside in order to bring a company forward and who can find the balance with the right investment in cost-saving machines.
Michaela,
I think you’re right on when you say that without the right people, Lean initiatives will take us nowhere. To add insult to injury, I’ve seen corporations’ abuse Lean programs by treating them as a cover to announcements of downsizing. The real motive wasn’t to make savings or to up-skill anyone but to create a climate of fear in the workforce that the company then used to rationalize redundancies.
Another short-sighted strategy is the practice of last-in-first-out downsizing. Vested interests in unions support it, and for the company it’s a cheap way to shed labor in terms of compensation, but if the newer, bright sparks are always the ones to go, then the “dead-wood” continue as before, and both company and employees suffer in the long run.
James,
You are absolutely right.
That last-in-first-out thinking is really a problem as that means that there is no fresh air and that means that there is no development within a company and you are right, the trade-unions are certainly a part of the problem which they would of course strictly deny..
Abusing managers start to hire consultants and use them to "excuse" the redundancies in order to wash their hands of it. It sickens me when I think about it.
No doubt, in many companies it was really necessary to get lean - I cannot deny that but if I take my own experiences it has not been done in a very effective way - effictive in terms of getting rid of the right people.
I have seen a management paying a huge amount of money using a very famous consulting company. For the money they have spent for them they could have saved the jobs of all people another 2 years. And just because the management wanted to get rid of people in a kind of "clean" way without making their own fingers dirty as they didn't have enough character to do that on their own.
Taking this example the result was that they have fired more than 1,500 people have lost their jobs and life-basis the consultants have taken information which they have got from the people fired and sold all as their own idea. This proves that companies should listen to the people they employ from time to time.
There is so much potential within a company which - if it would be supported - could save so much money because there would be less mistakes, the internal reject rate would go down. This would also be a possibility to save a lot of money - not only by exchanging people against machines. But the problem is that this is not really wanted.
Another point we should probably think about is that most of the people who have been fired have not been just physically present; they brought their work into the company. If too many people have to leave companies because of the lean program the work they have done needs to be delegated to the remaining people. Another big cost factor is the burn out syndrome of people. I can daily see people who are so much under pressure and are not able to do their work correctly and carefully because they simply do not have the time and they have to work overtime - of course without any increase of their salary. The result is that more and more people are getting ill - and not only for a short time…some of them are off for 1 year. And get fired later because they have been off sick for too long. It is an endless spiral because there are less and less people who have to do more and more work.
By the way, the company which became so lean with only 150 people remaining doesn't exist anymore.
Michaela Gerweler
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