Achieving the Lean dream

Unlike many manufacturing fads, lean manufacturing appears to be here to stay. But many firms are still struggling to figure out how to make lean achieve its promise, says author Nelson J. Teed, a management consultant and mechanical engineer.

“Build it and they will come.”

Like Kevin Costner in the popular movie Field of Dreams, managers in search of quality and productivity heard voices. Train the masses, create teams, win a quality award, and gains will come. Come when? How big? Measured how? We weren’t sure, but we had faith. We invested money and energy and threw a big party – but far too often no one came. Why?

TQM, in various forms from the mid-1980s to present, is a set of activities designed to change culture and only indirectly improve operating performance. Cultural change is difficult to measure and even more difficult to link by cause and effect to operating performance.

Then why do we place so much faith in cultural change? We can thank W. Edwards Deming. Dr. Deming was an elderly, opinionated, and confrontational physicist / statistician who came to prominence in the early 1980s by attempting to explain Japan’s quality and productivity dominance.

Deming’s message was that American management was too autocratic, hierarchical, short sighted, and numbers driven. Deming denounced numerical goals, performance ratings, and merit pay. Scientific management was labelled as outdated and dehumanizing despite the fact these work study methods, pioneered by American Frederick Taylor in the early 1900s, are highly regarded in Japan.

In hindsight, Deming was both right and wrong. American management needed to change, but the reasons behind Japan’s dominance were more basic. Deming’s contributions to statistical process control in Japan, and later in America, are immense and lasting. The same cannot be said for his “14 Point” management system which became the role model for later TQM programs. Activity based and aimed at cultural change, it’s a set of beliefs prone to loose interpretation, not a business strategy. Its lasting impact, if any, is unclear. As late as 1989, Deming knew of no one who had successfully implemented all 14 points.

Culture is real, and its effect on performance is real, even if difficult to measure. The cultural differences between Japan and the U.S. are profound and should not be ignored. Empowerment, flatter management structures, teamwork, and continuous improvement are crucial to success. But Deming and others didn’t recognize that “creating” these qualities in companies whose manufacturing system does not rely upon or promote these attributes is problematic. Companies using the Toyota system exhibit these qualities largely because their system encourages and reinforces them.

Juran and Crosby advocated a quality focused approach to improving performance, stressing statistical methods similar to Deming’s, but with more focus on reducing the cost of quality as the key to competitiveness. Along with Deming, they made up the “Big Three” of what came to be called the “quality revolution.”

As the title implies, Richard Schonberger’s “Japanese Manufacturing Techniques” (1982) tells a deeper story. Schonberger, as appropriate for an industrial engineer, analyzed Japanese manufacturing by carefully describing all its component parts. This “nuts and bolts” approach was better suited to manufacturing management and the shop floor. He explains, in clear detail, how the Japanese use a different, better manufacturing system, pioneered by Toyota and built around single piece flow, waste elimination, just-in-time production and delivery, and other simple principles independent of culture. But Schonberger did not gain the notoriety of his more “colourful” counterparts.

“The Goal”, “The Race” and “Theory of Constraints” are a popular series of books by Eliyahu M. Goldratt published between 1985 and 1990. A physicist by education, the outspoken, diminutive, cigar-smoking Goldratt preached the importance of inventory and cycle time reduction, increasing throughput, and treating manufacturing as a system whose performance is controlled by the bottleneck process. He recognized the superiority of the Toyota Production System, which he called “synchronous manufacturing”, in achieving these goals. Goldratt advocated a variation he called “Drum-Buffer-Rope” and delved deeply into the psychology of change and logic based decision making.

MIT’s five-year study of the world automotive industry, “The Machine That Changed the World” (1990) reinforced Schonberger’s 1982 conclusions. Widely read, it focuses on comparisons of quality and productivity. Conclusion: plants using the Toyota system, renamed “lean production”, significantly outperform traditional plants – whether located in Japan or not. The definition and building blocks of lean became widely understood.

The effort to convert to lean gained momentum. A reliable means of implementation emerged when kaizen events became the accepted vehicle for the transformation. Hundreds of American companies have conducted thousands of kaizens. These cross-functional, six to 10 member teams spend two to five days focused on a defined area of the plant. Using standardized tools and techniques, they analyze, brainstorm, implement changes, measure effect, and document the new system.

Typical gains of 25 percent in productivity, reductions of 90 percent in WIP, 50 percent in floor space, and 75 percent in travel distance are real and immediate. Lean works – quickly. It’s results-based and measurable. Faith is replaced with a bias-for-action.

It all sounds great in theory. You continue to run kaizens until you’ve completed the conversion to lean and enjoy all the benefits. Right?

What have we learned?

We really do live in interesting times. Schonberger’s book is now 18 years old. America’s understanding of lean is growing quickly, and many companies have experienced big improvements applying lean principles. But there’s much learning to be done, and some companies have had mixed results.

We’ve learned that lean manufacturing is a better manufacturing system, not a cure all. The lean conversion must be part of a more comprehensive strategic plan.

The combination of narrow focus, management mandate, tight deadline, bias for action, cross-functional team effort, and simple yet powerful analysis tools allow kaizens to quickly reshape the plant floor.

But the kaizens have limitations, cost money, and can be overused. The kaizen time studies are only good approximations – trained industrial engineers and broad time study data are not usually part of the kaizen. All analysis is based on a snapshot view of conditions at the time. Improving equipment flexibility, portability, and reliability are critical to achieving the full benefits of lean. Continuing kaizens when the key to further improvement is equipment changes creates inefficiency and frustration. Capital may be required to “right size” as the conversion progresses.

We know the lean conversion cannot progress beyond the beginner level without support from customers and suppliers. If so, it becomes a game of reducing your raw materials and WIP while increasing finished goods – for both you and your suppliers. Don’t complain if your customers and suppliers push you to accept and ship smaller, more frequent lots. They are making your total lean conversion possible.

We’ve found that achieving gains through kaizen is easier than maintaining them. Digesting the rapid changes is a major challenge for shop floor personnel. Operators must be retrained; displaced operators reassigned and retrained. The lean manufacturing system requires that we learn new skills and strategies to cope with post-kaizen changes in product design, mix, and volume. Kaizens, so important and effective in the lean conversion’s early stages, are of little use for the critical, ongoing task of consolidating and maintaining the gains and for adapting to changing conditions.

Proper pace is important and the lean effort must advance on all fronts simultaneously. Completing a kaizen event the organization can’t support is like an army division advancing too quickly, outrunning its supplies and exposing its flanks. The kaizen gains become islands of isolated, unsupported change which quickly wilt and die.

We know that meeting these challenges requires support from the entire organization. Manufacturing, where almost all value is added, must take the lead. Talent, authority, and responsibility, must reside at the plants and on the plant floor. Support areas such as engineering, maintenance, marketing, purchasing, and scheduling need to adapt.

One example is Materials Requirement Planning software, MRP, more commonly referred to now as Enterprise Resource Planning, ERP. In some cases, traditional MRP and lean may be incompatible. MRP is management by report, data entry is non-value added, and single-piece flow conflicts with batch and queue. Some MRP functions, such as long term capacity planning, will remain. Line managers need the organizational clout required to lead these changes.

Outside help might be necessary in the beginning. But if the earlier line managers take complete ownership of the kaizen effort and the new system it creates, then you’ll be much better off. They should be among the first to participate as kaizen members, learn to lead the kaizens, and then learn to identify future kaizen opportunities through shop floor analysis. Knowledge of lean should be a prerequisite for all hiring in key positions.

Most practitioners now recognize that all lean conversions need a road map. Analyzing the operation’s unique combination of products, equipment, materials, processes, and links with suppliers and customers prior to the kaizens helps ensure success. What’s needed is a clear understanding of where the operation stands today compared with the lean vision of a continuous stream of value-adding steps stretching from the first supplier to the end user. “value stream mapping” is one method to achieve this. Other components of a proper analysis are determining moveable and non-moveable equipment (called “monuments”), grouping products with identical process paths into families, and targeting growth products as first priority.

Lean’s advantages have proven greatest for high quantity, continuous production. The Japanese recognized this and pursued a strategy of increased market share. They achieved market domination by combining lower costs and higher quality to create more value for the customer. This was a triumph of their superior manufacturing – not marketing.

Growth and lean are great partners for another reason. Positive employee reaction to lean is crucial to success, and not automatic. Lean improves productivity and can reduce the number of people needed. Layoffs and employee involvement don’t mix – it’s the surest way to kill a lean conversion. The freed personnel should be absorbed by growth and natural attrition.

Even without job losses, fast paced change of this magnitude is stressful. Broader duties, steadier work pace, shift reassignment, more responsibility, and new emphasis on flexibility and teamwork can lead to resistance. Increasing pay to compensate for the new demands is often justified and aids the transition. Stressing the many positive aspects such as better ergonomics, more variety, higher job satisfaction, job security, and more input into improvements in safety, methods, equipment layout, tools, etc., also helps.

The key concepts to work on are teamwork, employee involvement, continuous improvement, communication, and self-direction: all the key elements of cultural change. But unlike the failed activity-based programs of 10 years ago, this is “on demand” cultural change. The need for it is obvious, even pressing. It is immediately applicable to supporting change on the shop floor. Staff positions and management levels are reduced, authority and responsibility are driven down to the plant floor, barriers fall, communication improves.

Exactly where the lean manufacturing revolution will take American industry is not yet known and there will continue to be challenges along the way. It’s form will likely evolve. So, what have we learned? Lean is here to stay.

Nelson J. Teed is president of Polymer Development LLC, a Summerfield, North Carolina-based consulting firm specializing in lean manufacturing implementations. Nelson is a mechanical engineer with more than 25 years of technical and senior management experience in the manufacturing Industry. You can reach him by email at: jteed@mindspring.com

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