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11 comments

Do We Pursue Lean for the Right Reason?

Posted February 16, 2011 8:30 AM by geanorm

Editor's Note: CR4 would like to thank Dick Kuster of GEA Consulting for contributing this blog entry.

We are often asked to look at Lean to reduce costs and improve manufacturing. We hear Lean expressed as a cost reduction or yet another efficiency improvement program. These are misconceptions (or at least the wrong focus) about the real purpose of Lean.

While cost reduction, greater efficiency and improved manufacturing are likely results of effective Lean implementations, when we focus on the total process from beginning-to-end, as Lean dictates, we begin to identify and eliminate waste and continuously improve the process. This is when we see what Lean truly offers. Eliminating unnecessary moves and combining multiple steps into one operation reduces in-process inventory and speeds up cycle time. Taking those steps and delays out of the process frees up physical space requirements, encourages working together, and provides the beginning of an operating environment where there is continuous improvement. And yes, some reduction of cost and increases in efficiency will follow.

Here is an example. The problem was presented as Lack of Capacity. The company was continuing to grow and they felt they didn't have enough room to add production of a soon-to-be introduced new product. Their owners said no more brick and mortar. Someone told them that Lean might help. It did!

Multiple bench assembly stations were replaced by work cells operating single-piece flow, and cycle time was reduced from 2 - 3 days to 2 - 3 minutes! The footprint required for the existing production was reduced 50%, leaving more than adequate facility for adding the new product line. Changing to a quick-dry adhesive eliminated overnight drying time (and inventory and storage space). With the existing bench assembly, assemblers stood in one place doing frequent, repetitive motions ending most days with back and foot aches. The work cell provided sharing of tasks, a variety of motions, and reduced reaching and lifting that resolved the fatigue issues.

And yes, standardizing and eliminating selected parts and restructuring some operations did provide some cost reductions.

Now, let's address a key tenet of Lean. We do not look at Lean as a program to make people more efficient; we look at Lean as a program that depends on the participation of people to collectively make the entire process more efficient. It requires providing training and opportunity with the expectation everyone participates. It is a change in management style and mission because it doesn't work without management's support, understanding, and demonstrated willingness to allow and encourage participation.

Generally, change should be driven by the need to solve business issues. The need for cost reduction is certainly one of them. How about sharply reducing in-process inventory? What about improving Customer satisfaction by shortening the cycle time from entering their order to shipping it? And, as in the example above, how about gaining needed production capacity without adding brick and mortar?

- Dick Kuster

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Anonymous Poster
#1

Re: Do We Pursue Lean for the Right Reason?

02/17/2011 9:29 AM

Hi Dick,

I desagree with the following sentence: "We do not look at Lean as a program to make people more efficient." For better performance we have to be more efficient. Yes, we are not efficient. We have to learn to be more skillfull. This is the reason we went to school, isn't it?

For me, LEAN means "with less make more". I explain, first, every manufacturing company must have a STANDARD OPERATING PROCEDURE (SOP) describing in details what and how to work, and everywhere, to obtain what supposed to be done. Use statistics extensibly to get corrective answers. The SOP must be reviewed and adjusted as soon problem, delay, or defect outcome. When we know what to do we can improve processes and operations by eliminating wastes around this operation, and be more profitable. Eliminate time, movement, and other futile things and actions that lengthen these operations. Buy and do only what you need. Transform raw materials into finished goods as rapidly as possible. Deliver orders immediately, and also, collect money in time. To operate LEAN, we have to have performing equipment, the right tools at the right places, and everyone must be trained to perform only ONE WAY and without DEFECT.

In any organization, we have unused people or people don't have enough work. It's better to pay overtime for some extra work than let people sleep or play on computer and paid. It means, do only what you do the best, which means, every company can cut 80% of products and sell only the remaining profitable 20%. It will reduce the number of raw materials, cycle-time, in-process and finished goods inventories, and the company can become JIT (Just-in-Time) manufacturer. Every individual of the company must be involved in, and trained in production, which is the only money-maker.

Cost-reduction comes from better SOP, training, and performing equipment that produces quality products, Gil.

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#5
In reply to #1

Re: Do We Pursue Lean for the Right Reason?

02/17/2011 2:55 PM

Hello Gil, I appreciate your comments. The "we do not look ... to make people more efficient" is one half of the line. The rest of the line, after the semi-colon (;), tells the story I want to tell. That is "Lean is a program that makes the entire process more efficient". Your next paragraph is right on and outlines very well the points to be made about Lean. When we go to our management seeking support for a Lean initiative we want to be wary of too much emphasis on direct labor and raw material reductions. There is so much potential for reductions in inventory and cycle time in the process. By reviewing the total process we are more likely to eliminate several steps rather than making them individually more efficient. Your wrap-up comment that "Cost reduction comes from better SOP, training and performing equipment ...." is the point. The Lean initiative, and it's focus on the process instead of the individual, provides the better SOP, training and performing equipment to which you refer. Dick

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Anonymous Poster
#10
In reply to #5

Re: Do We Pursue Lean for the Right Reason?

02/19/2011 12:47 PM

Hi Dick,

Thanks for the complementary answer.

After my opinion, most companies put accent to the infrastructure of the business. They must change, and I insiste on improving, MARKETING, DELIVERY and SERVICES, and PRODUCTION. First, question: Why we change infrastructure to obtain LEAN manufacturing?

When we fire workers and put new management on place, the company doesn't produce money. Management is cost. Production workers making money as revenue of goods sold. We see many companies firing people at production areas but maintain management positions or just shuffle it.

My second question: Most managers don't have the smallest idea what to do to make LEANER the processes and operations, and how to convert from regular to LEAN people, equipment, and processes. It was demonstrated by the industries - automobile, television, and many others losing production - by just converting high salary unionized people by foreign contries low wage workers, and we called LEANING OPERATIONS. LEAN manufacturing means that we keep production in the same or smaller building with the same people but we increase production by X and increase revenue.

Thanks again for the opportunities to learn what and how to do business in the global era, Gil.

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#2

Re: Do We Pursue Lean for the Right Reason?

02/17/2011 10:51 AM

This appears to be coming primarily from a management perspective of things. I would like to add one thing to your excellent blog.

That is, that I think that management, in all industries, would be astonished at how many answers to various problems, be it cost cutting, improvements, etc., can be found among the workers themselves.

I think there still exists a fairly pervasive, us vs. them, attitude among managers toward workers, rather than it being a team effort. The workers hold the key to many improvements that can be made. This, I believe, is a resource that should be tapped, exploited, and perhaps most importantly, rewarded.

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#3
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Re: Do We Pursue Lean for the Right Reason?

02/17/2011 11:34 AM

I agree with Kramarat.

In my experience in an office setting whenever I hear "lean" or "more with less" I know I'm about to get screwed. Managment has stopped providing me the tools I need to do my job because of cost cutting. Our industry is getting more and more computerized yet the first thing that happens when the economy tanks is we stop buying office equipment. Then we stop hiring new staff or even cut what little we have. If they want me to do more I need tools. Trying to access 3 or more web-sites at once while preparing the necessary documents on the company mainframe is next to impossible on a 15" CRT. this not really a problem though because the CPU from the 1970s usually quits before I get that much running anyway. Having to run across the office to the one printer that 15 people are using then wait in line to retrieve my print is just stupid.

In every company I have worked (except a brief stint at a dot.com) managment has failed to realize that just like carpenters or machinists, office workers need the best tools to do the best job. Even providing the test results that show work output relates directly to the amount of screen space an office worker has access to failed to convince the bean counters that an investment in hardware would pay off. I've stopped trying to drag this industry into the 20th century, never mind the 21st.

Now whenever I hear those buzz words I basically tune out and wait to see what else they are taking away from me.

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#8
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Re: Do We Pursue Lean for the Right Reason?

02/18/2011 2:29 PM

Ouch! One perspective is that the "lean" and "more with less" you have experienced came from programs that focused on the worker or work station and not the total process as Lean advocates. The expected results probably haven't been satisfactory for the company either. I don't know your operation but one might ask what/why 15 people are trying to print. I hope you will have the opportunity to have a positive experience with Lean.

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#9
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Re: Do We Pursue Lean for the Right Reason?

02/18/2011 3:24 PM

You asked ...I don't know your operation but one might ask what/why 15 people are trying to print.

A bit of history I guess. I'm not an engineer, I lurk about here however because I often need to know very technical information. I am in the freight forwarding and customs business. I run quality control and training for tariff classification, so if I am going to ask a client if a pump is centrifugal or positive displacement I like to know the difference first. The tariff is a very complicated instrument.

The crowd here at CR4 has been very helpful and understanding about my pretty basic questions. I've learned so much just reading the answers to others questions too. There are three words I hate to have to say when staff ask me something. Those are "I don't know." CR4 has helped me avoid that phrase often.

Dealing with Canada Customs involves a huge amount of paperwork and when your computer system is 10 years out of date everything has to be printed. Even when I worked at a broker with the latest and greatest computer system, the managment never took the time to learn how it could work almost paperlessly and so once again everything had to be printed.

It is a very old industry, computers and automation are looked at solely as evil expenses. There seems to be a real fear that if junior staff has tools that the seniors don't understand or know how to use, disaster will surely follow.

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#4
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Re: Do We Pursue Lean for the Right Reason?

02/17/2011 1:17 PM

Hi kramarat, I agree with you entirely! I am retired now, but when I was younger we used to have a suggestion box at work, and any of the workers could post any suggestion for improvement, you would be amazed at how much these suggestions have helped cut costs, and the person who came up with the suggestion was always paid about $100 if his/her suggestion was used. The person who's suggestion was used for 5 years or more was paid $1000 for every year after, if they still used the suggestion! This I believe is a great policy.

Xanasax

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#6
In reply to #2

Re: Do We Pursue Lean for the Right Reason?

02/17/2011 2:56 PM

Hi Kramarat,

I confess to spending a few years in management. A lot of it was on the production floor so I am not astonished but am always amazed about answers, insights and observations that come from those to do the tasks every day. If I were writing a blog on "how to" pursue a Lean Initiative it would clearly emphasize worker participation and team effort. I wonder if your statements favoring team effort and tapping and exploiting the worker resource aren't counter-intuitive. For sure, asking, listening, encouraging participation, supporting ideas and recognizing efforts are key. Your note is a good one for I also believe that everyone knows something that I don't. That's why it's fun to share. No * symbol or sarcasm from this quarter. Thanks for your good comments. Dick Kuster

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#7
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Re: Do We Pursue Lean for the Right Reason?

02/18/2011 6:52 AM

Hi Dick,

I too, was in mid level management for for several years. I considered myself a good manager. My projects always came in under budget, and I had a great relationship with the people that worked under me. That aspect made my job fairly easy. I got out of management, (my choice), because of the people above me. Like some others here have mentioned, they tended to make things unnecessarily difficult.

Maybe I should have said utilize, rather than exploit.

I occasionally use the * symbol when not being serious, due to the difficulty of inferring my meaning through the key board.

Good blog. Hope to hear more from you.

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Anonymous Poster
#11
In reply to #2

Re: Do We Pursue Lean for the Right Reason?

02/19/2011 1:04 PM

Hi Marat,

You touch the critical point of LEAN. Managers are in leading position, they decide when to become LEAN, and also they determine what and how to do the LEAN changes.

The money making workers, and we have to not forget that goods are paid by customers because production workers made what is revenue for the company.

However, most of the time, working people in production are the victime of LEAN operations. Example: Automobiles, televisions, computers, cellphones, other appliances and equipments, and many other including agricultural products, which our strenght.

I mention here Illinois Tool Works as LEAN organization before they start a business. They are growing and growing. They are LEAN because they understaood clearily that business is composed of MARKETING, DISTRIBUTION, and PRODUCTION. They have LEAN infrastructure. They have standard operating procedures to make repeatedly the same things the same ways because the customers pay ONLY those high quality things.

I just repeat with you: "The workers...I believe, is a resource that should be tapped, exploited, and perhaps most importantly, rewarded", Gil.

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