Should Lean efforts focus on the supply chain or within the plant? Comments on an Industry Week article

See on Scoop.itlean manufacturing

This article quotes Paul Myerson as saying that manufacturers preferred to “lean out within their four walls before working heavily with customers and suppliers.”

While I have heard this from many sources, I do not believe it is true. Having worked both within the four walls of plants and on their supply chains, I have repeatedly seen manufacturing managers conclude that their manufacturing needed no improvement, and that all the problems were with suppliers.

Before Paul Myerson, I also wrote a book on Lean Logistics. In 2005, it was the first on this subject. But I also wrote books on Lean Assembly (2002) and Working with Machines (2007), both of which deal with what happens “within the four walls.” Guess what? Lean Logistics sells more copies than the other two combined, and I don’t think it is a better book. To me, it just means that its subject is getting more attention.

Actually, it is getting a disproportionate amount of attention, and too early. Manufacturers should  focus on what happens within their walls first, and fix it. The vast majority, including many claiming to be Lean, have not. Until they do, they have no credibility with their suppliers and no business telling them how to improve.

See on www.industryweek.com

71 comments on “Should Lean efforts focus on the supply chain or within the plant? Comments on an Industry Week article

  1. Comment in the Lean CEO discussion group on LinkedIn:

    I couldn’t agree more Michel, until plants have a continuous improvement discipline up and running and being self generating (without constant pushing), focusing on the supply chain is at best pointless, and in the worst case destructive to the business relationship.

  2. Comment in the Lean manufacturing & Kaizen discussion group on LinkedIn:

    Supply chain work can and should be started once there is sufficient infrastructure, momentum, support from the top, and clear evidence that progress is being made and that it is there to stay. The customer and suppliers can then cross-participate and “walk in each other’s shoes” – this will add to the collaboration and embedding the Lean focus throughout.
    I would not wait till the inside 4 walls were “leaned out”.
    Another way to generate excitement at the suppliers is to “share” savings. Any savings on a component through a Kaizen would be split. That provides a tremendous incentive for the supplier to work hard at this, and provides savings for your procurement group as well.

  3. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    Michel, I can only agree with you. Even though their might be attempting to go for the big costs in supply chain. My absolute believe is that the most imortant in any business is PROCESS STABILITY and that you can only get from securing how you work and visualize deviation. Before leaving your own building and address suppliers and customer you should clean your own house to become reliable. How often has a purchaser heard that their company create problem for supplier with late orders, rush transport, limited visibility, etc.
    If you are a lean nerd you have read the Toyota Way where dr Liker illustrates this through the failure Ford did some years in US with a big effert to work with suppliers, but without any internal improvments…

  4. Comment in the Operational Excellence discussion group on LinkedIn:

    The answer to the question depends on choosing “doing the right thing” before you start “doing things right”.
    In my opinion, that is the subject of an initial analysis you solve with a Pareto, some other tool, or asking the process experts what are the most costly problems and then identify the causes (I realize that coming up with the answer may require some time…)

  5. First you have to lean Your process… then you will know what you need from your suppliers… you need to have “expertise” first to change your suppliers.

  6. Comment in the Lean & Kaizen discussion group on LinkedIn:

    I suppose if it depends on whether you are intent on changing your culture or are trying to make an impact in terms of cost / share price alone. I have had this debate a number of times over the years, to give you an example – I had a conversation in a factory where we identified somewhere in the region of say £5m in benefits in the first 2 yrs of a lean transformation but it would take 3-5 years to convert to a true lean culture, in the supply chain though we identified a minimum of £40m that could be achieved through the use of lean methods within 2yrs.

    This debate has always seem to come down to the simply question of what are you using lean to do – Cultural change of share price improvement? in the long term the answer is start inside, in the short term the answer may well be start outside – it depends on your priority.

  7. Comment in the Lean & Kaizen discussion group on LinkedIn:

    Good comments Darren.
    Cultural changes take quite a few years. Sometimes we may need to make some quick improvements to show the initiative works, free up cash for the company due to economic need but perhaps to also create self-funding for the Lean Initiative roll-out.

  8. Comment in the APICS The Association for Operations Management discussion group on LinkedIn:

    Getting the internal processes humming along first will make it easier to start going after more external processes later. But there should be an overlap of lean strategies coming to fruition in the plant and starting lean strategies in the supply chain.

  9. Comment in the Lean Business Process discussion group on LinkedIn:

    I would vote for leaning the plant before leaning the supply chain. Your vendors and customers are likely to be more eager to join your lean bandwagon once they see the results achieved within your walls

  10. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    It depends which link of supply chain you are responsible for. If you are not in control of the plant but rather work in other areas like logistics & distribution, procurement & vendor development, marketing, etc. you can focus lean on the constraint residing in your area. This will definitely affect the supply chain as Pareto 80-20 principle does not hold in the system which consists of interlinked chains.

    However, if we wait for the plant to be lean for subsequently making improvements in your area, then nothing will happen. But, if you are in control of the plant itself nothing better than applying Lean in the plant.

  11. “Lean Logistics sells more copies than the other two combined, and I don’t think it is a better book. To me, it just means that its subject is getting more attention.”

    I wonder if it is an attention thing or if it is a statistics thing. I think the fact that you sell more books on logistics than on manufacturing is directly attributable to the size of the intended audiences. A book on logistics is going to be widely viewed by professionals who buy, ship, and sell product. A book on Working with Machines is going to be widely viewed people who actually make stuff. The fact is, there are a lot more people employed in english speaking countries doing logistics work than there are people employed manufacturing.

    Real manufacturers are going to read books on manufacturing until they have their problems solved and they have to go to their suppliers. I think your differential in sales is actually a sign of a more serious issue. The proportion of people working in manufacturing is dramatically smaller than the number of people in logistics. If 95% of your business is actually logistics and only a very small portion of business is in adding value in manufacturing, then it’s not at all a mistake to work on logistics. It’s not that people have their attention in the wrong direction for their business, it’s that businesses have their strategies in the wrong direction for their people. How many companies out there do you know that don’t do anything other than buy, sell, and repackage products? What book should THEY read?

  12. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    A direct answer to Michel’s question, in my opinion, Lean efforts might focus in the whole process stream. My recent experience within Europe taught me that even with a full top management support, if you implement Lean in a process silos ( like supply chain of only within a plant) the main Lean benefit which is material flow across the whole chain it will never happen. The full Lean benefits can be only achieved if the whole chain operates integrated aiming for a one peace flow running in a takt time and delivering goods to customers with 99%OTIFat same time operates a plant with low inventories, small supermarkets and just in time delivery or consignation from suppliers. This beautiful picture described above is possible however will only be possible if the whole chain operates in a Lean thinking and applying Lean tools and principles.

  13. Lean activites albeit easier to do within your own four walls, should always be looking both upstream and downstream. Optimizing processes within your own four walls with disregard for those processes both upstream and down will only serve to move constraints and could possibly exacerbate other problems in the upstream and downstream flows if disregarded. Lowering the water and performing improvements with a total process vision, helps to keep the entire takt time of the system in balance while refining the system step by step, regardless of where the benefit may lie, either within your for walls, at a supplier or torwards your customers end.

    Maintaining balance allows for an exacting deployment of improvement activities. Point improvements with disregard for inputs, outputs and other touchpoints only serves to create fires that need to be extinguised quickly. Prevent firefighting by having a balanced game plan.

    • A well-conceived Lean project moves a segment of a process in the direction of takt-driven production, also known as “True North.” Since the global ideal would be to have takt-driven production implemented locally everywhere, such a project cannot disrupt the process upstream or downstream.
      A project that would cause such disruptions would be no improvement.

  14. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    It is a matter of at least two considerations:
    1) What is causing your company pain: Internal or External issues
    2) How many resources do you have to spread around?

    Many times traveling to and communicating directly with your suppliers can be costly. Also the root cause of your supplier problem may rest within your own 4 walls.

    Following a basic problem solving methodology such as the six sigma DMAIC process can help you focus your resources to the best effect.

  15. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    To create a “Level loaded Pull from your supply chain ” you must first practice what you preach and Lean your house first or you will be a Hypocrite and worst of all will bring your plant to a standstill if your supply chain is JIT and your are doing batch or have low CpK processes where everyday your are expediting something new. There will be an obvious Tipping Point where the internal drive to improve will necessitate you develop Lean Supply Chains. The best part is when you make this step you will find many of your suppliers will be happy to finally have you as a Lean customer who has predictable demand planning and not chaotic shipment demands or designs that are not optimized for high first pass yields and you both win with lower overhead cost and WIP …

  16. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    How about the profit margins of the companies that have flexible, responsive pull systems – are there any that have flat level demand? Trying to flatten a demand pattern with great variation makes my hair hurt, it’s just crazy. Need other tools. A Mill Girl at Blue Heron Journal

  17. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    I think humans are basically lazy and tend to fall into their norm of habits, HR and management conive in this lazyness by writing job descriptions so that the majority of people stay in their silos and do what they have agreed to do. So if you have buyers who like sitting at their desks then they blame the suppliers, if you have project engineers who like kicking suppliers around then the problems will be in your own factory. Talk about needing to go to “Gemba”. Journalists like to write challenging headlines for the same reason.

    Lean needs to be the anti-entropy stick that beats air into all this habit and stimulates a full process line of thinking resulting in simplification and speed.

  18. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Patricia,
    I love what you said !! My organization has a wild demand curves and out lean folks still try to force basic lean principles and they just don’t work when you have variations in your process over 15%. There are other things that must be done including discussion with your customers, internal and external suppliers. These other things include consignments stock, vendor managed inventories etc.. As yu stated you need much bigger toolkit than the basic lean tools most often presented ..

  19. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Ron, Lean is a Culture and not just ” those lean folks”. The Materials, Supply Chain, Sourcing leadership at “Lean Thinking” companies don’t need to be in a Kaizen to do what are actually SCM 101 these days. The “Lean Folks” should be the facilaitors to help speed up the implementations and inspiring the people in the SCM world to benchmark, and apply these proven technique unique to each company; People need come to work everyday wanting to improve aligned to a plan integrated into the comany strategic plan. Very few places I have worked with have “stable” forcasting even with the best SAP – MRP systems. Low volume – High Mix is the norm for me and my Lean Six Sigam tool kit makes Sears Hardware and Granger look like a corner market. My best tool is ability to help people remove waste and if the company has people who do nothing but expidite something every day then there is plenty of opportunty and I suggets people who are craving for a better way. Just look around and don’t let the Lean Folks slow down a good idea.

  20. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Am looking at a Made In The Americas (sm) story for Blue Heron Journal about a company that is NOT focusing on waste in its strategic sourcing, they are focusing on supplier relationship and performance, under the idea that when they pick the best suppliers, those suppliers will manage their own operations to offer best price and delivery. If suppliers get in trouble the customer has engineers to help, but for ordinary business, they want to pick the best supplier and then leave them to do their work! A novel concept, don’t you think? A Mill Girl at Blue Heron Journal

  21. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Ron, I tend to design manufacture for *4 and /4 variation about the takt time (I guess that is +400% to 25% of forecast) though even I think that is too far and I find my design falls short in practice but not by much. I think this dwarfs a variation from forecast of +-15% (=115% to 85% roughly) and is completely lean. I have no idea why you lean solution is so fragile. Do you have any process flow that can explain or are you operating at max capacity in 168 hours or have I misunderstood what you are saying?

  22. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Myles, of course, is absolutely correct in saying that it’s folly to have a supply chain that’s out of step with internal operations, but as is the case with most things, getting them in synch and keeping them there is easier said than done, which leads me to Patricia’s comments.

    As we know, one of the key obstacles to “leaning” an organization is the interface with the supply chain. The danger is that these relationships are defined and managed via contracts, often lasting years, that – unless we’re very, very careful – assume a certain stasis for their duration. Put another way, we can lean our little hearts out, but if all the links in the supply chain aren’t incentivized to do the same – well, you know what they say about a chain and the strength thereof.

    The importance of establishing close, flexible, synergistic relationships (I know – I hate that word, too, but this time it actually applies) with partners in the supply chain can’t be overstated. And a key element of that relationship is mutual respect, meaning that you find someone who’s really, really good at what they do, hammer out a suitable working arrangement, and then actually behave as if you truly believe that your new partner is really, really good at what they do. As Patricia said, a novel concept, but then, who would want to be treated any other way?

  23. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    It all depends on whether your view is about change or challenge.

    If you chose either of these as your target areas you will only challenge your waste, flow and process improvement opportunities. In the long term nothing will change

    If however you want to change processes and cultures, then you simply need to takle both together. This covers partnership, strategic alliances, open accounting and honesty. Things which we don’t want to do naturally as we basically ‘trust with reservations’ our partners and suppliers.

  24. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Strategic sourcing looks at big numbers at the throughout the supply chain – subcontract mfg costs, production costs inside suppliers, distribution/logistics, packaging spend, legal spend, etc. To focus on JUST the process flows and waste in a few suppliers will suboptimize. That’s why I love talking with execs who are in charge of both mfg (their own) and strategic sourcing (indirect spend like benefits, etc., plus supplier pricing). It’s the only way to look at ALL the costs, all the spend, all the savings potential.

  25. I never said you shouldn’t work on your supply chain, only that you should work on your internal opportunities first. You should be able to tell your suppliers to come see what you did in your own plant and how well it works. Then you can show them what they are doing that makes it more difficult than it should be, ask for their support, and offer to help them develop and implement similar solutions for themselves while sharing the benefits so that their profits go up while your materials costs go down. Note that Toyota’s work on supplier development started in the 1970’s, a good 20 years into the development of TPS.

  26. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    First, thanks for launching this interesting discussion. The opinions expressed here are thought-provoking and helpful.

    I think I understand – and mostly agree with – your and Myle’ss main point, which is that we’d better get the specks out of our own eyes before presuming to remove them someone else’s.

    But my point – and I think I may be echoing Patricia here – is that although I whole-heartedly believe that we can’t begin to talk to our supply chain partners about adopting lean concepts before our own operations are stable and under control and our own organizations are educated and indoctrinated in lean principles, if we wait too long before bringing them aboard we do indeed risk sub-optimizing the chain as a whole.

    I’ve had the best luck modelling the internal and external components of the supply chain as an integrated whole, and then working with our partners to identify and incrementally adopt mutually beneficial practices in concert. As Patricia points out, sometimes local lean initiatives must (and should) be sacrificed for the sake of the system as a whole, and sometimes – make that “often” – “lean” doesn’t emerge from the analysis as the greatest good. Other factors – reliability, for one – can be more important, and often must be procured at the expense of a little fat. (There is, after all, a difference between “lean” and “anorexic.”)

    Thanks again for taking a whack at this particular hornet’s nest. It’s always good to hear what the grizzled veterans have to say.

    Best regards,

    Keith

  27. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    For me, the best results I’ve seen have been when the lean speak is all about the benefits. This leaves conversation about initiaitves and lean deployment in second place.
    In partnering around essential performance must have’s for both internal operations and supply chain, removal of value stream waste and improved flow become the next aligned conversation. I believe this segues into what both Myles and Patricia mention as focus in relationships and culture becoming non-negotiables for any sustaining lean initiative. I thought Michel, likewise, inferred partnership while also acknowledging that conversation around benefits of the relationship as a key element. Otherwise and without failure based on what I have experienced, lean becomes either a flavor of the month with little achieved benefit experienced or a bottleneck in the value stream.

  28. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Hollie, Steven –

    “Well said” to you both, and I agree, but I think what launched this discussion is the perception that there is a dichotomy between the “internal” and “external” elements of a supply chain – and from a management perspective, the perception is largely accurate.

    We use different tools – contracts, mostly – to manage our suppliers, distributors, 3PLs, and so forth, than we use to manage our internal assets. That can be a real problem. To my mind the trick to getting the whole chain to work together seamlessly is to develop holistic, chain-spanning strategies and plans for improvement that incorporate yet transcend the letters of the contracts. To repeat what I said previously, sometimes that means subordinating internal initiatives to the good of the whole, letting experts be experts, and not just “leaning” for lean’s sake.

    To get back to the initial discussion point, doing this entails getting our partners involved sooner than later (which explains why I would be more inclined to purchase Michel’s “Lean Logistics” book than its two stablemates), and not putting it off until our own houses are completely in order.

    All the best,

    Keith

  29. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Should it or can it? The answers might be different. What I think has hurt lean is also what has made it so appealing to people – simplicity and an easy common enemy (MRP). To attack the supply chain lean will need to embrace formal planning and come up with something that will appeal to that side of the fence and the critical objectives it is trying to protect. Is it as simple as push versus pull? NO!! I wrote a white paper with Carol Ptak on this topic in which we propose a common ground and direction for a solution. You can access it here: http://demanddrivenmrp.com/leandl.php

    I would love your thoughts on it.

  30. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Keith

    I think my “problem” would be that I don’t see supply chain issues any different from any other issues.

    Also, I believe that Lean has been designed to help improve a company’s performance, not to become a religion that must be followed at all costs.

    One of the reasons, for example, that people like over producing, is that it builds buffer stocks and can hide poor scheduling, poor maintenance, poor deliveries and, just generally poor anything. But it has a cost, as we all know.

    RCM has a nice concept I really like: cost and consequences. Basically, is what we plan to do worth it?

    If I was even remotely unsure that a delivery could be made, I would order sooner or have a buffer. Not the previous levels that some companies still do, but a compromise value, based on Lean guidance.

    I digress a bit, but I once worked in a company that demanded JIT savings in a process, it relied heavily on predicting when a part would fail. But, if anyone got it wrong, the response was all about flying objects and Fans… Indeed, the most successful person, never tried to extend at all – and never had a fail.

    If we recognise we have a supply chain issue, we should just treat it like any other problem – and root cause the issues. This will highlight if it is a process failure, supplier failure, contract issue or whatever.

    It would not do any harm to run through the process (Supplier to customer) using a Capacity Map, as I have described in Strategic Lean Mapping.

    Steve
    www,productivity-jigsaw.com

  31. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    To maximize benefits and system effectiveness efforts need to address the entire value chain and include all processes. Not all manufacturing problems orginate in manufacturing. I’ve read several books on Lean Accounting which point out how traditional accounting methods can drive you to do un-Lean things. Does the Sales process drive demand variability through promotions or condition customers to place orders at the end of a quarter?

  32. What Keith pointed out is that driving change internally and in the supply chain are different games. Internally, at least in principle, management has the authority; in the supply chain, you have to get agreement among independent entities. It’s like the difference between getting something done in the US versus the UN.

    Collaborative customer-supplier relationships are more profitable for both sides than adversarial relationships. Everybody knows that, and everybody writes it. Yet they are rare. Why? Because both sides can betray such relationships for a short-term advantage, the customer by using the information shared by suppliers against them in price negotiations, and the supplier by gouging the customer. Both have been done: the first by GM purchasing czar Jose Ignacio Lopez in the early 1990s, and the second by Nissan suppliers before Carlos Ghosn arrived.

    Also, your internal transformation does not have to be “complete” before you start addressing the supply chain. Since a Lean transformation is never complete, it would mean waiting forever. What you have to have is credible showcases, like production lines or plants on which you have done substantial work and achieved spectacular results. Some plants will be farther along than others, but that is not a show stopper.

  33. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Steven, Pete, Michel –

    Excellent points, all. I really don’t think there is a right or wrong side in this discussion. I think we’re dealing in differences of a degree, not of a kind, and the degree that works for your business may not be right for mine, and vice versa.

    However, I would like to put an exclamation point beside Steven’s comment that Lean is not a religion. Here’s an example of why: I used to buy hydraulic valves from a company near Chicago that was a sterling, textbook example of what Lean/Six-Sigma is about. From a standpoint of quality and dependability, they were (and still are) exemplary.

    But there was a catch: we did a lot of customer-driven product-development work requiring fairly fast turnaround on prototype components, and in that respect, they were of practically no use. There simply wasn’t enough fat in their operation – no excess capacity, no bins of parts lying around – to absorb any request out of the ordinary, so we (reluctantly) had to take our business elsewhere.

    So as good as Lean is, as operations professionals, isn’t our primary duty to make it as easy as possible for customers to do business with us? And if that means carrying a little extra inventory or capacity, isn’t it a relatively cheap investment in customer satisfaction? If we can find ways to reduce waste or flatten a demand curve without angering our customers – and there are plenty of things we can and should do in that regard – great, but if not…

  34. @Keith – Lean is certainly not a religion. It is an engineering and management discipline entirely based on reason. It has no dogma. It requires no faith. All you need to accept it is an open mind and the willingness to experiment.

    I have a different experience from your hydraulic valve story. A year into the Lean transformation of a client plant making auto parts, I asked the managers of various departments what impact the Lean effort had had on them so far. To my surprise, the most enthusiastic was the sales manager. “Before,” he told me, “when I had requests from customers for the production of samples of a new part, Production was always too busy. Now they find a way to squeeze them in and, as a result, we have won several major contracts.”

  35. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Hi, Michel –

    Sounds like you did a great job of helping your client find the sweet spot between “lean” and “bulimic.”

    As for the company in my example, we tried to work with them to find ways to reserve capacity for rapidly developing new products, but they simply were too taut of an operation for it. The decision to leave them was as much theirs as ours. Their reputation as a great supplier was growing, so they had other potential customers standing in line who could offer them the kind of consistent, high-volume, low-variation business they wanted to service. They tried to talk us into having prototypes made elsewhere then bringing the final product to them for production, but that’s not the way I like to do things.

    Keith

  36. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Keith

    The company operating model can be designed such that it has an inventory level required to sustain the response time.

    I remember a company called RS components that would guarantee overnight or even hand carried parts in few hours – at a premium cost. Such a service requires a minimum inventory – not a pull.

    Others, offered a longer delivery that enabled them to pull from the wholesaler and so could charge less.

    PC manufacturers can do the same to keep prices down: they order parts as the PC is ordered. PC World need to buy PC’s for stock and hope that they sell or they become special offers in a later life.

    Then we have equipment vendors that charge very high rates but guarantee hand delivery from the US to Europe. Again, to achieve the level of service required, the inventory has to be higher.

    Steve

  37. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Hi, Steve –

    The problem – which turned out to be ours, not theirs – is that they were aggressively, rabidly committed to JIT across their entire supply chain. No air or slack or inventory anywhere. They were good enough at it to pick and choose a customer mix that gave them an Iowa-flat demand curve, which eventually squeezed us out. Customers danced to their tune, not vice versa.

    But that was in a previous life. Today I’m in a different line of work – supply-chain management – in a different industry, so I’ve lost touch with that company. I don’t know how well their business model survived the recent economic upheaval, but now that my curiosity is piqued, I may take some time to find out.

    Keith

  38. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    As my buddy Dick Morley likes to say, rabid leads to “corporate anorexia!”
    And a bit of good news Monday – our Cloud feature Microsoft exec story being syndicated!
    Let’s plug the computers back in! A Mill Girl at Blue Heron Journal

  39. I am young in industry but I have seen an array of different management techniques, but my personal opinion is that a company should lean their own processes before they attack any other companies. How can you tell another company how to clean their house if your house is not clean.

    I think that one of the biggest traps that most companies fall into is their own ego. Many times companies are too proud to ask for help in areas that they struggle. Benchmarking is a great tool if it is used properly. I have seen companies that struggle in many areas that another company 5 minutes down the road are superior at, but their egos will not let them go and ask for assistance.

    Best Regards,
    Derek

  40. If their business model works for the company you described, who is to
    knock it? I just would not call it Lean. They seemed to have skipped the
    big chapter that talks about flexibility. Another model that I liked was a
    small company in San Francisco making custom bags called Timbuk2 Designs.
    They are still around and I still use their products, but the company has
    changed hands and I don’t know how they are working today. When I saw their
    operations, they were receiving orders through a well-designed web site on
    which you could specify all sorts of features and see a color rendition of
    the bag appear on the screen as you went. This web site is still up today.
    Their plant in San Francisco was set up to deliver the custom bags within
    two to four days.

    Once I made an arrangement with the Operations Manager to order a custom
    bag on the morning of the first day of a class I was teaching across the
    country in Charlotte, NC, and have the bag delivered by noon of the following day, to be raffled off to one of the class participants. Inside the
    plant, you had U-shaped cells run as bucket brigades, like a Subway
    restaurant, receiving a sequence of orders on a screen at the first
    station. The Operations Manager who set up the system now runs iPhone and
    iPad production for Apple.

  41. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    There are IT efforts that need to be nailed down in the scm network, with the assumption that inside infrastructure has already been taken care of. But it’s a big assumption – basic IT infrastructure is in bad shape, neglected for many years. Take a look at what Microsoft exec has to say about “3 Screens and The Cloud” future of computing for mfg and scm – A Mill Girl at Blue Heron Journal

  42. Comment in the PEX Network & IQPC – Lean Six Sigma & Process Excellence for…discussion group on LinkedIn:

    Michel

    I am not sure what you mean by the big chapter on flexibility, but I expect it has to do with applying lean as it needs to be applied.

    Here is a nice example: barbeques.

    In most of the UK, we carry photos of the sun, the way other countries carry photos of their children. It can rain and rain and rain and rain and – well you get the point.

    Suddenly, like this month, we had a superb heatwave. Suddenly, all the supermarkets are demanding food for the barbie. The same thing happens in the summer, a weather forecast can define the production of a plant.

    How can a packaging company, for example, respond to an immediate change in demand? It must have (or offer) some kind of response time. This cannot be done without “excess” inventory. By the time new material is delivered the sun can be gone – again…

    Where lean benefits is that it provides an opposing argument that counter-balances the urge to fill the warehouse with everything. I discussed this in “Strategic Lean Mapping”.

    There are still sales folk and production folk that want as much in stock as they can get, but we need to persuade them of the disadvantages and seek a way to prove what we say is true – in a way that allows the company to make a smooth transition.

    Steve

  43. @Steven – My condolences for the British weather. You fortunately have many other things going for you and I always enjoy visiting.

    I really meant that Lean itself is about flexibility, not about getting yourself in a position where you can’t respond to unexpected changes or new opportunities. In the past, which car company has been best able to respond to rising gas prices, recessions, or natural disasters? When the Mississippi flood of 1993 interrupted rail service between Toyota’s Chicago suppliers and the NUMMI plant in California, Toyota logisticians were able to turn on a dime, set up deliveries by truck around the flood zone and avoid any shortage in California.

    There are tools in Lean that are specifically intended to boost flexibility, like manufacturing cells that can dynamically adjust staffing requirements as demand volume changes, multiskilled operators, or leveled scheduling to deal with fluctuations in product mix, or the physical organization of product lines based on the demand structure of runners, repeaters and strangers…

    Lean is not, and never has been, about putting yourself in a position where you cannot respond to changes in your environment. It is not about making yourself rigid and vulnerable, but instead flexible, responsive and adaptable.

  44. Comment in the APICS discussion group on LinkedIn:

    It is good to start by looking at the entire value chain from suppliers to customers to see where the most bang for the buck is and go after that first. I see a lot of companies so focused internally that they miss capturing lower hanging fruit by collaborating with suppliers or customers on sharing forecasts and inventories in a timely fashion.

  45. And I have seen many companies where managers refuse to consider that anything they currently do is anything but “optimal” and blame suppliers for all their problems. Then they start a “supplier development” program, only to be embarrassed by suppliers who are sometimes more advanced in manufacturing than the customer. The fruits appeared to be hanging lower, until they tried to pick it.

  46. Comment in the APICS discussion group on LinkedIn:

    When assessing the value chain, it would be short sighted to only focus on the internal OR external elements. This calls for a balanced approach where improvement opportunities are prioritized and ranked by benefit and effort. A lot of businesses want to get their own operations in order before they begin calling out suppliers, but in reality a concurrent approach provides the best results.

  47. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    Luiz, you are absolutely correct! The business has to see itself as one entity working together to realize the real benefit. One can’t separate supply chain from the rest of the business because orders, raw materials, production, shipping and getting cash are all connected. You want to optimize the flow through this whole process to achieve lowest working capital and cost with superior OTIF. Sub-optimization is necessary but it has to be seen within the context of the whole chain. You can’t achieve your goals for example if your suppliers see you as unpredictable in ordering patterns because you haven’t created level loading and/or effective forecasting strategies for stocked items. One week you want 1 then next week you want 10 then next week you want 2. As mentioned previously by Henrik, you have to create stability. Applying lean thinking and tools to see the whole and then strategically prioritizing your efforts seems to be a more effective approach. It does require everyone to place nice together.

  48. It is not a matter of what you work on but when. You need to address supply chain issues as well as internal issues, but they are tougher than internal issues and the internal improvements develop the skills you need.

    Also, it may be awkward to say in this group, but there is no place for optimization in Lean, because optimization is by definition antithetical to continuous improvement. Once you have optimized anything, it is the best way it can be, and therefore cannot be improved. By contrast, the next step after completing an improvement project is to start the next one. Whenever I have heard a manufacturing manager say “We have optimized X,” it was a way to refusing to do anything more about it.

  49. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    I agree Michel. If a plant manager says we have optmized an area or process meaning to say there is nothing else to do definitively it is time for him to find a new job. A leader that get a leash of Lean in an organization has to bear in mind that continuous improvment means that always has a way or new method to do it better. It never ends up even a successful optimization takes place…..

  50. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    Michel, I do agree with you, specifically on the optimization in the purest sense. I would say that by using value streaming as the tool to identify waste and opportunities you are constantly looking to remove the constraints or what and when. By having a future state you are looking for the break through activities and additional what and when’s. And this loop should never end. Now the problem is that people are constantly optimizing without seeing the whole picture and that is my point. Some of the activities may be necessary but without understanding what is stopping the best flow through the chain your cherry picking and also creating the feeling that you’re done. Thanks for pointing out the optimization point,I think it is appropriate.

  51. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    If the decision of where to start is in response to a delivery disruption, like Honda WEK fire, or Toyota Aisin Seiki, it’s all out there. But if it’s a financial decision, why not, as Dave Nelson says, go for the double digit gains? A Mill Girl at Blue Heron Journal

  52. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    Optimizing should be actually a continuous improvement process in which iterations of lean exercises are key to exploit the system constraint(s) in incremental steps and eventually move the system constraint.
    Simplified, this is done as follows with main objective : maximize profit (capacity/debottleneck investment against revenue) :
    1. Identify the system constraint (TOC)
    2. Exploit the constraint (increase its capacity)
    3. Subordinate all other processes (balance their capacity over the supply chain)
    4. Elevate the constraint
    5. Start over again (1.) when constraint is broken (the constraint is not the system constraint anymore.

    2,3,4 are typical Lean initiatives at a local (site) level and/or between the different SC system processes.
    Cheers !!!

  53. @Rudi – Your comment treats the problems as if they were purely technical. They are not. The practical opportunity to act depends as much on the skills available in your work force and the attitude of its leadership as it does on technical feasibility.

  54. Comment in the Lean & Kaizen discussion group on LinkedIn:

    Hi Michel & all,
    I’m from a made to order manufacturing type, which has high variance and low volume.
    and the flow at assembly line rely much on the sequence flow from the upstream (supplier),
    we cannot have real supermarket upstream for all the models,styles and sizes, because those styles/size/models may be never repeated.
    would it be a different point of view to start within/outside the four walls for this kind of manufacturing type?

  55. @Rianthy: The issue is not the relative importance of the supply chain versus your internal operations to the performance of the business but the feasibility of effecting change. The reason to focus on internal issues first is that you have more control over them. Once you have a showcase, you can invite your suppliers to see it and persuade them to work with you on improvements of mutual benefit. Credibility and trust are essential for this to happen; they are not easy to build and can easily be lost.

  56. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    @Michel. Correct ! What I have put down is a theoretical framework. But it is a powerful one if you don’t know how and where to start when facing a complex E2E environment at senior level. I am talking about exploring the real structural improvements (20/80). Obviously, it needs cross departmental stakeholder engagement and strong industrial&business engineering skills within the company. But that is where competitive edge lies, in-house competent people and a cross-functional Lean (Operational Excellence) culture.

  57. Comment in the Supply Chain Optimization discussion group on LinkedIn:

    Michel, What Rudi has highlighted is Process of continuous improvement (POOGI).
    These steps helps you to focus your lean efforts to enable to gain immediate benefits. Not the conventional methods where the improvement programs are just to improve local efficiencies & productivity rather than that of the whole system.

  58. Comment in the Lean & Kaizen discussion group on LinkedIn:

    I agree with Michel. Many years ago I worked for a large organization that had many problems. We worked hard on these problems until things began to flow. Although, we did not call it “Lean” back then, what we did was based on the same principles. After our suppliers saw how well the improvements were working, they actually came to us for help. It was a “win-win” since our supplier enjoyed the benefits of these improvements and we got a better product from then on time.

  59. Comment in the Lean & Kaizen discussion group on LinkedIn:

    It depends on the organizational priorities and the influence it can have on the Customers as well as Suppliers.

    For most companies the value addition is far higher beyond the four walls than within the four walls. Also the opportunities for waste elimination are more in Supply Chain.

    The approaches for lean implementation differ vastly in both cases. The cultural aspects carry higher importance if you are implementing within four walls, however bottomline impact will have more weightage in Supply Chain.

    Organizations can start simultaneous implementation if they can afford to spare the resources.

  60. @ Sunil – You say “For most companies the value addition is far higher beyond the four walls than within the four walls.”

    What do you mean by this? You seem to imply that moving things around on trucks adds more value than making them. That is not what you mean, is it?

    Also, we should stop treating supply chain issues as if they were independent of what happens inside your factory. For example, just-in-sequence delivery is an advanced method for delivering parts to a factory, but it can’t work unless the factory practices heijunka.

  61. Comment in the Lean & Kaizen discussion group on LinkedIn:

    Hi!
    It’s an interesting topic and there are many valuable posts. I will start with asking some important questions and that will be of course the answer to the main question “Should Lean efforts ….”
    What is the purpose of establishing Lean, Six Sigma etc. at plant?
    Shall we accept the current situation due to we use right now a specific strategy/methodology even though we are not satisfied and don’t achieve all our strategic goals?
    What these terms tell us Continuous Improvement and Best Practices?
    Is it right that the distinction between good and correct decisions is based on analysis?
    Best regards

  62. Comment in the Lean manufacturing & Kaizen discussion group on LinkedIn:

    A lean supply chain is the most important part as it makes you save the most. It is said TMC gains about 80% out of it.

    Respectfully
    Thomas

    • 1. You wrote: “A lean supply chain is the most important part as it makes you save the most.” What do you base this statement on?

      2. Why the focus on saving? Lean is about growth, not about cost cutting.

      3. Who is TMC? 80% of what?

      • Comment in the Lean manufacturing & Kaizen discussion group on LinkedIn:

        Hi Michel!
        Sorry for not having explained it better, was in a hurry. My deepest apologizes!

        Imho we are not talking about a fully transformed company, right?
        1. The Supply Chain is the most fragile part of Lean. No Lean Chain, no JIT.

        so what should we focus first? After detailed VSM, we can focus our efforts onto
        2. save time (= save money) to eliminate waste. As we are not talking about a “Lean” company, we cannot talk about growth, as we have to clear all conditions first. As in the Cost Minus Principle of Toyota, we have to cut costs (waste), in order to gain profit.

        3. TMC = Toyota Motor Corporation; can’t remember right now who stated this, but 80% of TPS’s effectiveness comes out of a perfect working supply chain.

        Respectfully
        Thomas

      • You could as easily make the argument that the production shop floor is the most fragile part of Lean. But I won’t, because I think it is counterproductive to discuss the two as if they were independent.

        They are not. You cannot have a Lean supply chain if the nodes in that chain are not Lean factories. You can have a Lean factory in a supply chain that isn’t, but its performance is going to be limited by the need to protect it from instability in its supply chain.

        The only question is where you start implementation. And my point is that it should be on the shop floor of your own factory, for reasons I have given in earlier posts.

        Individuals’ perspectives are biased by their places in organizations. People in production control, logistics, or supplier support are more likely to say things like “80% of TPS’s effectiveness comes out of a perfect working supply chain” than people who run machine shops.

        It is also a vague and ambiguous statement. I don’t know of a metric called “production system effectiveness.” What is that 80% supposed to mean?

        Best regards.

        Michel

  63. @ Michel
    I’m glad for having the opportunity to discuss with you!

    I agree with you that the shopfloor is one of the most fragile parts, too. But let me ask you: which part of TPS is not fragile?

    And I agree with you that you need to have a “Lean Manufacturing” as a whole with lean suppliers and a lean plant, together with a lean enterprise and marketing.
    There will always be bottlenecks, as in the chain there might be suppliers or factories that are not 100% lean.
    But imho we are not discussing this, but as the article stated “manufacturers preferred to “lean out within their four walls before working heavily with customers and suppliers…”

    In my humble opinion we need to understand what is the part of Lean that adds the most value, and for me this is the supply chain. Obviously, before we don’t have at least the minimum conditions cleared (before we are not having a Lean Shopfloor/Management through 5S, VSM, Jidoka etc.) we should not think about implementing JIT. JIT can only work if the Supply Chain is 100% adapted to our needs. We need lean Suppliers to achieve JIT.

    I would put the focus more on “When comes the right time to implement JIT”

    As for the 80%, the answer is rather simple. If you have no working supply chain, all your Lean efforts at the plant are mostly ineffective. Hence you need a working suply chain with lean suppliers and you will get the greatest benefits out of it. We are not talking about OEE or other metrics. Just think about last years earthquake in Tohouku and it’s consequences to Toyota and other japanese companies. They stood still for weeks because of a broken supply chain. These are the 80% that bring effective value to TMC.

    Imho this has nothing to do with people running machines or people in production control or logistics. My thoughts are based on experience and hansei. When we developed our Tool Takezawa Sankaku some month before the big earthquake, we were discussing the suply chain issue at TMC.

    Respectfully
    Thomas

    • Dear Thomas:

      Your wrote: “In my humble opinion we need to understand what is the part of Lean that adds the most value, and for me this is the supply chain.”

      One reason I use the word “value” sparingly is that everybody has a different meaning for it. In economic statistics, it refers to the difference between Sales and External Inputs, that are the sum of Materials, Energy, and Outsourced Services. If all you do is final assembly of cars or computers, your own value added per unit is low, but if you make integrated circuits, it is high. You cannot make a general statement as to where value is added that applies to all manufacturing activities. It depends on the depth of your own processes.

      Your wrote: “As for the 80%, the answer is rather simple.” I am still waiting for it. 80% is a ratio. Of what to what?

      Earthquakes break things. They damage the transportation infrastructure, but they also break factories. If you are a steel maker, you can lose a blast furnace, for example.

      But once again, in terms of implementation planning, it is not about where you can potentially get the most benefits, but where the ratio of benefits to implementation effort is most favorable.

      Best regards.

      • Comment in the Lean manufacturing & Kaizen discussion group on LinkedIn:

        Hi Michel

        As for Lean the standard definition for “Value” is everything that the customer is willing to pay for. Maybe we should use it this way in order to not create confusion.

        TMC gained an 80% competitive advantage through their supply chain against competitors. As the system is so effective, this adds value imho. Today we have many factories and plants that (think to be) lean, but their supply chain lacks. We can control a single plant much easier than a whole supply chain. This is one reason why TMC reduced the number of their suppliers for a single part down to 3.

        As for the steel maker, I would not compare his supply chain with the one of a car- or computermaker as the amount of different parts defines how difficult it will get to have a working supply chain.

        In business if I do not have an advantage against my competitors, Im out of the game. Checkmate! This is where the supply chain plays the biggest role imho.

        Respectfully
        Thomas

      • Dear Thomas:

        Your wrote: “the standard definition for “Value” is everything that the customer is willing to pay for. Maybe we should use it this way in order to not create confusion.”

        I would urge you to take a critical look at this theory of value added. Is it fully baked? Does it avoid or create confusion? Is it necessary? (See http://wp.me/p1UTIj-jd)

        By “80%,” do you mean “a lot” or do you mean a specific ratio? If so, what is the ratio?

        You wrote: “We can control a single plant much easier than a whole supply chain.” This is the whole point. Implementation is the art of the possible.

        If you make general statements about supply chains, they have to apply to steel makers, computer assemblers, toy manufacturers and food processors as well as car makers. If your statements apply only to certain industries, you need to say which ones.

        Best regards.

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