What to Expect From a Corporate Lean Program | MIT Sloan Management Review

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"We studied the implementation of the Volvo Production System, or VPS. The Volvo Group, based outside Gothenburg, Sweden, is a leading manufacturer of heavy vehicles, such as trucks, buses and construction equipment. (The company sold its Volvo Cars unit in 1999.) The Volvo Group introduced the VPS in 2007, and since then, it has been implementing the VPS in its 67 factories, located in countries around the world. VPS is similar to lean production systems used in many other companies, and we believe the insights from this study can be usefully applied in other companies. We examined the five-year history of this program, visited 44 of the 67 plants and interviewed 200 managers."

Michel Baudin's comments:

The first author of this article, Torbjørn Netland, is among my favorite bloggers. You can rely on him for good, clear-headed writing based on research. And this article delivers, as expected, but not what its title says. It's not about corporate Lean programs in general, but all about the case of Volvo. Since I have not seen this kind of disconnect on Torbjørn's blog, I suspect the title was selected by editors at the Sloan Management Review to broaden its appeal.

A general issue that is not addressed in the article is the level of knowledge of Lean in corporate Lean programs. A company that is just starting in Lean, by definition, has no internal expertise to draw on. If it wants its Lean program to be led by experts, it has to hire them from the outside, which is problematic in two ways:

  1. It is a challenge at this point for management to recognize real expertise.
  2. Leaders brought in from the outside have no roots or network in the company.

The alternative is to appoint insiders and expect them to learn. But then it has to be understood that they are not in a position to prescribe what plants should do, and that their role should instead be one of facilitation, coordination, and cross-pollination of ideas between plants.

Often, corporate Lean groups are overeager to standardize the approach across all plants -- regardless of what they make or the business and social environment in which they operate.

If they don't want to turn the Lean program into a exercise in formal compliance, they can instead, for example, on organize periodic conferences  where representatives from different plants present their work. They can also arrange for these conferences to be hosted in turns at the different plants and include shop floor visits. And this can be supplemented by various forms of knowledge sharing on the company's intranet...

There is nothing wrong with collecting the best practices from different plants into a corporate standard, once the different plants have had the opportunity to develop these practices. But if you do it too early, all you do is stifle the creativity that you need for this purpose.

See on sloanreview.mit.edu

Next frontiers for lean | McKinsey

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"...Quietly, though, in Nagoya, Japan, Taiichi Ohno and his engineering colleagues at Toyota were perfecting what they came to call the Toyota production system, which we now know as lean production. Initially, lean was best known in the West by its tools: for example, kaizen workshops, where frontline workers solve knotty problems; kanban, the scheduling system for just-in-time production; and the andon cord, which, when pulled by any worker, causes a production line to stop..."

Michel Baudin's comments:

This article implies that the "Kaizen workshop" is a tool of the Toyota Production System, when in fact it is an American invention from the 1990s and what it does is not what is meant by Kaizen in Japan

Then the article describes Kanban as "the scheduling system for just-in-time production." It is really only a a tool of scheduling among many, including heijunka, just-in-sequence, consignment... The last example, Andon cords, had been observed at Ford in 1931.

Even if this choice of examples is unfortunate, Toyota people invented many tools while adopting and refining existing ones, and it is true that each tool, taken out of context, is of limited value. Toyota's merit is to have deployed them in a uniquely effective way as part of a system of production.

This is, however, not what the article says. It jumps instead to management disciplines, like "putting customers first," an idea that bazaar merchants worldwide have had for millenia.

"Enabling workers to contribute to their fullest potential" and "constantly searching for better ways of working" is in fact something that Toyota has done better than its competitors. And these are sound management objectives, but you could pursue them and still not be competitive.

The article implies that the technical content of the Toyota production system is a detail. All that matters is focusing on customers and treating people right. Is it? I don't think so.

This attitude is the root cause  of the failure of so many "Lean implementations." Until the technical content of the Toyota Production System is understood and properly valued, the Lean movement cannot claim "Mission Accomplished" in manufacturing.

See on www.mckinsey.com

Business Intelligence and Jidoka | Toyota's Simon Dorrat | PEX

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Simon Dorrat is Manager of Toyota’s Business Intelligence function where he is responsible for defining and delivering all services relating to Business Intelligence and Data Warehousing including BI, ETL, Data Quality, Master Data and OLAP. [...] Simon shares his thoughts on how Business Intelligence fits with the Toyota Way, suggests three ways for IT to provide better value to the business and even explains why doing a kitchen renovation helped some illuminate important aspects of software development.

Michel Baudin's insight:

For the IT-phobic, a Data Warehouse is a database that makes historical data from multiple sources accessible for analytics. It is commonly used to provide management with Business Intelligence (BI). The process of periodically feeding a data warehouse is called Extract, Transfer and Load (ETL).

Of course, analysis is only worth doing on data that is complete and accurate, hence the need for tools to ensure Data Quality. The different sources usually have different nomenclatures for products, processes, or facilities, and you need your Master Data to integrate them in a single, consistent model. Finally, "OLAP" stands for Online Analytical Processing.

The first sentence in the article describes Toyota as "creating the precursor to Lean Manufacturing" and nearly made me stop reading further. It would have been a mistake.

See on www.processexcellencenetwork.com

Reduce maintenance costs? yes please - immediately | Wiegand's Watch

Bodo WiegandThis is a translation of the bulk of Bodo Wiegand's latest newsletter, about Lean in Germany, followed by my comments:

At the beginning of  this year I was at a company with a high level of Lean in Manufacturing and went into a discussion with the Board about how to go further the realize the full potential .

They did not want to get into the administrative areas, since there the world bosses were allowed to have their say -- even though there was real potential there . But life in a matrix organization, as has been frequently noted , is very pleasant.  Before doubly protected kingdoms can be torn down, it takes usually a crisis or a new boss. You know my motto: "Give a slave of two masters and he is a free man . "

Well then, what? We talked about opportunities in Manufacturing and, on our tour of the facilities, spent a bit more time on Maintenance. They were quite proud of the TPM plans they showed me, with a regular preventive maintenance plan, and involvement of production operators in routine maintenance. The whole range of tools set up and implemented was classic. Their pride was a new conveyor system, to which a maintenance technician was dedicated for inspections, routine maintenance, and troubleshooting . It sounded to me like: "With such investments, we must be able to afford this, to avoid the risk of failure ."

In another area , there were identical machines;  in the next hall several different presses. With the exception of heat treatment (3 shifts ) all areas were still working in 2 shifts. Of course, Maintenance is an area where you can see what happens inside just by looking from the outside. But my gut was telling me not to scream "wonderful" about the perfect organization. Instead, alarm bells went off and immediately came the question "What does the value stream look like?"  Proudly, the manager led me to the team leader room.  There hung the map. And I immediately saw  the date on which it was drawn. It was three years ago. Well, I expressed my concern: " Is the new system taken into account ? "

"No "

This is a mistake we encounter often. Value streams change with the actions we perform and should be revised especially after new investments or major changes. Bottlenecks migrate and thereby change the production system. Back in the office, we discussed again his question of why the value stream is important to Maintenance.  I told him about Lean Maintenance. He asked "Should Maintenance be organized according to the value stream? - Why? "

" In the value stream," I answered, "bottlenecks are detected, critical facilities are identified from a customer perspective and process stability is visible. Priorities given to equipment are the basis for  maintenance and spare parts stocking strategies."

That was too high-level for him.

So - I tried again. Equipment that is  the bottleneck or is in close proximity to customers is prioritized because it is important for delivery, and the bottleneck caps the production volume. If the bottleneck stops, so does the whole production system. If the last machine stops, which is important for  delivery, the safety stock increases .

Maintenance and stocks ? - The Board id not understand. " What does Maintenance have to do with working capital ? "

"Well, safety stocks are usually based on the worst-case  interruption time for repairs and mostly with people-related impact to it. " In this case, it was three weeks.

It is usually two to three weeks - no one knows why.

"Can the maintenance strategy reduce working capital? "

"Sure," I answered. " By prioritizing the facilities you identify the ones that are important for delivery . There you focus your maintenance activities and develop your spare part strategy. This is the only place where it is important whether this system fails. Failure analysis identifies the components that may be responsible. Then individual maintenance strategies must be developed for these components .

This starts with wear-dependent important components that are not predictable with sensor monitoring, and goes as far as the maintenance strategy of  "creating redundancy."  The aim is to increase the process stability and to allow no loss. This reduces the need for safety stock . From that we get a feel for what would be the biggest shutdown and can estimate this time .

The next step is to optimize the maintenance time, ie to reduce the repair times to a minimum . If it is possible to organize the maintenance response to a quasi Formula 1 - standard, and you also develop a maintenance strategy adapted to it , you can make the maintenance times as short as possible. The safety stocks can then be lowered furthe . Gut feel no longer prevails. Instead, you have clear maintenance strategies based on numbers , facts, and figures. "

" But isn't that more effort? "

"Perhaps on the facilities with high priorities. But why do you inspect machines that you take out of production for entire shifts? You have many working only 2 shifts. If a machine fails, it can be replaced by others. And why are you dedicating one person to your new conveyor system , which is certainly not a bottleneck?  Why do you thoroughly inspect your presses and have not considered how the failure of one could be compensated by the use of another. On such equipment "farms," you do not need preventive maintenance in the classical sense, only a maintenance strategy that is appropriate for this case. "

It is important to deliver and therefore you need a stable process. For this, you should evaluate the maintenance person, and not by cost. With a Lean Maintenance approach you will go from  failure-driven maintenance to  largely planned and predictable maintenance, requiring  less effort, providing higher process stability and reducing  costs for emergency response .

The result: we have reduced the worst-case repair time from 2.5 days to 8 hours, and safety stocks to two to three days, while reducing the costs of  external maintenance services by 80%.

The necessary investments in the sensors, redundancy or spare parts have been more than covered by the reduction in working capital. The annual reductions amount to a low seven-figure sum . The greatest gain was that the production and the maintenance staff are now working towards a common goal and are understood as a team . It culminated in this statement of the initially reluctant maintenance manager : "We want to be measured by the manufacturing productivity and working capital. "

Michel Baudin's comments:

What I read in Wiegand's words is the focus of improvement in Maintenance should not be on structures and tools but on purpose. We maintain production facilities not to comply with a mandate or fulfill formal requirements but because it allows us to deliver goods to customers without large safety stocks. You might add that, if your products are custom, or even if you just have high variety, there is no way you can hold stocks large enough to deliver promptly.

In most companies, "Lean Maintenance" is taken to mean TPM and, within TPM, the only component that is implemented in the most basic, autonomous maintenance.  The headings for the higher levels of TPM include equipment improvementquality maintenance, and maintenance prevention but, even in Japan, you often hear managers say "We looked into implementing these, but decided they were not worth the cost."

When you stick with autonomous maintenance, you have an approach to how the work is done but not what it is. This is a whole other topic. Wiegand states as the goal of maintenance to make interruptions of service less frequent and shorter. This is exactly what United Airlines focused on in the late 1960s when the Boeing 747 was introduced, and they called in "Reliability-Centered Maintenance" (RCM).

As part of this effort, they discovered that the "bathtub curve" of failure rates -- that staple of reliability textbooks -- only applies to about 4% of the aircraft components. In particular, many exhibited no tendency to fail more when aging, which made policies of periodic replacement pointless. They also developed the technique of Failure-Mode-Effect-Analysis (FMEA), on the basis of which they set policies for systematic replacement and spare parts stocks, and selected some items for targeted redundancies.

RCM was later adopted in nuclear power and process industries, and some RCM thinking has found its way into machine-shops, for example in the form of redundant tools in machining center pockets.

The criticism of RCM that I have heard is that it is a workaround to the limitations of the equipment rather than an improvement of it. It is better to have a cutting tool that lasts twice as long than to put a redundant tool on standby in the machine but then, you have to find such a tool.

Wiegand also seems to think that failures are not a problem when you have multiple, interchangeable machines with overcapacity. Technically, that's unquestionable, but it is another story from the human point of view. It won't be a problem next week, but what happens over time when overcapacity in an area allows you to have 25% of your equipment down? Your performance will eventually settle at a point where you actually have one machine in four down at any time. Why bother keeping all of them up all the time when they are not needed? Settling for this low availability, however, turns this process into a bottleneck.

Are Silos The Root of All Evil? | Bill Waddell thinks so

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"Functional silos – the idea that all engineers have to work in an engineering department, all sales people have to work in a sales department and all procurement people have to work in a purchasing department – represent the over-arching deficiency in just about all companies.  They are at the root of enormous amounts of wasted time and money and they are at the root of most lousy cultures. "

Michel Baudin's comments:

We all know bureaucratic horror stories associated with functional silos, like the manufacturing company where Sales, Engineering, Manufacturing and Accounting all had different product nomenclatures. Not only did they have multiple names for the same products, but they grouped them into families differently, so that it was impossible to get aggregate measures of anything.

In light of this, it is tempting to just dissolve these departments and reorganize along the lines of what Wickham Skinner called "focused factories," Hammer and Champy "business processes," and Womack "Value Streams." The idea has been around a while.

1996 Ford Taurus

1996 Ford Taurus

According to Mary Walton's account of the development of the Taurus 1996 in Car, this is what Ford did at the time.  and it cut the development time down to 30 months. According to Sobek, Liker, and Ward, however, this is NOT what Toyota did, and it was developing cars in 24 months with functional departments exchanging memos!

1996 Toyota Camry

1996 Toyota Camry

In addition, the Taurus 1996, while undeniably an artistically unique design,  did not set the market on fire and included body parts that were difficult to stamp out of sheet metal, Walton's book suggests that the marketing and manufacturing members of the team, having completely transferred their allegiance to the team , failed to make it give due considerations to the needs of the groups they came from.

This suggests that, while often a good idea, collocating all the participants in a business endeavor and breaking all the functional departments is not a panacea.

Sometimes it is technically impossible, because, for example,  the functional department is operating a monumental machine that you don't know how to break down into smaller units that could be distributed among different "value streams."

Sometimes, you can't do it for operational reasons. For example, you don't distribute Shipping and Receiving among the different production lines in the same building, because it would require more docks and access roads, and it would make truck drivers deliver to different organizations at multiple points around the same building.

Sometimes, you end up having specialists report to managers who have no understanding of what they need to be effective, and can't evaluate their requests for equipment, training, or permission to attend a conference.

Sometimes, you locate an engineer who needs a quiet space to concentrate on technical issues next to a boisterous sales rep who speaks on the phone all day...

Unfortunately, I don't think all evil has just one root. It's a bit more complicated.

See on www.idatix.com

Health systems learn to be lean | Jodi Schwartz | Argus Leader

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Without adding staff, the Avera Medical Group gynecologic oncologist spends 10 more minutes with each patient than he used to and leaves work two hours earlier.

'We were often stressed at our clinic and running late,' he said. 'Patients sometimes had to wait, and I was always behind on documentation.'"


Michel Baudin's comments:

See Mark Graban's blog post about this article. It is a case he has been following, and is featured in the 2nd edition of Lean Hospitals.

See on www.argusleader.com

Dispelling myths about manufacturing | James Manyika and Katy George

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"Myth 1. All manufacturing companies need the same things — low-cost labor, access to raw materials and markets, and a favorable business environment.

Myth 2. Trade and offshoring drove the decline in manufacturing in the U.S.

Myth 3. Manufacturing employment means assembly line work.

Myth 4. Manufacturing employment can someday return to historic peak levels."
See on www.washingtonpost.com

Who Invented the Car? | Ronnie Schreiber

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Marcus's 1870 car

"[...] the Nazis tried to write Austrian inventor Siegfried Marcus (who was Jewish) out of history by ordering German encyclopedia publishers to replace Marcus’ name and credit Gottlieb Daimler and Carl Benz as the inventors of the automobile[...]"




Michel Baudin's comments:

As this article is not about manufacturing or Lean, I hesitated about posting it. Who cares who invented the car anyway?

When President Obama mistakenly referred to the car as an American invention, it created a small diplomatic row with Germany because, as everyone knows, the car was invented by Gottlieb Daimler and Carl Benz...

Or was it? Not according to Ronnie Schreiber, and he shares plenty of  evidence that, until the Nazis decided otherwise, the inventor of the car was an Austrian jew named Siegfried Marcus who beat Daimler and Benz by about  two decades.

We should care about giving credit where it is due, even for inventions that are 150 years old, and for practical reasons. We want the inventors of today and tomorrow to know that they will be properly honored for their contributions, whether or not they are able to profit from them.

Now back to manufacturing!

See on www.thetruthaboutcars.com

Does the World Need More MBAs? | Sally Blount says "Yes" | Business Week

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"Business is our most important social institution—improving the lives of millions. Yet it falls far short of its potential to serve society [...]  When you’re creating the next Google, Tencent, or Apple, you’re going to need people with the training, skills, and network that business education is uniquely good at providing. There’s a reason all of those companies hire people with MBAs. Even more important than the skills argument, however, is the intellectual argument for an MBA education, where there is critical knowledge to be gained. Business has evolved to be the dominant social institution of our age. Business is the cultural, organizational, and economic superforce in human development."

Michel Baudin's comments:

Bill Waddell disagrees. I do too, for different reasons.

While I agree with Blount about the value of business skills, I see MBA programs as steeped in the druckerian fallacy that management is a profession in its own right, like Medicine or Engineering, and that a well-trained manager can be equally effective at running businesses in any industry, whether selling sugared water or making computers that change the world.

Rather than being a specialty in its own right, "Business Administration" is best viewed as a set of skills that complements industry-specific knowledge and experience.

That business is "the cultural, organizational, and economic superforce in human development" is something the dean of a business school would say. You could easily make the case for other forms of human endeavors, like universal public education, scientific research, or even democracy.

Bill Waddell seems to think that MBAs are inherently unable to implement and sustain Lean. I have, however, met several leaders who excelled at Lean while having MBAs. But it was not all they had.

A unique feature of this degree is that it takes over the identity of its holders, to the point that they describe themselves as "being MBAs" rather than "having MBAs." The ones I have admired for their excellence in Lean had an engineering degree and had worked as engineers before getting MBAs.

See on www.businessweek.com