Management

To get to Dublin, you don't start from here

Oct 22 2011

Kaizen without prerequisites

Question from Pedro Burgos: You have an assembly line where ‘Standardized Work’ is not utilized. The operators have ‘work instructions’ and follow them. They do not miss steps. But there are differences between operators in how the work is performed in terms of sequence. All of them perform under takt time, some more than others. Due to ‘wastes’ of motion. You are asked to do a Kaizen to reduce inventory quantities and space. Inventory quantities on the production floor varies, some parts have 3 days of inventory, some have 2 days, some have 1 day (16 hours). The goal is a ‘kanban’ of 2 hours of inventory in the assembly line. Do you think is possible to do this Kaizen? (Discussion in the LinkedIn Global Lean & Six Sigma Network)

Your question reminds me of the old story about asking a farmer in the countryside of Ireland how to get to Dublin, and getting the answer that “you don’t start from here.” In fact, regardless of its current state, a production line can always be improved.

Looking further at the way you describe the challenge, however, several things disturb me. First, while Kaizen, meaning improvement, is always possible, “a Kaizen” seems to designate a Kaizen event, a project template which is not always appropriate. Second, your description suggests opportunities for productivity and quality improvement, but neither is stated as an objective.

A top-down mandate to use a particular method to pursue two goals like inventory and space reduction does not strike me as a recipe for success. Instead, someone needs to do the following:
1. Take a close look at this assembly line.
2. Identify improvement opportunities in all dimensions of its performance.
3. Select one or two to pursue in priority based on improvement potential, technical feasibility, and human feasibility.
4. Determine the project management approach based on content, rather than the other way around.

This approach is much more likely to achieve the desired inventory and space reductions, among other improvements, than just running a Kaizen event to pursue these objectives directly and exclusively.

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Continuous improvement from bolts to clamps

Oct 19 2011

The Role of Technology in Continuous Improvement

In an article on this topic in Industry Week today, Ralph Keller asserts that Continuous Improvement is focused on business processes rather than technology.

However, if you wrap tinfoil around the feet of a welding fixture to make it easier to clean, replace bolts with clamps on a machine to reduce setup time, or mount a hand tool on the machine on which it is used, it usually counts as Continuous Improvement but involves technical changes to work that I don’t think anyone would describe as business processes.

Yes, Continuous Improvement is done without expensive technology, but it does involve cheap technology.

Ralph Keller also reminds us that Continuous Improvement is not “rocket science,” which implies that it is easier. I agree that it is different, but not easier. I don’t know any rocket scientist with the skills to facilitate Continuous Improvement.

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Speaker competing for attention with laptops, reduced resolution

Oct 16 2011

Meetings, seminars, and laptops

Communicating face to face is supposed to be more effective than electronically. Yet it is common today to see professionals travel thousands of miles to be in the same room and then engage in parallel play on their laptops while one of them is giving a presentation. The speaker stands in front of tables arranged in a U, facing a wall of open laptops. The people behind are silent and focused, and seldom make comments or ask questions. They appear to be taking notes, but in fact, they are completing an unrelated budget spreadsheet, checking emails, or playing solitaire.

It takes the presentation skills of a Steve Jobs to successfully compete for attention with the rest of the world coming to each seat through the web, and most speakers do not have these skills, especially when in a foreign language, and it is also quite possible that the information they have to convey does not lend itself to an entertaining presentation, but today’s business audiences make no allowance for this.  The notion of giving each person a polite hearing, as taught in elementary school, is gone.

The intrinsic discourtesy of this behavior, however, is not the main problem. By providing escapes,web-connected laptops make badly-organized, boring meetings bearable, and allow them to continue unchallenged. Possibly the most tedious of all business rites, the regular staff meeting involves members of a department standing up one after the other and giving a status update on issues that are usually of interest only to themselves and the manager. Without laptops, some members would fall asleep and snore, and others would eventually rebel against this waste of time. And this would lead to a positive change. Wired in to their laptops, they don’t challenge the status quo.

A few years ago, cell phones routinely disrupted meetings,   with their owners leaving the room to take the calls, which were obviously more important than anything the people present in the flesh might have to say.  Today, cell phones disruptions are abating, as meeting participants usually comply with requests to turn them off, or, even better, to “turn them back on at the end of the meeting, so that they don’t miss their important calls.” The current situation with laptops, however, is not sustainable. It is a technology-induced problem, that technology may actually solve. Laptops are an endangered species, likely to be replaced with tablets that do not provide the same kind of visual shield as a raised laptop screen. Already today, people who bring iPads to meetings actually participate in the meetings, as doing otherwise would be too conspicuous.

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Jun 14 2011

Management Whack-a-Mole and the Value of Lean

On 5/24/2011, NWLEAN moderator Bill Kluck launched the richest, most vigorous debate in the 13-year history of that forum by asking members whether they were cost cutters or capacity enhancers. Over the following three weeks, 29 authors posted 68 spirited, yet courteous messages accessible from NWLEAN to anyone with a Yahoo! ID.  The contributors included several well-known authors and some of my favorite sparring partners. In alphabetical order, they were  Dan Barch, William Bowman, Robert Byrd, Abhijit Deshpande, Mark Graban, Jim Harrington, Jonathan Harrison, Rob Herhold, Blair Hogg, Gangadhar Joshi, Bill Kluck, Joachim Knuf, Ed Larmore, Paul Layton, Ted Mayeshiba, Jim McKechnie, Larry Miller, Joe Murli, John Nelson, Stephen P. O’Brien, Anthony Reardon, Tom Robinson, Sunita Sangra, Dale Savage, Patrick D. Smith, Tom Stogsdill, Mike Thelen, Chuck Woods, plus a few others who did not use their real names.

The message that started the thread was as follows:

“It seems more and more (especially in this recession!) that lean professionals fall into 2 camps:
– Cost cutters
– Capacity enhancers
There are some out there that are saying that you HAVE to cut costs, or you’re not getting lean.
There are others that say lean is about improving capacity, so you can enhance the customer experience.
Which are you, and why? Is this driven by the top of your organization, people who may not understand what lean is? Do we risk becoming cost cutters, or smoke-and-mirror guys?
Just askin’!

Bill”

Although I didn’t participate initially, it was clear to me that the effect of a successful Lean implementation was limited neither to cost cutting nor to capacity enhancement. Instead, I see Lean as the pursuit of concurrent improvement in all dimensions of manufacturing performance, but I had already shared my thoughts on this matter in Lean as the End of Management Whack-a-Mole. Management Whack-a-Mole is the game illustrated in Figure 1, in which managers  boost performance in one dimension at the expense of the others, shifting focus every few months without ever achieving a genuine overall improvement.

Figure 1. Management Whack-a-Mole

Several of the early posts, however, prompted me to  jump into the fray and respond on a variety of topics, initially as follows:

  1. People trained in Finance and Management Accounting have had their shot at running US Manufacturing from the 1950s to the 1970s, with outcomes that should make them modest about the value of their approaches.
  2. Companies that have grown through Lean include Toyota since 1950, Wiremold from 1991 to 2000, and many others that are not publicized. A successful Lean effort helps Sales in specific ways, as, for example, when more flexibility enables Manufacturing to accept a sample order for a new component by a customer, who then designs it into his own products and becomes a major OEM.
  3. Cost reductions are a by-product of Lean but not its primary purpose. Manufacturing is a competitive sport, and Lean a strategy that makes you a stronger player, and not just right now but in the long run as well. When you hire a top coach for a sports team it’s not to cut costs but to win games.
  4. ROI is just one ratio, invented at DuPont 100 years ago to report in a common form the activities of multiple business units. There is nothing magic about it, and, by itself, it certainly does not give a complete picture of the health of a business, as even finance people recognize.

This caused further exchanges with Robert Byrd, who wrote: “…The most basic concept is Profit = Price – Cost. The market dictates price, so we have the best leverage for maximizing profit through controlling our cost structure…”  My response:

Is this always true? What about situations in which time to market is of the essence? I remember a client that was introducing a new frozen food product. On one of our visits they had us taste the R&D prototype, which was delicious. Three months later, they had a jury-rigged production line making 900 units/minute. The line left much to be desired, but we could not argue with their focus on getting the product to market. During all that time, their focus was not on getting it done cheaply but on getting it done at all. Then they could go back and improve the line.

He also wrote: “…Which is best accomplished through the elimination of waste and problem solving…”  My response:

This is the key point. We have yet to encounter a manufacturing or service organization in which the details of how work is being done contains no improvement opportunity, and this is what most managers simply do not believe. They are trained to think in terms of “big pictures,” and look for cost cutting opportunities like eliminating entire departments or reducing every department’s budget by 5%.

And finally: “If the aim is only to increase profit by reducing cost, without focus to grow the business, then the culture will never take root and only a short-term improvement will be realized. Or the company will never achieve it’s true potential.”

Your point does not fit in a 30-sec sound-bite or tag line. Good managers are able to monitor all aspects of performance at the same time, from growth to costs. But communication is tricky. For example, if you showcase ” Profit = Price – Cost,” what behaviors do you expect to stimulate, other than cost cutting?

In his second response, he added: “However, what was their business objective once they focused on improvement? I would venture to guess that it was focused on cost reduction.” My response:

I don’t recall them mentioning cost reduction explicitly. When the line first started, about 20% of the units were defective, and that was a focus of concern. Of course, quality improvements reduce costs as a side effect, but they also have other effects: quality problems have an impact on customer perceptions of the product because of variability among the units that are not defective.

In their other production lines, improvement was driven by marketing concerns. This was in Europe, and, in spite of the existence of the EU, frozen food packages had a different sizes by country, in addition to having labels in different languages. Based in Italy, they pursued quick changeovers in package sizes in order to be able to export to Germany, France, the UK, etc.

Their Lean program fit within their business strategy, but it is a stretch to say that this strategy was centered on cost reduction.

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Apr 24 2011

Recruiting and Lean Human Resource Management

Some companies subject job applicants to hands-on tests of the skills required for a position. This says that they appear more interested in filling a capacity gap for a skill set than in recruiting people for careers. The most extreme cases are the “coding interviews”  given at Silicon Valley software companies, during which candidates are asked to solve programming problems. This  has spawned a whole sub-industry of coaches and books to help cram for such interviews. The problems are typically the kind of textbook exercises given in college that experienced programmers have long forgotten and are irrelevant to their actual work. College students, for example, learn various ways of sorting records, while professional application programmers just use built-in Sort functions. Software developers with, say, 20 years of experience with databases perceive these interviews as silly and demeaning, raising the question of whether they  are intended to bias the hiring process in favor of recent college graduates.

This is the opposite of the Lean approach. During a career at a company, a person would have to acquire many technical and managerial skills. With that in mind, the willingness and ability to learn are more important than what the person knows walking in. When Honda set up its Marysville facility, they deliberately hired people with no prior experience in car manufacturing, to train them from scratch in the Honda way. As an employee, the background knowledge you need is supposed to have been provided at school. Whether in the US or Japan, however, schools never work perfectly, and companies end up providing remedial training they feel they shouldn’t have to. However, if all you need today is a technical skill set, you are probably better off hiring a  contractor than an employee.

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Apr 22 2010

Lean is about simultaneously improving all dimensions of performance, including quality

Originally posted on The Lean Edge on 4/22/2010

Quality not central to Lean? Says who? Lean is about simultaneously improving all dimensions of performance, including quality.

Quality professionals frequently miss this, because what they learned primarily addresses process capability issues that are central only in high technology, where, if your process is mature, your product is obsolete. This is the context where statistical approaches like Six Sigma make a difference.

Modern machine tools, on the other hand, can easily hold required tolerances, and most quality problems are not due to lack of process capability. They are instead due to discrete failure of the equipment or human error.

The main issue with discrete equipment failures is to detect them quickly so that they affect few parts and can be diagnosed before their trail is cold. With one-piece flow, defects are detected immediately instead of being buried in WIP, and this is why conversion from batch production to one-piece flow typically yields large improvements in quality.

The next step is having machines stop as soon as they start producing defectives, but this still leaves human error, and that is addressed by mistake-proofing.

Beyond these approaches, there is also management to prevent the deterioration over time, and planned responses to potential new problems.

This is a hierarchy of approaches. Actual numbers vary, but, in orders of magnitude, statistical tools will get you from 30% defectives to 3%, one-piece flow to 0.3%, mistake-proofing to 15ppm, and I know of one case of a Toyota supplier achieving <1ppm on some parts.

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