Lean manufacturing

Kommersant is Russia’s main business newspaper; Tatarstan, a small republic in the Russian Federation, on the Volga river 620 miles East of Moscow, with a government that supports the implementation of Lean in the local industry. This interview is part of a 4-page section on Lean Manufacturing added for Tatarstan. They asked for my views on the status of Lean manufacturing implementation worldwide, the effect it has had on successful companies, the key elements required for implementation, the motivations of various companies undertaking it, and the ways government can or cannot help. What follows is the original English version, that was translated into Russian.

Mr. Baudin, you were in charge of Lean projects in many companies in different countries…

As a consultant, I am not in charge of projects. I am not Theodore Roosevelt‘s “man […] in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds.”

This role, to whom credit belongs, is played by the VP of Manufacturing, Plant Manager, or Production Manager who own the processes that are the targets of improvement in Lean projects. My role is to be in their corner and help them be successful, but the credit and the glory is theirs.

How efficiently are Lean principles implemented there?

To date, very few companies have anything but a superficial veneer of Lean. For all the talk about “making Lean simple,” it just isn’t. What you see almost everywhere is what I call “Lean light”: a little bit of Lean sprinkled throughout the company, in the most visible places. It is just enough to get you certified as a “Lean supplier” by customer auditors, or even to get an award.

What are sights to behold are the few companies that implement Lean deep, making fundamental changes in the engineering of their production lines, their logistics, from the supply chain to in-plant part movements, the way they organize and use people, and the way they manage performance.

It is an enormous, multi-year effort, but what keeps them moving forward is that the benefits start accruing immediately.

What was the maximum effect from implementing Lean methods?

Industry dominance. This is what Toyota achieved, starting as a minuscule, nearly-bankrupt company in 1950 to become the Number 1 car manufacturer worldwide today. Because Lean is not easy, most managements give up early, creating opportunities for those who persevere. If you stick with it through the years, it gives you  a durable competitive advantage.

Which company was able to achieve it?

There are a number of companies that are known for their success with Lean, like Autoliv, from Sweden, the Hon furniture company in the US, Valeo in France, or Porsche in Germany.

But I would rather speak of companies I have been personally involved with, even acknowledging that credit for their success redounds to their managers, engineers and operators, and not to any consultant.

The most successful one doesn’t want to advertize it, to the point that, if you google its name with Lean, nothing comes up. Without bragging about it, however, they have been at it since 1984. When I first visited them in 1987, they were a small to medium size maker of high-end mechanical parts outside the auto industry, with a few small plants in Europe and the US. When I last visited them about 20 years later, their sales were 10 times larger, and all their competitors from 1987 had become internal divisions.

To mention companies I can talk about, we also helped Renault of Argentina go from worst to best performer in the Renault group within four years. At the time, it was called CIADEA and had been sold by Renault to a prominent Argentinian businessman named Manuel Antelo. CIADEA was making Renault cars under license and was later sold back to Renault. I have stayed in touch with some managers involved at the time of our engagement, and they tell me that the high performance was sustained after we left.

By the late 1990s, the Japanese electronics manufacturer Canon was struggling to maintain its position largely because its production lines were not Lean. I worked with the US branch of Canon to introduce the cell concept in laser printer assembly. This was consistent with what Canon did elsewhere and, several years later, the top management of Canon credited the use of cells with restoring the position in the industry that it still holds. The Japanese electronics industry now actually uses the term “cell production” for Lean.

La-Z-Boy is an American armchair manufacturer that is also quite open about the success it has achieved through Lean, and in particular through cells. This was a short engagement for me but a major one for my colleague Kevin Hop, and we were both gratified with the outcome.

Is it possible to track a consistent pattern: is there a component of Lean without implementing which proper practical results are impossible?

It is usually a mistake to try to implement every Lean tool in a particular organization. What you should do in every case is analyze its business, technical and human situation, and deduce from it which kinds of projects make sense to undertake and in what sequence.

Eventually, all the dimensions of the business — engineering, logistics, organization, and performance — must be addressed in some form, but, for this purpose, not all of the existing tools of Lean may be relevant, and you may need to invent new ones.

How efficiently do you think is Lean implemented in Russia?

I would rather leave that question to colleagues who are living and working full time in Russia. I am based in the US and have come to Russia about a dozen times in the past 6 years. I have not seen a Russian plant I would consider a showcase of Lean, but then, I have not seen that many Russian plants.

In Tatarstan, Lean principles are implemented as a government program. But apparently it doesn’t always happen that way.  

It actually rarely happens that way. I have nothing against government support for Lean, but it must be designed so that government officials are not put in a position to choose service providers for Lean implementation support, which is exactly what has happened in the US with the MEP (Manufacturing Extension Partnership) program. Through the National Institute of Standards and Technology (NIST), the federal government has been subsidizing consulting firms in all 50 states to provide services at reduced rates to small and medium-size entreprises (SMEs).

NIST is the agency in charge of standards for weights and measures, is run by managers who have never worked in factories, and is not competent to select Lean consultants. It is, however, exactly what NIST did, and, in so doing, created unfair competition to all other consultants.

What the government should have done instead is subsidize the SMEs directly, for them to select consultants, and pay market rates for services. Such a system would not have been perfect, and probably have led to some SME managers hiring their brothers in law with government money. This kind of risk is always present, but, at least, the choice of consultant would be made by the client, who understands his needs and the consultants’ capabilities better than a bureaucrat does, no matter how well intentioned.

What makes a company pursue Lean methods?

The two main motivations are (1) complying with external mandates and (2) improving their own performance. If a major customer of yours decides to buy only from “Lean suppliers,” it places on you the burden of proving to him that you qualify for this label, and it means satisfying auditors from your customer who may not know the first thing about your business and will come with a checklist. Then making sure you pass these audits is part of the cost of doing business. This motivation leads companies to strive to appear Lean, and success is measured in terms of obtaining the required certification. This is what leads companies to implement Lean-light.

If your motivation is improving performance, you will make different choices in your implementation plan, and you will go for Lean-deep, as explained above.

How important can government support be?

It can be necessary, but it must be limited in amount and temporary. Even from the beginning, support should not cover 100% of the implementation cost of the recipient companies, or else they are unlikely to implement anything. They should bear enough of the cost to want to recoup it through improvements. They should also stop needing support as they become successful.

Many CEOs of production associations in Tatarstan believe that Lean methods were used back in USSR as “scientific labor organization”. Do you agree?

And many American managers believe that Lean is nothing but warmed over Industrial Engineering or Fordism from 100 years ago. If soviet industry had been using Lean, it would have shown in its performance, and the whole world would have taken notice. The soviet union had a world-class industrial engineer in A. K. Gastev, and many outstanding inventors like Rostislav Alexeyev with his flying boats, or Alexander Kemurdzhian with Lunakhod. It even had Genrich Altshuller to develop a theory on how to invent (TRIZ). It just didn’t have Lean.