5 Critical Success Factors for Evaluating Operational Performance

“Ready, fire, aim.”
“If you don’t know where you’re going, any road will get you there.”
“Shoot from the hip.”

These are not sayings you want to hear when you’re trying to set direction and plan for operational performance improvements. Yet, this is often how situations are described in hindsight when the vital first steps are done poorly. Not to mention those situations where months and months (and MONTHS) of deep dive analysis result in a pretty presentation but isn’t rooted in any kind of operational reality and shortly thereafter, falls flat on its face. (Sound familiar anyone? Bueller? Bueller?)

Bueller, Bueller, Bueller

To develop an improvement plan and portfolio you must first get an accurate baseline of the current situation and describe the gaps. Doing this part well ensures better results because you’ll have practical, and more importantly, credible, information starting out.

In this post, we outline 5 critical factors that we use to ensure a high quality, yet efficient performance evaluation process. One that leverages internal experts and external viewpoints, is focused on both the operational realities of the front line and leadership priorities / objectives, and that gives everyone the same baseline measurement system from which to make an objective assessment of “what good looks like.” Oh, and did we mention that it’s a process that only takes one day? This is Kaufman Global’s Rapid Performance Evaluation.

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But, before we dive into the 5 factors, a short history of business consulting analysis…

For many years, the traditional way of getting started with clients involved a request for lots of data, a long list of questions and a team of four or five consultants onsite for 4-6 weeks to conduct a formal analysis. This would result in an implementation road map and ROI calculation that validated the path forward project. There are certainly situations today where the business case needs to be defined and this type of analysis is the right approach. But we have found that many clients no longer have the appetite or time for this and want to move almost directly to implementation.

On the complete other end of the spectrum was the famous “kick the tires” visit of the 90’s. This was basically a site walk-through to look around and get a feel for the location and how good or bad it seemed, but very little data was used to make the assessment and the structure of the visit varied greatly depending on the consultant and their personal preferences.

These approaches both have their pros and cons. As the consulting model continued to evolve, we observed that getting a client a great answer quickly required a fundamental rethink of the approach with emphasis on the following issues:

  • Speed – busy operations can give you a day or two to get some good information, but more than that feels burdensome
  • Standardized rating systems that can be used for comparison were largely missing from systems we’ve seen. Or if there is a rating system, its relevance was questioned. We’ve heard, “Those ratings aren’t completely applicable to our situation.”
  • Many organizations skip the people side of the equation during the analysis altogether – leaving it to be dealt with during the project. This is a serious flaw that will impede progress when you try to get the organization on board AFTER the fact.
  • Most traditional attempts to evaluate the operation have not adequately incorporate an assessment of the organizations ability to change and engage themselves. Evaluations are typically all soft stuff (people skills, organizational dynamics, engagement, etc.) or all technical stuff (productivity, quality, cost, supply chain, etc.). These two dynamics are so connected that both must be considered in any meaningful evaluation.

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To address these issues and meet the demand of clients who really needed a solid baseline assessment but didn’t want a full-blown analysis, we developed the Rapid Performance Evaluation (RPE) process. A holistic, effective and efficient approach to the initial gap analysis that could be done in a day and provides team-validated, benchmark scoring with an identified improvement portfolio of ranked opportunities for both the people and technical sides of the equation.

How did we do it? We looked at the gaps in traditional approaches and developed a set of 5 counter measures aimed at making the evaluation fast, relevant, user friendly and credible. Design considerations include:

  1. Use a good template
  2. Limit the evaluation of operational metrics on the first pass
  3. Apply change management techniques from the start
  4. Use a credible rating system
  5. Prioritize opportunities and describe an implementation approach

Use a good template – To achieve speed, consistency and quality, use a great template. People are busy and have not planned for the interruption. Our templates are based on the idea, “This is what good looks like, let’s see how this operation compares.”

The template must be standard, yet flexible. Too rigid and the response will be “That doesn’t apply to us.” So, be prepared to modify to make it more usable for the situation at hand. We’ve found that the people and organizational parts change little between locations, industries, sectors, etc., but the technical pieces like flow, supply chain, quality, etc. usually benefit from some adjustment.

Limit the evaluation of operational metrics on the first pass – For any given operation there are about 10 metrics that tell the story. Things like inventory, quality, productivity, turnover (people), etc. We like to ask how difficult is it to get this information too. This tells us a lot about the operation and location’s leadership style. Vast amount of data does not always (read: rarely) translate into usable information. By usable, we mean available in a standardized format and used for running the business.

Identify and ask about the best few metrics for the operation and then use them as a guide for where to look more closely during the evaluation. Later on, more information and more analysis may be required, but for your initial look, keep it simple.

Apply change management from the start – When you ask people what they are doing and why they are doing it, its personal. But this engagement is essential because they know more about what they are doing than any outside observer. A non-threatening environment, supported by a skilled facilitator, will yield the best information. Don’t wait for “the real project” to start respectfully engaging the knowledge of the organization.

To make this work, the key is to quickly develop internal evaluation experts. For us, that means having a joint KG + Client team conduct the RPE. This is where standardized templates and processes prove their value as it enables us to easily on-board and train the client participants in how to do the evaluation. With a 60-minute orientation, the joint team is aligned and up to speed on what to look for during the tour and how we will do the individual and team scoring later. This facilitated, open and honest team discussion helps ease the dialog that occurs later when the team must come to consensus on certain performance measures.

Use a credible rating system – A rating system gives the organization a way to measure their improvement. The score is the baseline performance of the operation and clarifies the real gaps. As improvements proceed, better ratings show tangible evidence of the gaps closing. We use a series of three assessment tools that provide different ratings:

  • Opinion – What do people think and how do they feel about what’s going on
  • Systems Factors – The big picture. It looks at things like quality, governance structures and how the organization deals with complexity
  • 20 Keys® – A drill-down into the details. They provide guidance on specific improvement activities and exactly what must be done to get to the next level of performance.

Prioritize opportunities and describe an implementation approach – Once the evaluation is complete and the gaps described, the question becomes, “What next?” This question must be answered at least at a high-level. A one-day RPE won’t yield a detailed implementation plan and business case. But, it will answer things like: top operational priorities, engagement problems, leadership mis-alignment and recommended next steps.

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When evaluating performance, it’s difficult to achieve adequate results without incorporating an external objective view. That’s why we’ve found the RPE process to be so powerful. We have found a formula to bridge the gap between providing an unfiltered outside view, while incorporating the expertise and knowledge of insiders to accurately assess the current situation. It’s natural for those who are directly involved as part of the team to defend the work they do, so a balance must be struck. In one memorable situation the supply chain was so bad that simple commodity replacement parts were taking 8 weeks to obtain – crippling the operation. Yet in talks, the manager being hurt by the problem rated the supply chain a 5 out of 5: Perfect. These difficult discussions are almost impossible to have without a baseline measurement of “what good looks like” to test against and some objective external facilitation.

When done well, an evaluation of operational performance is a fantastic starting point for real change and improvement. When done poorly, it becomes simply another exercise in futility and data point for “Why this stuff never works.” If our RPE process seems like it’s the right fit for you, give us a call or drop us a line and let’s talk about how to get started.

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If you want to know more about how we think about the topic of Analysis as it relates to our service offerings, click here.

The “Real” 3 + 2 Rules of Successful Project Management

I’ve got your “REAL” 3+2 rules right here.

In my earlier career before I became a Lean-head, I held progressively responsible engineering and management roles within the technology sector. Those were the days. Silicon Valley was positively sizzling — the engineer’s revenge. If you didn’t take at least three after-work meetings each week with your personal headhunter (aka, the Long Island Ice Tea enabler), you were branded a “going nowhere slacker”.

New breakthroughs were scheduled daily by suit-wearing big bosses far above my salary grade who vaguely recalled from college that Ohm’s Law was some advanced form of guided meditation. These were the same guys who had long since forgotten the importance of performing a credible tolerance stack-up… you know, one good enough that you’d trust the safety of your family with the product. Anyway, since no one told us we couldn’t develop new stuff all the time, and capital was positively e-v-e-r-y-w-h-e-r-e, we blissfully did make new things every day… uh… that is, blissful for the most part.

With some early performance wins on my part, and a willingness to accept accountability for my actions, my career swiftly blossomed into leading the development cycle for the hardware I used to touch. Like all the other new Project Managers, I thought my job was more or less to get people organized to meet contract and technical requirements. At the time, we used a genuine bleeding-edge breakthrough called the “Integrated Product Development Team” (IPDT). (May say more about that another time because it’s not what this post is about. For our purposes here, just imagine what it might be or refer to the link.)

Among the IPDT’s rollcall were many of my former colleagues from the high-tech trenches. That description of them mainly denotes that we took morning breaks together and were on the same after work (when not with our headhunters) beach volleyball squad. Sometimes we even accidentally put on each other’s lab coats — and then laughed about it. Still a crack-up.

The first time out of the chute with my very own IPDT I detected some interesting characteristics among my former frontline collaborators; qualities that I had not previously perceived through my 5% pink-tinted tech-nerd spectacles (caused by early-onset presbyopia from scanning too much fine print).

First off, some of the team were unaware of the difference between reality and illusion.

We now know that at the root of this problem was the influence of freshman philosophy and psychology classes foisted upon these poor souls before their brains had fully developed.

Others had no concept of time.

That one was harder for me to fathom as I had been acquainted with several of these folks since our foundations in public school. I was certain that calendar and timekeeping theory had been covered, even in home room… more than once. And it wasn’t that long ago. Of course, back then the bell sounded to change classes at the end of the period, so that helped bridge the gap.

Many of the rest simply couldn’t make decisions – at least not very quickly.

Okay, I kind of get that one. I mean, things were changing so fast that – if – you simply waited for the fabled “optimized solution” with “better data”, you could easily justify taking four weeks to place an order for a simple digital multimeter — because hey, everyone knows that newer one will be way better.

As I pondered emerging perceptions concerning my mates and considered how to best manage my troubled sentiments about our workforce in general, I was also fortunate enough to work for a string of really excellent bosses who, in composite, laid down an easy to remember set of rules that absolutely addressed all of these concerns and has served me well. Now, it’s true that there are countless tomes available on the machinations of best-in-class project management that I might have referred to instead. On the other hand, these rules are simple enough to remember and actually use. For each, I’ll inform, then briefly expand upon the real 3 + 2 rules of successful project management – the only ones that genuinely matter.

Since you’ve been patient and probably only scrolled down two or three times to look ahead for some concise table that images well on the screen of your Galaxy S8+, I’ll now share them with you here.

RULE 1: If it exists, show it to me.

  • Elegantly simple it its demand, we have an agreement that something which occupies space and has mass should be here today. Nothing else will do… Really.
  • Enlightened manager query: Ryan, could you use some help with keeping your commitment?

RULE 2: Time stops for no man.

(I mean, person… I mean, associate… I mean… oh, crikey… recurring attack of charm school political correctness. Thought I was cured. Sorry everyone.)

  • We have competitors. I’ve been told that the definition of ‘competitors’ is that they do everything better and faster and seek to annihilate us… Really.
  • Enlightened manager solution: Look everyone! Who could have dropped off this crate of day-planners?

RULE 3: Make a decision; if it’s wrong, we’ll make another one tomorrow.

  • Chances are darn good that you know the right thing to do. You’ve got a 4.0 Stanford BSEE, right? Wallow in indecision if you must. Or better yet, take a leap and be handsomely rewarded… Really.
  • Corollary to rule 3: I said make a decision, not any decision. If you make a decision and it doesn’t work out, you’ll still be here tomorrow for the redirect. If you make any decision as a habit, eh… probably not so much.
  • Enlightened manager recognition: Chris, well done, just what we needed. You da’ bomb!

Later on, inspired by notable IPDT outcomes while observing only the prior three rules, I was then prepared to absorb the following two concepts that I’ve discovered apply almost universally… bonus rules I include just for you.

RULE 4: Where there is the shadow of a doubt, there is no doubt.

  • If you’re positive that “Casey” is stealing from the company, everyone else knows too. And if Casey openly admits he / she is stealing, then there’s a good chance you’re all correct in your assertion. No mob mentality here, just common sense… Really.
  • Enlightened HR Manager’s role: Casey, I need to inform you that we are separating you from your employment here today. (Can you guess why this act is enlightened?)

RULE 5: Hope dies last.

  • Special corollary of rule 4: Waiting for Casey’s behavior to improve and return the money he / she embezzled from the company reveals what a truly great heart you have. But, it won’t happen… Really.
  • Enlightened project manager’s take: I could buy some time, heal Casey, and lose the respect of all my honest project team members who are just trying to get something done and have some fun with like-minded people – or not.

That’s it dear readers. The real 3 + 2 rules of successful project management. These should spare you years of tedious discovery and position you for speedy domination, control, uh… leadership of your market space.

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See how we helped a West Coast based biotechnology company streamline their contracting process so that new drugs could be brought to market more quickly and with higher quality. Read the case study –>

 

Time is the Common Denominator of all Wastes

When it comes to improving operations, how many wastes are there really?

I recently read an article that asked the question: How many types of waste are there really? This was in reference to Lean and the original seven wastes in Taiichi Ohno’s iconic Waste Wheel, shown here.

Ohno Lean Waste Wheel

The comments were interesting. Apparently there are tightly-held beliefs on this topic. Let’s try not to over complicate something that Ohno intended to be quite simple, but because waste is the red thread of all Lean, it’s worth consideration.

Purists believe that there are 7 wastes as described by the sensei and there shall be only 7 wastes. Period. Another faction makes the argument for adding the “waste of people’s intellect” or something similar. This notion has become increasingly popular over the years. Kaufman Global added it long ago, but I’ve always found the classification a bit difficult. Is it intellect, human potential, creativity, insight, involvement, et cetera? Unlike Ohno’s originals, these descriptors seem abstract and difficult to attach to an action.

The case for waste of intellect arose from the observation that bosses and managers tend to treat people like cogs instead of active participants in value creation. Ohno’s writings illustrate his struggles to help people understand. Who knows why he didn’t include it in his original work? Maybe he considered himself an “under-cover” social engineer and felt that sticking to hard assets was more pragmatic. Or maybe he didn’t want to too openly point out that management was missing the point? The gap shows no sign of closing soon.

If you want to get really basic, there is only one true waste: TIME. With Lean, time is incorporated in many ways: cycle time, value added time, non-value added time, downtime, uptime, etc. Ohno simply broke it down in a way that made it easy to identify obvious targets to be addressed with appropriate techniques.

wasting time

My take: It doesn’t really matter. Waste can be subdivided many ways. If you think there are 20 different types of waste and this helps attack any one of them better; go for it. In the name of continuous improvement we must be willing to add or subtract in order to improve the system. Right? Yes. Be careful though: More choices seems somehow less Lean, doesn’t it?

People Energy, Alignment and Engagement

Which brings us back to the concept of the waste of people’s intellect. When it comes to achieving operational excellence, a tremendous amount of time is lost by failing to engage people doing their daily work. Non-inclusion results in false starts, half measures, low sustainment and do-overs. Workshops and Kaizen Events may be common, but sustainable results are only achieved when people are tangibly connected to everyday improvement.

Kaufman Global Lean Waste WheelAlignment

Any attempt to be operationally excellent means real and sometimes uncomfortable change; which always meets resistance in some form. Alignment is about getting everyone to support new ways of work. This is a cascading process where actions are different depending on ones place in the organization. If there was only one choice about what to align on however, it would be the need to engage everyone.

Engagement

Engagement means giving people a voice in the work they do and holding them accountable for continuous improvement. Achieving broad engagement up and down the organization is tough for many. Kaufman Global uses structures like the Executive Steering Team, the Lean Daily Management System ® (LDMS ®), and Procedural Action Teams to force engagement. They’re simple enough to understand and do too. If methods are overly complicated, they are easier avoid.

When it comes to waste, everything revolves around time but it’s okay to define as many subdivisions as you like. If you had two to choose, I’d recommend alignment and engagement. When you get these right, smart people working together toward a common goal always solve the other problems.

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Notes:

  • Muda is the Japanese term for waste. This is the word Taiichi Ohno would have used.
  • A simple definition of waste is: Anything an all knowing, all seeing customer would not be willing to support (pay for).

If you want to learn more about Kaufman Global’s approach to engagement and alignment, check out SLIM-IT, Procedural Adherence and Lean Daily Management System. For a deep dive into the waste wheel and how it applies to Lean, check out our White Paper: Implementing Lean Manufacturing.

Lean Manufacturing White Paper: Part 3 of 3

The third and final excerpt in a 3-part series from Kaufman Global’s updated white paper, Implementing Lean Manufacturing: A Holistic Approach.

In Part 1 and Part 2 we covered the genesis of Lean manufacturing, why “pull” is such a fundamental concept and how Lean is an integrated system that goes well beyond technique. Here, in Part 3, we close the series with prescriptive approaches for attacking each of the 9 forms of waste. In this installment we discuss:

  • SLIM-IT ®: A proven structure for successful implementation
  • The Lean Daily Management System ® and the 20 Keys ®
  • A graphic example of what happens when you move from push to pull

Waste Wheel for Lean manufacturing

 

 

 

For each of the forms of waste there are certain attack methods. We start with People Energy Waste because it is the most challenging for most organizations.

 

 

 

Attacking People Energy Wastes

Attacking people energy waste

SLIM-IT, noted on the Master Jargon Chart section above (see the full chart in Part #2), is a pronunciation of the acronym for Structure, Lean (Daily Management System), Mentoring, Metrics, Teamwork, Tools, Training and Technology (SLMMTTTT). Kaufman Global’s SLIM-IT model is the primary engine of any Lean (or other) implementation because it aggressively attacks the people energy wastes that derail so many initiatives. Most organizations have ample technology, tools, training and teamwork “potential” to solve almost any problem or achieve any goal. The difficulty lies in compelling the right combination of the “Ts” to come together at the right time. This is what SLIM-IT does. Figure 6 presents the SLIM-IT model.

SLIM-IT Implementaion Model by Kaufman Global

Figure 6 – The SLIM-IT® Model

The Structure element of SLIM-IT employs several processes / mechanisms, including:

  1. Executive Steering Committee (ESC) that directs and coaches the initiative, ensures alignment and measures engagement.
  2. Work Stream Teams that are responsible for an ESC-approved element of work such as implementing shift start-up meetings or transferring a new product into a facility.
  3. Experts that provide process coaching, an executive sounding board, content expertise and overall initiative management for the organization.
  4. Charters for each Work Stream Team that are developed with and approved by the ESC. Charters include objectives, critical success factors, activities, deliverables, responsibility matrices, schedules and so on.

The building block of Lean is the intact workgroup. These are the hands-on associates who work near each other on similar processes every day.  Each workgroup of ten or fewer people operates its own LDMS that nurtures improvement and sustains realized gains. LDMS compels, coaches, mandates, and supports workgroup engagement in applying the correct tools to minimize waste in their work area.

LDMS consists of six core elements:

  1. Primary Visual Display (PVD) – The PVD is a large visual display that presents the current status of the workgroup on key metrics, goals, objectives and action plans.
  2. Shift Start-Up (SSU) Meeting – This is a tightly facilitated, structured, daily, stand-up meeting of the intact workgroup held in front of the PVD and lasting no more than ten minutes.
  3. 20 Keys ® Action Plan – The 20 Keys approach focuses each workgroup on a long-term improvement plan. Every set of 20 Keys (customized for different functional areas or processes) consists of a chart for mapping goal attainment and a corresponding set of point or level descriptors for individual keys. Each workgroup assesses itself and develops its own 20 Keys Action Plan for improvement. Figure 7 displays a 20 Keys chart for a manufacturing cell that has a current score (denoted with squares) of 30 out of 100 with a goal of 40 within 6 months.
The 20 Keys of Lean Manufacturing by Kaufman Global

Figure 7 – Example: a 20 Keys ® Action Plan for a Workgroup

The triangles represent the group’s improvement goals for individual keys for the next year. The improvement plan lists the specific actions required by the group’s members to attain the point goals. The chart and the accompanying improvement plan are posted on the group’s PVD.

  1. Kaizen Action Sheet (KAS) Improvement System – This technique allows the workgroup to capture small “inspirations” and improvement ideas. These are often “too small” to be considered by the formal suggestion system but are the basis for “kaizen” in Lean. The most important aspect of the KAS system is that it ensures the improvements are relevant for the workgroup.
  2. Metrics – This important element integrates detailed micro-process metrics tracking and short-interval coaching to focus individuals and workgroups on the critical few results drivers for a given process. Metrics are selected by the workers with input from management or supervisors / leads. Workgroup metrics are dynamic – if they are not effective in improving outcomes for the workgroup and overall process, they should be revised. Results are reviewed at the start of each work day by the team as part of its daily workgroup meeting.
  3. Short-interval coaching (SIC) is a technique where supervisors and managers visit the work area frequently (more than once a day) and provide coaching and feedback related to both results and activities. Short interval coaching is the manifestation of a shift in values for the organization. In the new, more Lean way of thinking and acting, there is greater emphasis on engagement (Is the LDMS fully functioning and improvement?), workgroup metrics (Is the information on the PVD up to date?), and improvement (Tell me about some of your Kaizen Action Sheets?). Short Interval Coaching is a vital change management method that must be taught as it isn’t a skill that is naturally occurring in most managers. Everyone in a leadership position can and should participate to reinforce new behaviors.

These five elements, if implemented and maintained, provide a rock-solid foundation for any world-class Lean program. They provide the mechanism for each workgroup to take ownership of their work processes.

Lean Daily Management System establishes the involvement and commitment that are the soul of world-class achievement in every human group endeavor.

All other Lean tools and techniques will realize only a fraction of their potential if any of these elements are not implemented and rigorously practiced.

Mentoring is the next element of SLIM-IT. This is the day-to-day coaching of managers and supervisors in real time, on-the-job, as the tools and techniques of Lean are implemented. The coaching must be done by those who understand the why, what and how of applied Lean. Mentoring is the mechanism that assures that management behaviors at all levels will be changed sufficiently and over a long-enough period of time to infuse them into the organization’s culture.

Metrics get a lot of attention in traditional organizations but they are often misguided. The most common problem is an overabundance of them. Second, the metrics that are most interesting to the top of the organization are often difficult to connect with the day-to-day work. The Metrics in the SLIM-IT model can be described in three ways:

  • Top-Level Strategic metrics that are the traditional measures of overall performance: Cost, Asset Utilization, Quality, etc. Here, less is more.
  • Micro-process: The metrics that workgroups focus on to steadily improve their performance. Here, diversity is key – one size does not fit all.
  • Activity-based metrics: These are the metrics that must be in place to make sure that the organization is engaged and aligned. They measure the occurrence, participation and frequency of the ESC and LDMS along with components contained within – like the effective use of team-based problem solving workshops, Value Stream Mapping as something more than a one-time occurrence and the 20 Keys. Personal performance measures and coaching also play a role here.

The linkage between these three types of metrics deserves careful consideration. Usually the top-level metrics get all the attention with little thought to how they are affected by micro-process improvements or measures that ensures broad participation.

Tools, teamwork, training and technology approaches are used by every organization in attempts to improve. Many of these approaches work if properly implemented. The key to their success is combining their usage within the other elements of SLIM-IT. Without a foundation of structure and coaching, tools, teamwork, training and technology will fail to deliver what they promise.

Attacking People Work WastesAttacking People Work Waste

Workplace Management methods are used to minimize people work wastes. They include standard work, workplace organization and Kaizen.

  1. Standard Work techniques are related to traditional Industrial Engineering (IE) analysis. With IE, engineers measure working time to establish concepts like “earned hours.” Standard work involves much more. Using a variety of worksheets (see Figure 5 – Master Jargon Chart), workgroups assess their own work and establish the best way to eliminate all types of waste. Standard work analysis leads to the development of Standard Work Instructions. Notice the sequence of this: The intact workgroup (team) determines the best standard way to do the work, then the Standard Work Instruction is developed. Many organizations get this completely backward and attempt to describe the work from outside the process. This always fails and always requires re-work.

The worksheets and templates used to develop standard work are extremely important for two reasons. One, they permit workers in an area to identify and measure micro-process waste that might otherwise be overlooked as insignificant. Two, in the process of attacking waste, workers develop the feelings of ownership that are so critical to the success of the people energy waste techniques. Figure 8 displays the “before” improvement portions of two types of worksheets for an actual cell.

The numbers on the Standard Work Instructions (SWI), shown in the left portion of Figure 8, represent worker actions. These actions are measured and classified as manual (hands-on) work, waiting, machine or walking on the Standard Work Combination Sheet (SWCS) shown in the right side of Figure 8. The cell is in trouble because it cannot meet its takt time of 65 seconds.

Standard work instruction and standard work combination sheet in push system

Figure 8 – Portions of a Standard Work Instruction (Left) and Standard Work Combination Sheet (Right) Showing the “Before” Situation in a production cell.

  1. Workplace organization, which is intimately involved with standard work, optimizes a workgroup’s environment through labeling, workplace / tool / part arrangement and visual displays. 5S, a Lean technique for cleaning and organizing is usually the starting point for workplace organization. Many organizations start out here because it’s easy for people to understand and natural for them to do. However cleaning and organizing is often the end point for many Lean endeavors. Visual systems – color coding, labeling, floor markings, andon lights, etc., are powerful techniques for making Lean part of the fabric of the enterprise, but they are only part of the system and are not a one-time event. They must be done with the same discipline and follow-up as any of the other methods described here.
  2. Kaizen, which appears as a separate approach in Figure 5, is actually the interplay of SLIM-IT with all of the other methods and techniques. It’s both the spirit and structure of worker participation in a focused manner. Kaizen Events are structured, team-based problem solving workshops of variable duration. These are only effective when supported and sustained by a functioning Lean Daily Management System.
Standard woek instruction and standard work combination sheet for pull system

Figure 9 – Portions of a Standard Work Instruction (left) and Standard Work Combination Sheet (right) showing the “After” situation for the production cell shown in Figure 8

The “after” situation in Figure 9 shows significant improvement toward the elimination of three types of People Work Waste within the cell: walking, waiting and processing. This optimization develops over time. The workgroup is aware of their performance based on their metrics that are a visible part of their PVD board. Sometimes the improvements are incremental and part of the Kaizen Action Sheet System. Sometimes, the improvements are more abrupt and come from Value Stream Mapping or a Rapid Improvement Event. The point is that the standard work of continuous improvement that is embodied by LDMS is a major influence on workgroup, and therefore overall, performance.

Attacking Quantity or Material Wastes

Attacking quantity waste

Just-In-Time (JIT) methods address the quantity wastes of making too much WIP, inventory and movement. Some people refer to all of Figure 5 as JIT or Kaizen. While technically incorrect, the JIT association is frequently made because you cannot employ JIT techniques to remove quantity waste unless you also address the other wastes concurrently. The kaizen substitution derives from much the same logic, although the popularity of kaizen blitzes has made kaizen an all-purpose descriptor for Lean for many people.

There are four primary JIT methods: kanbans, leveling, Quick Set-Up (also known as SMED: Single Minute Exchange of Die), and preventive maintenance (PM). We have already addressed kanbans and work leveling to some extent earlier in the paper.

  • Quick Set-Up is a collection of “best practices” that apply standard work and some machine modifications to changeover activities. A typical SMED study involves creating worksheets on a changeover and attacking the root causes of waiting and processing wastes. Reductions of 90 percent or more in changeovers and set-up times are not uncommon with SMED. Machines must be integrated into the level work of a JIT approach. If machine set-ups and changeovers take too long, there will be waiting waste (if downstream parts are not available) or inventory waste (if large lots accumulate to provide work during changeovers).
  • Preventive maintenance is the final JIT method. In a finely tuned Lean system, unplanned downtime is a bigger problem than in a traditional push system that is glutted with inventory. When a machine breaks down in a Lean system, there is little built-up inventory and delivery to the customer is at risk. A well-structured Lean system has well managed safety stocks to protect the customer during such repairs. Lean systems train operators to do routine preventive maintenance tasks such as lubricating and checking so that maintenance technicians can attend to overhauls, teaching operators and making design changes to improve machine efficiency.

Attacking Quality WasteAttacking quality waste

Error Proofing often referred to by its Japanese name, poka-yoke (pronounced “polka,” as in the dance, “yolk,” as in the egg, and “a,” as in bay), uses a variety of detection, warning, prediction and prevention mechanisms to catch or prevent errors at their sources. As you can imagine, the implementation of workplace management would automatically generate a number of error proofing actions (and vice-versa). Error proofing is a primary technique for quality improvement in Lean because it is so basic and easy for people to apply. One of the primary sources for error proofing ideas is via the Kaizen Action Sheet method contained within the Lean Daily Management System.

Six Sigma is a comprehensive set of practices that takes careful aim at variation reduction to improve product and service quality. It contains within it specific methods for statistical analysis, project management and problem solving and emphasizes the DMAIC model: Design, Measure, Analyze, Improve and Control.

The Danger of “Tool-itis”

As you can see from the above discussions, the fundamentals of Lean are not complex. Yet, few organizations pursue it as a key strategic goal. Many failures with Lean are derived from a “tool shopping” mentality. Rather than designing a step-by-step implementation of Lean, they attempt (either by accident or through management-led efforts) to cherry-pick bits and pieces of elements found in the “focus points” column of Figure 5. These organizations believe that if they install a few of the pieces, Lean will eventually happen on its own. This never occurs – especially since the isolated tools are typically accorded little management support and don’t mandate engagement. Examples:

  • Kanbans and lot size reductions will always reduce inventory, but they often generate more waiting waste unless standard work is pursued.
  • Error proofing efforts will eliminate only a small portion of those wastes that could be tackled with kaizen and workplace management methods.
  • SMED procedures will dramatically reduce machine downtime in any traditional plant, but the economic benefits pale next to those that also installed kanbans and work leveling.
  • Kaizen blitzes, or rapid improvement events, will deliver big results quickly but without a significant, planned effort to engage the broader organization, the benefits won’t sustain.

It is essential to realize that Lean involves both a philosophy and its accompanying approaches and tools. They are mutually supportive and interwoven. If an adequate number of the tools and approaches are aggressively implemented – and enthusiastically coached at the micro-process (hands-on worker or “gemba”) level – the philosophy of Lean springs to life.

Simply stated, the full impacts of Lean can only be achieved by implementing a total systems approach.

Conclusion

Lean manufacturing is a people process, not a tool installation exercise. It is a journey, not an event. It’s an intensive and proactive effort that requires planning, resources and day-to-day management attention and coaching. It is not easy or painless and must be approached with the understanding that it will take time to change and even longer to create a new Lean culture. Those who endeavor to pursue it holistically will reap the significant performance gains that will allow them to win in increasingly competitive markets, provide significant shareholder value and by enabling an organization of engaged and empowered problem-solvers.

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If you’d like a pdf copy of the entire white paper (Parts 1-3 in one place), click here to access it via our Resources page.

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About Kaufman Global

Kaufman Global is a proven implementation partner that focuses on accelerating performance. Since 1995 we have worked with clients around the world to drive enterprise-wide change initiatives and cultural transformations. Leveraging Lean, Six Sigma and proprietary change management techniques, Kaufman Global delivers structured implementation and transformation projects that enable sustainable operational and financial results.

20 Keys®, Lean Daily Management System®, LDMS®, Lean Leadership®, SLIM-IT®, WIN-Lean®, and the Kaufman Global logo are registered trademarks of Kaufman Global.

Lean Manufacturing White Paper: Part 2 of 3

The following is the second excerpt in a 3-part series from Kaufman Global’s updated white paper, Implementing Lean Manufacturing: A Holistic Approach. In this paper we discuss:

  • An integrated model for Lean implementation
  • How to improve engagement and alignment
  • Why “pull” is so fundamental to Lean success

In this installment we discuss why Taiichi Ohno’s original 7 wastes must be updated to include two new ones: Alignment and Engagement – which if not addressed will foil any implementation.

Lean Manufacturing Evolves from Traditional Push Systems as Waste Is Eliminated

Lean is not “installed.” A self-regulating, Lean system is created by a continuous focus on eliminating small instances of waste or “muda” (muda is the Japanese term for “waste”). Waste is defined as any work that does not add value to a product or service. If the customer does not benefit from it, it is muda. All inspections, rework, repairs, walking, material movement, inventory of any sort, waiting, and so on are muda. They all cost money and produce nothing of value for the customer. Lean (pull) slowly evolves from a traditional (push) system as wastes are eliminated little by little. When an organization first begins to initiate Lean activities, it is a traditional system with perhaps a few Lean tactics being applied here and there. At some point, with dedicated effort, it becomes more of a pull system than a push system.

Lean Waste Wheel

Figure 4 – The four categories and nine types of waste (muda)

Figure 4 displays the four categories and nine types of Lean waste. This new model evolved from Taiichi Ohno’s original three categories; People (work), Quality and Quantity, and associated seven types of waste. In the late 90s, an eighth waste that acknowledged the value of people began to appear. That “waste” has been described in a number of ways, including: intellect, creativity, involvement, etc. In the time since it has become increasingly apparent that the people aspect still receives too little attention and prior descriptions have not been specific enough.

Kaufman Global gets more direct by describing the People Energy wastes of Engagement and Alignment. This draws attention to the elements that must be overtly addressed in order to make Lean really work and puts a finer point on the idea of holistic, integrated Lean. It’s necessary to do this because of the almost insurmountable implementation problems that many organizations encounter. Their struggles are driven largely by the fact that people energy wastes are not dealt with as an integral part of Lean adoption. Therefore, we have directly incorporated people energy wastes, along with ways to minimize them, into the basic conceptual model of Lean. The specific definitions of each type of waste are described below.

People Energy Waste

People energy waste wheelPeople energy waste arises from a failure to harness the potential that exists in all workgroups. This form of waste is the most important thing to address in Lean implementation or any other type of change initiative. Failure to harness people energy creates most of the significant problems that organizations encounter when they attempt to do something (anything) different.

Alignment Waste is the loss of value that arises when management and employees at all levels are not consistently aligned and energized to address critical issues. Making this happen is the sole responsibility of leaders and managers who are easily distracted. Alignment requires conscious and planned strategy and tactics that ensure messaging is consistent, priorities are established, communication is open and deviations are explained. “Flavor of the Day” or “Programs of the Month” are good indications of alignment waste. Good alignment means that you start, and stay, the course.

Engagement Waste is the loss of value that occurs when people do not have some control over the work they do. This is one of the toughest things for managers to abide because they feel like they are giving up some control – which they are. True engagement means requiring workgroups to measure their performance at a micro-process level and then expecting them to improve their performance over time. Many organizations waste a lot of energy on faux-engagement activities such as coffee talks and lunches with “their people.”

The idea here is to engage and align the organization via well-defined structures. All the good intentions and skills in the workplace cannot operate seamlessly if responsibilities, resources and personnel are not formally assigned and led. Structure requires a formally dedicated steering committee, work stream leaders and teams, explicitly assigned resources, schedules, charters, and champions.  Alignment and engagement compel two critical outcomes that are essential change- management requirements for successful implementation: relevance and ownership.

Relevance: To sustain any initiative, people must work on issues that are, in some part, relevant to them personally. The most basic and beneficial aspect of good alignment and broad engagement results when individuals and teams are compelled to deliver on improvements and fixes within the processes they control. This creates, by default, an environment where much of the improvement activity is truly relevant to those doing the work.

Ownership: Human beings are territorial and proud. If they are associated with something, it is absolutely essential for them to believe that it is admired and respected by others. This tendency is wired genetically into us all. If people are not permitted to exercise some degree of control and power over their work place, they will not be inclined to identify with it nor will they strive to make it excel. This is the underlying basis for the outstanding performance of all self-directed workgroups.

Concerning all People Waste, understand that it’s not that the people are being wasteful but rather that these are wastes that are visited upon people by a non-Lean configuration of work.

People Work Waste

People Work Waste WheelPeople work waste arises from human actions involving processes. This type of waste is most analogous to the waste encountered in industrial engineering concepts. It can be divided into three categories: processing, motion, and waiting.

Processing waste is the result of inefficient work. Typical causes are inadequately trained workers, hard-to-use / locate tools or poor-fitting parts. Employees are hard at work, but there is a better way to do the job.

Motion waste is all movement that does not add value. All walking and reaching for parts or tools is muda.

Waiting waste is people waiting for parts, help, a machine that is broken or down for a die exchange, and so on. People can add no value to the product or service while they are waiting.

Quantity Waste

Quantity Waste WheelThere are three types of quantity waste that arise because material (or data or paper) must be processed. This type of waste comes from creating too much inventory between workstations (WIP), Raw and Finished Goods inventory and material movement and transport – think; forklifts, stackers and trucks.

Inventory waste arises when inventory is not being used but has been paid for, perhaps has had value added to it, takes up space, requires expensive storage and retrieval systems and becomes lost, damaged and / or obsolete. Finished Goods inventory is even worse, as all of the intended value has been added and several weeks or even months may pass before it is paid for.

Work In Process (WIP) waste is inventory somewhere in the system between Raw Materials and Finished Goods. Whenever there is material waiting between two processes, it is waste. WIP waste occurs because process times are not balanced and matched with takt time.

Movement waste is all transportation of materials. Shigeo Shingo, the conceptual organizer of Single Minute Exchange of Die (SMED) and poka-yoke (error proofing) concepts, humorously observed that forklift and conveyor salespeople must routinely bribe traditional plant managers. Why? Because, he jested, no other mechanism could explain the incredible amount of unnecessary movement built into the processes of non-Lean plants.

Quality Waste

Quality Waste WheelFixing defects is the sole quality waste. Each defect turns value-added work to waste and requires more nonvalue-added work to be repeated during rework or repair. Prior to the implementation of Lean, quality waste is usually the most visible waste due to its impact on customers and the tendency of a traditional push system to fail to recognize the other types of waste as significant. Ironically, reduction of the other wastes through Lean always results in a dramatic decrease in defects. This occurs even without the focused implementation of powerful tools such as error proofing or Six Sigma.

The next section presents an integrated discussion of Lean tools, concepts and implementation techniques. The tools and methods should not be separated from the implementation approach. While this paper does not provide a detailed examination of Lean tactics, it does present sufficient information for the reader to determine what they must learn in order to develop a successful Lean implementation initiative in their organization.

Implementing Lean Manufacturing

As muda is eliminated through the application of various Lean tools and methods, a pull system gradually emerges. Figure 5 presents the Master Jargon Chart of Lean Manufacturing. The Master Jargon Chart summarizes and presents the various Lean wastes, tools and methods into a single conceptual framework. Figure 5 is Lean; that is, in order to “do” Lean, the waste reduction approaches and corresponding tools and methods shown there must be comprehensively applied in an integrated manner.

All of these tools and approaches need not be implemented simultaneously. In fact, it would be a mistake to do so. Further, the criticality of each tool varies in different environments. This is why a “one-size-fits-all” Lean implementation is a mistake. While all successful Lean organizations use many of the tools to some extent, various tools are more comprehensively applied in certain environments than in others. As we discuss specific tools and approaches, this will become obvious.

The Master Jargon Chart of Lean Manufacturing by Kaufman Global

Figure 5 – The Master Jargon Chart of Lean

The left two columns of Figure 5 present the four categories and nine types of waste described earlier. The structure of this model might suggest that each waste category is targeted by a specific approach and / or method. While this is true to some extent, all of the methods are extensively interdependent and interactive. You cannot “cherry pick” tools and techniques and expect long-term Lean success. In particular, if you do not employ the methods required to address people energy wastes, the other methods will fail to achieve competitively meaningful results.

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To be continued. In Part 3 of this series, we provide describe a fail-proof system for implementation. Or, if you’re ready to read the entire white paper now, click here to access it via our Resources page.

Lean Manufacturing White Paper: Part 1 of 3

The following is the first excerpt in a 3-part series from Kaufman Global’s updated white paper, Implementing Lean Manufacturing: A Holistic Approach. In this paper we discuss:

  • An integrated model for Lean implementation
  • How to improve engagement and alignment
  • Why “pull” is so fundamental to Lean success

In this installment: THE EVOLUTION OF LEAN AND WHY PULL IS SO IMPORTANT, we describe the foundations of Lean over the past half-century and why pull vs push is one of the most fundamental aspects of any Lean system.

Part 2 discusses why Taiichi Ohno’s original 7 wastes must be updated to include two new ones: Alignment and Engagement – which if not addressed will foil any implementation.

Part 3 provides an easy to understand table that shows the systemic nature of Lean: wastes, approaches, methods, tools and results and describes a fail-proof system for implementation. For over 20 years Kaufman Global has pioneered the interface between people and process, always with engagement and alignment at the core.

The Evolution of Lean and Why Pull is so Important

 

Japanese symbol for Kaizen

Kaizen is a Japanese word that means “small, ongoing good” (kai) and “good, little, for the better” (zen). The term has come to mean small, continuous improvements by hands-on workers all the time.

 

Introduction

Lean manufacturing has become synonymous with world-class operational excellence. Under various names (synchronous, pull, demand flow, flexible, cellular, just-in-time, one-by-one), Lean is the single most powerful strategy for improving a production operation’s competitiveness. The dominant players in every market segment are aggressively implementing Lean as a strategic weapon because they realize they have no choice. If they don’t “do Lean” and stay Lean, they will quickly fall behind the market leaders because they are less able to adapt to an ever-changing competitive environment.

This white paper is directed at organizations that are either eager Lean practitioners or those who have not yet had a Lean awakening. Both will find value in its explanation of the foundations and basic mechanics. Additionally, this paper describes Kaufman Global’s specific approach to Lean implementation and our learnings over years of working with clients. Our method is holistic and pragmatic, reduces implementation time, increases benefits and ensures sustainability. Kaufman Global has pioneered several techniques that are in wide use across a broad spectrum of industries and business today, including: the SLIM-IT® model for implementation, Lean Leadership®, the 20 Keys® and the Lean Daily Management System® (LDMS®).

A Definition of Lean Manufacturing

Lean manufacturing, or Lean, is an integrated leadership philosophy, management system and set of tactical methods / tools that focuses on creating an operation with minimal amounts of nonvalue-added activity, inventory (Raw, Finished and Work-In-Process) and errors. The primary engine for eliminating nonvalue-added elements in  Lean system is the employees who do the hands-on work.

The Benefits of Lean

While the mechanics and approaches of Lean may not be clear to everyone, there is little doubt concerning the magnitude of potential benefits. Years ago, in order to get people interested in the notion of Lean, it was necessary to quote double digit percentage savings from process improvement. Without making that list here, in our experience any process is capable of a 10 – 30% improvement if Lean is applied with some rigor. This is in any and all dimensions whether it be cycle time, lead time, quality, inventory, customer satisfaction, absenteeism, etc.

Results like this cannot be attained by chance or half-hearted, informal initiatives. They can only be generated through carefully planned and aggressively supported efforts that are overtly led by management. Isolated improvements have no chance of leading to an organization-wide transformation of day-to-day behaviors, expectations, metrics and the entire system of work.

The Evolution of Lean Manufacturing

Figure 1 is a conceptual diagram showing the progression of Lean between the 1940s and today. Lean would not have emerged as a structured system when it did (or at all, perhaps) if it had not been for two circumstances. The first was the condition of Japan after World War II. Totally devastated and with few resources, Japan could not compete with other industrialized economies on costs, volume or quality using standard mass production approaches. There wasn’t enough money to build modern factories or buy modern equipment. Japanese manufacturers had to “make do” with what they had; and they had very little. This massive handicap created the ideal conditions for the true catalyst of Lean to operate.

This second circumstance was the pioneering thinking of Kiichiro Toyoda, Taiichi Ohno, and Shigeo Shingo. Their focus on low-tech, pull systems and the elimination of waste evolved into the Toyota Production System (TPS) over the period from 1945 to about 1975 (the original, Toyoda, was changed to Toyota for American consumers). The 1990 book, The Machine That Changed the World by James Womack, et al, popularized the term Lean manufacturing to refer to the TPS and its derivatives. Other generic names for the TPS are flexible, cellular, one-by-one, pull, synchronous, demand-flow and World-Class manufacturing. Also used are just-in-time and kaizen although both are only elements of the TPS, not the entire system.

Starting in the mid-1980s, the large automobile manufacturers adopted many of the basic principles of the TPS, but each changed the name to something that sounded more “home grown” to their employees, customers and shareholders. Other companies have since taken the same approach. Thus, it is common to find that Company X has the “X Production System” in place. Peel back these “labels,” and you find significant elements of the TPS underneath.

During the 1990s, it became apparent that there was plenty of room for Lean application far flung from automotive assembly and well beyond the factory floor. This started the integration of methods and techniques that is still going on today – Office Kaizen is one example. As organizations from all industries, sectors and segments embraced adaptations of the TPS, new tools and methods were developed and Lean continued to evolve.

In the mid-2000s, the term operational excellence or “OpEx” started becoming the popular catch-all phrase for operational improvement of any kind. It allows for the inclusion of a multitude of techniques – especially the integration of Lean and Six Sigma – and is often more acceptable to the ears of those in non-manufacturing pursuits. The generality of the term is also its weakness because anyone doing anything to improve performance can proclaim they have OpEx – which may or may not be true.

While the basics never change, the Lean of today has many additional bells and whistles that Toyoda, Ohno and Shingo did not develop but would have welcomed. Anything that enhances the fervent elimination of waste is part of Lean.

The evolution of Lean manufacturing from mass production, to the Toyota Production System, to the people-focused Lean enterprise

Figure 1: Where Did Lean Manufacturing Come From, Where it is Going

Pull Versus Push in Lean Manufacturing

A critical distinction between Lean and traditional systems is the pull philosophy of Lean versus traditional manufacturing’s push philosophy. Figure 2 displays the mechanics of a typical push system with three employees working on three consecutive processes. The curved arrows represent sequential actions of each process step. In this example, each of the three workers does his / her work at the same time independently and then passes the completed item to the next worker. We assume that each worker performs each and every task at a constant rate of speed.

Conceptual representation of a traditional push system prior to adoption of lean manufacturing principles

Figure 2: A Conceptual Representation of a Push System

The “start” scenario illustrates the situation in the cell as it has just started to work on a new product. The Process A worker has four pieces of Raw inventory waiting to be worked. There are also four pieces of Work-In-Process, or WIP, waiting for both the Process B and Process C workers. Each worker has one piece of work at their station. There are four pieces of Finished Goods waiting to be picked up after Process C.  In Figure 2, the processes are not balanced. We know this because the workers, operating at a constant rate of speed, require different amounts of time to do their work. Takt Time (TT) is noted for each process. Because at least one of the workers is over the Takt Time (TT), it will be impossible for the three-person workgroup to meet customer delivery demands unless additional resources in the form of time or people are added.

Takt is the German word for “cadence” or “rhythm” (pronounced “t-ah-k-t” in German but typically pronounced “tack” in English). In the TPS, Takt Time is the heartbeat; it is the standard time interval between the each output of a product from a process that is required to meet production demand.

TT is obtained by dividing the total amount of work time in a day or shift by the required output. That is: Takt Time = total time in seconds / required output. The bar graph below each process represents the amount of actual time that each worker requires to perform their work to the product.

The rate of completion of work for each process varies because the work is unbalanced: Process C takes the longest, B is the fastest. Process A tasks are the only ones that match the Takt Time exactly.

After some period of time operating under the typical push philosophy, the original “start” situation has evolved into the “later” example shown in the bottom half of Figure 2. With a starting level of four pieces of inventory between each worker, Worker B frequently ran out of material because they are out of balance with the preceding process (A). The supervisor or manager, uncomfortable at seeing an idle worker and believing that any work is better than none, ordered that more inventory be added so that Worker B could stay busy. This typically happens as managers strive to make “earned hours” or “standard labor hours” look better. If the workers in Processes A, B and C are operating machines, the quest for better “absorption” numbers creates additional pressure to build up inventory.

Raw material accumulates with Worker A because it is pushed to the operation by Materials Management and Production Control. More and more inventory is added until all workers are kept busy all the time. The result is masses of inventory of all types – Raw Materials, WIP and Finished Goods. Upon seeing busy workers and a lot of inventory, managers receive the false perception that considerable value is being added and that there is a lot of product almost ready to meet customer demand.

The total output of the combined processes of cells A, B and C can only ship at the rate that Process C can complete the work. If any process downstream has a problem, other upstream processes will continue to churn out inventory. All of the WIP and Raw inventory is irrelevant to meeting customer requirements. All of the labor that is added to inventory that cannot be shipped is waste – and no, it is not “pent-up value.”

Worst of all, because everyone appears busy, the issue of unbalanced work between the three workers and the inability of the cell to meet takt time is seldom addressed.

This is the root cause of the entire inventory buildup. Rather than focusing effort on balancing the work in the cell, the push reaction is to resort to overtime, more workers, more expensive equipment, or all three.

Note the diagonally striped squares that appear in the “later” scenario of Figure 2. These are “problem” assemblies: a part was bad, an assembly error was made and / or a component was missing. When one of these problems occurs, the unit is pushed off to the side for later assessment. However, in most push systems, these problems are rarely addressed — and, when addressed, never timely. With the organizational imperative to stay busy and make more, the problem units appear insignificant among so much other inventory.

Figure 3 presents analogous “start” and “later” scenarios for a pull system. A detailed examination of demonstrates the power of a pull system to overcome the problems created by the push approach. In the “start” configuration, the times for each process to complete one unit are identical to those in Figure 2, as is the TT.

The first thing noticeably different about Figure 3 is that there is little inventory. This is not something that happens all at once when transitioning from the Figure 2 push system, but is a gradual result of moving towards a pull system. The second major difference is that the three processes do not work independently. Work is always “pulled” from upstream.

Conceptual representation of a lean manufacturing pull system with takt time, WIP, kanban signals and finished goods

Figure 3: A Conceptual Representation of a Pull System

The pull begins when the completed unit at station one (1) is removed. This creates an empty spot, which generates a need that pulls the completed unit from Worker C. This pull message is called a kanban (denoted by dotted box in Figure 3).

Kanban in Japanese, originally meant “store sign.” It is said that Kiichiro Toyoda got the idea for the pull system from a visit to a US supermarket after World War II (goods pulled off the shelf today are replaced tomorrow). In reference to what he had seen, he called a pull signal a kanban (rhymes with “bon-bon”).

A kanban can be a spot on the floor, a pallet or a piece of paper attached to the material or the material’s container. Traditionally, it was a card or sheet placed in a see-through pouch. The kanban states what it can accept.

For example, if a pallet is the kanban and a pallet can hold 16 assemblies, Worker C could continue to place work on the kanban until it has reached its limit of 16.

At that point, no more units could be added to the kanban. Worker C would have to stop working after completing the unit in front of him and wait until the kanban was emptied. In our example, the kanban only holds one piece. If the downstream kanban is full and Worker C has completed work on the at their station, they must stop working and wait. Nothing can move without a kanban, only Production Control can create new ones.

The beauty of the pull system is that if there is a problem at a downstream process, the entire line stops. No worker is permitted to work on another unit and / or build up inventory unless a kanban arrives. The “later” scenario in Figure 3 shows that the three processes are more balanced than at the “start” scenario. In a pull system, there is a continuous effort to balance work between adjacent processes workers and cells to eliminate waiting and reduce WIP inventory.

Also note that there are no problem units in the later scenario. Since inventory is not pushed along the production sequence, each problem unit in the pull scenario creates an “empty spot” in the process chain that cannot be hidden by WIP inventory. Management and employees are energized to address problems by the very nature of the pull system. As a result, errors decrease and quality improves.

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To be continued. In Parts 2 and 3 of this series, we update Ohno’s original waste wheel with the most dangerous waste of all: people energy and provide an easy to understand table that shows the systemic nature of Lean: wastes, approaches, methods, tools and results. Then we describe a foolproof template for implementation. If you’re ready to read the entire white paper now, click here to access it via our Resources page.

Operational Excellence Will Save You Millions (and Millions)

Well… the exact number is not certain, but organizations could get much more from their OpEx by shifting perspective.

Operational excellence is another way of saying “comprehensive process improvement.”

As an enterprise function it’s better than ever. Across business and industry (government, healthcare, services and manufacturing) it delivers year-over-year benefits. Yet, results could be much better. Many of the Operational Excellence (OpEx) programs we encounter are too narrowly defined and treat OpEx simply as deployed resources with some useful tools.Connected Team

A broader definition recognizes operational excellence as a result and OpEx as a system that affects the entire enterprise. It’s not an overlay, but rather a cohesive network of people applying standard techniques to deliver and improve results.

The OpEx Function Emerges

In the mid-90s, OpEx programs began to emerge from their automotive heritage, branching into other settings where they were perceived to offer a return on investment. Many of those efforts fell under the headings of Lean and Six Sigma. The basic concepts of process improvement have changed little over time but there has been such a proliferation of techniques and jargon that it can be a little confusing. Now we use terms like Continuous Improvement (CI) and Operational Excellence (OpEx) as a catch-all for anything related.

A few major themes are part of any OpEx endeavor, such as: what it works on, the techniques applied and how its organized. These attributes can be designed-in, or as is often the case, derived incrementally and ad hoc. This happens when one part of the business tries one approach, while another faction tries something different. Instead of resolving to a standard, the outcome is often the ‘tyranny of the OR’ where it’s hard to discern what is working and what is not. “Are we doing this, or are we doing that?”

Let’s look at these three themes in a little more detail.

What OpEx Works On

OpEx has two modes:

  1. Reaction – Responding to the most pressing issues of the day in areas such as productivity, quality, service and customer satisfaction.
  2. Prevention – Focusing on incremental improvements and sustaining; including process adherence and change management.

This is the right combination, but it’s pretty easy for organizations to get stuck in reactive mode and think of OpEx people as fire fighters whose main job is to put out fires instead of prevent them. This weakness can contribute to the downfall of OpEx when times get tough. Then, the biggest issue may be cutting cost and OpEx is often a cost that gets cut early. The up and down behavior makes it even tougher for the OpEx function to take off each time there is a restart.

Operational Excellence Techniques Applied

Tool kits includes things like: Lean, Six Sigma, manage change, coach, facilitate, deploy policy, map value streams, define standard work and conduct kaizen events and workshops, etc. That’s a pretty big list. Organizations often attempt to include too many tools and end up doing few of them well. Efforts can feel disjointed because they are. This is an area where the need for tool selectivity and standards guided by OpEx governance is obvious, but often lacking.

Differences in techniques applied across various industries have less to do with type of industry and more to do with the plethora of opinions, experiences, and competing priorities. For sure, a variety of techniques are expected and one size does not fit all. But wherever people and process come together, while the vocabulary and examples change, waste elimination and variation reduction methods don’t differ too much. Moreover, the methods and structures that deal with behaviors, engagement and change management are always the same.

How OpEx Is Organized

Maybe the most obvious shift in recent years is the rise of OpEx as a legitimate internal function. This means that, at the very least, people are identified on an organization chart. Assigning resources is a good thing, but the amount of variability in how talent is applied suggests too much experimentation. Models include:

  • Corporate Owned – Resources are sponsored by headquarters and mostly directed from there
  • Operating Unit Owned – Resources are sponsored by and embedded within the operating units
  • “Spray and Pray” – Broad skilling of associates without requirements for immediate application
  • “Hammer and Nail” – Attack obvious problems with available resources, often with limited tools and experience

BalanceIn practice it’s typically a combination of all of the above. The ratios shift over time as organizations learn and politics play out. Striking the right balance is essential for OpEx effectiveness. Articulating governance, communication and how people engage are all critically important.


A Systems View

The themes noted here – targets, techniques, organization – should be familiar to anyone who has worked on or inside of OpEx. It’s easy to get caught up in organization charts, tools and the “fires”. When this happens, focus narrows and we miss the opportunity to engage broadly across the entire enterprise.

Operational excellence is not a function. It is a RESULT that is best achieved by an OpEx SYSTEM that engages everyone.

Effective OpEx systems balance corporate and operating unit needs, target urgent problems and prevent others from ever occurring. They define, and then use, standard work to get things done. Reporting, capturing best practices, communication and sharing information is described, done and enforced. These are the things the OpEx function should be working on.

Broad organizational involvement and commitment is perhaps the most obvious benefit of a robust OpEx system. Leveraging the knowledge and input of those closest to their work shows respect for people and drives decision-making to the lowest possible level – a key tenant of an improvement culture. A fully engaged organization achieves relevant results, gains traction and becomes a sustainable continuous improvement engine. When the OpEx system is designed and defined, its performance can be evaluated and improved. A good OpEx system is:

  • Simple – The easier it is to understand, the easier it is to see if people are doing it
  • Engaging – Everyone participates. Ownership and expectations are articulated
  • Actively Managed – Leaders are hands-on in guiding the change process
  • Structured – The way the organization is expected to interact is clearly defined

FlipchartDon’t over-complicate it. Too many rules lead to unwarranted bureaucracy and can kill beneficial creativity. If design and definition become the major focus, no one will ever get out of the blocks and actually start fixing things. Balancing standard requirements with creative and flexible problem-solving is one of the great challenges. Sorting that out creates a sense of ownership and develops the organization.

As people should be at the heart of any OpEx system, start by describing the critical few things that demonstrate personal participation and then link these elements to recognition and reward. This is just one of many small steps that the enlightened enterprise goes through to become operationally great. It can be done once leaders decide that operational excellence is a literal objective and OpEx is a system for engaging the organization instead of a check the box function or a quick-fix for the crisis du jour.

Want to read more on topics like this? Head over to our Knowledge Center to get access to our full catalog of white papers.

Rapid Performance Evaluation – Speed Matters

Rapid Performance Evaluation: Standard Work for Identifying Operational Performance Gaps

Kaufman Global helps clients solve complex problems and drive fundamental improvement. We engage when people and process collide – places where expertise and leverage can speed results. Even when an organization knows there is a problem, understanding operational performance, getting to solutions and knowing which levers to adjust can often benefit from outside perspective.

Rapid Performance Evaluation (RPE)Over the past few years, we’ve observed that clients want answers faster than ever before. And while it could be that “time is money,” it seems to us that it’s more related to the frenetic pace of, well, everything these days. Headlines and “apps” often don’t dig deep enough and the “Ready, Fire, Aim” approach has great potential for missteps.

To meet the demand for fast but thorough answers, we devised an innovative method for quickly getting to the heart of the matter – operationally and organizationally. Our Rapid Performance Evaluation (RPE) uses a standard work approach to cut the time required for credible solutions to about a day. How, you ask?

Instead of only identifying and prioritizing process problems, the RPE delivers tangible feedback and scores that can be used to immediately take action to improve. The RPE:

  • Provides a comparison against well-defined standards and benchmarks
  • Ensures the leadership team is aligned on the issues
  • Establishes specific and prioritized things to work on now
  • Engages the organization out of the gate, reducing rework and improving data fidelity 10x
  • Is fast and agile – minimizing disruptions. Getting accurate info doesn’t have to take weeks

The process begins by on-boarding the team and communicating with site leadership. It ends with a report to same. Core attributes of the Rapid Performance Evaluation are noted below.

Visit the Gemba

The gemba is the place work is done. It’s the shop floor, the office, the warehouse, the lab or the medical unit. It embodies the concept of “Go look, go see” and is a vital step in collecting information for analysis. We’ve found it helpful to review immediately before the visit what we’re trying to “see”, so we use a standard set of definitions to focus our attention. For example, in an office environment one thing we look for is communication between functions. In a factory we want to understand how material is moved (pushed or pulled) and stored (inventory) from one location to the next. Lots of paperwork is not needed for reference. Our optics have been adjusted ahead of time so the visit to the gemba can be for observation and understanding.  We need to keep our eyes and ears open.

Template Driven for Simplicity

Templates are used to compare existing practices to best known practices. With the RPE, simple but proven definitions and an intuitive measurement system make it easy to get everyone on the same page when it comes to scores and ratings. We look at factors that correlate to overall performance, such as quality systems, teamwork, continuous improvement capability and material and information flow. The correlation factors provide a big-picture view and point to overarching or systemic causes affecting performance.

For more discrete aspects of the operation, we use the Kaufman Global 20 Keys ® to evaluate 20 critical elements that affect efficiency and effectiveness. For each key, the tool ranks the current level of performance using a 5-point scale where 1 is “Traditional” and 5 is “Currently Invincible”.  Levels are described simply so the requirements for achieving the next level of performance are easily understood. The 20 Keys dig a little deeper than the correlation factors by identifying and prioritizing specific things to work on.

Alignment  Speeds Change

No matter how good the templates and rating systems are, they don’t account for the human factor. Opinions matter. During the course of the visit we interview key leaders and stakeholders. This usually means functional heads who have valuable insights and who will play a critical role in any changes moving forward. We start to see how much (or little) agreement there is about the underlying issues. This is an area where being external to the organization is a key advantage. Functions are typically protective of their turf. Outsiders can ask more probing questions. If there is a significant difference between what we hear from the leaders and what we see on the ground, we sometimes opt to survey the organization. This can help identify broader organizational issues.

Balance Speed and Accuracy

The RPE is done with a small joint team comprised of Kaufman Global and the client. Since the method is standard, well defined, intuitive, and template driven, training for the client participants can be completed at the start of the day. The real benefit of this simplicity becomes clear at the end of the day when scoring begins. After we’ve completed the tour and interviews, we individually rate and rank based on our personal observations. Then, we come together to discuss and negotiate consensus results. The evaluation is better because it consolidates multiple views, experiences and vantage points and compares actual performance against intuitive and easy to understand benchmarks.

Results

Any operation can be assessed for performance quickly if the method considers all of the output requirements and integrates change management approaches. The RPE gives leaders rational ratings of performance, a clear understanding of organizational challenges and confidence that they’re spending energy in the right places.

Find an example of the approach and results here: Rapid Performance Evaluation (RPE) Case Study: Automotive Electronics.

 

4 Tips To Simplify Work Complexity

Complexity means more options for failure.

Complexity Is Naturally OccuringPeople and processes come together to deliver products and services. Like a ball of string collected, complexity builds as things are added to accommodate the dynamic environment: organizations, procedures, technologies, reporting, etc. This “growth” happens incrementally and naturally in every business. Simplification can overcome complexity, but it takes energy to accomplish.

When two entities merge and attempt to integrate, the chaos is more obvious. Either way, the interactions are seldom or appropriately examined to determine what can be eliminated.  Ultimately, the patchwork of fixes and micro-solutions generate systems that are more complex than they need to be. They are difficult to understand, standardize and control.

Complexity doesn’t automatically resolve itself. Some organizations endeavor re-design from time to time, but the work is typically limited in scope and stays inside functional boundaries. Here, there are plenty of examples of success in areas like Finance, Manufacturing, Product Development, etc. When we explore enterprise value streams that cross boundaries―for example the alignment of Sales, Product Development and Production, it gets a little tougher. Even so, opportunities to improve competitiveness are vast, therefore it makes sense to take a broader approach and navigate the stream through the enterprise. Results are more assured when the initial work is well planned and executed with precision.

1.    Inclusive Workshop Aimed at Reduction

A structured workshop is the best way to begin. This may be a single event or a series of sessions. It goes beyond getting a few people together to compare ideas. Top considerations are:

  • Leadership engagement (governance)
  • Simplification Team participants and
  • Implementation imperatives.

To determine scope, start with the system of people and processes that you have; the current state. Some will argue it’s better to begin with a clean-slate, but really, there is no such thing. In rare situations where there is no process to begin with, gaining a systems understanding without preconceived notions is more or less impossible. Besides, in most cases, products or services are already flowing. So start here to decipher the variables that are adding value.

2.    Governance and the Politics of Change
Governance

Once you’ve got an idea about the scope of work, it’s time to get the right leadership engaged. First, determine the major processes and or functions that are part of the system. Then identify the single point of control for all of them. For many organizations, the control point for value streams that bisect the enterprise is the CEO. This isn’t so surprising when you consider the rich mix of silos, shared services and dual reporting structures that exist within most organizations. Single-point control at high levels is the main reason simplifying enterprise value streams is difficult, and why we often settle for optimizing functions or sub-processes. Don’t settle.

The control point then directs the functional leaders to participate by forming a coalition to govern the progress of the workshop (and beyond). This direction is the catalyst for action and it is a critical step. The task often requires more effort than initially expected, so be prepared with enough up-front work to make an effective case for change.

3.    The Simplification Team – Dealing with Data, Facts, People and Emotion

The workshops are staffed by individuals who work inside the existing system and therefore understand the most about what it delivers and how it functions. They also tend to defend the status quo but will probably be part of the change moving forward, so get them involved them early. You’re digging into things that people have built over time. Don’t underestimate the work required to keep this team motivated and on track.

Include some who don’t operate the existing system to get an unbiased view and to ask the “obvious” questions. In the ensuing conversations, you’ll hear “You don’t understand.” a lot – which is exactly what we want. Through these interactions, the team gains clarity about the system as a whole, instead of just their part of it.

4.    Consider What Comes Next
Simplification

The workshop decision is taken, simplification is an objective, the processes and people are known and an accountable Steering Team is enlisted… all good. So far the task at hand doesn’t seem too daunting.  Now, as part of the workshop, go beyond simplification design and consider implementation. What will it take to operationalize the changes?

Workshops get things rolling by providing an output that describes processes at a high level. As the future state becomes current state in the real world, change is managed and kinks are worked out in-situ. The new system is built by standardizing processes as they emerge and then attaching and adhering to relevant procedures. Don’t add complexity back in by over-prescribing. Simpler definitions are more likely to be adapted, provide fewer options for things to go wrong and give more room for value-driven decisions to be made at the right level.

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Complexity happens naturally. Simplification does not. People are frustrated working in bloated, ineffective and inefficient systems. There are no silver bullets, but smart design is a great starting point. Use an inclusive, holistic approach to extract solutions, identify value and restructure the work. Then engage the organization for extraordinary results.