3 Ways to Make Lean Work for You - No Matter What Your BusinessAdd bookmark
Lessons from the Lean Transformation of a Small Manufacturing Company
Lean is often considered as a strategy for large corporations, writes contributor Vivek Naik, but in reality Lean is better suited for small businesses and even non-manufacturing operations. Here are 3 ways to make Lean work for you regardless of your size or industry.
"Vivek, customer X will stop buying from us if we don’t ship those orders within next 3 days" said my boss one fine day about 4 years ago.
My boss is the second generation business owner of a small manufacturing organization. He has seen the business grow from doing the work himself on the front porch of his house to hiring his first employee, and now a full fledge manufacturing operation.
The initial growth of the company could be handled by adding more and more unskilled workers. But on that day four years ago, we had over 90 orders overdue for 20+ days; our average lead time from order to shipping was 24 days and adding more people did not solve the problem. To make matters worse, this was our second largest customer and we could not afford to lose them.
We would try to expedite the order only when customers called and screamed about it; we always thought we were too busy to try to improve our process - we just didn’t have time for it! Everyone was diverted to get one order out at any cost. The same thing happened that day and we tried to get the order out in 3 days. But this time the possibility of losing our customer made us wonder, do we really not have the time to change the way we operate?
We realized there was no option but to change in order to survive and grow: this was our "Burning Platform".
Our platform is burning but where do we go?
Once we had decided that change was needed, I had to figure out what needed to be done. We had several identified problems: our Shop-floor (known as Gemba within Lean circles) was chaotic except for one production line, there were no standard procedures to carry out any tasks, and there was a lack of production planning.
This was the reason for very inefficient utilization of our labor.
Additionally, there was no data about how many units were produced, what was scrapped etc. Production was not able instantly tell how many orders are open, what needed to be shipped on any given day, etc. Without that stake in the sand we were not sure where to go.
Personally, I became convinced that the Principles of Lean manufacturing would provide a solution.
Photo: Unreformed shop floor
But isn’t Lean only for the big guys?
Lean is often considered as a strategy for large corporations. But, in reality, Lean is better suited for smaller business and not necessarily manufacturing operations. I think that this quote sums up why:
"It is easier to change the course of a boat than to move an iceberg" – Anonymous
Bigger organizations have too much inertia even though they may have more resources at their disposal (such as ability to hire in experts, etc.). A smaller organization, on the other hand, is much more flexible and responsive to change. Small organizations have few levels of management - often it is just the owner and employees. This helps to avoid problems of miscommunication because the head and the tail are not very far away. Of course, a small organization may not be able to stop everything to start applying Lean or spend billions on the program.
But that is not lean in true essence: Lean has to start organically within the organization. You don’t need experts to start lean. My belief is that you can learn lean principles by systematic and religious application of common sense. When we started, we didn’t stop lines to hold lean events - we just did it when the line was already down due to a broken machine or a delay in getting parts. We started small and thought big, and I think with a similar approach lean can be applied in any organization, no matter what the size.
Here are some of the lessons that we learned along the way:
Lesson #1: You Don't Need To Solve All Problems To Be Successful
When we first started out, we knew what we wanted to achieve - to be a more efficient operation, delivering what our customers want, on time and right the first time – but the path there wasn’t always so clear. We thought that we needed to come up with a road map with exact details of how we would get to where we wanted to go. We thought we needed to plan every step from beginning to end and use the completion of these tasks as measure of our success.
But our first attempt at planning it proved to be quite difficult. Coming up with such a detailed plan is a huge undertaking, requiring a lot of time and lot of skilled people to problem solve. A detailed Roadmap was not going to work for us. We had to look closer to understand that all the problems are not the same. This could be summarized as follows:
Only few important problems need to be tackled to make a big impact. If you tackle the top 20% of issues, it will help you achieve 80% of the solution.
Problems are like a pyramid – there’s a huge base of simple problems which can be easily resolved and small set complicated problem which needs creative problem solving skills.
The majority of problems can be easily solved
How do you solve such a big chunk of problems at the bottom of the pyramid? This can be achieved by training and empowering all your people. When you allow the people who run the process to also do the improvements, they own the change. This is helpful in sustaining the change and also the synergistic effect of everyone solving the problems gives a tremendous momentum to your change program. But how do we get there?
Lesson #2: Start By "Cleaning House" And Standardizing Processes
A clean workplace is an efficient work place and a safe workplace. Having a place for everything, and getting rid of unnecessary tools and parts, makes it easy to find the tools more efficiently. Another advantage is that you immediately know if anything is missing from its place (Visual Control). One of the lean tools commonly used for this purpose is 5S. The word 5S stands for Sort, Straighten, Sweep, Standardize and Sustain.
5S could be a good starting point of any lean transformation and forms a catalyst for a culture of change. Due to the very visible results it makes the process of buy-in easy for both the shop floor personnel and management.
Some of the key points of how 5S helps in laying down the foundation of Lean Transformation are:
- Standardization of process provides a stable base for incremental improvement
- Visible results helps boost morale of the people who then take pride working in the area
- It is an enabler of "Continuous Improvement" culture
Prepares the workplace and people for implementing other Lean tools
Photos: The transformation of the office
Photos: Transformation of the shop floor
Photos: Transformation of workspace
Lesson #3: Motivation Gets You Started But Habit Keeps You Going
Lean transformation works beautifully in the beginning but many fail in sustaining the efforts. This is not the fault of the people involved but the way traditional management works. Traditional management is results driven. It is mostly concerned with the end result and not the means to get there. To sustain lean in any organization you need to radically change the management system to Lean Management.
There are 4 elements that make up the Lean Management:
1. Leader Standard Work
2. Daily Accountability
3. Visual Controls
Leader Standard Work sustains the systems and integrates the changes made during the transformation process. Visual Control and Daily Accountability helps keep the process and people aligned to solve problems as they arise. The Discipline of the leader ensures that standard work is followed and the whole system works coherently.
These elements of lean, helps the leader to be accountable to the process by religiously following the "leader standard work" and discipline to the point they become a habit. This is essential mental transformation required in a lean manager.
Continuing the Journey
In the past 4 years we have learned a lot from our experiments. Our success and more important our failures have helped us develop our own experts within the organization. We have tremendously improved our delivery from 20+ days to 97%+ of the orders shipping within 3 days. We had few setbacks too when some of the team members moved to bigger companies for better opportunities. But it is just another challenge any organization faces and we get better at doing things every time we learn from our failures.
We raise the bar with every improvement. What was acceptable yesterday may be the focus for improvement today and tomorrow may need further work again.
Afterall, it cannot be "Continuous Improvement" if we stop doing it!