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Greetings!
Welcome to the Lean Roadmap Newsletter! Our goal is to provide, on a semi-monthly basis, information you can use to benchmark your current Lean activities, or to help you develop/modify your organization's Lean Roadmap.
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The Four Components of Lean
by Vince Fayad |
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Most organizations underutilize the power of Lean because they are not using Lean as the "System" that their organization operates with or runs by. Lean is an appendage, an add-on. While these organization make improvements using Lean and achieve a level of success (usually just in operations), not using Lean as a System prevents them from accessing the full power of Lean to achieve their organization's goals and improve the entire organization.
This occurs because organizations do not recognize that there are four components or elements of a Lean Implementation as shown in the above chart. In the correct order of implementation they are, Lean Planning, Lean Concepts, Lean Tools, and Lean Culture.
It is important to note that this order of component implementation may seem incorrect to current Lean Practitioners. This results from our tendency to jump to the Lean Tools first. While this can result in "some progress," the roadmap to using Lean as a System and becoming World Class starts with the end in mind - Lean Planning. Lean Planning ensures we are not using Lean as an appendage in our organization, but as a system to accomplish the organization's goals.
All four of these components must be implemented to their fullest extent throughout the organization, in a timely manner, to be successful. Most organizations like to pick and choose what elements of Lean they would like to implement. This is primarily because they do not understand that Lean is a total system and represents a complete and comprehensive culture change in their organization. Lean represents a completely new way of managing the organization.
To be successful, a company must be in balance. It must achieve the correct balance when it comes to Lean Planning, understanding Lean Concepts, using the correct Lean Tools, and empowering its workforce by creating a Lean Culture. But you must have all four components before you can announce you are a truly a Lean Organization and have the makings of a World Class Enterprise.
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Start De-Departmentalizing Now! |
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Lean as a System
by Larry Rubrich |
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Many companies have used Lean/World Class Manufacturing techniques to make their production areas more competitive and improve customer satisfaction, yet these same companies often still find themselves falling short of being able to compete globally, and therefore consider chasing the low wages of a foreign country. Why are these companies having trouble competing globally? The answer to this question is that the costs that end up in the selling prices of our products are not just manufacturing costs, they are the costs of the entire Enterprise. To compete globally, we need a Lean Enterprise. The reasons we have not applied Lean to the entire Enterprise are noted below.
First, we have defined "adding value," an absolutely critical measure in Lean, in manufacturing terms. It is defined as "changing the shape or form of the product" or as "what the customer is willing to pay for." These both have manufacturing connotations. This is supported by the fact that many Value Stream Mapping books only consider the manufacturing operations when calculating the percent of value-added time. What about the cost (and impact on our lead-times) of the ten days the customer order spent in the administrative or engineering areas before it hit the shop floor?
Secondly, this manufacturing definition of adding value has led us to ignore the administrative function and its impact on overhead costs. Yet, can we produce a physical product in manufacturing without the "knowledge product" or "information product" known as the engineering drawing? Or without the customer order entered into our system, or without raw materials? Or could we produce a quality product without standard work?
The administrative areas of our companies do produce a product - not like the physical product we produce in manufacturing - but a knowledge or information product that supports the production of the physical product. Unfortunately, our Lean concentration in manufacturing and our lack of understanding of what products are produced in our office areas, have left us with administrative areas that are the least productive area of our companies.
Why are administrative areas the least productive part of our business? One reason: we don't do something in our administrative areas that we always do in manufacturing - measure! We know how many widgets all of our machines can produce in an hour, and how many widgets we can assemble and ship in a day, but we don't know how many information/knowledge products (quotes, customer orders, new designs, work orders, part purchases, etc.) we can do in an hour or a day.
Once the administrative functions understand that they are in production also, there is one other roadblock/barrier to system thinking. Administrative departmentalization! Companies have known for many years that the cellurization of our manufacturing processes (grouping machines by product or family of products rather than by function) makes them significantly more efficient, yet we have almost no cellurization in our administrative areas. Departmentalization roadblocks businesses from achieving the Lean Enterprise because:
- Departmentalization usually means individual departmental goals. Individual department goals prevents teamwork throughout the organization, since everyone is most concerned about achieving their own department's goals and how that will impact their own performance reviews and merit pay increases.
- Individual department goals reduce the system efficiency since it causes individuals within a department to make bad decisions. For example, people working for a department (instead of the system) generally process the "information product" passing through their department in production batches. They use batch production because for their department, batching is most efficient (because of mental or physical setup time). Unfortunately, batching stops the information product flow, extending the information product lead-time, and making the system less efficient. Additionally, these individual department goals may cause other behaviors detrimental to system efficiency. The salesperson who only cares about "getting the order" and not making sure all the required information to produce the order is obtained, or engineering tossing product design "over the wall" to manufacturing even though the design is not production ready.
- Departmentalization inhibits cross-training, which prevents associate growth. It limits the full utilization of our mental resources in improving the system efficiency since few people understand how the system operates.
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