By Larry Rubrich
American organizations are unable to sustain Lean improvements in order to achieve any real business results. While often there is a spurt in activities and improvements early in the Lean implementation, this slows down and stalls when the organization begins to realize that:
- Lean is not a "magic pill" or "silver bullet" for the organization's problems
- A Lean implementation requires difficult and company-wide change, especially for top management.
- Not everyone thinks Lean applies to them (i.e. sales, accounting, engineering, IT, human resources, and other key areas).
- Quick bottom line results do not appear, giving rise to questions about Lean payback.
- Top management support for the change necessary to implement Lean is limited or missing.
This results in 74% of American business reporting "little" or "no progress" with their Lean implementations (as reported by Industry Week Magazine). Toyota purportedly says this number is 70%. For the "little" or "no progress" organizations, Lean is viewed as an "appendage," or an add-on; something we do in addition to our normal busy schedules.
Ultimately, this lack of sustainability is the result of two factors which are missed in the beginning when organizations consider adopting Lean. These factors are:
1) How the organization views Lean's role in running the company
2) How to implement Lean completely to insure the desired results.
Sustainability Factor #1 - Our View of Lean
To be successful with Lean, we must view Lean as the "operating system" by which we will run our organization and achieve our desired results. Lean is not just a set of Lean tools. Achieving our "desired results" means we are focused on the three key metrics by which all "for profit" companies are measured: profit, cash flow, and revenue growth.
These business results cannot be achieved without "Lean thinking." Lean thinking is the elimination of waste to achieve our organizational goals, and it must saturate our company-wide discussions and activities. If we view Lean as our operating system, with people at the center of our Continuous Improvement activities, then we must view our Human Resources area and our company culture as important components in the development of this operating system. We will discuss this further in in Factor #2.
Sustainability Factor #2 - How We Implement Lean
Once our understanding of Lean's operating system role in our organization is clear, we can then work on the implementation. Lean consists of four components that all must be implemented simultaneously to be successful. An organization's Leadership Team is responsible for the completeness of all components of the Lean implementation. These components are shown on the chart below.
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. However, the roadmap to using Lean as a system and becoming World Class starts with the end in mind - Lean Planning.
Lean Planning ensures that we are not using Lean as an add-on or appendage in our organization, but as the system to accomplish the organization's goals. Lean Planning makes sure that the Lean tools we use and the kaizen events we complete are tied into achieving the organization's goals. To do otherwise is to risk doing "drive by" or "spot" kaizen events which may not help us secure the future as envisioned by the organization's leadership team.
The next component that we will discuss is Lean Culture. An important part of the development of Lean Culture includes the Human Resources area integrating Lean into the following traditional H.R. guideline/recommendation areas of:
- Performance appraisals (which should now include adoption of company values/culture)
- Candidates for promotion
- Merit increases
- Hiring recommendations
- New employee training
Additionally, H.R. should be responsible for monitoring the completeness of the communication and empowerment plan. Part of the evaluation of the completeness of both of these areas should rely on the use of an outside survey.
Unfortunately, most organizations do not utilize H.R. in the company culture building activity. The company culture is left adrift to develop on its own and Human Resources is relegated to hiring, firing, and keeping us legal. Have you ever seen any Certified Lean Facilitators that have come from H.R.?
Lean Concepts is the understanding that waste in our organizations stops or impedes the flow of information and material. The concept of flow is critical since it, or the lack of it, determines the lead time for our product or services.
Note that Lean Concepts include eliminating waste to improve the flow of information. This includes the "information or knowledge product" that is produced in the transactional areas. The information product includes producing sales orders, drawings, work orders, and other information products required to support the production of the physical product.
To be successful in Lean, a company must have all four components of Lean 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. You must have all four components before you have the makings of a World Class Enterprise.