Header WCM Associates LLC Newsletter

Edition 48

February 2012

In This Issue
How Successful are American Organizations in Deploying Lean?
Is Your Leadership Team Ready to Implement Lean?

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How Successful are American Organizations in Deploying Lean?

  

By Larry Rubrich

 

The September 30, 2011 edition of Manufacturing and Technology News magazine presented an article entitled, Lean and Six Sigma Are Not Leading To Breakthroughs In Corporate Performance. This article (the result of a survey of 100 business executives conducted by AlixPartners, a business consulting firm) highlighted some problems with Lean and Six Sigma implementations, including:

  • 70% of respondents reported a less than 5% improvement in manufacturing costs as a result of Lean.
  • 60% of respondents said their previous Lean improvements were not sustainable.
  • Only 17% of respondents reported seeking long-term culture change in their organization.

AlixPartners made observations about the survey that are summarized here:

  • Most companies are getting a poor return on their investment in Lean and Six Sigma.
  • Companies are far too focused on implementing Lean tools and processes rather than on basic execution.
  • Organizations need to dramatically rethink their Lean strategies by focusing on cash and finding the biggest opportunity to improve, and then deciding which Lean tool(s) will help them achieve that result.
  • Company Leadership Teams must take responsibility for the Lean implementation, rather than trying to push this responsibility down to the Lean facilitator.

All we can say is - Amen!

  

This data supported a report completed by Industry Week magazine in 2007 that reported the following Lean results from American business:

 

Industry Week Pie 2 

 

As noted in the figure above, 74% of American businesses who indicated that they were using Lean as their business improvement activity, reported "little" or "no progress" with their Lean implementations. 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 that is done in addition to our normal busy schedules, not as the operating system by which we run the organization and achieve our business goals. This lack of progress leaves organizations saying, "We're different, Lean doesn't work for us," thereby placing the lack of results on Lean itself rather than the organization's Lean implementation plan.

To be successful with Lean, we must view and acknowledge Lean as our "business operating system" by which we will run the entire organization and achieve the desired business results. This business operating system includes the establishment of a Lean Culture.

Lean is not just a set of Lean tools used on the organization--for example, 5S or Kanbans. Achieving the "desired results" means being focused on the three key metrics by which all "for profit" companies are measured: profit, cash flow, and revenue growth. Organizations must establish linkage between the desired business results and Lean activities using a technique called Policy Deployment. Policy Deployment also establishes the framework of a Lean Culture.

In Policy Deployment, the Lean tools are only deployed into the organization when we understand how using 5S, Kanbans, or other Lean tools will help eliminate the wasteful activities that are preventing us from achieving the desired business results.

The idea of adopting Lean as a business operating system in U.S. organizations has been very difficult to accomplish because it is rarely understood as an absolute requirement to a successful implementation. This has resulted in an extremely low level of Lean success as measured by either the ability to achieve "World Class" (globally competitive) status, or significant improvement, for an organization's Lean activities.    

 

 
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Is Your Leadership Team Ready to Implement Lean?

  

By Larry Rubrich

 

In the book, Leading Change, noted organizational change expert John Kotter notes that there are five prerequisites required to achieve any type of organizational change:

 

1. Establishing a Sense of Urgency

  • Individuals or organizations do not change without a sense of urgency to do so.

2. Creating the Guiding Coalition

  • Put together a group with enough power to lead and guide the organization through the change. This group should represent a cross-section of the organization.

3. Developing a Vision and Strategy

  • A vision is a broad description or picture of the future state of the organization. Create a vision to help direct the change effort (this is completed in Policy Deployment).
  • Develop strategies for achieving that vision that include both marketing and operational activities (this is completed in Policy Deployment).

4. Communicating the Change Vision

  • Use every verbal and visual vehicle possible to constantly communicate the new vision and strategies (this is completed in Policy Deployment, Step 7 enabler projects).

5. Empowering all associates (developed in Lean Culture)

  • Get rid of obstacles that prevent associates from participating.
  • Change systems or structures that prevent associates from creating the change vision.
  • Encourage risk taking and nontraditional ideas, activities, and actions.

Experience has shown that adopting Lean requires, right from the beginning, a strong "sense of urgency" and commitment from the Leadership Team to the organizational change required to successfully implement Lean. This commitment to change must include the area where generally the greatest change must occur--the Leadership Team. Without that sense of urgency, the Lean implementation is headed for the "poor return on their Lean investment" barrel of statistics. Prerequisites numbers 2 through 5 are necessary also, but they can be guided and developed in Policy Deployment if number 1 is firmly in place.    

 

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  WCM Associates LLC, 2012. All rights reserved.