NC State of Business

At the end of the post in Part 1, we left off with the thought of how to get everyone on the same page. Let’s start with discussing the culture piece. Organizations must first transform their culture to one that is conducive to change. How do we do that? Most organizations have decades of strained workforce relationships, confusion over roles and responsibilities, and perhaps worst of all, leadership that changes direction on what seems like the slightest whim. Often, very few people in the organization understand where the organization is headed and they are not about to tell the rest of the folks. Senior management is often fearful of providing a direction and incapable of generating the trust to get the entire team on board. Metrics are often scarce with most not aligning with the true performance indicators of how the organization is doing. Layers within the organization work on their “objectives” with little understanding of what other facets of the organization are doing and how their portion aligns within total organization performance. Sound like a company you know? Do you think a sports team would be very successful in this type environment? Most of us easily see that they would not have a winning record if run this way. So why can we not clearly see this in our companies and organizations?

It has to start at the top of the organization. Senior management must set the tone and direction of the company. In other words, they must establish the true core objectives and a means to deploy to all levels of the company. They should start with five to eight core objectives. Hey, it is harder than you think to find those five to eight that are right for your organization. Do not get side-tracked or enticed into selecting an objective that does not fit your organization. If your organization is losing profits due to high cost of off-quality and its impact on customer sales, then don’t focus on getting efficiency improvements or that fancy new piece of machinery that will help you make more of the off-quality that the customers don’t want and are not going to take. Just like when your pitching cannot get the other team out, you apply resources to fix the pitching. In this business case, we would apply resources to improve our quality and satisfy our customers.

Once senior management identifies the core objectives, they need to deploy throughout the organization. Each layer within an organization should have objectives that link. Each layer creates its objectives to support the core objectives. Layer objectives will differ as each function or role supports the organization; but, all align to the core objectives. Relationships between different layers are clearly identified so that each can see how it fits in the total picture. All layers and associates will now have a clear view of the core objectives and how they impact those objectives on a daily bases. Once you clear out the weeds, you can see the crop. Getting everyone aligned on the very few core objectives and actively participating each day, all day, is a way of thinning out the weeds. Sports are filled with statics and data. I often wonder just how important it is that a particular pitching staff allows 0.05 more runs on Wednesdays when it is 47 degrees with a slight mist falling against teams with an “e” in their name. I see this same type “data” in many organizations when they seem to chart data just because they can. Instead, they should remove these items and replace with metrics that tie to the objectives. By narrowing the focus to only the important metrics, you will be able to increase the attention that associates give to these metrics and reduce the time they spend on less important tasks.

Please hold frequent meetings with small groups in their area. Large meetings held infrequently (or only when there is bad news) are generally not constructive and usually add to associate mistrust. Keep the meetings focused and brief. Allow open discussion and provide follow-up. Honest analysis of performance and participation from all associates will create a culture change and provide support to the direction of the organization.

I love numbers, lists, and good writing. So I guess it isn’t surprising that I find myself merging these interests here with a “Top 10” post. Here are 10 of my favorite quotations about lean thinking, waste, and continuous improvement. I hope they challenge and inspire you.

1. “The most dangerous kind of waste is the waste we do not recognize.” – Shigeo Shingo
2. “When you buy bananas all you want is the fruit not the skin, but you have to pay for the skin also. It is a waste. And you the customer should not have to pay for the waste.” – Shigeo Shingo
3. “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” – Taiichi Ohno
4. "Where there is no standard there can be no Kaizen” – Taiichi Ohno
5. "Having no problems is the biggest problem of all." – Taiichi Ohno
6. "Costs do not exist to be calculated. Costs exist to be reduced." – Taiichi Ohno
7. “A bad system will defeat a good person every time.” – W. Edwards Deming
8. “If you can't describe what you are doing as a process, you don't know what you're doing.” – W. Edwards Deming
9. “There is nothing so useless as doing efficiently that which should not be done at all.” - Peter Drucker
10. “There are three kinds of leaders. Those that tell you what to do. Those that allow you to do what you want. And Lean leaders that come down to the work and help you figure it out.” – John Shook

Like any favorites list, you’ll probably see some of yours conspicuously absent. Please send me your favorite lean-related quotations so that we can expand this list.

Many years ago when I was in the electronics industry, we congratulated ourselves for the great efforts that resulted in our reduction of inventory. We must have been pretty smart since we reduced raw materials by 25% while maintaining the same customer delivery service levels. What great things did we do to accomplish this?

Well, we implemented consignment inventory with several suppliers along with vendor managed inventory on site.
This resulted in a short term cash flow benefit, but long term degradation within our supply chain. We did not work with our suppliers on opportunities to be more efficient, we simply pushed inventory from our books to their books. The entire value chain did not realize any benefit and the system cost did not gain a reduction.

Real supplier development means just what the words say. Analyzing how cost and non-value added activities can be removed from the entire system. In defining the value stream, we look at all the value added and non value added activities that are required to bring product from raw material to finished goods. When we extend this raw material concept to include our suppliers (and sometimes their suppliers) we can really tackle a full set of system issues.

A very good lean manufacturing tool for identifying bottlenecks and non-value added activities is Value Stream Mapping (VSM). This is a visual representation of all processes from start to finish that analyzes the material and information flow. Many companies use this tool for their internal processes but to tackle the full supply chain, the tool can be extended through the supplier’s processes. Lead time and non-value added activities can be better identified and attacked. Sometimes suppliers are uncomfortable having their customer work with them through these activities. If a 3rd party support would be a better alternative, call us we can help.

The bottom line here is that the really good companies are working to reduce non-value added activities internally and externally. And VSM is one of the good tools that can analyze opportunities for improvement within the total supply chain.

Recently I was asked whether formal Quality Management Systems like ISO 9001, and programs like Lean and Six Sigma can work together effectively. Many people think that there are conflicts between the goals of ISO 9001 and the goals of Lean and Six Sigma. In reality, the goals of the three programs are generally the same – to continually improve processes, remove waste and non-value added activities, reduce process variation and enhance customer satisfaction.

We know that a quality management system like ISO 9001 (or AS9100, TS16949, etc.) provides the basic framework for managing a company’s processes as an integrated system with the goal of enhancing customer satisfaction. The standard requires that the processes must be defined and “criteria and methods” must be determined to “ensure that the operation and control of the processes are effective.” The standard also requires that the quality management system be continuously improved and suggests potential sources of improvement will come from the corrective and preventive action (CAPA) programs. This is where Six Sigma and Lean programs can add value and be integrated into the ISO 9001 program.

Six Sigma emphasizes the Define, Measure, Analyze, Improve, and Control (DMAIC) process for continual improvement. The focus of DMAIC is to define potential process problems, measure the processes to determine the critical factors which affect process performance, analyze the data and look for root causes, improve the process by implementing actions to fix the root cause problems and implement controls to “sustain the gains”. It is not much of a stretch to see that a well managed Six Sigma process would provide potential preventive actions for the CAPA program and could be a method to solve some of the recurring Corrective Actions.

Actually, in analyzing the language of the ISO 9001 standard, you will find that it has some terms in commom with the DMAIC process. There is a section in the standard titled “Measurement, analysis and improvement” which is the middle three steps of the DMAIC process. Control is required throughout the standard, specifically addressing monitoring and measurement activities and the use of monitoring and measurement equipment to provide the “controlled conditions” necessary for the effective operation of the processes. A Define focus is implied throughout the standard in determining the processes and their interactions, defining the root causes of problems and potential problems, and in reviewing the data collected for potential process problems.

So how does lean fit in? We know that Lean is focused on eliminating waste and non-value added steps in processes. Exploring the language of the standard again, we can find where the company is required to determine the processes needed for the quality management system and their application, sequence and interaction throughout the organization. Lean tools like Value Stream Mapping could be a robust way to address this requirement. We can look at the control of non-conforming materials requirements to see the importance of eliminating the waste of rejected parts. The Corrective/Preventive action program requirements seek to further eliminate waste by identifying and correcting product or process problems. Overall ISO 9001 requirements for Customer Focus and Continual Improvement align with the Lean enterprise focus on satisfying the customer and continuous improvement.

Integrating your ISO 9001, Lean and Six Sigma programs will align all your process improvement initiatives and increase the success of your business management system. This should lead to common goals instead of conflicting goals and, in the long run, increase the effectiveness and efficiency of your organization.

The Merriam-Webster dictionary defines the word paradox as “a statement that is seemingly contradictory to common sense.” I have spent this week working in a very rural county in North Carolina. I watched turtles and a bear cross in front of the car while traveling the roads of a county that does not have a single stoplight. At the same time, while there, I received photo and video text messages of my dog from my daughter through my personal cell phone; obtained and transmitted key work information with the aid of a wireless card on my laptop; and kept up with breaking world events via the satellite television service offered by my small local hotel. I find this all very paradoxical. It seems counter intuitive that in a region with no fast food joints, chain hotels, “mega” supermarkets, big box stores, or interstate highways, the kind of place ideal for “getting away from it all”, I was able to maintain instantaneous contact with my family, work, and world. In the early 21st century, such high-tech tools intersect with the peaceful, beautiful setting of rural farmland, wildlife (including various waterfowl and the occasional aforementioned bear), and waterways.

Pascal Dennis and others have made the point that Lean Thinking is full of paradoxes as well. In his excellent book Lean Production Simplified, Mr. Dennis points out such lean paradoxes as: standards change all the time; making something one at a time is more efficient than making a whole batch; you must stop production so that production never has to stop; and you must seek perfection, even though you won’t be able to attain it. I have often thought about how successful lean implementers have to be incredibly disciplined and structured in following the right approach and standard methodologies such as “stop-call-wait” and “A3 thinking”, while also being very creative and out-of-the box thinkers in order to come up with improvements to systems that may be, on the surface, already very efficient and successful.

What are some other Lean paradoxes? Please feel free to share your thoughts with us!

Meanwhile, I need to keep my eyes open for more bears.