Empowering Workers to Enact Change

One of the concerns I’ve always had about Lean is the strong focus on process and the somewhat weak focus on people. World Class Manufacturing predated Lean, and it was comprised of three basic elements, one of which is involving people:

1) Total Quality Management

2) JIT

3) Total Employee Involvement

While the House of Lean has a pillar named Respect for People, in practice most organizations focus on process improvement and workplace organization and overlook worker involvement. Particularly in Six Sigma the worker is often pushed aside while the experts determine the improvements.

Peter Drucker considered his most important contribution to be the concept of the responsible worker and the self-governing plant community. He formulated much of his thinking on this topic during his project with General Motors in the early 1940s, well before the Toyota Production System came on the scene. One of Drucker’s biggest disappointments was his apparent failure to convince US automakers to use these concepts, while Japanese companies seemed to pick them up and run.

Part of the critical change component – strong leadership – involves empowering people at the point of work. Be sure any improvement opportunities include that consideration.

© 2016 – Rick Pay – All Rights Reserved.

Inventory: The Key Indicator of Lean

Inventory reduction was a core element of Taiichi Ohno’s Toyota Production System. Excess inventory is one of the seven wastes, and Ohno focused heavily on flow and Kanban to reduce inventory, improve flow and help reduce the other six wastes. During that time a classic process visual was developed, showing that as water (inventory) was lowered, the rocks (problems) were revealed, which allowed problem solving to occur and thus continuous improvement.

As I tour many companies that are engaging in Lean efforts, one of the things I notice is that their inventory turns are very low. I see piles in the warehouse or on the production floor and as I read pallet tags, I see inventory that’s been there for months and even years. When I ask why their turns are low, executives often tell me that their focus is on productivity improvement and they have inventory to help assure they can meet their customer commitments. In other words, you can’t sell out of an empty wagon.

However, I’ve found that I can often double or even triple inventory turns while increasing customer delivery performance. I do this by taking a holistic view of inventory management looking at four elements: Demand Management, Supply Chain Management, Inventory Management and Product Management.

You can’t improve turns by simply buying less inventory. Lowering the water without removing the rocks is a recipe for disaster. However, if you look at the four elements above, it is possible to dramatically increase inventory turns. I’ve seen turns well into the teens and have reduced inventory for clients by 75% with improved profitability and service levels.

Don’t choke on your own inventory and don’t run your ship onto the rocks. Take a holistic view of inventory management and you’ll experience benefits beyond anything you can imagine.

© 2016 – Rick Pay – All Rights Reserved

 

 

Empowering Workers to Enact Change

One of the concerns I’ve always had about Lean is the strong focus on process and the somewhat weak focus on people. World Class Manufacturing predated Lean, and it was comprised of three basic elements, one of which is involving people:

1) Total Quality Management

2) JIT

3) Total Employee Involvement

While the House of Lean has a pillar named Respect for People, in practice most organizations focus on process improvement and workplace organization and overlook worker involvement. Particularly in Six Sigma the worker is often pushed aside while the experts determine the improvements.

 

Peter Drucker

Peter Drucker considered his most important contribution to be the concept of the responsible worker and the self-governing plant community. He formulated much of his thinking on this topic during his project with General Motors in the early 1940s, well before the Toyota Production System came on the scene. One of Drucker’s biggest disappointments was his apparent failure to convince US automakers to use these concepts, while Japanese companies seemed to pick them up and run.

Part of the critical change component – strong leadership – involves empowering people at the point of work. Be sure any improvement opportunities include that consideration.

© 2013 – Rick Pay – All Rights Reserved.

Ford Pursues Flexibility

We’re all familiar with the Toyota Production System, but not everyone knows that the Toyoda family learned a great deal from Henry Ford’s manufacturing systems. However, the post World War II Japanese economy was unable to assemble the large volume of parts that Ford’s system required. Instead, Toyota crafted a different production model that didn’t demand a large stockpile of components, paving the way for future innovations in manufacturing and supply chain innovation.

Today, Ford’s business strategy is leading to a new push for flexibility. According to an August 6th article in Reuters, increased efficiency and flexibility in production is part of Chief Executive Alan Mulally’s business strategy. “The ‘One Manufacturing’ system is designed to provide standard processes, greater flexibility and improved investment efficiency.”

I’ve written about letting the voice of the customer inform operations strategy choices, and Ford seems to be doing just that: “Plants that are flexible will be able to switch more quickly to manufacture vehicles, based on market demand for different models built in the same plant…at times these changes can be made week-by-week.” This is an excellent example of a company that is embracing agility as a way to increase profit.

© 2012 – Rick Pay – All Rights Reserved

Authors: Paige McKinney, Rick Pay

Is Toyota the Only Icon We Should Learn From?

Many company managers follow the tenets of Lean and often cite the Toyota Production System as the way to productivity, profitability and innovation. But what other companies have developed groundbreaking practices we can learn from and implement in our organizations?

Take 3M for example. In the 1930s and 40s, the president and chairman of 3M was a fellow named William McKnight. He was a visionary thinker who said, “Hire good people and leave them alone.” That was the foundation of employee empowerment and the autonomous workforce. McKnight encouraged his people to spend 15% of their time on projects of their choice. Out of that came such innovative products as Post-It notes, now sold in over 600 variations in over 100 countries.

The push for autonomy and empowerment is vital to improving company performance and innovative operations strategy. Google allows up to one day per week (20% of time) for working on side projects. More than half of their new offerings come from these efforts.

In his book, “Drive – The Surprising Truth About What Motivates Us,” Daniel Pink tells a number of stories like those above from companies other than Toyota about developing motivated workforces that thrive on innovation.

© 2012 – Rick Pay – All Rights Reserved

Separating Symptoms from Real Causes

In addressing operations problems, we need to get to the root cause. In late June I wrote about this in a two-part post called “Thinking Outside the Bottleneck.” In this post I’d like to show an example of one way of getting to the root cause: the 5 Whys method.

5 Whys

Let’s say that there are too many dumpsters taking up space in the weld shop. We could just move them somewhere else, but that won’t address the root cause of the problem. Here is how we can separate symptoms from real causes and prevent this situation from recurring…

Problem:   There is a traffic jam in front of the weld shop

Why?            Because there are dumpsters in the doorway and in the road

Why?            Because they aren’t being repaired in a timely fashion

Why?            Because there are not enough welders available

Why?             Because two are out with injuries

Why?            Because they don’t have the correct support equipment

Problem restated: The shop does not have the correct support equipment.

Solution:  Get the correct support equipment. This corrects the root cause.

Have you used 5 Whys in your operations? Did you discover any surprising root causes?

© Rick Pay, 2012. All rights reserved.

Go Lean for Your Customers

Last week I gave a presentation to a trade group entitled “Leadership and Strategy in a Lean environment.” The attendees were key executives and Lean Champions from a number of companies, all of which are on the journey toward Lean.

As part of the presentation I asked, “Why is your company implementing Lean?” The audience split into teams to examine this question and presented their main reason to the group. The results were telling.

Some of the answers included:

  • To save money
  • To eliminate waste
  • To be more competitive
  • To improve morale

One group said to change the culture and another said to improve the quality of life, which I thought was interesting.

Essential considerations for Lean

Notice that no one said anything about the customer! If you study the roots of the Toyota Production System through the writings of Taiichi Ohno and his consultant Shigeo Shingo, you will find that their basic goal was the reduce the time it takes from order to delivery to provide the customer what they want. While quality and cost can be part of that, the two keys are speed and customer.

If your Lean initiative is focused internally, recent studies suggest that you have a better than 70% chance of failing to achieve your goals. A focus on the customer is vital to your success.

© 2011 – Rick Pay – All Rights Reserved

Waste Reduction Through Sound Supplier Management

I am currently reading Toyota’s Supply Chain Management by Iyer, Seshadri and Vasher (New York: McGraw-Hill, 2009). Dispersed among lots of fairly dry detail are several valuable nuggets, one of which is: “80 percent of the waste in the auto industry is the result of poor supplier management…the cost related to such waste is estimated to be $10 billion.”

Think about that. Of all the Toyota Production System related waste in auto plants, these authors suggest that 80% starts with the suppliers! Given Toyota’s recent quality problems and their apparent root cause, I see how that could be possible.

Many of my clients’ inventory, quality and service problems start with the supply chain. Much of the actual waste can be traced back to communication (or lack thereof) with the suppliers. Exceptional supply chain performance is built on things such as good specifications, effective order coordination and strong planning and execution.

There are two approaches to reducing waste through supplier management: a strong supplier partner program and measures of performance.

The supplier partner program includes involving suppliers during the design phase, and strong communication through:

a) providing forecasts and demand planning,

b) sharing actual parts flow plans including internal production schedules and pull systems, and

c) having regular face-to-face meetings.

Frequent performance measurements should monitor cost reduction activities, quality and delivery. Suppliers need to know how they are doing.

Supplier management is a vital business process with the potential to reduce waste and increase the bottom line.

© 2011 – Rick Pay – All Rights Reserved

Liker and Rother Cite “Lean Bandwagon” in Their Article “Why Lean Fails”

The tendency of Lean initiatives to fail over time continues to interest Lean experts, even those as renowned as Jeffrey Liker, Ph.D. and Mike Rother, who address the subject in a new article published by the Lean Enterprise Institute.

Liker is a professor of Industrial and Operations Engineering at the University of Michigan, principal of Optiprise, Inc. and the author of the international best-seller, The Toyota Way:  14 Management Principles from the World’s Greatest Manufacturer.

Mike Rother’s latest book, Toyota Kata, is based on six years of research into Toyota’s management practices.

Their latest article for the Lean Enterprise Institute, “Why Lean Programs Fail,” addresses the persistent question, “Why is the pursuit of excellence through lean so difficult?” In stating the background for their article, the authors cite my 2008 Industry Week article, “Everybody’s Jumping on the Lean Bandwagon, but Many are Being Taken for a Ride.” For the full text of that article, please click here.

© 2011 – Rick Pay – All Rights Reserved.