How Lean Transformation is evaluated

1. How Lean Transformation is evaluated Business Excellence Consulting Companies Lean is a way of thinking. It is a journey that is never over. It is a system framed in a collection of rules and principles. Current conditions and criteria must be examined. Some of the following 10 criteria may be more important than others to consider at the different phases of lean transformation. 1. Creative Tension Typically, tension carries a negative connotation. It is associated with headaches and difficult circumstances. When a company is pursuing lean, however, tension is a good thing. In fact, the urgency for lean and its introduction into an organization is always easier when a company is struggling—when there is sufficient tension—than when it

2. is doing well. The real challenge is to get organizations to embrace lean in good times. To develop tension, not stress (stress arises out of hopelessness), a company needs to develop and articulate a clear vision of the ideal state’s characteristics. Then it must contrast that against a deep understanding of its current state and define the gap. It does not matter how well a company is performing because there is always a gap. The gap creates the tension. For example, to instill some tension and a sense of urgency for introducing lean, a presentation was given to the senior leadership and management staff of a building materials manufacturer. After hours of discussion, it was clear the presenter failed. The company was experiencing healthy profit margins; its market share was growing; and it was practically debt-free. It was not until the company’s ideal state was defined and its leaders witnessed choreographed plant tours to reveal the current state that they recognized the gap. The tension was immediate and the leaders’ response was decisive. 2. Go for the Pull If tension helps spur momentum for lean, it is best to capitalize on that momentum by engaging champions predisposed to recognize the tension. An entire company cannot be taken on all at once. So, start where there is a “pull” for lean rather than trying to “push” it in another area. Most organizations start lean in their production areas where the effort is highly visible and likely to reap the most benefits. However, when determining where to start, it is often best to evaluate where there is the greatest pull. Look for a champion, sponsor, or compelling business need.

3. As an example, a major gas and electric utility company started its lean efforts in the finance area, because that is where the champion and the pull existed. Lean eventually spread to its power plants, service centers, and other parts of the company. 3. Leadership Involvement There are no better champions and no better advocates for pull then a company’s leaders. It is ideal to have senior leadership actively engaged in the lean journey, not just sitting in a seat, but also driving the vehicle. Unfortunately, senior leadership typically delegates the responsibility of guiding the lean journey to others of lesser authority. Even though there was a sponsor in the gas and electric utility’s ranks, it was difficult to engage senior leadership on the journey in the early stage. To implement and institutionalize lean, activities and structures at the management level were developed. This elevated the value and results of lean to senior leaders, and today they are active and effective in leading the utility on its lean journey. 4. Business Conditions Business performance will determine what “gear” a company is in as it moves forward in its lean journey. If a company is in survival mode or is under extreme pressure to immediately improve performance, then leadership should focus on the immediate application of lean tools such as Kaizens, waste elimination, or Five S. Development of a lean culture may be put on the back burner for better times. If the climate is competitive pressure and recognition of the need to improve, a company should begin with the tools but in parallel, work on changing the culture to sustain and continue the improvements. If a company is

4. in growing, flourishing industry that is facing little pressure, then it should work specifically on developing the lean culture and apply the tools as a manifestation of the culture. 5. Baggage “Baggage,” refers to the bad taste left by past unsuccessful organization initiatives. A company often overlooks this when it begins to design a lean approach. It does not make any difference if the baggage is real or perceived; it should not be ignored. Baggage may include past corporate initiative activities that resulted in layoffs or failed to satisfy expectations. It may also encompass the “flavor-of- the-month” syndrome.The organization’s people may be primed to “wait it out or wear it out” until the latest initiative—lean transformation—fades as well. 6. Culture Consider the cultural makeup of a company. “Culture,” does not refer to the “lean culture” to which a company may aspire. Rather, it is the unique traits and characteristics of the people within the organization. Are there particular sensitivities to consider, such as language? For example, multilingual training and development materials may need to be offered. There also may be literacy issues. For example, at an aerospace supplier some basic lean tools were presented in expectation of significant results as the company had many ripe improvement opportunities. After less-than-stellar results, it was realized that there was some basic reading and math deficiencies to address. 7. Resources

5. Ideally, a company will want the resources available to develop and dedicate certified lean specialists to business units, plants, or specific areas. “Certified” means they are proven to have reached some specified level of proficiency as determined by the company. The importance of this is to establish a common language and a common lens for those who are driving the organization. The specialists can act as internal consultants to teach, facilitate, and help direct lean efforts. However, competition for resources or the relative size of the company may result in the addition of lean to someone’s current responsibilities. Regardless, resource availability or constraints must be considered when designing the approach. 8. Integration More often that not, a company introduces lean either during or after other continuous improvement initiatives. This can cause confusion between initiatives such as lean and six sigma. One should not replace the other; they should complement one another. One lean implementer likes to explain lean as, “…the systems you need to fight the daily fights and manage the war. Six sigma, on the other hand, is the tool you need to storm the beach.” No matter how it is looked at, an organization must see lean as a complement to the initiatives in which it is engaged. Lean must be perceived as the vehicle to take an organization to new heights. Successful efforts should not be negated. Lean should be used to leverage a company’s effective efforts—not replace them. 9. Measurement / Evaluation

6. Measurement/ evaluation systems dramatically influence organizational behaviors. Unfortunately, the resulting behaviors often conflict with the desired behaviors of a lean initiative. A company should carefully look at what it measures and evaluates, and who is accountable. At a major automotive parts supplier, direct labor was the Holy Mantra : “drive out direct labor and you will be rewarded.” The easiest way to drive out direct labor was to automate processes, so that is what the company did. After closer examination, however, the company’s leaders realized that costs actually increased because of downtime, scrap, indirect support, inventory, and other issues. The point is not that automation does not have a place in lean: it absolutely does. The point is the measurement drove the behavior, which is not the best lean practice. 10. Vocabulary Vocabulary may seem like an unimportant consideration, but jargon can be confusing. Employees of organizations become increasingly confused as leadership introduces one initiative after another—the flavor of the month. If a company has a “process excellence” initiative, the title should not be changed. Instead, it should be integrated with the rules, principles, and practices of lean. If a lean concept is introduced, but there is already an existing word with the same meaning, keep using the same world.