Where Did We Fail in the LEAN Manufacturing Transformation? LEAN to LEAN.2 and How to Get There

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James J. Connor is a transformative, CEO-level global business executive with over 40 years of experience leading and advising companies through strategic transactions, operational transformations, and turnaround situations. He has held the positions of Chief Executive Officer or President of industrial, primarily public companies for a combined 14 years and draws upon his diverse experience to craft meaningful and practical strategies for complex business situations. Connor presently serves as Managing Director of Alderney Advisors.

“I’ll tell him I need it in a week on my desk! We’ll make sure we’re lean! We’re the best after all, our Ops guys will get this done.”
If you truly feel this way, then sadly, you’re not LEAN. You’re part of the problem. Volumes of papers, books, trade articles have been written on the positive effects of LEAN. Ever since ”LEAN Transformation” by James Womack in 1990 , and “The Toyota Way” by Jeffrey Liker in 2001 there has been a clamoring toward that illusive “LEAN” approach as U.S. companies embraced the philosophy.

After all, why not? The statistics show LEAN processes bring dramatic improvement in costs, productivity, lower scrap and in virtually all important metrics. Information boards went up on plant floors, employees were informed on all kinds of statistics, the steady and sometimes incredible accomplishments of LEAN were broadcast. Awards were given for “The Best LEAN Company.” At Alderney Advisors we were among those early proponents of LEAN. Educating ourselves with our Sensei at NUMMI, the epitome of LEAN at the time, we reviewed systems in Toyota plants, Honda plants throughout the world and specifically in the US. We watched assembly line changes from right- to left-hand drive vehicles in less than one hour. It was mind boggling when it was taking us 6 hours to change a complex stamping die. These Japanese guys really got it. Right? They cleaned our clock in the auto industry. Early skepticism turned to embrace.

Initially, the industry scoffed. We rejected the discipline then sent them Deming to preach quality. We watched with a bit of humor as they charted plant floor metrics and set ridiculous goals like zero defects per million parts! Many in the industry waited for them to fail and confidently waited for them to return to reality like Prodigal sons.

At that time, many thought the LEAN fad would pass — like quality circles, participative management, and numerous other “flavors of the month” – it would soon be followed by another. Naysayers pointed to Fredrick Taylor’s book Scientific Management written in 1911 to show these concepts had been around and were nothing new.

But then, success after success started showing up. Quality of the Japanese manufacturers slowly surpassed the Detroit Big 3, and Detroit found itself playing catch up. There was a scramble to hire anyone trained in “LEAN.”

Hordes of doubting Thomases were beaten down as the cost reductions and quality improvements were implemented and the savings rolled in. LEAN principles continued gaining support and gradually U.S. manufacturers began their come back, joined in the effort first by the Europeans, then the Koreans and ultimately the Chinese.

Today, U.S. manufacturers have caught up. We espouse the attributes of LEAN everywhere. We point to our zero PPM’s metric proudly as a measure of our LEAN success. Tie score – right? Maybe even a little edge to the US because, after all we’re just simply better at doing these things.

Wrong again! Fat, dumb and happy as we are, we’re failing once more.

Alderney Advisors have spent more than 40 years watching and being part of the LEAN transformation. We drank the Kool-Aid early on. We’ve lived the history. So why do we conclude we’re failing now?

Anecdote from the past points the way to the future

It was very early in 1990’s that we were training in LEAN concepts and working with a group in NUMMI near Fremont, California. We were excited, we were creating shadow boards, learning the “machine waits for man” principles, making paper plane manufacturing lines in the training room. We were converts to LEAN. We understood the concepts — we knew how to take the “muda” out of the system. We were ready to take on the world.

Our NUMMI instructor finished the exercise on the final training day and we were all pretty pleased.   He told us we were now trained in the basic concepts of the Toyota Production System (TPS); we understood much about TPS and could teach others these concepts. Then he asked us a simple question: – “Do you believe you are now qualified to teach LEAN manufacturing principles in your company?”

Of course we thought! We all concluded that we had just been through weeks of intensive training, we were in awe at this new way of thinking. So yes, we were ready!

He looked sad and we waited for the hammer — the continuous improvement speech, how you are never the best, you always need to learn more and train more. We thought it was a trick question.

But instead of a lecture, he placed his hand on his heart and said, “LEAN is here.” It is not in the metrics, it is not in the charts, it is not on the production floor, nor is it on the information boards, it is here. LEAN is in your heart. It is a love, a passion, an ache that you yearn for each time you walk through an operation. It is an unending quest to improve.”

That is where we learned LEAN thinking. It starts with the passion to be the very best, to never stop improving, never stop learning. It is an emotion not a concept, nor is it something you can completely teach because it is in the heart, not in the mind nor in your hands. It is a passion to operate at your very best and it transcends the workplace or any function in any particular industry.

I conclude this is why we are failing. We maximized the LEAN principles from books and seminars to be sure. We’ve mastered the LEAN tool kit and that has helped us tremendously. We’ve drawn our LEAN houses and made the posters and hung them throughout the plants. But what we didn’t do is think about how we sustain the LEAN principles. We need to instill emotion to drive towards lean principles in order to sustain them.

LEAN is a mindset, not a checklist, not a book we read. We can’t dust off our hands and put it back on the shelf. Management, foremen, accountants, janitors, truck drivers, salespeople — everyone in the organization has to “get it”. It is a mindset and passion few organizations ever achieve, let alone sustain. Importantly, it starts at the very top of an organization. This reality is so profound, I think of it as LEAN.2.

So how do we get there, how do we get to LEAN.2? It has to start at the top. If you’re the CEO, do a critical self-assessment of your company’s LEAN philosophy. Yes, you, the CEO. If your reaction to this statement was: I’ll get my operations guy to do this

The path to LEAN.2 starts with hands-on Self-Assessment

So suck it up CEO, It’s not hard to do the assessment, nor is it subjective. Personally take a walk around the plant of your choice. Do it unannounced. That’s key. Arrive early, before start of first shift and have none of the usual presentations by plant management when you visit. Don’t stop at the conference room. Get your coffee before you arrive and go right to the shop floor.

Check out the information board typically at the employee entrance. Disregard the data, look at the dates of the information. You’re looking for current charts, yesterday or last shift’s info — not last week or last month. See that the board is neat, orderly, and clearly depicts the one or two objectives in the plant.

Does it look like it is actually being used? Stop any hourly employee, ask him to explain a chart that you pick at random, or ask him to explain any item he wishes on the board. Ask him the last time he actually looked at the board.

It’s not a test, point out, you’re just curious if the information is meaningful and whether or not the info makes sense. Ask a couple employees; see if they can explain the metrics and the goals for quality or production. Engage them in a discussion.

Continue your walk, looking for cleanliness. The plant should be spotless, free of any clutter — like it normally looks on your planned visits. Look for rework bins, scrap containers, and any defective material that might be scurried away during your official tours.  You are, after all, 5S right?

Continue your walk, looking for signs of quality directives, current initiatives on improvements, and such. Engage the hourly folks every chance you get. Ask them to explain what you are seeing, ask them if they know the production requirements, the run rates for their equipment, ask them what we could be better in their production area.

Avoid the “higher pay, or more time off” responses. Personally, after hundreds of plant tours, I have never had that response, rather employees are so thrilled you’re soliciting their opinion they will happily contribute. Just walk and talk.

Regroup to the conference room when you’ve finished. Get the plant team together; ask them what can be done better. Ask for their ideas on how to improve the simpler things. If you get silence, that’s a huge problem and you should tell them so.

Your expectation is sharing ideas, contributing. You’re on a fact-finding mission and this is everyone’s chance to be heard. Let them know silence means they are not the team you hoped they were. Encourage them to speak up. Get their thoughts.

Document your findings

Now, the really hard part: you need to write up what you saw in a tedious, report style that’s honest and structured. The report is going to everyone in the facility.

If you are truly LEAN, in your heart, and the employees live and breathe these principles, then – you will know. I don’t care if you’re background is finance, operations, HR. You will know.

I strongly suspect in many cases, there’s a failure to instill LEAN into the hearts of employees. Most of time management just lacks the passion and doesn’t “get it.” They track the numbers.

If you, as CEO, want to delegate this self-assessment, you do not have LEAN in your heart. That’s okay — get a very good consultant and have him or her start with you. LEAN starts at the top and if done right it is a contagious fever that spreads throughout the organization. Put yourself through the LEAN.2 Assessment. See how you match up.

Alderney Advisors LLC is a business advisory firm providing uniquely valuable expertise in the areas of management consulting, supply risk management, interim management, debtor representation, creditor representation, due diligence and litigation support. With its unique Alderney Scorecard™ analytical tool, Alderney Advisors supplies industries with critical supply chain financial monitoring capabilities and clients with a turnkey service to support their critical risk mitigation activities. For more information about Alderney Advisors, visit www.alderneyadvisors.com.

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