We've all experienced or heard stories about an organization that has a "slam dunk" opportunity for a double-digit profit from a new business win. The company submits its quote confident it has the right plant -- an award-winning, quality-focused, lean manufacturing operation -- relevant design experience, past success working with the specified materials, and existing inventories of the required packaging and containers. Within a few weeks the contract is awarded and the company is celebrating the new business win.
With two years until launch, there is no way this organization could stumble on the project... or could it?
Fast Forward To Launch...
The company president is having daily crisis management meetings reviewing the problems associated with the new business with a team formed for the sole purpose of fixing the following:
- Remove containment activity in the next 60 days.
- Reduce premium transportation in the next 30 days.
- Revisit the internal cost estimate.
- Examine process controls.
- Comprehend the engineering change requests in the next 60 days.
- Examine the material issues causing the product to fail in the field.
- Reduce overtime in the plant by 20% in the next 60 days.
- Attain the productivity rates advertised in the project.
- Revisit the flexible agreement language at the plant.
- Revisit the organization's ability to respond to problem requests from the field.
How could a plant recognized for high quality and lean awareness have failed so miserably?
The quick answer is that while the plant may be a disciple of lean manufacturing, the rest of the organization operates in functional silos.
Failure To Launch
After reviewing the problems more closely, here are specific reasons why the launch was doomed to fail:
- Component designs were not compatible with new equipment. The engineering staffs did not provide a capable process and assumed the operations team would determine a solution.
- Production samples were built on weekends at low volumes on tools very similar to, but not the same as the new routed production tools, which were late.
- Quality checks on the early pilot material were passed with marginal justification.
- The new designs were not subject to stringent run at rates.
So, while the plant was well-suited to deliver a quality product, this launch fell victim to an organizational culture that didn't embrace lean initiatives.
To avoid situations like this, organizations must create a lean enterprise.
Get Your Lean On
Lean initiatives such as standard work and quality at the source are as important to the company's engineers and accountants as they are to the assemblers in the plant. Just in time delivery is determined by more than a card system in the plant. Everyone in the organization has a role to play.
To create lean energy around their core value streams, organizations need to embrace a cultural shift to become a lean enterprise.
To start, each department head needs to:
- Teach the team lean initiatives. "Learn by doing."
- Create a value stream map to identify the activities in each department and highlight the opportunities for continuous improvement.
- Recognize the value of the current state and create a future state map.
- Examine whether the department supports the value stream or if it is a functional silo that has little to do with the internal or external customer.
- Focus on metrics related only to value stream opportunities. Other metrics are irrelevant.
- Recognize team members that understand the value of the organization's shift to a lean enterprise.
- Have access to a lean enterprise expert, or sensei, throughout the process.
The lean enterprise, like lean manufacturing, doesn't occur overnight and it can be a difficult process. What's important is to remember that customers will not be satisfied in the long-term until the organization recognizes and pursues one system that leads to excellence.
The Value Of Lean
It's been said that the value of an organization is in how it handles the launch of a new product. A lean enterprise helps ensure success for that critical product launch.
The lean enterprise embraces a common language and culture based on customers and people. There is no room for the status quo. Organizations cannot allow themselves to be dominated by the functional silos of the past.
The lean enterprises -- those that recognize the value of a standard work approach to every task within their companies -- are the organizations that best comprehend today's dynamic business climate and are best positioned for success.
Your goal should not merely be a lean plant floor. That's only part of the solution. Every department in your organization needs to embrace lean principles.
When that happens, you'll have a lean enterprise.
Dave Wolgast is a managing director for BBK and Operations Advisory Group Lead. Guy Morgan is a managing director for BBK. BBK, an international business advisory firm that provides financial and operational services. BBK has completed thousands of engagements for a variety of clients, including Fortune 500 corporations, mid-sized companies, financial institutions, law firms and private equity firms For more information, visit www.e-bbk.com.