4 Ways to Bridge the Lean Performance Gap

April 16, 2009
Isolated areas of excellence can be fixed by developing a cohesive strategy.

"When times are good, it covers a lot of mistakes," said John Brandt, CEO of the Manufacturing Performance Institute, during a recent IndustryWeek-hosted Webcast. However, those mistakes become glaring in economic slowdowns such as the historic global event currently under way.

While the tendency among many manufacturers, and many industries, is to freeze in the face of such uncertainty, aggressive, growth-minded firms are using the time to refine their strategies and prepare for the better times that will eventually arrive. Indeed Brandt shared with the audience results from a recent MPI survey that showed manufacturers were both pursuing improvement initiatives and spending money on information technology and capital equipment despite the downturn.

That said, not all manufacturers are reaping the hoped-for rewards from investments in improvement initiatives, IT and capital investments, even as some are. In his presentation, Brandt discussed reasons why some manufacturers are seeing this performance gap in their initiatives. When it comes to IT investments and capex spending, he pointed out several errors. For example, he said for some, the investment is not driven strategically or with an overall plan, or with any linkage to an improvement methodology. Instead it's driven by something like an equipment breakdown, or an isolated IT manager or maintenance manager who isn't thinking about overall process improvement. What happens under those conditions, Brandt says, is that "you tend to make changes that don't take into account the improvement methodology or the entire flow of value to the customer and frankly, the resulting flow of profits to the firm itself."

And when it comes to lean initiatives, firms embrace a tool or two, and fail to comprehend the culture change that is vital to a successful lean effort. In those instances, isolated areas of operational excellence spring forth, while overall improvement remains elusive.

Brandt provided a broad outline to help manufacturers reduce the lean performance gap. He suggests these four steps:

  • Develop a cohesive strategy focused on the customer. Keep in mind: What is the customer need? Have some "frank and blunt conversations" with customers to determine what they want. In doing that, "you also find out what customers don't want," Brandt says, which may help a company cut out steps you think are creating value but "in fact are not."
  • Translate those goals into functional targets. Make goals actionable at every single level of an organization. Individual workers must be involved in setting their own targets; it can't be a case of senior management just dictating all the targets at each level. That means workers must have enough information to make changes over a period of time.
  • Link financial plans to operational plans.
  • Use a system for performance management, one that enhances transparency, direction and execution of your goals.
Brandt's discussion was followed by a presentation from John Colbert, vice president, research and analysis, BPM Partners. Colbert's conversation focused on business performance management, the fourth step mentioned by Brandt. Colbert shared recent survey data and several case study examples from several firms using business process management.

To view the full presentation of the Webcast, visit 4 Ways to Bridge the Lean Performance Gap.

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