Lean Improvement: What To Tackle First

Dec. 14, 2006
Many companies have yet to pull product and material through the supply chain with the type of demand-driven agility that defines a Lean enterprise.

Editor's Note: This article is the second part of a two-part series that summarizes an executive roundtable discussion held at the Lean Learning Center. The first part is Lean Improvement Begins With Asking The Right Questions.

In my last article, I reflected on some of the questions that were discussed at the roundtable. Here, I offer some perspective on how individual organizations and our industry groups might take action in addressing some of our key issues.

Making Lean a Strategic Priority Within Your Organization

For any Lean initiative to gain full executive attention and sponsorship, I'm convinced that it must be rooted in solid financial benchmarking and ongoing monitoring. Even the most dramatic process improvements can fall on deaf ears if not tied to a compelling set of metrics that directly impact the bottom line in a way that is clearly meaningful to the organization.

As such, gaining a financial champion for the initiative as a whole, as well as for individual projects or programs is imperative -- not merely to ensure proper funding and resources to launch but even more important to make certain that the program continues to track to meaningful performance measures that make sense for the business both today and in the future.

Last month's IW Manufacturing Business Challenge column spoke to this very issue, as the VP of Operations at a hypothetical appliance manufacturer lamented the fact that the company's CFO was questioning the value of the Lean program -- despite major reductions in inventory and lead time. Clearly, the two executives were not on the same page about how to effectively measure Lean impact and the dots were not being connected well from the outset of the program.

Trying to bridge that gap once the wheels are already in motion can put manufacturing in a defensive posture and make achieving strategic priority status a much more uphill battle than it need be. Conversely, bringing the CFO and other senior executives into the fold at the beginning of implementing Lean creates a universal understanding of its importance and reduces the likelihood of the initiative coming under undue scrutiny as a result of misunderstood metrics.

Driving Greater Consistency Across Lean Initiatives

Once you have agreement on Lean's strategic importance and how to measure its impact, the next key element involves putting a platform in place to drive both broad and consistent deployment.

Many Lean initiatives can lose steam if they become a series of disjointed projects with no unifying touchstone. This is where technology can play a vital role.

Software applications can provide a vehicle for extending Lean principles across multiple departments, facilities and divisions, while institutionalizing best practices and enabling both repeatable and sustainable improvements. This was the very conclusion our leadership team and board of directors at the American Standard Family of Companies came to when faced with the challenge of bringing all factories up to the same high Lean standards of performance, across a diverse landscape of 85 plants in 35 countries in four distinct business divisions. We invested significant capital to maintain the momentum of the Lean programs that were powering a tripling of sales and inventory turns, while doubling productivity.

Even in a much smaller-scale initiative, the power of technology cannot be underestimated. Applications that leverage existing process information, organize an empirical model of ideal flow along the value stream and provide a step-by- step approach to fully deploy a demand-pull production process across the business and supply chain can dramatically accelerate cost performance and growth in any enterprise, large or small.

While Lean may be appropriately described as a journey, it's important for every journey to have a clear pathway to follow, with well-defined milestones along the way, in order to avoid non-value added wandering, frustration or unfulfilled performance.

Accelerating Industry Adoption of Lean Principles

We came into the roundtable wondering whether establishing a set of standards might be the vehicle to accelerate the adoption of Lean Manufacturing principles in the American automotive industry. Research has shown that while many manufacturers have taken steps toward becoming Lean, many businesses still have a considerable gap to close with regard to really pulling product and material through the supply chain with the type of demand-driven agility that defines a Lean enterprise.

Ultimately, we determined that while they have worked well in propelling quality initiatives, standards are not the way to go in this case. There is simply too much variation in how people and organizations define Lean and the objectives that Lean is meant to achieve. Some have even gone so far as to suggest that we need to change the word itself.

To drive toward a more unified understanding and coordinated vision within the industry, the better approach may be to provide best practice guidelines with actionable advice that OEMs and suppliers can refer to in implementing Lean methodologies.

True, there are a number of resources already available, including the IW Best Plants program, that offer valuable guidance to manufacturers around Lean and other operational issues. But in order to help both OEMs and suppliers in the auto industry to better compete in the global marketplace, perhaps a greater form of collaboration is required.

That is why several attendees from the roundtable, including myself, have formed a working group to seek the Automotive Industry Action Group's support in creating guidelines that will help make Lean a more universally understood and widely adopted way of doing of business.

There is much to be learned from each other -- both our successes and failures -- and much to be gained from us all achieving the highest levels of customer goodwill, the agility to manage change effectively and profitably, and operational excellence across different aspects of our business -- all things that leveraging our Lean capabilities can deliver.

Contact the author at [email protected] and visit www.pelionsystems.com to learn more about gaining value from Lean initiatives.

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