Ask Art: At What Pace Should A Lean Turnaround Be Implemented?”

Your pace will be determined by: 1) what you are trying to achieve 2) the complexities that arise from trying to run two systems—batch and flow—at the same time 3) the difficulty in implementing something as different as lean and 4) perhaps the differences that arise from various types of business, for example, service vs. manufacturing. Let’s discuss these factors.

To me the main driver relates to the fundamental question of “what are you trying to achieve?” Are you trying to reduce costs to be more competitive, for example; or are you starting out with the objective of becoming a complete lean enterprise and realizing the full benefits of a lean transition? There is a vast difference between the two, and the path you choose will pretty much determine the pace at which you go.

Take note, as well, that the specific implementation approach you choose will have a big impact on the pace. Will you use a traditional problem-solving route of forming a team of salaried experts, giving them a problem to solve and then having them meet, say every week, to study the problem and come up with a recommended solution? This is the traditional approach that most companies take: “the way we have always done it.” I’ve found that it will get results—but it takes a long time and, most of the time, doesn’t involve the people who are doing the work.

Or, you could choose to implement your lean turnaround using the kaizen approach developed by Toyota. Going down this vastly different path will feel uncomfortable for the traditional management team. Here, we form a team comprised equally of salaried and hourly employees, give them a problem to solve, set stretch goals and have them work full-time on this for a whole week. (There is nothing sacred about the one-week time frame, but this is the most common length of a kaizen.) This is not a “planning” exercise but a “doing” exercise as we expect that a solution that meets the stretch goals will actually be implemented by the end of the week (in other words, before the traditional problem-solving team would be holding their second meeting).

In my experience, more than 90 percent of all companies see lean as a cost reduction approach. As a result, the pace at which they choose to go will be determined by the cost problems they have and need to solve. In a traditionally run company with 1,000 employees, you will likely find that most major issues/problems are addressed by a rather small group of managers, say between 40-70 people who tend to get involved in everything. The approach here would be to train this group in the lean tools and then send them forth using things like value stream mapping, A3 thinking and SMED to reduce costs. The lean tool kit, applied correctly, will always produce good results, so you will get some cost reduction. The pace at which a company like this goes isn’t something they really think too much about. The objective is simply to reduce costs. They can try to complete one project per month, which they might consider an aggressive pace. Or they could just break out the lean tool kit every other month or as the need arises.

The traditional company taking this approach will see steady gains…at a slow pace. Lean to them is all about cost reduction. By taking this limited approach it follows that the rest of the company and all its systems and measurements will continue to be batch in nature. Lean will just be one of maybe ten corporate objectives and the bulk of the employees won’t feel much change. Sales and marketing, for example, won’t be any more connected to operations. The company culture also won’t change and will likely remain driven by “make-the-month.”

If, on the other hand, you start with the objective of becoming a complete lean enterprise, the pace at which you go will change dramatically. You will have to change to a lean culture where every one of your 1,000 employees is trained in problem-solving, knows what is expected of them, takes responsibility for their actions and functions like a true team. This allows you to leverage the power of all 1,000 employees, as opposed to relying on just 40-70 key managers/engineers. While you will get plenty of cost reduction, your main objective will be delivering more value to your customers than your competitors by focusing on removing the waste from your own operations, every day.

In order to do so, you will have to understand and commit to three key management principals (in addition to the constant application of the four lean fundamentals; i.e. work to takt time, one piece flow, standard work and pull system). These are:

Lean is the strategy

Lead from the top

Transform the people

When it comes down to seeking new markets, developing new products, and pursuing higher quality, lean companies and traditional batch companies have similar strategies. What I’m talking about here is that for the lean company the core strategic approach is removing the waste: this is the daily work of the entire organization and allows the lean company to implement traditional strategies faster and at lower cost than the competition.

Bear in mind that changing a culture is difficult and cannot be done overnight. You can’t just proclaim it from on high, as a traditionally managed company might do, and think that it will happen. A culture change as significant as lean must be led from the top with the CEO/owner and senior staff out front. This hands-on involvement conveys the seriousness of the change and, more importantly, sets the example for the entire workforce that things are different and their ideas and participation are encouraged.

Understanding that you are trying to change your people is perhaps the most important element of a lean conversion. How you go about doing this will have the biggest impact on the pace of your lean turnaround efforts. As lean is something that you can only learn by doing, using kaizen as your principal approach is almost a no-brainer. Some upfront training on the lean fundamentals and what people can expect is very helpful but don’t overdo it. Focus instead on getting everyone on a kaizen team as soon as possible. A good rule of thumb here is that everyone participate on at least one kaizen team within the first year, that all senior managers participate on at least six full week kaizens; and the CEO/owner participates on twelve within that first year. Meeting this standard will help you calculate the right pace for you.

The fact that good kaizen teams are made up equally of hourly and salaried employees helps to spread the learning and builds the sense of teamwork and thus begins to change the culture. The best ideas on how to improve the work (i.e. remove the waste) will always come from the people that do the work. They will feel empowered, and propose additional ideas for removing the waste. As an example, early on at Wiremold we reduced the setup time of a rolling mill from 14 hours to 6 minutes, and a 150-ton punch press from 3 hours and 10 minutes to 1 minute. The best ideas came from the operators. Their work load was drastically reduced and the work place became much cleaner and safer. They understood this immediately and were very appreciative and ready for the next challenge. You get buy-in kaizen by doing kaizen, so the more you do, the faster you can change the culture and become a lean enterprise.

So, to be successful, kaizen must be the main approach. On top of that the dramatic results that come from the kaizen activity should themselves be a driver for going even faster. Staying with the setup reduction examples above, here are the results of Wiremold setup reductions after one-week kaizen events.

WIREMOLD SETUP REDUCTIONS AFTER ONE-WEEK KAIZENS

If you are the owner or CEO of a company and you see these type of results being repeated on all kinds of equipment, it should make you want to increase the frequency of your kaizen efforts. After all you know you can’t spend very much money in a week and these gains are almost free. They lead to more effective work and a safer environment for your associates and, by freeing up capacity, allow you to respond much quicker to the pull of your customers. You’ll be able to shorten your lead times, lower your costs and gain a big competitive advantage. If you can see this and still say, “Gee that’s interesting, let’s do another kaizen every six weeks,” then I have to ask: why do we have you in this job?

Another driver of how fast to go will be the fact that as you change from a batch/make-the-forecast/push approach to a lean/sell-one-make-one/pull approach, you will in effect be stuck, at least for a time, with running two completely different operating systems. The faster you can get to all pull, the better, which is another reason you may want to increase the pace of your kaizens.

SUMMARY

So, going back to your original question, my recommendation is that you should go at a pace of two kaizens per week per manufacturing facility, and one kaizen per week for a non-manufacturing service facility. To be fair, these are stretch goals. We could not maintain this at Wiremold during the four months of the year that were our peak season, as we couldn’t afford any machine downtime during that time. We could maintain it during the other eight months. Bigger companies will find this pace easier to do as they have more resources and more things to improve. Service type companies are a little different as well as they tend to rely more on computer systems that take some time to change. Even so they should strive for the one per week per facility goal.

At the end of the day, changing from a traditional batch, make-the-month culture to a lean value driven culture takes a lot of time and effort. The faster you go the sooner you see the enormous benefits of lean. Also, the faster you go the less backsliding you will see and the changes will become permanent. So be bold, go as fast as you can.