“There is nothing so useless as doing efficiently that which should not be done at all” – Peter Drucker
As we continue to contemplate the elements of Sustainable Wealth Creation, we need to address the practice of Lean Thinking. Often when people talk about lean manufacturing or TPS (the Toyota Production System), they think about removing inventory and delivering products just in time. This is indeed an element of TPS, but lean thinking is in fact a much broader and more universal concept that can and must be applied to all activities of the enterprise in order to achieve world-class excellence and profitability
Lean Thinking was a concept developed and popularized by Taiichi Ohno of Toyota Motor Corporation in the 1970s and 1980s. This concept was arguably the single most important advance in the concept of management in the second half of the 20th century. Before that, the US industrial complex had been fascinated with the idea of optimization of processes to make them efficient, often by the exploitation of the capabilities of the computer to automate and expedite process controls. Ohno’s radical idea, as in the Drucker quote used to lead off this post, is the least expensive process is the one that does not happen at all!
Therefore, in a Lean Thinking mindset, we need to evaluate each process and first determine whether or not this process is necessary at all before we optimize the process to make it more efficient and cost effective.
It is easy to fall into the trap of thinking this step is unnecessary. After all, if we do something and have done it for a long time, there must be a reason for it, right? The simple answer is, sometimes yes and sometimes no. It is amazing how many processes in organizations exist for a reason that no longer applies, yet the process remains.
Let’s examine an example. Suppose our plant has a supervisory sign-off process to review the quality of our finished product before final pack. At one time this was a great idea – the organization was new, the processes were unfamiliar, the workers were not yet well trained, and poor quality product was getting shipped to the customer. A decision was made to have the supervisor double check the quality and sign off prior to final pack and ship. This process was created and implemented, along with paperwork and clerical record keeping and auditing and tracking of the results, and provided a valuable customer service at that time.
Now, ten years later, the process persists. Why? – because of what I call organizational inertia. Everyone is used to this process, and in fact everyone believes it must be done that way or we will damage the high quality reputation we have established with our customers. After all, the supervisors still are finding defects at their final check and if they did not do it, who would prevent the defective product being shipped? The data says we need it!
Yet the underlying motivation that caused the need for the process is no longer there. Our equipment is stable, our operators are well trained, our in-line quality control plans are robust, and our people are justifiably proud that we have a great record of low customer claims and rejects. In fact, just last year we received a “top supplier” award from a major customer.
Now we have to look a little deeper. Why are defects still being found by the supervisors in this situation? It makes no sense, until we consider human motivation. Our process has a cost, and the cost is more than the time and attention of the supervisors, the clerks and administrators and auditors who gather and compile and report and check this data. The hidden cost is the impact on the operators. What message does our process send to them?
To the operator, the following messages are subtly but clearly communicated by our process:
- We cannot trust you to make an important decision that could impact our customer relations; and
- Our supervisors can make better judgments about quality than you can.
Upon reflection with Lean Thinking, we realize our process is not only costly in the expense to administer the process, it has a people cost as well. It communicates some negative messages to our operators, which are internalized in their approach to their work.
After all, what is the point of an operator checking their work carefully if they know a supervisor will check it again anyhow? Why would they feel responsible, accountable (and yes, empowered!) to represent the company’s quality aspirations when our process tells them we neither expect them nor trust them to do so. How much damage does this attitude do to our cost of quality beyond the tangible costs of our process?
So the thoughtful Lean Thinker will not seek to optimize this supervisor inspection process by building a computer system to read bar coded defect data into a database so we can automate the reporting of the supervisor quality checks. Instead, he or she will eliminate this process and clearly communicate to the operators that their decisions on the quality of the finished goods will be final. We trust them and empower them to be fully accountable for their craftsmanship.
There is retraining and communication and roll out of this process change over time so that everyone is fully prepared and equipped to take on this new responsibility. There are some operators who do not want to accept this responsibility and are reassigned to other work. There are supervisors who resist passing this control to the operators and have to be reassigned as well. And yes, there are some defects that go to the customer, with their requisite root cause analysis and elimination back at the plant to ensure they do not reoccur.
In short order, however, not only does our inspection cost decrease by the elimination of this completely unnecessary process, but we enjoy a much more important benefit. Now our operators know and feel full accountability for the quality of their work. More importantly, they feel more empowered, bringing not only their hands and eyes but also their brain and full self to the plant as a critical component of our customer relationship. They are not just cogs in the machine any more, they are trusted teammates who take pride in their craftsmanship and the quality of their work.
I would suggest this is a huge win for the enterprise, which will reverberate not only to the bottom line but to operator engagement as well.
Two critical clarifications of Lean Thinking are in order.
First, Lean Thinking is not just applicable to the shop floor. In contrast to the common perception that TPS is for manufacturing only, it applies equally well to office functions. The reports and meetings we have in our offices that at one time served a purpose but today consume time and resources yet no one cares about them are a fruitful opportunity for cost reduction and elimination of frustration. After all, there are few things more demoralizing to any human than the occupation of their time and efforts on work that creates no benefit to the organization or its customers.
Second, Lean Thinking seeks to eliminate “Non-Value Added” processes. We cannot eliminate processes that add value to the product or service we are selling unless our customers are willing to accept the lower valued product or service, or we are willing to accept customer defections. Thus the first step to Lean Thinking is to distinguish what processes are valued by the customer (things they are willing to pay money for because they need it to be that way) versus those we do for our own internal purposes and the customer would not be willing to pay for, which are candidates for elimination.
We have value adding processes in the office as well as the factory floor. A human voice to answer the telephone may create value for the customer just as much as a grinding operation to remove burrs on the part. Elimination of either in the name of cost reduction or efficiency is a reduction in value that may be opposed by the customer and may not end up creating wealth in a sustainable way.
What process can you eliminate this week in your operation? Comment to this post with your ideas and let’s share thoughts about it.
As always, I look forward to discussing how I can help increase the Performance of your enterprise by incorporating world-class Principles and Processes, like Lean Thinking!