Lean Management

Tom C. Witt
One of the concepts that is gaining popularity is called Lean management or Lean performance. It's based on the principles from Toyota's production system (TPS). These concepts helped take Toyota from a small car company to one of the market leaders in the automotive industry in terms of quality and efficiency. The primary goal is to get rid of waste that occurs in the product process. Toyota even came up with three types of wastes called muda, muri, and mura. But for most Lean efforts everything is based around the muda (waste). Muda translates into any activity that is wasteful, meaning it does not add any value or is unproductive. Seven activities fall into this category: 1. Transportation: Work is moved from one department to another for no reason. A process can be set up to go through many different departments and people that is more about control instead of adding value. 2. Inventory: Normally people think of this as the material or final product that needs to be stored until it's sold. The goal is to keep the minimal inventory on hand to meet the demand. But this also deals with resources. Until the final product is completed resources are stored or held captive. The goal is to keep the minimal resources on hand to meet the demand. 3. Motion: More work is being done than what is required to create the product. Tasks and processes are involved that do very little, if anything, to help in the creation of the product. 4. Waiting: The process is based on stops and starts as it goes from one department to another or through different phases. 5. Overproduction: Production is done ahead of demand. Things are not done just in time (JIT). An example is a linear project process, where tons of documentation is created and maintained early in the project process but never used in the later phases. It occurs because early in the process it's unsure what is needed and what is not. So on the safe side, documentation is overproduced. 6. Overprocessing: This deals with purchasing very expensive equipment when something much cheaper could create the same results. In processes and procedures it deals with creating very complex solutions for something that could get the same results with a simple process. 7. Defects: The effort put into inspecting and fixing defects. As this topic is covered you will realize that Lean is similar to the other topics already covered. Process engineering and continuous improvement, deal mostly with making changes to reduce or eliminate waste. The Deming wheel makes small changes to remove wastes so that optimum performance is met. Lean at a high level is about doing more with less, which could be time, resources, money, processes, or even inventory. It deals with looking at the entire process that exists from the start to the end in a company. It encompasses going across departments and even divisions if that is the path of the product being created. The concept is to use the big picture to make large performance increases instead of using individual items at a department level that will end up optimizing only certain parts of the process. This is different from what happens most of the time in companies. Normally when there is an improvement initiative it's left up to each department to make its own improvement efforts. Usually, only a couple of departments end up making major improvement changes in their part of the process, with many other departments doing little or nothing to improve their process as the product processes through. The end result is that there is little change in the end result. Just because one or two bottlenecks are removed in one department, the work will still encounter the many other bottlenecks in other departments; thus, large performance increases in the process do not happen. Another factor is that as a product is passed down through the different departments there are dependencies and handoffs. Instead of the product having a continuous flow there are stops and delays before the product goes from one department to another. The ability to make changes to the procedures

around the exchange points from one department to another is normally out of the control of a single department. It takes the collaboration of two departments for changes to occur. But many times a new process will increase performance in one department but for the other department will increase the workload. Because of this there is resistance to implementing the beneficial change from the department that will have to do additional work. The only way to get around the territorial issue and to obtain large performance increases is to look at the entire product process at a company level and not just at a department level. With the Lean initiative, at the enterprise level the team can address and overcome those issues and barriers to create the most efficient and effective process, no matter how much work the changes will make in a department. Normally, Lean is thought of as being applied to manufacturing where a tangible item is created. But it can be used in a variety of situations, including in the project process. As a project goes through the different phases, many handoffs occur, along with many different people from different departments involved with each phase. So in the project situation a large amount of waste (muda) occurs. Lean works only if there is buy-in from all of upper management. Many of the improvement changes will happen across several departments. Whether Lean or something else, the most common reason for all improvement effort failures deals with upper management who did not buy into the improvement initiative and are not open to making changes. Without upper levels trying to improve, it becomes a barrier for the lower levels to execute the improvement changes. To begin the Lean process, an organization should select the person who best understands the entire product process from the start to the end. This person should be assigned to lead the Lean improvement effort for that product. Besides the company and product knowledge, they should also be very knowledgeable in all six best practice disciplines: leadership, communication, ability to influence, negotiating, problem solving, and decision making. This person will report to the top person responsible for the product. Besides showing everyone involved in the product process that the improvement initiative is being taken seriously, this also gives a direct reporting relationship so that barriers such as territorial issues or challenging the direction of another upper management person can be addressed quickly and concisely. The Lean lead duties include leading the implementation of the changes along with monitoring their effects. The Lean lead needs to be a hands-on person who drives for results. The second task in Lean is to understand the current environment the product passes through. The lead person must perform value stream mapping (VSM) on the product, wherein its process from start to end is documented. On the surface this might seem simple, but each product process can have several different flows for the same product. The most obvious flow is the tangible product that is being passed from department to department, but additional flows deal with information and people processes. All of these flows are affected when a change occurs, and all must be defined and measured to see if improvement occurred. To create these flows, the Lean lead and their team need to go out to the different departments to gather the necessary information from the front-line workers associated with their product. There are many ways to do this. One creative way is to video the path of the product. For example, in the early 1990s I was on a team that reengineered the business personal lines of two insurance companies into one company. Part of this VSM was done by video recording the product process. To be able to issue and support an insurance policy was our product for the project. The product process for one flow began the minute a piece of mail came into the company. From that point, the filming started. As each department did a task to the piece of mail, it was filmed. This gave a visual, along with an estimated time frame as to how long a task should take. When the piece of mail was passed to another person or department, this was also filmed. Most of the time, this occurred in a batch process where as work was completed it was put into a basket. The completed work in the basket was routinely picked up

at certain times during the day and delivered to the next department so another task could be done to it. At each one of these waiting points, a sign was made to show the best and worst situations. The best situation was that a piece of mail was completed and put in the basket for the next department, just as the mail was being picked up. The worst was that the piece of mail was completed and put into the basket right after mail was picked up, so that piece of work would have to wait until the next time mail got picked up before the processing could continue on it. Value stream mapping (VSM) is an essential part of the Lean process. It helps make visible the entire process one step at a time throughout the different tasks and departments. It's a true representation of what is occurring in the product process. When the mapping of the entire current environment is completed, then work can start on goal-state improvements. It's important to understand that it would be a wrong assumption that "all" changes created by the Lean process are always going to bring about beneficial results. The process is a trial and error process in that sometimes the changes that are going to be made might adversely affect the final product outcome. Even though an idea might seem to be able to improve performance greatly, it's only theory until it's actually put into production and then measurements are taken to validate it. Many times instead of looking at the actual process that drives improvement, the quantitative numbers drive the improvement, for example, when there are lots of defects, the improvement effort is concentrated only on improving defects. The solution might reduce waste of not having as many defects, but the solution increases waste in several other muda catagories. Therefore, the big picture doesn't change. For example, to reduce defects, a new process is built where all logic will be double-checked. In the muda category of defects, the number of defects decreases, so waste has been reduced for that category. But in the category of motion, waste increased because of the double-checking. So the entire process needs to examined and a goal state decided. For creating the goal state of peak efficiency and performance, one can leverage the knowledge acquired in Chapters 12 through 14 that covered process engineering, quality, and continuous improvement. This includes the log chain concept and specialist versus generalist. The easiest improvements for identifying and removing and changing are the waste (muda) that occurs in the processes and procedures. Most of the time, look to change the processes so that there is a continuous flow. Do this by removing many of the steps that have a stop and start, along with removing as many hand-offs as possible. In order to create the best process, there might be a need to change how work is passed from step to step. Almost always the product is pushed through the process in an assembly line. But once in a while a better process is a pull at certain spots. Think of it like a grocery store. The dependency on the amount of material coming through the process is based near the end of the process with how much the customer purchases. What is sold in the store triggers what is pulled into the store. This concept can be applied at certain spots in the process to increase efficiency. There might be a resource restriction in a certain area. Instead of forecasting when people are done and giving them deadlines that most of the time are not met, do a pull process. Instead of deadlines and timelines, just queue up work for the person so that when they are done the next piece of work is ready. Timelines and deadlines are based on estimates that usually end up being inaccurate. Many tasks can take longer because there is more to the change than originally expected, or they could take less time because it ends up to be a simple change. If it's easier, the person will work slower to meet the deadline. If the work is harder than expected, the person will work extra hours to meet the deadline, which adds stress and reduces quality. When the work is pushed, the performance is based around meeting the deadline generated from the estimate and not what the true capacity of the person is. With a pull process there is no waste when a task ends up being simpler than expected. As soon as the worker is done she can start the next task. When it takes longer, there is less stress because work is not based around a specific deadline. Allowing adequate time to complete the task increases quality. The pull

process can easily be used in IT for development. A list of tasks can be created indicating the order in which they should be done. As a developer finishes the current task, the next one on the list is assigned. An example of the pull concept is a claim system in insurance. Work is assigned to a claims examiner based on the location of the claim and not the volume. If a severe storm goes through a claims examiner's territory, they could end up being bombarded with pending claims that need to be worked and closed. They have two options: (1) work at their normal pace, which ensures quality but will make them look bad on their review because of the number of pending claims; or (2) ignore quality and take shortcuts to close claims as fast as they can to get their pending claim number down. Neither option is a win-win situation. Instead of the storm driving the number of pending claims an examiner gets, a system should be in place to limit the number they can have. If the claims examiner is at their maximum limit that they are supposed to have, only when they close a claim will a new one be pulled into their workload. If the claims examiner is at the maximum number of pending claims and a new one comes in for him or her, the system will automatically route the claim to another claims examiner who is not as busy but is qualified to handle claims in that territory. No matter what processes are used, once the goal-state VSM is done, the most important part comes next: implementing the necessary changes. Unless there is a measurable change, people including upper management will feel as if it's just another futile attempt at improvement. Then like all the other improvement initiatives that show little or no return, Lean will be looked as something that does not work. The Lean lead needs to build a simple implementation plan. The plan needs to include what is planned on being done and when. It must be in a step-by-step process with a timeline. Before the implementation there must be documentation created on how the tentative improvement change will be measured. If it's allowed to wait until after implementation to define the measurement, people who are creating the performance results will pick out only the positive results that occurred to communicate the status of the change. The negative results will fall by the wayside. The last step before implementation is the communication of the change. This should include what and why things are being changed, along with the expected results. The implementation is nothing special. How changes get implemented in a company is unique to each company. After the implementation, follow-ups should be conducted with the affected areas and the effects measured. Even though it's not part of Lean, these follow-ups and measurements must occur several times over a specific time span. When changes occur, rarely will the full results show themselves immediately. It takes time for people to get up to speed on the changes. Most people are hesitant of new processes so they naturally work slower in the beginning, but once they see that there are benefits, plus the fact it becomes part of their everyday work process, then speed and quality increase. Only by talking to the users and taking measurements several times can the true effect of the change be reported. Along with word Lean, the word Kaizen is normally mentioned. It's a Japanese word for continuous improvement; it usually indicates a gradual, orderly continuous improvement, without a large capital investment. This is accomplished by finding and eliminating the wastes that exist in an organization's systems and processes. This is totally different from the traditional management style. The traditional system is referred to as management by exception, which translates into the "If it isn't broken, don't fix it or improve it" approach. Kaizen and Lean take the opposite approach: It's best to always challenge the existing systems and processes no matter how well they are performing. The purpose is to always be looking to find ways to add improvement and value, which were the same goals and concepts related to Deming's wheel and continuous improvement.

About the Author: Tom Witt has a B.S. in mathematics, with a minor in coaching, from the University of WisconsinPlatteville. He has worked in the information technology (IT) environment for almost 30 years. Early in his career, he moved into management for 14 years before entering the project world, in which he has held the titles of office automation manager, project manager, technical manager, technical lead, architect, and system analyst. Most of Toms experience has been in the insurance industry in addition to three years in the magazine fulfillment business and three years at an institute of higher education.