“Change is not necessary. Survival is optional”

By Al Norval,

One of my favourite quotes from W. Edwards Deming goes like this “Change is not necessary. Survival is optional”. I find this strikes to the heart of the debate companies have over whether or not to begin a Lean Transformation or in fact undertake any Continuous Improvement activity. Why change the status quo? Sure we always want to get better but things aren’t too bad the way they are. In today’s day and age, if you’re not getting better, you’re falling behind. Those that fall behind don’t survive. Fortune magazine says that on their Fortune 500 list of companies, ranked by revenue, only 62 companies have been on it every year since its inception in 1955 and 2,014 have appeared at least once. If that doesn’t make the case for change, nothing will.

Lean Value System

by Al Norval

Lean is about providing value to our Customers and to do this we look at our Value Stream which is the sum of all activities which go into providing these goods and services to our Customers. The Value Stream extends all the way from our Suppliers right through to our Customers and include all the steps in between such as Planning, Distribution and Logistics. We know that in these value streams the value added time is very small often just a tiny fraction of the total lead time of the process.

If this is the case why do so many organizations work very hard at reducing piece price of purchased raw materials by bashing, threatening and coercing suppliers? While we all want the benefits of reduced piece price, we don’t want it at the cost of larger batch sizes, longer lead times and reduced reliability of our Suppliers. In fact we want smaller batch sizes, shorter lead times and improved reliability in addition to reduced piece price. Wouldn’t it make more sense to work together to examine all the waste in our Purchase to Pay systems and work in conjunction with our Suppliers to reduce the waste. Rather than fighting over a piece of a small pie, why not work together so we each get a larger piece of a larger pie. A true win-win for both parties.

The House of Lean

by Al Norval,

The House of Lean has many parts to it that work together in combination to form a Lean Production System. One, which we are all familiar with, is Just-in-Time but it’s also one of the most misunderstood parts of the Lean Production System.

Just-In-Time or JIT means giving your customer:

A. what they want,

B. when they want it,

C. in the quantity they want it.

It’s based upon a foundation of Standard and Stable processes and works together with the other pillar Jidoka or Built in Quality. Typically, organizations want the benefits of JIT, namely cash from freed up inventory but often reduce inventory to a level lower than their processes are capable of supporting. This results in missed schedules, customer service problems and higher costs. For this reason it’s called “Just about in Time” or “Almost in Time” and has a bad, almost negative, connotation to it. In fact JIT can be very powerful in driving quick response to problems by making problems visible and urgent. However, we need to have a couple of pre-requisites in place first including stable and standard processes and a human response system capable of responding to problems as they arise and putting counter measures in place before we run out of materials.

We must understand the capability of our processes and the variation inherent in our processes. Only then can we set the right level of inventory in our production system. Then as we drive process improvement we can remove inventory and move closer and closer to Just in Time.

More on Lean Thinking and the NFL

Hi all,

Pascal reporting from beautiful Copenhagen. I've just spent a couple of fine days with my friends and colleagues at Dansk Industri.

Thought I'd build in our earlier themes of Lean Thinking and the NFL. I had the pleasure a few years ago of sharing an airplane with the coaching staff of the Green Bay Packers. I sat between James Campen and Lionel Aldridge, great fellows who shared many insights into their work. I explained the Lean system and was struck by how quickly they got the fundamentals.

They described their versions of standardized work, visual management, A3 thinking and so on. "Isn't that how most companies operate?", they asked.

Since then, watching NFL broadcasts, I'm struck by the simple, two-sided playbooks (often on A3 sized paper), by the use of the scientific method in analyzing and preparing for games, of standardized work in play development and practice -- and by other elements of Lean thinking that are common in the NFL.

I'm reminded again of the words of a very senior GE executive: "This is just good management..."

Obliged for your thoughts.

Skoll,

Pascal