When asked to describe their understanding of “Lean,” many professionals cite cost reduction, labor savings, or “Isn’t that a manufacturing thing?” With national news headlines of consolidation, workforce reductions and the shrinking labor pool, it’s no wonder many see Lean as just another way to save money.
Viewing Lean as a cost-cutting effort alone understates the real power of Lean. Worse, if company leaders attempt to apply Lean with a one-time “fix it” mentality and let workers go as a result of improved processes, they’ll destroy the initiative. Why would your team members help you lay off their associates?
Lean’s power is in its strategy for engaging your people to continuously improve. When deployed effectively, your organization will gain advantage over the competition because you keep getting better every day.
What is Lean?
Lean is a proven method for eliminating waste that results in more value to customers, delivered at a lower cost, in a shorter time, with fewer defects and less human effort. It comes from the Toyota Production System and was developed over decades as the company worked its way out of the devastation from the Second World War.
Lean practitioners seek the “least waste way” to perform tasks. It’s a never-ending quest. The advances made today become the baseline for future improvements. As people learn to see and eliminate as much waste as possible, they discover still better ways of performing the work, and the cycle repeats.
Most business leaders have heard about the dramatic results of Lean. It is common to see productivity improvements in triple-digit percent gains the first time Lean is effectively deployed in an area. The real benefit, however, is in developing standards that keep your team improving over the long term.
Defining “value” and “waste”
Lean recognizes that the concept of “value” must be from your customer’s perspective, not yours. That value is created only when three criteria are met:
- The customer is willing to pay for the product or service, and
- the work transforms the product or service, and
- the work is done right the first time.
When one or more of these criteria are missing, the activity is considered waste, or “non-value added” activity. The customer doesn’t pay for waste; the producer, manufacturer – or the grower – does.
Many are surprised to learn the typical business has about 95 percent activity waste. Even Toyota, which has been practicing Lean since the 1950s, estimates that half of their activity is still non-value added.
Seeing waste – and dealing with it – is key
Companies applying Lean improve productivity by viewing processes from the customer’s perspective, and by eliminating waste wherever possible. Toyota defines waste as seven types of activities that do not add value for the customer:
- Transportation of raw materials, products or information
- Inventory or build-up of materials, products or information
- Motion of people
- Waiting for people, product, raw materials or information
- Overproduction – making more than the customer requires
- Overprocessing – doing more to the product than the customer requires
- Defects – rework or scrap
The goal is to eliminate waste in a way that respects the people working in the company. When you see any of the above in your business, you’ve found an opportunity to learn and improve.
Keeping Lean going
The principles of Lean are simple, but difficult to sustain. While initial activities show results, many companies struggle with keeping improvement gains without a plan and support for continued application. Leaders often miss the human factor of implementing change.
So, how do you keep processes from backsliding to the old way of doing things? Develop standard work – the “standard” way in which a job is expected to be done.
Standard work includes a description of the work, the sequence of tasks involved, any equipment or tools needed, and the time required to complete each task. It should be posted at each operator’s location.
The process of developing standard work usually delivers productivity gains. Andres Alamillo, Continuous Improvement Manager with Smith Gardens, said, “In our selecting process with pack items we were able to improve our units per worker hour by 55 percent just by developing standard work.”
Continued improvements are not possible without standard work. Quality and productivity vary based on the knowledge and capability of the person doing the work. This reliance upon human experience is called “tribal knowledge.” It is an environment where only certain individuals have the ability to do a job well, and understanding of how to do a job is passed on from person-to-person.
Tribal knowledge can be destructive. This type of work environment not only creates the opportunity for power plays and control situations, but also limits the ability of the company to staff and schedule consistently. If there are functions in your company where the ability to do a job relies on a small group of people – or worse, a single skilled and experienced person – you need to develop standard work.
Standard work needs a visual workplace
Lean companies work to create a visual workplace. This is an environment where anyone can walk into an area and understand what’s going on with the process, if the work is on schedule or not, and if there are any abnormalities. A visual workplace makes it easy for people to follow standard work.
Examples are area signs and walkway markers, checklists, safety alerts and status boards. Color-coding is effective and often used; red-yellow-green commonly reflects bad-alert-good.
Visual controls are commonly used in our world today. Imagine a parking lot with no stripes, roads with no lanes or signs – or a grocery store with no labels or pictures! Examples of effective visual controls are everywhere, yet many organizations still rely on tribal knowledge to accomplish much of the work.
Language differences make creating standard work more challenging, but should never become an excuse for not doing so. These language “gaps” can be mitigated by the use of good visual controls, translated documentation, and ongoing training and support from leadership.
One example: standardized maintenance carts to reduce time and steps
A grower in Marysville, Washington, has large expanses of property, with plants grown both in greenhouses and in the field. Golf carts had been used as a mode of transportation for maintenance crew members to work around the site. Each member of the team had a different set of tools and supplies on his cart, based on personal choice, and these tools and supplies were not consistently well organized. Responding to maintenance calls required personnel to retrieve and carry ladders, sections of pipe, etc., and the tools required to make a service call – perhaps one-quarter mile away or more.
Multiple trips to the maintenance shop for parts and supplies were time consuming and expensive. Each maintenance crew member was making 15 to 20 trips to the shop per day. Additionally, the standard golf cart lacked the size, power and interval before recharging to be of practical use by maintenance crews.
How standard work solved the problem
An improvement team set out to work with the crew to address the lack of standard work for how maintenance carts were stocked. It became apparent the golf carts were inadequate for the task; these were replaced. Larger carts can now carry parts needed for nearly 90 percent of the calls with 90 percent less transportation waste.
The need to recharge carts during the shift was also eliminated. Each cart was configured exactly alike. Inventory items stocked on each cart were standardized and restocked as needed daily. By creating standard work for arrangement and replenishment of the new carts, the company saw its return on investment within months. The customer experiences far less downtime as team members have what is needed at the point of use the majority of the time.
This new system not only improved first-time responses by 80 to 90 percent, but also cut the number of round-trip visits per person to storage from 15 to 20 to two to four per day. The company estimates their overall time saved annually is 2,016 hours (one employee shift/day). The new carts have dramatically improved employee morale, and there are requests for standardized point-of-use carts for different teams across the company.
One approach to keeping the momentum: consortium
A handful of Oregon companies are tackling the difficulty of sustaining Lean by working with the Oregon Nursery Lean Consortium. Members of this consortium have found that a trusted group of peer companies, working together on Lean deployment, brings results and delivers a strong, positive message of long-term commitment to employee development and continuous improvement.
The consortium is a small group of companies working together to learn Lean principles and methods, and then applying them systematically to processes in each other’s companies over the course of one year.
Each company engages three people through the program. Typically this is a company owner/manager, plus two others, the first year. These three become trained in Lean principles and “volunteer” to serve with improvement events at different facilities throughout the year.
Hosting companies receive an on-site improvement event in their company, with help from other consortium members. These “kaizen events” involve direct, hands-on changes at the hosting company with a facilitator and trusted peer practitioners from other companies. The team makes rapid changes the day of the activity in order to immediately gain improvements and reinforce learning.
With so much talent to draw from at one time, each team has Lean veterans working alongside less experienced personnel. The learning curve drops dramatically, and a great deal can be accomplished in a short time. Additionally, all of the training, materials, tools and improvement events are facilitated and managed by professionals who assure the process follows standards for Lean deployment.
Continuous improvement requires leadership
It takes strong leadership with vision and tenacity to make significant, ongoing improvements in an organization. Some resist change because it’s uncomfortable – it’s human nature. Organizations that short-circuit the process of creating standard work will find improvements are lost over time due to a tendency to drift backward to a prior, more wasteful state. To minimize the impact of change, give ownership and promote buy-in, always involve those doing the job in developing their own standard work.
With the aging of our working population, labor is less available, and competition for skilled labor is greater than ever. Companies that want to stay in business over the long term are building up their workforce to support continuous improvement.