LEAN & THE GLOBAL ECONOMY

by Mark Slattery

Certainly the situation as described above is a frightening experience and one that understandably shakes victims to their core. In follow on interviews victims often state they never forget the feeling of invasion and fear. Folks who were known to be meek and unassuming suddenly find a hidden reservoir of strength and courage in the fight to protect home and family.

Global Economy: “There’s someone downstairs” China and India are the leading countries supplying the opportunity and energy for the expanding global market. It’s clear that with a lower standard of living and a deep untapped workforce the rules of competition have changed forever. Business Week’s December 6th cover story read “The three scariest words in U.S. industry: “The China Price”. The tag line made the point “Cut your price 30% or lose your customers and that every manufacturer is vulnerable.”

If so, it’s hard to understand why the adoption of lean isn’t more widespread than the 5-15% range research articles suggest. At speaking engagements we hear from many companies who are struggling in the launch phase or having launched are stuck trying to go beyond their initial kaizen success. The common theme being either management isn’t totally committed or there are just aren’t enough resources available to keep up the kaizen momentum.

Even so this low adoption rate is puzzling. The new competitors have radical cost advantages but rather than reacting like there is an intruder downstairs the reaction is more like a wallet was stolen. An intruder would spark an immediate response to survive and that means reducing costs. Reducing head count, closing plants or dropping lines is a reaction not a strategy to compete. In retrospect did the furniture, textile, electronics, clothing and others ignore the noise in the living room?

LEAN: "Think Globally, Act Locally" A tip of the cap to the Earth Day movement but it’s a phrase that certainly applies here as well. It’s clear the new global competitors are lining up in the living room banging around looking for customers. To compete under these new rules companies must have an active continuing project to remove costs and improve productivity in double digit proportions to survive. This involves a pro-active plan that’s not a knee jerk reaction to a poor sales forecast, twisting supplier’s arms or head count reductions. This is a ground level analysis into the guts of each process step, identifying value and eliminating waste.

Lean Recipes: It would be decidedly easier if lean came in a shrink wrapped box and you installed it but that’s not the case. Lean at the conceptual level is the relentless pursuit of eliminating waste. There are guidelines and tools in support of this stated goal but it’s a tool box not a recipe box. When you see lean in operation-5S, kanban, u-shaped cells, etc…, what you’re not seeing is the level of analysis that had to take place to get the point where flow can actually begin to occur. There is a tendency to want to skip to the last chapter and just cut a PO for the end result. Success at lean has nothing to with time, technology or money. It does require analysis of every process in use and determine whether it passes the value test. Once you have this information in hand you can then begin to make improvements.

Lean: Short List A common reason we hear from companies as to why they don’t start or fully commit to lean is they don’t know how to make sense of the tool box. Where to begin?

We find from personal experience that a list of things to do greater than three isn’t particularly useful. If you can perform three of the ten items on a list completely you are likely doing great. Hence this short list; we’ll cover others in a future newsletter.

Don’t give into skipping ahead without executing these completely and consistently. The truth is if you can’t do these there is no sense skipping ahead anyway.

1. 100% Executive commitment: Read everything you can, listen, visit other companies so that you are educated well enough to model the behavior you’re asking others to follow. You can never waver in this commitment even if it’s the inconvenient path at the time. It will pay dividends in the future.

2. 5S Everywhere, Every Day: If you can’t do 5S (Sort, Straighten, Scrub, Schedule and Score) then your efforts with the rest of the lean tools will fail. Period. Weekly measurements with both positive and negative consequences are the only way to do this successfully. Start small and certainly don’t try to do this everywhere all at once but in key areas, even administrative areas, which will be models for others to follow. In many cases this will improve productivity and reduce re-work by 30% and sometimes more. Most of our clients have seen 50% improvement by 5S alone. (See our previous newsletter covering 5S )

3. Standard Work: Implementing 5S will lead to a detailed analysis and discussion of how best to execute each step in the work process and what tools are needed and how they should be arranged. Document the process as a training tool and a base line for future improvements as you proceed in the lean journey. (See our previous newsletter on Standard Work )

Follow these three items consistently and they’ll provide a solid basis to go forward with the other lean tools.

Pay Attention To The Noise In The Living Room: Lean has been around for 50 years but widespread success has been elusive. Given the documented benefits in all manufacturing and even non- manufacturing settings its time companies make the time to figure out their lean puzzle. Even if it means hiring additional personnel to keep the lean engine moving forward while your meeting today’s quota. They will fund themselves through the savings if they’re executing correctly. Either way there has to be continuous effort to remove costs, improve quality and reduce delivery time in good times and bad. It no longer can be a part time effort based on a short term goal. The companies that you are or soon will be competing with are starting from zero and have a “nothing to lose  mentality". Companies can no longer be lulled into a false sense of security that your industry is somehow immune. Listen.

“Thump” “Thump”

“The hardest thing isn’t to get people to accept the new ideas; it’s to get them to forget the old ones.”- John Maynard Keynes