Can Lean Be Green?

On May 19, at the upcoming Institute of Industrial Engineers (IIE) annual conference in Puerto Rico, Keivan Zokaei will introduce his latest book, Creating a Lean and Green Business System: Techniques for Improving Profits and Sustainability, which he co-authored with L. Hunter Lovins, Andy Wood, and Peter Hines.

I recently spoke with Keivan about his book, and I asked him: "Why should companies bother incorporating sustainability and 'green' aspects into their Lean initiatives? Here is his complete answer:

Lean and green is not about protecting the planet; it is about protecting your company’s purse. I am encouraged by the proactive approach of a few leading-edge companies for whom going "lean and green" has become a key economic driver. Take elite firms such as Toyota, WalMart, DuPont, Tesco, Unilever, Procter & Gamble, Marks & Spencer, General Electric, and General Motors – all of whom have invested heavily in greening their products and processes during the past few years.

Unilever plans to double revenue over the next 10 years while halving their environmental impact. General Electric aims to reduce energy intensity by 50% by 2015. Toyota has already reduced emissions per vehicle by 37% between 2001 and 2012. Similarly, DuPont committed itself to a 65% reduction in greenhouse gas emissions over a 10-year period up to 2010. In 2007, DuPont saved $2.2 billion through energy efficiency. In the same year, its total declared profits was not much more than $2 billion.

The secret is in a simple yet powerful realization that environmental and economic footprints are aligned. When we prevent physical waste, increase energy efficiency, or improve resource productivity, we save money, improve profitability and enhance competitiveness. In fact, there are often, huge “quick wins," thanks to years of neglect. Today, the “greening industry” movement stands where the “quality movement” stood around 40 years ago. During the past 30 to 40 years, industries realized better quality can be (and often is) cheaper to make. By the same token, going “lean and green” is free – and in fact much cheaper. Lowering our impact on the environment, rather counter-intuitively, means lowering costs. I see the same phenomenon as we have observed in the evolution of our thinking about quality. Those companies who move fastest are the billionaires of tomorrow.

What do you think of Keivan's points? Have any of you incorporated green issues into your Lean initiatives? What have been the hurdles?

Understanding the Whole Enterprise

Last week, I spent some time on the phone with Jerry Harbour discussing his latest book titled The Performance Mapping and Measurement Handbook, and I asked him this question: In The Performance Mapping and Measurement Handbook, you talk about the need to develop performance maps and measures at multiple levels, starting at the higher enterprise level. Why is better understanding of the entire enterprise or the “whole thing,” as it were, so important? Here is Jerry's complete response:

Most organizations do an effective job in the “how to” of performance improvement. Where I often see them falter is in the “what to” improve part of the performance equation. This is why performance mapping and measurement is so important. Performance maps and measures, especially when developed at multiple levels, represent a systematic and objective way of identifying and prioritizing areas for improvement. Sometimes performance gains garnered at the local process level fail to translate into real improvements at the higher enterprise level. A common reason for this observed failure is the presence of unidentified throughput constraints and bottlenecks within the higher enterprise materials flow network. For example, one company implemented a very successful Lean Six Sigma effort at an upstream production site that significantly increased output. Yet at the enterprise level, those gains in productivity could not be realized because an immediate downstream transportation link that connected the production site to a needed export terminal was maxed out in terms of carrying capacity. Because the company couldn’t ship the increased output, it couldn’t sell those newly accrued gains to awaiting customers. Accordingly, the only real result from the company’s local improvement effort was increasing stockpiles of output that couldn’t be shipped or sold. This is why I always advise organizations to first take the time to better understand performance (and especially material flow) at the higher, enterprise-level right at the beginning of any local process improvement effort . As in the presented example, overall, there is very little benefit in making gains or improvements in one part of an enterprise if that gain cannot be realized or “flowed” throughout the entire enterprise.

Do any readers use performance maps? Have any of you run into the types of cross-functional or  hierarchical problems that Jerry describes?

Sustaining Lean = Long-Term Leadership

Just this month, Robert B. Camp published a new book titled Sustainable Lean: The Story of a Cultural Transformation, and I talked to him about some of the topics addressed in the book. Most Lean initiatives begin with noble intentions but often plateau or fail to maintain the gains. It’s commonly known among consulting circles that 80% to 85% of all first-time attempts at a Lean transformation fail, and I asked Robert: Why does this occur? Here is his complete answer:

Lean comes from a culture, originally developed at Toyota, that understands that plotting a strategy requires taking the “Long View” -- looking for the best long-term solution, irrespective of what might be best in the short-term.

Making a decision to launch a Lean transformation is a strategic decision. It is a life-changing transformation, the equivalent of leaving the doctor’s office with the emphatic “lose weight or die.” You can’t perform a Kaizen event or two, any more than you can lose a pound or two, and declare victory. Making the decision to embark on a Lean transformation is making the decision to change life habits, and not just on the shop floor.

What most leaders don’t understand (and, frankly, most transformation experts are afraid to tell them) is that for Lean to work, leaders have to change. Leading Lean is not achieved by hiring a well-known consultancy or appointing a Continuous Improvement Coach -- It is achieved by effective leadership from the top.

Leading Lean means learning about the philosophies of Lean and the tools that issue from them. It means changing the way in which processes are measured and goals achieved. It means being transparent and living the life before you ask others to. It means holding everyone in the organization accountable for achieving expectations. It means a lot of mentoring and coaching and going to see for yourself.

Mostly, leading Lean is about a personal commitment to change.

What do you think of Robert's ideas? Have any of you been involved in a Lean transformation that has stalled or failed because key champions have left the company or the emphasis was solely on tools?

The Best Candidates for a Kanban System?

I had the pleasure of speaking with Steve Cimorelli this month. He recently published a second edition of his book Kanban for the Supply Chain: Fundamental Practices for Manufacturing Management, and I had a lively discussion with him about materials requirements planning (MRP) versus kanban pull techniques and the importance of synchronization.

One general question I asked him was: "Which component parts or products are the best candidates for a kanban system?" Here is his answer:

Kanban works best when applied to parts with stable and repeatable demand. An effective way to quantify stability is to determine the mean (average) and standard deviation of daily or weekly demand for all parts under consideration, then calculate a “coefficient of variability” or CoV (CoV = Standard Deviation / Mean) for each part. Parts with a small CoV have more stable demand patterns than those with large CoV values. Another useful criteria is frequency of usage because frequently used parts tend to be more stable than infrequently used parts. Creating a scatter diagram of these two values on a simple Excel chart, can help you visualize where to "draw the line" on CoV and frequency rules. Finally, ABC class codes, which allow parts to be categorized according to both cost and demand, can add additional perspective to the equation. Many companies find it useful to set CoV, frequency, or other criteria differently by ABC code because A-items have a much higher impact on inventory investment than do B-items or C-items.

What do you think of Steve's advice? What type of parts or products have worked best for you in a kanban replenishment system?

Process Problems -- Just Five Types?

I recently spoke with Kicab Castaneda-Mendez, who recently published a book titled What's Your Problem? Identifying and Solving the Five Types of Process Problems, about root cause analysis and his definitions of process problems. I asked him specifically: "How is reducing process problems to just five types a breakthrough in process improvement? What are the key benefits?" Here is his complete response:

Typically, root cause analysis is taught by explaining a variety of tools that requires users to gain considerable experience before being able to apply them correctly in the proper settings. To provide practice, tools are often taught without context which results in users not knowing when to apply them. A third common condition is when problem solving is taught as a sequence of expansions and contractions, specifically in finding root causes and solutions.

By reducing all process problems to just five types based on the cause, we eliminate the need to search for what the cause is. Since these specific causes can be addressed in time-proven ways, the search for solutions is also reduced. The result is that we can significantly simply process problem methodologies to a three-step procedure:

• Identify the type of problem,
• Find the root cause (where it occurs -- we know what it is), and
• Address the root cause.

We benefit in several key areas: vastly simplified teaching, learning, applying, and mentoring. Because virtually every adult has solved these types of problems using the proven techniques, we can easily create lessons that build on this knowledge without burdensome language. With training time reduced by as much 50% to 80%, students can go through multiple cycles of practice on the three-step procedure on all problem types versus at most one cycle of other methodologies on one problem.

Isn’t that what process improvement is all about: increasing quality while reducing costs and time?

What do you think Kicab's methodology? Do you think all process problems can be reduced to just five types?

Robert "Doc" Hall is Inducted!

Everyone here at Productivity Press was quite happy to hear and read that Doc Hall was inducted into IndustryWeek's prestigious Manufacturing Hall of Fame. I can say, without exaggeration, that the understanding of Lean methodologies and the growing popularity of Lean implementations and Lean culture could not have been imagined without Doc. He published his first groundbreaking book, Zero Inventories, in 1983.

I first met Doc Hall about 10 or years ago at an Association for Manufacturing Excellence (AME) annual conference. Doc has not only been a wealth of knowledge since, but his engaging personality and quick-witted demeanor has always made a novice like myself feel welcome to ask any questions or seek insight on any particular topic. Doc has an uncanny knack to say a lot with a little, and always offered clear and concise explanations. What often appeared complex to me was often neatly simplified after hearing Doc speak on the topic.

Back in 2009, I had the pleasure to assist in the development and publication of Doc's book titled Compression: Meeting the Challenges of Sustainability Through Vigorous Learning Enterprises. This forward-thinking book discusses how we will have to adapt to do more with less as demand increases while resources dwindle and become higher-priced commodities. He shows how the Toyota model, the most successful and enduring manufacturing system ever implemented, can be applied and adapted to help identify roots of problems, eliminate waste, and create a new vision along with the path to realizing that vision. I hope all the readers of this blog will join me in congratulating Doc on this great honor.

Happy holidays to all!

The Production Preparation Process (3P) -- A True "Game Changer"?

At a recent conference, I had the chance to speak with Drew Locher about the Production Preparation Process (3P), and how it is used. Drew recently co-authored a book titled Unleashing the Power of 3P: The Key to Breakthrough Improvement with Dan McDonnell. I asked Drew: "How does 3P provide a real breakthrough? And, how does it function within a Lean initiative?" Here is Drew's full response:

3P can provide breakthrough results since it is foremost a methodology for innovation.  First, one needs a clear problem statement of a problem that should be resolved.  This can be the function that a new or existing product is expected to perform. Then, two key principles are used to expand people's creative thought process. "Biomimicry" is where examples of that function are identified in nature.  Why nature?  Nature has already solved countless problems over millions of years. This principle also helps people "get out of their box" and expand their thought process. The next principle is "Seven Ways" -- Do not simply identify one possible solution, identify seven. This stretches the creative process. The creative process ceases when people converge too quickly on a possible solution, and perhaps overlook a better one. At some point, those examples from nature are translated to possible human-made solutions, and the best elements of the seven ways are combined to form a better solution.  A third principle is rapid simulation -- to make the "fuzzy" as tangible as possible, as early as possible.  This provides the means for rapid learning cycles, which improves the solution that results.

As for "fitting in" with Lean, think of 3P as kaizen on steroids.  Instead of making incremental improvements on existing products or processes, 3P is intended for major redesigns of either or both simultaneously.  Therefore it must be fully supported by leaders in terms of the commitment of appropriate resources to insure success.  It is not for the weak of heart!  The underlying principles, however, can still be applied in many business contexts.  Consider an example of a cellular/flow kaizen event on an existing process and where major change is not possible. A team should be encouraged to consider multiple alternative cell or flow line designs for the purpose of identify a better one.  And the team should rapidly simulate proposed designs using simple materials.  In this way, the "spirit" of 3P is maintained though the exact methodology is not necessarily followed.

What do you think of Drew's explanations? Have any of you used 3P at the front end of the design process? Do you believe 3P is key to designing market-changing products?

Here is a video of Drew speaking directly about his new book:

What Differentiates a Lean Initiative in a High-Mix Environment?

Mike Elbert authored a great new book titled Lean Production for the Small Company, which explains how to adapt Lean initiatives for high-mix/low-volume environments. I recently spoke with Mike and asked him some questions, namely "What really differentiates a Lean initiative in a high-mix environment?" I'm including his complete response here:

Many people believe that Lean Production is only viable for large high volume producers -- those who produce few variations of their product. Lean concepts and methods, however, were actually developed by Toyota for their high-mix production environment. Companies such as machine shops, sheet metal shops, printing shops, and medium sized companies of all types with lots of different products or product variations with small production runs of each product are all good examples of a high-mix environment. What differentiates a high-mix environment from a low-mix environment is the number of product variations that must be produced all within a short period of time.

To implement lean into this type of environment takes some planning but can easily be done. Remember that flexibility on the production line is important and quick change over of machine tools, stamping dies, molding machines, printing machines, and assembly lines is essential. First, implement a program to reduce change over time of each machine or assembly line. Take a look at your current change over times and think carefully and brainstorm what you could do to reduce the time by 20%. Second, create a simple scheduling system for these machine and assembly areas. A scheduling system (as described in chapter 12 of Lean Production for the Small Company) using a simple visual display of removable production cards for each product will be very efficient, flexible and work very well.

Do any readers here work in high-mix, low-volume environments or job shops? What have been your experiences with Lean initiatives? What have been your main difficulties?

Righting the Wrongs of Organizational Measures

Mark Nash and Sheila Poling recently published a book titled The Right Measures: The Story of a Company’s Journey to Find the True Indicators of Its Success and Values. I spoke to Sheila on the phone and asked her: "What is the relationship between all the measures that an organization compiles?" Here is her response:

Organizations, regardless of type -- private sector, public sector, or non-profit -- should identify what they value as the overall goals of the organization.  The goals at the top (or strategic goals) are where most of the effort is focused.  Yet, to truly measure success, you must have Key Performance Indicators (KPIs).  KPIs are a type of performance measurement and are used by an organization to evaluate its accomplishments.  Typically KPIs are used to evaluate an organization’s success in terms of making progress toward, and ultimately achieving, its strategic goals.  KPIs should be the basis for all other measurements within the organization.  For long-term success, you need to have your key measurements linked, with direct relationship to the KPIs, from the bottom to the top of the organization.  

In the fictional story in our book, Max Housholder explains to the management team at M.E. Burdette Company how the measurements that are used to report success are related.  Relying on his life experiences, Max talks about how a construction crew and a homeowner each use the same tape measure to determine the individual success of their own goals in building a house and how in the end it is all related.  The differences in the measures lie in their detail.  All the measures are connected, linked or aligned to the ultimate goal of building the house. "Each of you in this room needs to find your tape measure. Find your sixteenth of an inch. Then connect the dots. You’ll see how it fits with the eighth of an inch, and then the quarter, half, and then the inch. As you move up your corporate structure, you’ll then start seeing how all the inches fit together to form a foot and more. If you don’t figure out how to tie the entire organization together through measurement, you will never be able to sustain success."

Her response lead me to the follow-up question: How do a company's measures affect its performance? Sheila summed up her response with:

One of the characters in our book says it best -- Chris Anselmo speaking to the management team says: "The things you measure are a reflection of your organizational values. And these values are the fundamental building blocks that shape your company’s vision and action. You measure what you value. Measures directly influence how people work. In turn, how people work affects organizational results.  This is a big interlinked circle of events wrapped around the culture of the organization.  When we talk about the culture of an organization, this is at the heart of that culture.  The organizational values drive what we do as an organization.  When we measure what we value, it affects our behavior...."

What do you think of Sheila's response? Does your company measure too much or too little? How do your measures affect your company culture?

Team Building Using the Workforce Engagement Equation

Jamison J. Manion published a book titled The Workforce Engagement Equation: A Practitioner’s Guide to Creating and Sustaining High Performance, and I recently had the chance to ask him a few questions during a phone conversation. I wanted to know why he developed The Workforce Equation.  Specifically, I asked him: "What value would practitioners gain from investing their time to learn standardized approach to team building outlined in The Workforce Engagement Equation?”  Here is Jamison's response:

The pace of change in today’s world is staggering; it’s hard to keep up with all the technological advances.  To remain competitive organizations are incessantly driven towards process improvement.  Practitioners in every field must continuously sharpen their skills to remain relevant.  What’s more, every field is becoming more and more specialized.  People aren’t just programmers anymore; there are programs just for mobile apps, programmers for the healthcare industry, industrial drives, PLCs, ERPs and CRMs, etc.  Every field is becoming more and more niched.  But, regardless of the industry, the human element lies at the heart of every change initiative.  Post-project analysis consistently confirms that human factors, more than any other single element, are at the root of poor performance and failed change initiatives.  So, regardless of the industry or business sector, successful change agents must understand the human variables involved in implementing change in order to effectively utilize their in-depth professional expertise. 

Where do you begin? If a practitioner wants to gain expertise in managing the human elements there is a virtually endless supply of literature about leadership, change management, communications, conflict resolution, engagement, productivity improvement, performance improvement etc.  It becomes overwhelming; people just don’t have the time.  They end up picking up techniques here and there as they have time and apply whatever they can.  Like the old adage says, 'The solution to any problem you face is the one you happen to know.'  It’s all very piecemeal.  Consequently project success relies too heavily upon chance and circumstances – hoping that the problems that arise fall within the solution set available.  Speaking for myself, I became very frustrated that so much of the advice available was overly simplistic, nonspecific non actionable, and redundant.  I wanted a solution I could apply in my own practice on real-world problems and projects. 

Analysis of the research and personal experience observing how people learn, how teams form, what drives behavior, and how people make the transition from involved to engaged, revealed some consistent behavioral patterns.  To simplify the patterns I built upon the work of past practitioners and applied systems thinking to define the five stages of organizational development that resulted in The Workforce Engagement Equation:

Forming à Focusing à Committing à Sustained Performance à Renewal

Each phase represents a juncture where the team will either successfully navigate the situation to move to a higher, more cohesive level of group dynamics and operational performance or they’ll stumble, experiencing confusion, frustration, and lower productivity. 

Each stage requires appropriate management and leadership interventions to simultaneously satisfy the needs of both the project and the team.  The comprehensive change management approach addresses:

·       People Needs

·       Effective Management Responses

·       Effective Leadership Responses

·       Tools and Techniques to Employ

Understanding the logic model prepares practitioners to recognize the patterns and empowers them to adapt their response to successfully navigate the phase.  Regardless of the industry or the size of the team, understanding The Workforce Engagement Equation will equip practitioners to achieve success more consistently and in shorter time. 

What do you think of Jamison's response?  How often have you been frustrated by the human factors involved in project management or process improvement?