I read an interesting blog from Steve Shapiro through a link in his newsletter that I thought I'd share here. What struck me most was the frame of reference as integrators and innovators. It re-enforces and expands the 5-why concept;
“(As innovators,) we are architects of companies and industries. An architect is not a ‘reengineer.’ To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty. The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as ‘Who’s thirsty?’ ‘Why water?’ Or ‘Is there another way to satisfy the thirst?’ It is this questioning, challenging and rethinking that differentiates architects from those who rearrange the deck chairs on The Titanic.”
Find solutions everywhere. Embrace open innovation. And think like an architect. Ask the difficult questions. Assess what matters most. And build a core competency around integrating point solutions.
Read the entire blog post here
Norm
www.normanbain.com
Thursday, October 15, 2009
Wednesday, October 14, 2009
Business problems show up as inventory
Have you heard the business axiom "business problems show up as inventory"?
Whether you count inventory as WIP, raw materials or finished goods, the health of your organization is generally apparent in the level of inventory on hand. Many companies recognize this simple truth and adopt a goal to reduce inventories. The senior leadership typically sets a target for a 20% inventory reduction. Most companies typically carry 30-40% more inventory than they need to.
But without effective tools to identify excess inventory and properly manage it, most companies fail to achieve and, more importantly, sustain this inventory reduction goal. The impact of poor sales and operations planning, poor scheduling, engineering changes, material shortages, long lead times and cycle times, batching and large order quantities, overzealous buying and early material receipts are often blamed as causes for excess inventory. Without a structured approach, sustained inventory optimization is difficult to achieve.
Many companies have applied ABC categorization of inventory. This time tested approach states that by paying attention to a small percentage of line items in your inventory (20%), you can manage the lion's share (80%) of your inventory value. Most MRP systems are based on this premise.
The next step in achieving inventory reduction (as a focussed initiative unto itself) is to use the IQR methodology. Inventory Quality Ratio (IQR) is a ratio of your high moving items to the total inventory value. This is typically 30-40% in most companies. By further categorizing your inventory into active, excess, slow moving and non-moving inventory, you can improve this quality ratio enormously - typically identifying, achieving and sustaining a 30% reduction in inventory on hand.
While Lean Thinking as a strategy will yield impressive results in WIP and inventory reduction, the results can take from 6 to 18 months to see. Using IQR as a tool for rapid inventory reduction deployment, expect to see step change results in 3-6 months. Contact us for more details.
Norm
www.normanbain.com
Whether you count inventory as WIP, raw materials or finished goods, the health of your organization is generally apparent in the level of inventory on hand. Many companies recognize this simple truth and adopt a goal to reduce inventories. The senior leadership typically sets a target for a 20% inventory reduction. Most companies typically carry 30-40% more inventory than they need to.
But without effective tools to identify excess inventory and properly manage it, most companies fail to achieve and, more importantly, sustain this inventory reduction goal. The impact of poor sales and operations planning, poor scheduling, engineering changes, material shortages, long lead times and cycle times, batching and large order quantities, overzealous buying and early material receipts are often blamed as causes for excess inventory. Without a structured approach, sustained inventory optimization is difficult to achieve.
Many companies have applied ABC categorization of inventory. This time tested approach states that by paying attention to a small percentage of line items in your inventory (20%), you can manage the lion's share (80%) of your inventory value. Most MRP systems are based on this premise.
The next step in achieving inventory reduction (as a focussed initiative unto itself) is to use the IQR methodology. Inventory Quality Ratio (IQR) is a ratio of your high moving items to the total inventory value. This is typically 30-40% in most companies. By further categorizing your inventory into active, excess, slow moving and non-moving inventory, you can improve this quality ratio enormously - typically identifying, achieving and sustaining a 30% reduction in inventory on hand.
While Lean Thinking as a strategy will yield impressive results in WIP and inventory reduction, the results can take from 6 to 18 months to see. Using IQR as a tool for rapid inventory reduction deployment, expect to see step change results in 3-6 months. Contact us for more details.
Norm
www.normanbain.com
Lean Resource Guide
Confused about lean concepts or terminology? Then visit the NBI knowledge center or our management library. Our on-line education and continual learning resource guide!
Norm www.normanbain.com
Norm www.normanbain.com
Friday, August 21, 2009
Lean waste elimination fails to hit the bottom line numbers
Many companies, embracing the concepts of lean thinking, hear the urging to 'Just do it', in the spirit of the leaders and pioneers of the Toyota Production System. They then excitedly delve into the transformation process. They stage a kickoff meeting to share their passion, pick something important and start removing waste quickly to capitalize on that “low hanging fruit”.
The target area becomes a beehive of activity, kaizen events, continuous improvement blitzes, 5S initiatives and production tracking boards. People get engaged in the process improvements and the staff gains some hope that finally the company is listening to what they are saying.
Yet flow through the facility does not consistently improve, the mounds of in process inventory do not reduce, and expediting hot orders remains the norm. No cost savings reach the bottom line, there is no demonstrable service and quality improvement for the customer. The improvements are not sustainable. Processes drift back to the old ways of doing things.
So management reaches the conclusion that lean does not work in this environment. We are “different” and the principals must not apply in this industry. We cannot demonstrate a return on our investment.
This lean offensive with its disappointing result drifts off as another abandoned program.
So why does this happen? Why do the concepts of lean, that seem to be such common sense, not work when we apply them? How can so much information be readily available about this approach to process improvement, yet it is so incredibly difficult to implement with concrete demonstrable results?
Click here to read the rest of this article and explore the answer to this all too common dilemma
Norm
www.normanbain.com
The target area becomes a beehive of activity, kaizen events, continuous improvement blitzes, 5S initiatives and production tracking boards. People get engaged in the process improvements and the staff gains some hope that finally the company is listening to what they are saying.
Yet flow through the facility does not consistently improve, the mounds of in process inventory do not reduce, and expediting hot orders remains the norm. No cost savings reach the bottom line, there is no demonstrable service and quality improvement for the customer. The improvements are not sustainable. Processes drift back to the old ways of doing things.
So management reaches the conclusion that lean does not work in this environment. We are “different” and the principals must not apply in this industry. We cannot demonstrate a return on our investment.
This lean offensive with its disappointing result drifts off as another abandoned program.
So why does this happen? Why do the concepts of lean, that seem to be such common sense, not work when we apply them? How can so much information be readily available about this approach to process improvement, yet it is so incredibly difficult to implement with concrete demonstrable results?
Click here to read the rest of this article and explore the answer to this all too common dilemma
Norm
www.normanbain.com
Tuesday, August 18, 2009
Creating a Sense of Urgency Among Employees
John Ryan of the Center for Creative Leadership posted an article this week on Creating a Sense of Urgency Among Employees.
In it he talks about:
• Don't take your foot off the gas.
• Don't hesitate to share bad news.
• Convey optimism and passion.
• Publicly praise urgent actions.
• Partner with colleagues on strategy.
Great thoughts from a great organization. Read the post here.
I had the pleasure of attending the Center for Creative Leadership LDP program early in my career. It was a great experience - good people, great advice!
Norm
www.normanbain.com
In it he talks about:
• Don't take your foot off the gas.
• Don't hesitate to share bad news.
• Convey optimism and passion.
• Publicly praise urgent actions.
• Partner with colleagues on strategy.
Great thoughts from a great organization. Read the post here.
I had the pleasure of attending the Center for Creative Leadership LDP program early in my career. It was a great experience - good people, great advice!
Norm
www.normanbain.com
Wednesday, August 5, 2009
Typical approach to solving problems - Fly Swatting
Lean teaches us to look at problems as treasures. An organization that has no problems cannot improve. In order to learn and grow, we need to take risks, make mistakes, discover problems and solve them. The first step to continuous improvement is finding problems.
So, by changing the environment so that discovering problems is encouraged, we create a no blame and learning organzation. An organization where the people are engaged in improving their processes, eliminating waste and adding value for their customer. An environment where people want to work and contribute to the organizatons success. Companies who embrace this philosophy become the employer of choice and typically see a noticable reduction in turnover.
An end result of a systematic approach to problem solving is continuous improvement, lower cost, quicker response and higher profitability. All the things that businesses strive for!
And now I have another problem. All these people finding problems and working to solve them is akin to swatting flies. Everyone is swatting away, but we are not looking for why the flies are gathering in the first place. We need to ensure we get to the root cause of the problem and solve that, rather than the symptoms (swatting flies).
This requires a formal approach to problem solving (so that we get to the root cause) and a systematic approach to improving our system (the value stream) so that we get results sooner and focus our resources on what is important for system throughput. The more responsive our system is to customer demand, the better we can act and improve profitability.
So a great start to a lean journey is to insist that your leaders find and solve problems, and are looking at the business processes as a value stream. A great measure of success would be system throughput and lead time!
Looking to improve your operation? Start by asking your people what value they add for your customer and what problems they are solving!
Norm
www.normanbain.com
So, by changing the environment so that discovering problems is encouraged, we create a no blame and learning organzation. An organization where the people are engaged in improving their processes, eliminating waste and adding value for their customer. An environment where people want to work and contribute to the organizatons success. Companies who embrace this philosophy become the employer of choice and typically see a noticable reduction in turnover.
An end result of a systematic approach to problem solving is continuous improvement, lower cost, quicker response and higher profitability. All the things that businesses strive for!
And now I have another problem. All these people finding problems and working to solve them is akin to swatting flies. Everyone is swatting away, but we are not looking for why the flies are gathering in the first place. We need to ensure we get to the root cause of the problem and solve that, rather than the symptoms (swatting flies).
This requires a formal approach to problem solving (so that we get to the root cause) and a systematic approach to improving our system (the value stream) so that we get results sooner and focus our resources on what is important for system throughput. The more responsive our system is to customer demand, the better we can act and improve profitability.
So a great start to a lean journey is to insist that your leaders find and solve problems, and are looking at the business processes as a value stream. A great measure of success would be system throughput and lead time!
Looking to improve your operation? Start by asking your people what value they add for your customer and what problems they are solving!
Norm
www.normanbain.com
Thursday, July 16, 2009
A Lean Roadmap - where do we start?
I'm often asked what a typical lean journey looks like and how long it takes to become a lean organization. While the answer to those questions is as varied as the organizations that ask it, this post will explore the most successful and repeatable approach that I have been engaged with. If you would like a copy of this post as a downloadable PDF, click here.
Step 1 Create the environment
The concepts of lean and the thinking behind lean can seem quite foreign to traditional organizations. Thinking, approach and activities must be changed, sometimes dramatically. This is often referred to as the "culture" of the organization. Lean requires a collaborative, team oriented, customer focussed and systematic approach. This shift may appear threatening to people. Fear of change is real and usually unspoken. Often, a compelling driver for change is required - an "oh-shit" experience that instils a sense of urgency with the team. This could be the loss of a major customer, a competitor challenge, or a downturn in the economic climate similar to what we are currently experiencing. This "pain" can be a strong driver to explore new ways to do things and make your world a better place. Linking lean to the global organizational strategy is a winning approach. Top management must support the initiative and communicate global measures for success. It is important to assure people that they will not lose their jobs directly because of the lean initiative. Respect for people is a lean fundamental. People are a key part of the system.
Step 2 Introduce basic concepts
This may start with a benchmarking visit to see how other organizations do things. It may start with a seminar or conference. Or you may invite someone to your site for introductory training. Exploring how others have applied lean ideas and how these can transfer into your own organization is a key concept in lean thinking. Learning from the experience of others is key - you cannot afford (in terms of both time and money) to make all the same mistakes yourself. Some formal introductory training for your team to develop an understanding of the supply chain and your value stream usually follows. The language of lean and introduction to the terms so that they are widely recognized follows.
Step 3 Manage Visually
The internet revolution and our fascination with technology has led many of us away from managing visually. In our quest to have dashboards and KPI information on our desktop, we stop visiting the gemba - where the work is done. Lean visual management requires that we can see at a glance in the workstation what is working well, what is not working and where our hot spots are. Shadow boards, production control boards and product flow lanes can quickly highlight trouble spots and direct our attention to where we should focus. By understanding and implementing the power of visual management, we can achieve a step change in product throughput. This is the quick win "low hanging fruit". Managing visually typically starts with introducing a 5S process. The 5S process pulls the other lean tools out of the toolbox as the need is identified. Can you find anything in your work area in 3 minutes? Can anyone else find anything in your work area in 5 minutes? In most workplaces, a large amount of time is wasted looking for parts, materials, instruction or decision makers. Managing visually means that you can see at a glance what is working, what is not and what corrective action has been initiated.
Step 4 Understand the current state
Now that the organization has a fundamental understanding of lean concepts and is starting to manage visually, its time to understand what kind of mess we are in. A scoping exercise identifies each task we do, how long each takes, what inputs are required (materials, instruction, approvals) and which of these tasks add value (in the eyes of the customer). We start to identify waste and see improvement opportunities in our processes. At this point, its easy to get confused and overwhelmed with information. Often, even in small to medium sized organizations (under 100 people), several hundred improvement opportunities arise. What do I tackle first? How do I manage change so that I get the maximum benefit from my limited resources?
Step 5 Identify the bottleneck
These questions are very real - and very important to the organization. No company has unlimited resources and every company realizes that they cannot tackle everything at once. The key is to look at the value stream system throughput and focus our improvement effort on where this system throughput is bottlenecked. Spending time and money on any process that is not affecting system throughput will not achieve additional revenue for the organization. And if the bottleneck to the process is a lack of customer orders, then we should not be producing to forecast. In this case, we should focus our efforts on marketing and sales so that we only produce what we have commitments for, and our system can meet our customer demand. Continue to look at your processes as a system and focus your improvement efforts on managing the bottlenecks.
Step 6 PDCA
Now that we know where to focus our attention, its time to pull out some more lean tools from the toolbox. Put the Plan-Do-Check-Adjust continuous improvement cycle to work. Host kaizen improvement events in the bottleneck areas and ensure the team is using standard work, pull signals (Kanban) and error proofing techniques. Continue the PDCA process within your bottleneck processes and improve flow through your entire system.
Step 7 Strategy Deployment (Hoshin Kanri)
At this point in the lean deployment the organization has seen some success and continuous improvement can take on a life of its own. Many departments are adopting the principals and utilizing the tools effectively. An air of excitement exists where people see real change occurring and can envision the potential for future improvement. Its time to align the entire organization around our strategy and ensure we are all pulling on the same rope. Departmental objectives need to align with the company purpose and vision for the future. Often departmental initiatives are not aligned with corporate goals and may even directly oppose other departmental initiatives. In other instances, duplication of effort exists as departmental improvement initiatives outpace the internal communication processes.
The first place to start this alignment process is with the senior leadership. What is our vision for the organization in the next few years? What are the biggest issues facing the organization today that prevent us from achieving this vision? Define the organization's true north - the business needs that must be achieved. These will exhibit a magnetic pull for the organization, the same way a compass guides the traveller. If we don't know where we are going, we'll never get there!
Conventional strategic management emphasizes planning - strengths and weaknesses, opportunities and threats, values and social responsibilities. Lean strategy deployment asks the same questions, but emphasizes deployment - any fool can make a plan, its the execution that gets you screwed up!
Strategy deployment (Hoshin Kanri) utilizes A3 storytelling. If you cannot tell your story on one page (the A3), you have not thought it through thoroughly enough. Keep it simple and easy to understand. Tell your story and execute! The mother A3 will support the organizations true north. Baby A3's are initiatives that support the mother A3. This process focuses our attention, resources and effort on what's important for the organization as a whole. It focuses on execution - where the rubber hits the road - getting it done!
Step 8 Follow-up and review
Now that the organization strategy is aligned and resources are deployed on what's important, we must monitor the results of our activities and make corrections based on results. (The PDCA cycle applies here as well).
The approach above begins the lean journey with leadership team commitment. It engages the team leaders and people doing the work by introducing the tools and lean thinking concepts where the work is done. We achieve step change results by focussing on the bottleneck. And we align the entire organization with strategy deployment. Sound like a winning approach?
Feel free to contact me for real world examples of where this has been deployed and the actual results that can be achieved. We can also discuss typical timelines - how long will this take in your organization. Lean truly is a journey - its not just a set of tools or the program of the month!
Best success on your journey!
Norm
www.normanbain.com
If you would like a copy of this post as a downloadable PDF, click here.
To discover more about organizational strategy and the A3 strategy deployment (Hoshin Kanri) process, click here.
Step 1 Create the environment
The concepts of lean and the thinking behind lean can seem quite foreign to traditional organizations. Thinking, approach and activities must be changed, sometimes dramatically. This is often referred to as the "culture" of the organization. Lean requires a collaborative, team oriented, customer focussed and systematic approach. This shift may appear threatening to people. Fear of change is real and usually unspoken. Often, a compelling driver for change is required - an "oh-shit" experience that instils a sense of urgency with the team. This could be the loss of a major customer, a competitor challenge, or a downturn in the economic climate similar to what we are currently experiencing. This "pain" can be a strong driver to explore new ways to do things and make your world a better place. Linking lean to the global organizational strategy is a winning approach. Top management must support the initiative and communicate global measures for success. It is important to assure people that they will not lose their jobs directly because of the lean initiative. Respect for people is a lean fundamental. People are a key part of the system.
Step 2 Introduce basic concepts
This may start with a benchmarking visit to see how other organizations do things. It may start with a seminar or conference. Or you may invite someone to your site for introductory training. Exploring how others have applied lean ideas and how these can transfer into your own organization is a key concept in lean thinking. Learning from the experience of others is key - you cannot afford (in terms of both time and money) to make all the same mistakes yourself. Some formal introductory training for your team to develop an understanding of the supply chain and your value stream usually follows. The language of lean and introduction to the terms so that they are widely recognized follows.
Step 3 Manage Visually
The internet revolution and our fascination with technology has led many of us away from managing visually. In our quest to have dashboards and KPI information on our desktop, we stop visiting the gemba - where the work is done. Lean visual management requires that we can see at a glance in the workstation what is working well, what is not working and where our hot spots are. Shadow boards, production control boards and product flow lanes can quickly highlight trouble spots and direct our attention to where we should focus. By understanding and implementing the power of visual management, we can achieve a step change in product throughput. This is the quick win "low hanging fruit". Managing visually typically starts with introducing a 5S process. The 5S process pulls the other lean tools out of the toolbox as the need is identified. Can you find anything in your work area in 3 minutes? Can anyone else find anything in your work area in 5 minutes? In most workplaces, a large amount of time is wasted looking for parts, materials, instruction or decision makers. Managing visually means that you can see at a glance what is working, what is not and what corrective action has been initiated.
Step 4 Understand the current state
Now that the organization has a fundamental understanding of lean concepts and is starting to manage visually, its time to understand what kind of mess we are in. A scoping exercise identifies each task we do, how long each takes, what inputs are required (materials, instruction, approvals) and which of these tasks add value (in the eyes of the customer). We start to identify waste and see improvement opportunities in our processes. At this point, its easy to get confused and overwhelmed with information. Often, even in small to medium sized organizations (under 100 people), several hundred improvement opportunities arise. What do I tackle first? How do I manage change so that I get the maximum benefit from my limited resources?
Step 5 Identify the bottleneck
These questions are very real - and very important to the organization. No company has unlimited resources and every company realizes that they cannot tackle everything at once. The key is to look at the value stream system throughput and focus our improvement effort on where this system throughput is bottlenecked. Spending time and money on any process that is not affecting system throughput will not achieve additional revenue for the organization. And if the bottleneck to the process is a lack of customer orders, then we should not be producing to forecast. In this case, we should focus our efforts on marketing and sales so that we only produce what we have commitments for, and our system can meet our customer demand. Continue to look at your processes as a system and focus your improvement efforts on managing the bottlenecks.
Step 6 PDCA
Now that we know where to focus our attention, its time to pull out some more lean tools from the toolbox. Put the Plan-Do-Check-Adjust continuous improvement cycle to work. Host kaizen improvement events in the bottleneck areas and ensure the team is using standard work, pull signals (Kanban) and error proofing techniques. Continue the PDCA process within your bottleneck processes and improve flow through your entire system.
Step 7 Strategy Deployment (Hoshin Kanri)
At this point in the lean deployment the organization has seen some success and continuous improvement can take on a life of its own. Many departments are adopting the principals and utilizing the tools effectively. An air of excitement exists where people see real change occurring and can envision the potential for future improvement. Its time to align the entire organization around our strategy and ensure we are all pulling on the same rope. Departmental objectives need to align with the company purpose and vision for the future. Often departmental initiatives are not aligned with corporate goals and may even directly oppose other departmental initiatives. In other instances, duplication of effort exists as departmental improvement initiatives outpace the internal communication processes.
The first place to start this alignment process is with the senior leadership. What is our vision for the organization in the next few years? What are the biggest issues facing the organization today that prevent us from achieving this vision? Define the organization's true north - the business needs that must be achieved. These will exhibit a magnetic pull for the organization, the same way a compass guides the traveller. If we don't know where we are going, we'll never get there!
Conventional strategic management emphasizes planning - strengths and weaknesses, opportunities and threats, values and social responsibilities. Lean strategy deployment asks the same questions, but emphasizes deployment - any fool can make a plan, its the execution that gets you screwed up!
Strategy deployment (Hoshin Kanri) utilizes A3 storytelling. If you cannot tell your story on one page (the A3), you have not thought it through thoroughly enough. Keep it simple and easy to understand. Tell your story and execute! The mother A3 will support the organizations true north. Baby A3's are initiatives that support the mother A3. This process focuses our attention, resources and effort on what's important for the organization as a whole. It focuses on execution - where the rubber hits the road - getting it done!
Step 8 Follow-up and review
Now that the organization strategy is aligned and resources are deployed on what's important, we must monitor the results of our activities and make corrections based on results. (The PDCA cycle applies here as well).
The approach above begins the lean journey with leadership team commitment. It engages the team leaders and people doing the work by introducing the tools and lean thinking concepts where the work is done. We achieve step change results by focussing on the bottleneck. And we align the entire organization with strategy deployment. Sound like a winning approach?
Feel free to contact me for real world examples of where this has been deployed and the actual results that can be achieved. We can also discuss typical timelines - how long will this take in your organization. Lean truly is a journey - its not just a set of tools or the program of the month!
Best success on your journey!
Norm
www.normanbain.com
If you would like a copy of this post as a downloadable PDF, click here.
To discover more about organizational strategy and the A3 strategy deployment (Hoshin Kanri) process, click here.
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