Rethinking lean

Before investing in more technology, make sure the processes in place are working at, or close to, capacity

By Thomas R. Cutler

Lean processes are introduced in companies to eliminate waste. Considering how effective the process has been for many companies, it’s somewhat surprising to learn that only about 61% of Canadian manufacturers have introduced a lean process into their operations. Of that 61%, many confess that the effort has been cursory, managing to deal with only surface issues at best.

The road to fulfilling a lean initiative begins with a willingness to do some serious housecleaning. Some do this cursorily, derive quantifiable improvements, and suggest that they have achieved their lean objective. However, a lean process has to be a continuous process of improvement if it is to succed. After cleaning a section of the manufacturing house, it’s time to ferret out the dirt and dust throughout the rest of the enterprise. The bottom line is that if a lean program doesn’t touch all areas of the business, it won’t succeed.

Defining Kaizen

Kaizen is a common form of continuous improvement. Using Kaizen as a business strategy means committing to sustained continuous improvement. This doesn’t necessarily mean large capital costs with new equipment. However, it does indicate a serious commitment to eliminating waste.

There are two types of Kaizen programs; a point Kaizen (interested in a cell) and a flow Kaizen (interested in the whole enterprise). Kaizen events are usually performed by a team of people - those who are most interested in making the improvements, company staff. Those chosen for the team always include the person that actually performs the tasks because they know the operation the best. Other members are typically individuals from other departments in the organization. In a small company, this may be the manager, a supervisor, a salesperson and/or the shipper. In larger companies, additions will include engineering, maintenance, IT staff, product managers, operations directors and other key players.

For those companies just starting a lean initiative, or for those organizations that have allowed their process of examining and eliminating waste to become dormant, there are ways to ignite (or re-ignite) the lean spark. These tools are part of the cleaning supplies needed to diligently ferret out waste in an enterprise.

Process evaluation

Kaizen doesn’t necessarily require an examination of a process’s integration with existing technology such as Enterprise Resource Planning (ERP) systems. However, this is a very useful way of looking beyond simply identifying broken processes and fixing them. Michael Ligudzinski, CEO of Pronto North America, a consulting and technology firm based in Eden Prairie, Minnesota, believes that any company that is serious about lean initiatives has to take a good look at the tools already in place within their company. Chances are, he says, the technology already in place isn’t being used nearly effectively enough.

“Until a proper executive-level review is conducted, the average company is using only 30% of their technology capacity, losing the benefits of lean manufacturing for the rest of the enterprise,” says Ligudzinski. “Kaizen events are usually targeted localized examinations of waste reduction, whereas a proper executive-level review should be a corporate process-centric honed program that allows for the greatest return on investment and maximized functionality throughout the entire company.”

Ligudzinski engages his clients in a process he calls a process evaluation executive review (PEER) to determine that the tools that are in place in a company’s management processes are maximized. PEER is a discovery process for the executives. It allows the company to ‘discover’ the real business issues, roadblocks, and imperatives instead of starting with the presumption that a new ERP system (technology or process) will solve its problems. It’s essentially a process of self-exposure and problem identification. Unlike a typical executive workshop, such a process requires a rigor and accountability for processes as they currently stand.

Full process reviews

Dixon-Bayco Industries is a manufacturer of quality industrial and recreational products. The company was founded in 1941 and has almost 200 employees, an 80,000 square foot plant on 8 acres in Winnipeg. Through the use of an executive review process, the company was able to get back on track without a huge cost outlay.

“What surprised us the most about the format of the review was that we expected someone to lecture us on how the system worked,” says Malcolm Kirkland, controller of the firm. “We did not expect to get involved with investigating our current procedures and discovering how we could solve the problems we were experiencing. We had to take a hard look at why we were doing certain things and then whether or not it made sense to continue doing things this same way. We had become conditioned to fitting in to the system rather than having the system simplify our procedures.”

Another example of how such a review can help a company is Hamilton, Ont.-based GS Dunn, a 40 person company that provides a complete line of mustard flours, ground mustards, brans, and deactivated mustard, ranking the firm as the premier supplier of mustard products worldwide. Ron Kramer, GS Dunn’s president, initially approved a review process to select, purchase, and reinforce the implementation a new ERP system. “Our existing system was badly outdated and was not giving us the information we needed,” says Kramer. “The person who was supporting the system no longer supported it.”

External forces were also driving the need for improved technology, including increased sales and increased competition. Demand by GS Dunn customers for additional information and expansion into at least four currencies mandated system improvements. Kramer wisely recognized that buy-in among the approximately 15 end-users of the ERP system selected was critical. “GS Dunn is not heavily staffed,” he notes. “We do not have an IT department. There was a great concern that the work necessary to introduce the program was overwhelming.”

The executive review event was attended by Kramer, senior staff, and their external system consultant. The event established the business objectives and the process improvements required. In fact, it produced a blueprint for the activities necessary to achieve greater efficiencies through the use of the new technologies. To maintain focus on the project, Kramer actually hung the charts produced at the event on his office wall.

The tasks agreed to at the event were to achieve measurable, achievable, and clear improvement. The objectives were agreed to by all the attendees, emphasizing why it was important for senior management and key personnel to be part of the process.

Business process management

This executive review process outlined above is the first step in improvements that Business Process Management (BPM) tools can help to further - nothing can be effective without proper implementation. Too many ISO certified organizations have binders of documented processes that are not being followed or measured, and no one is held accountable. BPM technology can effectively support implementation.

“While an executive review almost always creates buy-in and team consensus, the actual implementation of process improvement requires accountability,” says Ligudzinski.

Process management helps optimize the process and ensure that each process step owner has the required resources to complete the tasks specified - escalation is merely a control mechanism to redistribute the work load or identify, in real time, the failure of timely process step completion. Frequent escalation may indicate a process redesign is required. Different BPM systems provide this notification; without obvious notification of process failure, band-aid solutions and sloppy last minute solutions will create stop-gap methods that violate the optimized lean processes identified in earlier process steps.

Most BPM tools are stand alone workflow design tools or technology toolkits for IT technical staff to use with ERP systems, and the effective integration of these two technologies can be complex and difficult. Yet lack of integration is counter-intuitive. After investing an average of $350,000 in ERP systems (software, implementation, and support), Canadian managers are often disappointed in the bottom-line results. The role of an integrated BPM/ERP system creates a rapid cost recovery on both components in the technology solutions. Autonomously each system has value; combined, there are exponential lean cost savings and waste elimination benefits.

Continued process improvement

One of the fundamental concepts of all lean initiatives is continued process improvement. One never stops improving, yet even among the 61% of Canadian manufacturers that report a functioning lean initiative, less than half have a documented continued process improvement plan.

As Fred Fishman, manager of strategic procurement programs for TechSolve, Inc., notes, “the term ‘continuous improvement’ serves as an umbrella spanning a great many improvement processes. Whether portrayed in the formula-rich analysis of a Six Sigma event, the rapid fire and instinctive physical changes implemented during a Kaizen Blitz, or the methodical development of a Value Stream Map, each technique employs some variation of mathematical, statistical, or visual analysis to achieve the desired result, specifically improvement.” With more than half (51%) of Canadian manufacturers lacking a plan for continuous improvement, an effective lean process is both challenging and remote.

The role of lean manufacturing has expanded far beyond the plant floor. If eliminating waste is the objective, and the plant floor is only 30% of the enterprise, then there is ample waste to be found throughout the remainder of the enterprise. Ultimately, until there are levels of accountability throughout the organization, waste will continue. Finding the tools necessary to enforce an ongoing lean consciousness is critical. Both executive reviews and BPM should be part of a company’s toolkit. While not a universal lean panacea, these are instrumental in keeping lean and continued process improvement alive and measured.

Thomas R. Cutler (trcutler@trcutlerinc.com) is the president & CEO of manufacturing marketing firm TR Cutler, Inc.

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