Message from Jim Womack Regarding Sustainable Success

In a recent article titled “Sailing a Straight Course in a Time of Variances”, Jim Womack, of Lean Enterprise Institute, Inc., presents an all too typical scenario within organizations that claim to be “Lean” and offers some key questions that can be asked to be sure the organization is on track to sustainable success. Rather than repeat in different words the sentiment of what he has to say, his article is included below (with permission).

Sailing a Straight Course in a Time of Variances

Recently I spent a day as a lean anthropologist, sitting in the back of the room and observing the behavior of senior managers during the monthly leadership team meeting of a large corporation. I hadn't done this in some years and it caused me to reflect again on how organizations do strange things, particularly in difficult times.

The first agenda item of this meeting was to review how the team was progressing on its lean journey, but I quickly noticed a lack of actionable detail in the team's mandate. They wanted to create a "world class" lean enterprise, responsive to customers and all other stakeholders. That's fine, of course (whatever "world class" means -- I always ask and rarely receive a useful answer.) But how? What were the big, cross-organization problems standing in the way? What countermeasures were being pursued to clear the problems in the path? And who was taking responsibility to do what when to implement the best countermeasures?

Given the lack of clear objectives and the lack of progress toward stating them, I was not surprised to feel the relief in the room when the meeting moved on from the high-level overview of "lean" challenges for the whole enterprise to the next agenda item, a discussion of each department's performance on its annual plan. Given that the plan had been developed in the second quarter of 2008 for a fiscal year beginning July 1, 2008, it was not surprising that there were a lot of variances from the plan to explain. But was the original plan wrong? Or had the economy collapsed in the mean time? (It had, of course.) Or was the plan poorly executed? Or was it all three? Or was it two of the three? Or…?

In fact no evidence was presented and no analysis was done. Instead the discussion was about tactical measures to make the situation look as positive as possible by the rapidly-approaching end of the fiscal year. And the path of least resistance was short-term cost cutting including more lay-offs. I was disappointed with the turn of the discussion, but I did learn something. I could see more clearly than I ever had the phenomenon present in every recession as companies rushing to avoid variances in out-of-date plans continue to cut costs and jobs after economies start to stabilize and stock prices start to rise (as is happening across the world right now.) This instinct then shortly turns to a realization that the skeleton crew doesn't have the capacity to deal with revenue growth in a rebounding market. And this is followed by a burst of re-hiring or outsourcing. The intensity of this natural but unfortunate response by senior managers to cut costs – which economist John Maynard Keynes long ago called the "paradox of thrift" – is a key determinant of the length and depth of a recession.

That' a shame for all of society because the recession is longer and deeper than it needs to be. But the loss to the company in this meeting was that the urgent – variances – had once again crowded out the important – the organization's long-term need to find its North Star and steer a steady course toward sustainable, superior performance. In fact, setting a course to stabilize the organization is what senior managers are supposed to do. And this is what senior leadership meetings should be for.

Next time you are in a management team meeting, whether you are a senior manager or working at a lower level of the organization, I hope you will keep a few simple questions in mind. (You might even want to ask them out loud at the start.)

"Are we all clear on what is really important for our organization in order to solve customer problems and succeed in the long term? (Or, stated another way, can we get past the merely urgent.)"
"Are we agreed on what big problems we need to solve as a team?"
"Are we sure what obstacles are in our way and their root causes?"
"Have we – or will we now – assign responsibility for determining the best countermeasures and removing the obstacles?"
"Critically important, do we have a way of surfacing and resolving all of the cross-function, cross-department conflicts that stand in the way of resolving all major problems in any multi-functional organization including ours?"

If you can answer these simple questions -- blowing away the clouds that obscure your North Star -- you’ll be on your way to sustainable success as the world economy recovers in the coming years. And you may avoid disruptive shifts in course to deal with short-term variances in financial performance.

James P. Womack
Founder and Chairman
Lean Enterprise Institute, Inc

Management expert James P. Womack, Ph.D., is the founder and chairman of the Lean Enterprise Institute, chartered in August 1997 as a nonprofit research, education, publishing, and conferencing company with a mission to advance lean thinking around the world.

© Copyright 2009 Lean Enterprise Institute, Inc. All Rights reserved. www.lean.org

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Total Success by using Both Lean and ERP

There are those who feel that if Lean tools and concepts are implemented, there is no need for ERP tools and vice versa, but in fact, the two need to be used together in order for an organization to get the most out of each. Aberdeen Research recently released an article titled “… Reducing Waste in the Supply Chain”. This is an interesting combination of terms since “Reducing Waste” is typically associated with Lean tools and concepts and “Supply Chain” is often times embroiled in non-lean ERP tools and concepts. The truth is that BOTH sets of tools and concepts need to be used and integrated in order for the organization to go from “Doing Lean” to “Being Lean”.

In the study that is the basis for the Aberdeen article, Best-in-Class companies were achieving:

• 96% Perfect Order Delivery
• 3% decrease in Inventory Carrying Costs
• 2% decrease in Inventory Write-off
• 4% decrease in Customer Lead Times
• 4% decrease in Manufacturing Cycle Times

Unfortunately for the lazy reader, Aberdeen saved the best part for the end where they discuss actions to combine the two schools of thought. Some of the ideas they present include:

Develop standardized information flows from the supply chain managers to the operation managers. The Sales and Operations Planning (S&OP) functions should be connected to the tactical execution functions via regular, collaborative meetings so that customer demand requirements and company supply capabilities are discussed and matched.

Establish bi-directional information flow between the supply chain and manufacturing functions. There is a need to compare monthly and weekly plans from S&OP activities to the weekly schedules and daily results of the execution activities. With this connection, the needs of the customer can be translated to what the plant needs to do (i.e. takt time) which leads to an execution plan to achieve what needs to be done.

Determine appropriate inventory buffers throughout the supply chain. Instead of keeping excessive WIP inventory, it is likely more effective and cheaper to keep finished goods to meet changes in demand patterns. Where keeping finished goods is not practical, such as with an engineer-to-order product, working to a planned inventory of semi-finished components may be a viable alternative.

Incorporate demand and production variability, inventory levels and supplier lead times as part of the level plan creation. In Lean, the goal is to eliminate all of this variability, but in many cases, this is not possible. ERP is a process of managing these variables. Using the two together can provide a compromise that satisfies the requirements of the specific business.

Develop Lean and ERP techniques that support pull concepts for both internal operations and suppliers. By combining Lean visual concepts of Kanban and other pull concepts with ERP software solutions that support non-visual processes such as time-phased predictions and advanced warning/alert tools, those who live in the hour-to-hour mode of operating will not be bogged down with the functions of “the system” and those who must manage the variabilities external to the execution processes will be connected to what is really happening.

Many times the supply process is longer than the delivery lead time demanded by the customer, so the key is to manage the process such that a minimal investment is made while still being able to manage the variations that exist and are uncontrollable. Lean can be used to manage the tactical processes that result in reduced waste, reduced work-in-process inventory investment and improved flexibility. ERP can be used to manage the longer term variables that are not controllable by Lean techniques. The integration of the two is what allows the organization to be successful.

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Monitoring Business Performance Leads to Improving Business Performance

In a recent article, I focused on the issue that the operation of any organization has plenty to offer in terms of letting management know what is working and what needs to be addressed. Once there is agreement on this, the next questions usually relate to what to do and how to do it. The key to success here is to get executive visibility into the operation so that focus can be put on issues that 1) matter and 2) can be controlled and affected. Monitoring current and future performance factors will be much more effective than monitoring performance for decisions made in the past. For instance, controlling the purchasing process to buy only what is needed when it is needed will affect the bottom line much more that paying attention to the utilization rate of a fixed asset which was bought and paid for some time ago. Three steps can be utilized to facilitate this process of monitoring key issues for performance improvement:

• Measure Critical Few Performance Criteria
• Analyze Results and Recommend Actions
• Implement Focused Improvement Activities

Measurement activities need to target the life line issues that must be satisfied in order for the organization to survive. They also need to be factual, without emotional influence, so that owners of the process can objectively evaluate their performance and identify issues. Selecting a few key measures that tie directly to success will focus attention on the factors that affect success and will allow people to get a quick, substantive picture of current performance. Using drill down type metrics to provide more detailed information regarding the specific performance is fine, but it is most important that the appropriate message is received by the appropriate people via the top level measure. Areas to focus on include:

Customer Value: This is the most important area for any organization. What the customer considers as value is the only thing that is of importance to the organization. Having everyone understand how their actions relate to what the customer wants will allow them to re-evaluate what they do so that they can focus on eliminating wasteful non-value added activities. One way to think of value added activities is to consider if an item could be listed on the invoice for the activity in question. If not, then its value should be questioned. Suggestions for measures here include on-time delivery, total order lead time, quality per complaints/returns, and repeat business or lost customers. These metrics need to be at the customer level and not departmental level since the customer sees one organization, not a group of departments, some that perform well and some that don’t.

Operational Performance: Operational flexibility will allow the organization to adjust with the changes in demand without having to make major sacrifices in order to do so. By making a connection between what the operation does (actual supply) and what it needs to do (actual demand), those involved can begin to understand which of their activities are wasteful and which are value added. Suggestions for measures in this area include total operational throughput (as defined by deliveries to customers, not additions to inventory), processing lead time (quote to cash), non-capital investment (inventory, supplies, etc, not fixed assets), and ability to make changes to the schedule.

Financial: Cash. Let people know what is happening to the money in the organization on a regular basis (weekly or daily) and let them know how they affect this cash flow. Once workers understand this and see their impact, they will probably focus more on making good decisions. Obviously, this information must be presented in accordance with corporate information sharing policy, but the more people can relate their actions to the money being spent, the more they can affect the outcome. Some suggestions include cash flow - inflows and outflows, spending trends as a function of shipments, and comparisons to plan that are adjusted for volume differences. Simply showing the bottom line is ineffective because people typically cannot relate their actions to this measure.

All too often metrics are created, detailed and publicized that have little effect on improving performance. In order to be effective, it is important to improve the executive visibility to operational drivers, replace “gut-feel” decisions with “fact-based” decisions and educate everyone in the organization about the operational life-line drivers of performance. By making a direct connect between the metrics of performance and the actions of people, positive results from improvements are possible.

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Hello?! The Operation is Talking to You!

In these economically challenging times, organizations of all industries are finding that they need to control critical issues in order to survive, much less remain competitive in the marketplace. Issues such as cost control, capacity and resource utilization and reacting to demand changes become areas of concern that get executives’ attention as areas that must be mastered. An all-to-often approach to getting at these issues is for the strategists of the organization to meet, develop priorities for improvement and then mandate the “Must Do” statements to everyone in the organization that include carte blanche directives for efficiency improvements, spending reductions, and labor reductions. However, by tuning in to the operation itself, issues that can have an impact can be identified and corrected, usually in a short time and with a quick return. Activities that can have an impact in this regard include:

• Get real-time (or at least very timely) feedback from the operation as to progress of work being performed.
• Implement scheduling and control techniques the provide directions as to what to work on next on a daily or hourly basis.
• Utilize alerts, visual and/or computer, to quickly identify real time issues that need to be fixed before further work is performed.
• Concentrate on customer facing issues throughout the operation, such as lead time reduction, on-time delivery, and end-item quality.
• Reduce the inventory investment by concentrating on the reasons for having the inventory. Like lowering the level of water in the stream, more rocks will appear.
• Create improvement teams consisting of those most directly involved with the operation to identify and implement quick hitting improvements.

In order to make these tactical practices effective and pervasive throughout the organization, management needs to adopt strategies that support this collaborative and synchronized approach. By having executives focus on the operation and looking beyond simple efficiencies in the work place, organizations can improve their overall performance. Aberdeen Research has identified several actions that organizations can implement to achieve Best-in-Class performance which include:

• Improve collaboration across all functional boundaries, such as Engineering, Operations, Customer Service, and Purchasing.
• Create visibility across of the operation throughout the entire enterprise, including the executive level.
• Synchronize the output of operations to match the changes in demand.
• Dynamically update business practices as best practices are developed.
• Create a scorecard that normalizes performance across all areas of the organization.
• Engage the system integrators at the executive level.
• Automate the work flow to manage non-conformance events across the enterprise.

By achieving Best-in-Class performance, Aberdeen has identified results that will improve customer performance, improve capacity utilization and translate directly to the bottom line:

• 97% On-time and Complete Delivery to the Customer
• 92% Overall Equipment Effectiveness (OEE) accounting for variability, performance and quality
• 99% Operation Compliance as measured by in-compliance output vs. total output

It should also be noted that when these operational issues are managed effectively, an improvement in cash flow and profitability can be expected.

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A Roadmap to Lean: Measure Continuous Improvement

Part 10 of a 10 part series
In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The fifth step in the Implementation phase is to Measure Continuous Improvement throughout the organization. In this step, we want to:

• Implement Measurements for Key Success Factors and for Each Improvement Event
• Develop Business Performance Metrics that relate to Customer Value
• Develop Metrics to Monitor Lean Learning for Everyone in the Organization
• Establish Baseline Measurements Prior to Improvements
• Communicate Progress and Results to the Entire Organization on Daily Basis
• Initiate a Formal Review Process for Key Functional Leaders

In a traditional business model, cost plus profit was used to determine the price. In the Lean model, price minus cost determines the profit, so the focus needs to be on the elimination of waste. True, the price may be affected by the concentration on customer value because the customer is willing to pay more for what you deliver, but price is not under the organization’s control as much as cost is due to market and competition issues, especially in the world market we exist in today. Measures that focus on the Lean process, the elimination of waste and customer value are those that will drive continuous improvement once the initial Lean effort is complete. Key deliverables of this phase include:

• Business Performance Metrics (a critical few) that are Simple and Straightforward
• Operational Metrics that Relate to Takt Time and Waste Elimination
• Public Scoreboards to Communicate Event Related and Business Performance Metrics
• Lean Learning Metrics that Promote Cross Training, Improvement Activity Involvement, Problem Solving, Team Building , Empowerment, Commitment and Cooperation
• Dynamic Communication to Everyone Regarding All Lean Initiatives
• Rewards that are Aligned with Lean Goals
• Frequent Celebrations of the Successes

This tenth and final step in the Roadmap to Lean is not really a single step – it is an ongoing and ever evolving process: hence the term Continuous Improvement. Those who treat Lean as a project that comes to completion are missing to whole point of taking the trip. The real benefit is the transformation within the organization that allows everyone to contribute to the elimination of waste and the concentration on what brings value to the customer. It is the culture change that occurs that brings the biggest benefit of the Lean journey. Lean performance is focused on the efforts of people to accomplish change and is never complete. Instead, it is an ongoing process that will lift the organization to previously unattainable results. By following these ten steps of this Roadmap to Lean, an organization should be able to change its focus from “Doing Lean” to “Being Lean”. Are you Best-in-Class?

A Roadmap to Lean: Integrate the Supply Chain

Part 9 of a 10 part series
In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The fourth step in the Implementation phase is to Integrate the Supply Chain into the lean ways of the organization. In this step, we want to:

• Evaluate Each Supplier and Customer as to Applicability of Lean Concepts
• Define “Quality at the Source” and “Pull” Demand Concepts
• Select a Few Key Partners for a Pilot Progra
• Build Mutually Beneficial Relationships with Supply Chain Partners
• Share Information and Synchronize Planning
• Develop and implement an Education Program for your Supply Chain Partners

To be most successful, organizations need to extend the lean thinking concepts from the shop floor to the entire supply chain including, the front office, customers and suppliers. Transferring the benefits of Lean to your suppliers and customers can greatly enhance the benefits of your own Lean efforts. By using your results and facilitator skills to motivate them, these supply chain partners will be able to improve their operations so that they can coordinate their activities with yours and accurately deliver what you need to improve your success. Key deliverables of this phase include:

• Definition of Mutual Benefits
• Lean Education Materials Adjusted to Each Supply Chain Partner
• Lean Education and Training for Facilitators of Partner Organizations
• A Roll-out Plan for Targeted Supply Chain Partners
• Key Metrics of Success Related to Quality, Cost and Delivery Performance
• Implementation of Lean Concepts and Techniques across the Entire Value Chain

To be honest, working with suppliers will be easier than working with customers because with suppliers, you are the customer and they may be more willing to listen. However, don’t let customers slip by the wayside. One of the key concepts of Lean is that of “Pull Demand”, and who better to include in this effort than the customer who pulls from you. Success in having your supply chain partners effectively implement Lean means that your organization can eliminate the wasteful buffers that exist between your organization and theirs. The next and last stop in this roadmap is to Measure Continuous Improvement.

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A Roadmap to Lean: Transform the Information System

In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The third step in the Implementation phase is to transform the information system within the organization. In this step, we want to:

• Define What Implications the Lean Objectives Have on the Information Systems
• Document As/Is – To/Be Information Flows
• Identify Visual Methods that can be Used in Lieu of the Information System
• Determine Which Systems Need to Change to Support Non-Visual Requirements
• Create a Plan for Making the Changes Necessary to the Information System
• Monitor Cut-over and Provide Support

Sometimes, when an organization is implementing changes to their information system, such as implementing an ERP system, Lean principles can be applied. Sometimes, when implementing Lean, limitations are reached since the information system needs to be changed. Either way, addressing the needs of the information system early in the process will reduce the roadblocks that arise during the effort. With the main premise behind Lean being to eliminate waste and support value added activities, the information system needs to be revised so that it is not causing wasteful activities in and of itself. When evaluating the information that is being collected within the system, it is important to ask “How am I actually going to use this information and what value does it provide?” If good answers do not come of this evaluation, it is likely that there is no need to have it in the system so revisions should be made to eliminate it. In this step of transforming the information system, key deliverables are:

• Definition of “Must-Have” vs. “Nice-to-Have” Information
• A Plan of Action to Eliminate/Replace Non-Essential Information
• Written Procedures and User Training Documentation
• Training of Users for Visual and Non-visual Techniques
• Specification, Coding and Testing of Software Changes
• Tracking of Open Issues for both System and Procedural Issues
• Updated Performance Measurements

There are some who think that if Lean is implemented, there is no need for an information system to be used, however, most experts who understand the whole business process will agree that the two go together to support the whole business and must be integrated in order for the organization to be successful in its Lean efforts. However, this step of transforming the information system will often times include the need to change how one thinks of the business process requirements altogether, but then that is the whole purpose behind the effort of Going Lean. The next stop in this roadmap is Integrating the Supply Chain.

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A Roadmap to Lean: Manage the Culture Change

Part 7 of a 10 part series

In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The second step in the Implementation phase is to manage the culture change that comes with going Lean. In this step, we want to:

• Identify the cultural impediments that must be overcome
• Impart the vision of Lean to the entire organization
• Make sure that “Continuous Improvement” and Quality are part of the culture
• Get middle management on board
• Identify and win over the “Grumblers”

Attaining the paradigm shift that is required throughout the entire organization is the biggest challenge to succeeding at Going Lean. Along with developing the idea of Continuous Improvement, Employee Empowerment is one of the most critical issues for success. It has been stated “…. the major inhibitor to get a lean environment is the inability to trust the workforce and really give up a certain level of control in order to give people the power to implement their own ideas and be respected as experts in their area….”. Although this is a statement regarding the managerial side of the issue, it must be noted that it is as difficult of a change for the regular workers as it is for the managers. You can’t just give empowerment to people, they have to take it, and many do not know how to be empowered.

Management needs to monitor the impact of Lean on the organization and make Continuous Improvement, Quality and Empowerment part of the culture. Points to remember in this process are:

• Resistance to change IS THE NORM, not the exception
• People must be informed, empowered, willing and able in order for changes to be made effectively
• Personal and organizational values affect how people react to change
• People go through the change process in stages and go through these stages as individuals

Managing the culture change is vital to success in Being Lean. The consequences of not doing so include having managers who don’t supply resources or those who filter important information, employees become distracted and loose interest, valued employees leave the organization, or unforeseen obstacles arise. By succeeding in this aspect alone will mean that all of the unknowns and obstacles can be overcome as they arise. Transforming the information system is the next stop on our roadmap.

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A Roadmap to Lean: Implement Rapid Change

Part 6 of a 10 part series
In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The first step in the Implementation phase is to implement a process of rapid change by following the overall plan developed so far. In this step, we want to:

• Form the Kaizen event for a specific improvement
• Train work teams on new methods
• Observe the process being addressed
• Develop the Takt Time
• Develop improvement ideas and a detailed action plan
• Cut-over and monitor results

A Kaizen event is a team activity aimed at rapid use of lean methods and tools to eliminate waste in particular areas of business processes. The purpose of the Kaizen team is to investigate, analyze, and evaluate each process and every operation in order to add value and eliminate waste. This is usually done by a small group of people directly involved with the process being analyzed, however, it is also a good idea to include someone unrelated to the process in order to provide an un-biased opinion. Deliverables from this task can include:

• Value stream mapping of the specific process
• Work flow re-design and re-positioning of equipment
• 5s - organizing the work place and standardizing processes
• Standardized work for tasks being performed
• Setup Reduction and shortened change over times
• Visual “pull” for materials
• Error proofing techniques for tasks
• One piece flow (or at least significantly reduced batch sizes)
• Cellular manufacturing / processing

The Kaizen event itself typically takes three to four days where the team develops solution ideas and a plan of action which is typically implemented within a month or two after the event is complete. In this way, results are quick and noticeable throughout the organization and the benefits from the Lean process are realized quickly so that the improvements directly affect the bottom line of the organization. Because of this quick return aspect of Lean Implementation, this process is a great way to make improvements during tough economic times and when the times improve, the results are that much more magnified. In addition to addressing the mechanics of going Lean, Managing the Culture Change is the next step in our roadmap.

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A Roadmap to Lean: Creating the Plan

In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The final step in the Planning phase is to create the implementation plan. In this step, we want to:

• Define and sequence the Kaizen events to be conducted
• Identify and allocate personnel required for each Kaizen event
• Re-allocate existing workloads if required to free up resources
• Create a plan that reflects the priorities identified to date
• Define the overall metrics to be used to monitor progress

All of the planning steps so far have lead to this point in the effort. With this information, the plan can set in motion the actions that will begin to deliver actual results – savings from waste elimination. Although the plan should be oriented to deliver the best bang for the buck, it is often times a good idea to start with a fairly simple, easy–to-do event so that those involved can learn about the process and have an early success. Coming out of the chutes with the biggest, most difficult event will likely discourage people before they even get started. Deliverables from this task will include:

• An activity plan that defines the sequence and duration of the planned Kaizen events
• Defined milestones and expected dates of achievement
• Definition of the progress metrics to be used
• Assignment of participants and accountabilities for each Kaizen event
• Creation of a public information area so that everyone can be informed

It should be recognized that this plan is not set in stone. Many times, during one Kaizen event, an issue is uncovered that was not considered before which becomes more important than others in the plan. By being flexible, which is a mantra of Lean, these new and better ideas can be addressed without losing the overall focus. As long as these ideas are in sync with the overall goals and metrics set forth in the beginning, changing the plan makes sense to seize the new opportunities.

This five step planning phase for Going Lean can take a few days or a few weeks, depending on the size and type of organization and the scope the effort. However, it needs to be done to some extent since implementation without it will lead to a haphazard approach that kills momentum and does not yield significant results. It also isn’t really over when it is “done”. Like the whole idea of Being Lean, it is all about ongoing, continuous improvement - so it all needs to be constantly reviewed over time.

On to Implementation!! Are you Best-in-Class?

A Roadmap to Lean: Analyze the Opportunities

In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The fourth step in the Planning phase is to analyze opportunities for Lean in the organization. In this step, we want to:

• Create Current and Future State Diagrams of the Business Processes
• Identify Non-Value Added Activities
• Identify Potential Process Redesign Opportunities
• Define and Document Expected Improvements
• Review with Management for Approval

Using a value stream approach to looking at the current state of the processes used in the organization, non-value added activities can be identified and targeted for elimination. With this map of the current state and the knowledge gained by the team though the strategy development activities and the education to date, a future state of the organization can be developed. Deliverables from this task will include:

• Current and Future Process Flow and/or Value Stream Mapping Documents
• New Process Layouts and Material Flow Diagrams
• New Organization Diagrams and Work Team Assignments
• Ranked List of Potential Lean Opportunities

By developing a future state map of the organization and identifying where the various Lean concepts can be applied, waste eliminating opportunities will be identified. The specific opportunities that come from this analysis will lead to Kaizen events in the implementation phase and will form the basis of the plan to be developed. The ranking decisions will incorporate the magnitude of the change, the impact on the organization, the potential cost, the potential benefit, and the ease of implementation. This information will become inputs to the next and final step of the planning phase, Creating an Implementation Plan.

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A Roadmap to Lean: Develop a Lean Strategy

In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The second step in the Planning phase is to develop a market driven strategic plan for implementing lean in the entire organization. In this step, we want to:

• Educate Senior Management on the Fundamentals
• Identify Market Drivers for Lean
• Define a Lean Vision
• Develop Leadership Commitment
• Update the Strategic Business Plan to Include Lean objective

By using the Lean assessment and the resulting findings and recommendations from the first step, the biggest opportunities and overall directions for the organization will start to become clear. The deliverables from this task will include:

• A Lean Management Education Course
• An Organizational Profile with a Lean Vision
• Documentation of the Critical Success Factors
• A Written Lean Mission Statement
• A Proposed Implementation Time Frame

Including Lean in this level of strategic planning for the organization will assure that the lean concepts, practices and activities are in sync with the overall direction desired for the organization. Without this activity, it is highly possible for an organization to embark on the Lean journey, only to find that it keeps running into the “same ol’ way of doing things” and that the attempts at Lean are counter to the overall direction the organization wants to go. This will lead to ineffective implementation at best with downside results that include the creation of even more waste, poor morale on the part of those involved, and a loss of momentum for making improvements in the future. People are very tuned into performing per the direction from above, so if the top leadership of the organization has not taken the steps to be sure all is in order at the top, it will be very difficult to get the ship to turn around. Once the Lean strategy is developed, the next step of planning, Analyzing Opportunities, can proceed.

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Lean Applies to the Office Too

Lean in the office is not about eliminating staff or resources, it is about improving the value of activities so that workers are performing duties that directly relate to the result that the customer wants. And, it’s not only for front office functions of manufacturers. Service, retail, professional, healthcare, educational, governmental, volunteer or any organization that delivers something to a customer via a process involving multiple people and activities can benefit from leaning out the processes, eliminating waste and working to the needs of the customer.

Lean focuses on five principles that can be applied to office environments as well as to production environments:

1. Value Definition
2. Process Mapping
3. Uninterrupted Flow
4. Customer Pull
5. Pursuit of Perfection

Much like the shop floor, a lean office consists of processes that have eliminated waste, minimized non-value added activities, corrected performance issues, integrated disjointed processes and automated required activities. The only real differences between the shop floor and the office are that information is usually being processed instead of actual material components and the product being delivered may be a service, not a physical item.

All too often, office improvement efforts concentrate on how to do things better rather than concentrating on what things really need to be done. By using a Lean methodology, the “how” part does not get addressed until the “what” part is defined, leaned and redefined. This methodology consists of:

• Creating a team of process owners that fully understand the business process.
• Performing current state process mapping activities to identify how the process works.
• Indentifying all of the process inputs and outputs and their suppliers and customers respectively.
• Building a future state map of what the process should be.
• Developing a work plan that identifies what activities must be done, who will need to do the work and when these activities should be completed.

By applying the lessons learned in manufacturing and focusing on the five principles of lean, those who have embraced a Lean Office and its disciplines have made an important change to how their business operates. Getting administrative personnel focusing on continuous improvement and the customers’ needs is just as valuable as getting the shop floor to be lean in regards to the organization being competitive and profitable. The key to success in a lean environment is for the entire organization to “Be Lean”, not just “Do Lean”.