Lean projects, lean leaders and getting priorities correct

Lean manufacturing implementation is a project and has to be managed very carefully to get the best results out of it. One of the most important activities of any project is identification and prioritizing the activities of that project.

One of the basic mistakes people do when it comes to lean implementations is rushing in the initial phases of the project and setting up unrealistic timelines and goals. People want to show instant results and convince the top managers and stakeholders. But they forget that the time spent on the drawing board is very important to the success of the project.

Every move in lean must be carefully planned. All the plans must be instrumented with required resources before the actual implementation. Plans must be communicated effectively to every levels of the organization. Everyone in the organization must know what their responsibility in the process is and especially why they do it. If this has not happened effectively, the project will not go far. Lean leaders must lead the way by example. They should not expect people to follow when they are not following the guidelines set with the new changes. They also must respect people and their talents in this process. All the people must be rewarded effectively for their efforts in the project and even after that.

All the moves in any lean implementation must be for the betterment of the entire organization. Critical mistake lean leaders make in lean implementation is trying to entertain higher authorities without looking at the benefits organization will get with those moves in the bigger picture. Simple yet critical mistakes like this will be recorded as lean failures, not as a failure of the project and methods used in implementations. I strongly believe most of the failures of lean are in this nature. They are failures of the projects rather than the failures of lean concepts.

Lean manufacturing, MTS and MTO

Among manufacturing concepts there are two very important terms to understand. They are Make To Stock and Make To Order scenarios or operating models. To understand lean manufacturing in different contexts we will have to understand the basics of these concepts.

In simple terms Make To Stock scenario occurs when manufacturers carryout their manufacturing of goods without having an actual order from a customer. For an example most of the consumer goods manufacturers operate in this manufacturing model. Soap manufacturers manufacture their soap and stock them and then deliver based on the requirement of the market.

Make To Order scenario occurs when the manufacturer start manufacturing only when there is a order for a particular product. Manufacturer will produce only to complete the requirement of that particular order. Some people refer this type of manufacturing as contract manufacturing.

If we look at these two operating models from a lean perspective, MTO provides ideal ground for a lean implementation. MTO is purely a demand driven system externally. That is customer order drives the manufacturing. Manufacturer will have to align himself internally and with suppliers to create a lean operating model in this scenario.

MTS by its nature is working on a push strategy. Manufacturers will produce goods without an actual demand from the customer. Then he has to get read of these stocks to earn money. MTS manufacturers will use advance tools to forecast their demands and will try to predict the future of the markets and trends of these markets. Needless to say this is in the opposite end of lean manufacturing. Lean believes in pull, not in push when it comes to manufacturing.

But interestingly automobile manufacturers are not pure MTO manufacturers. Their industry is tilted more towards MTS by its very nature. Car manufacturer won’t wait until you place an order to manufacture. But obviously the leader of lean, Toyota is an automobile manufacturer. It is very interesting to find out how these demand driven concepts originated in a company which is more towards make to stock manufacturing.

In the macro picture demand can be interpreted in many ways. You are welcome to add your ideas on this. Leave a comment with your ideas on lean manufacturing, MTS or MTO and your interpretation of demand.

What is a lean supply chain?

Lean has evolved from just in time manufacturing to lean manufacturing and to a lean enterprise. In each of these stages there was an addition to the scope of lean manufacturing. For an example from the early manufacturing focus, lean manufacturers started looking at their full organization in the process of value creation. Then the lean manufacturers extend their boundaries to their customers and suppliers in order to create value.

Lean manufacturing is all about eliminating wastes form the system. A system contains many components in it. Any components when taken isolated from other components, has wastes which are born within those components. But there are many other wastes generated in the interaction points of these components. For an example in the manufacturing context, manufacturers themselves generate wastes. Over manufacturing, waiting for bulk manufacturing are some of them. On the other hand wastes are generated in the supply chain itself. For an example if the suppliers of the manufacturer is supplying only in bulks and if the lead times are longer, then the time of the manufacturer is wasted. The end result would be lengthening the lead time of the customer who sits in the other end of the supply chain and may be the cost of the products. Even the customers can contribute to the wastes in supply chain. For an example if the necessary information to the manufacturers is not passed on time, manufacturers and the suppliers to them will have to suffer consequences of to and ultimately will affect the customer himself apart from the other members in the chain. You can refer to my previous articles on lean manufacturing customers and suppliers for more thoughts on this topic.

So it is clear that a single unit in the supply chain can do very little in eliminating the wastes in the system. To effectively remove wastes from the system and gain value everyone throughout the supply chain must contribute. Everyone must be aligned to the needs of each other and must accept other as their partners. This will help all the parties including suppliers, manufacturers and the customers to achieve low costs, higher quality standards and lower lead times. Apart from these main business indicators reduction of wastes is an absolute requirement in today’s world. There are no resources to be wasted. Environmentally a lean supply chain is a blessing.

Lean and customer focus: How many customers to focus

Lean manufacturing is a system which is focused on customers. The customer supplier relationship is a key feature of lean both internally and externally. When it comes to customers outside the manufacturing facility, every manufacturer has a great concern on them. Lean proposes to align your organization to their requirements as much as possible. This will make it easier for your organization to remove wastes from your system and to deliver what customer wants. In simple terms this is known as “customer focus” manufacturing.

But especially if you are not manufacturing for final consumers and if you are manufacturer for large brand owners, that is if you are a contract manufacturer, it is important to understand the possibility of aligning to the requirements of your immediate customers. You will have to fulfill special requirements of these customers. But how well your organization can focus on number of customers? Yes, having too many customers might not be a good thing. Having many customers might mean not aligning to any of those customers requirements and hence not producing value to those customers. At the end of the process the customer will walk away from you.

In lean manufacturing we have been talking about narrowing down the supplier base and about partnering with them to create closer relationship in the supply chain to eliminate wastes and generate value. Now it is the time to think similarly about the customers. Having your focus on the customers and having a closer relationship with them is essential for the long term business success.

This method of thinking may not be applicable for some of the industries and manufacturing and marketing contexts. But definitely we will have to provide greater value to the customer to be in the business in today’s competitive markets.