Lean is not about change without a plan

Any organization will change with time due to many reasons. This is why managers call “Change is the only constant”. But should we chase the change or should we allow it to come to us. In either case how do we manage it? These are series of questions we have to ask ourselves when we try changing something. Especially in the context of lean manufacturing when it demands us to change continuously.

The term change is misused by many organizations especially in the name of lean. Any change should add value to the customer. If not that change is just a waste adding cost and confusion than doing any good to the organization.

In the context of lean, continuous improvement or Kaizan can demand continuous change. But kaizen events will be inline with the requirements of the organization for it to achieve the best. It is not random set of events happening in uncoordinated manner. It is well organized and planned.

In most of the organizations they misuse the words like Kaizen and continuous change in order to hide the inefficiencies of the organization. People will do certain things without planning and without analyzing the decisions in deep. When those decisions go wrong they will change the changes they made earlier and will call it lean manufacturing. Some lean consultants call this LAME not lean.

So if you are lean, think about the plan and what you are going to achieve before making the decision to change. Changing the change continuously is not lean.

Is your organization too Fat - Try the lean pill

Most of the organizations are too fat to withstand the time of recession. They had plenty of food earlier in the form of large orders and predictable and stable demand. But it is no more. Now organizations are starving for orders. Naturally it might be the best time to swallow the lean pill. It will make you “lean” and will make it possible to withstand the testing times of recession. In a normal time your organization might not want to swallow this bitter pill even most of the people used it talks about it positively.

One of the factors stopping organizations from turning to lean manufacturing is the change it will bring to the organizational thinking. Traditional organizations are built with large hierarchies (which I call fat structures). They operate smoothly by having larger warehouses and large amount of safety stocks. Lean which encourages totally the opposite, naturally will have to go through huge amount of resistance and most of the times will never be materialized even when there are proven examples all over the globe.

But this economic crisis provides less food for these over weighed organizations hence they have to loose fat whether they like it or not. You can not have huge hierarchies. Organizations will not be able to have large amount of money to be tied down in the form of inventory. They will not be able to predict the demand for the years to come and be prepared since the demand will change quicker. So they will have to produce only for the orders they have in their hands not for the predicted demand. Importantly, competition will get tougher since most of the traditional competitors will be ready to slash their operational costs and reduce margins just to keep the business rolling. You have to do much better operationally with a fraction of cost for your organization to just be in the game.

If the above sounds familiar and if you feel this is your organization, then I am sure you will not be feeling comfortable with the situation. But I have good news for you. All what you want to achieve, higher manufacturing flexibility, lower levels of inventory, quick response to the changes in the market and higher quality for lower costs are among the benefits lean manufacturing techniques have to offer. There are good amount of examples for the organizations who have achieved these goals by practicing lean in their organizations. But there are some failed too.

Was something stopping you from practicing lean in your organization up to this point? It might be the fear for change, fear of not getting it right or resistance from the others. Now recession has made your choice simpler. Either you become lean or you are out of the business. So what would you choose?

Although I can not guarantee your particular implementation of lean is going to succeed (Although I believe if it is done correct, should not be the case) it is better to give a try since you have no other choice, isn’t it?

Lean manufacturing – Being Proactive To Be Reactive

We have different definitions for lean manufacturing from different people. We have discussed some of them in our past blog posts. I believe simplicity of its concepts is one of lean’s key success factors. So we should understand lean in the simplest possible way. When I answered (once again) the question of “what is lean manufacturing?” I thought it can be simply answered as “lean is being proactive to be reactive”. Let’s discuss this answer in some detail. But before we go into details do not forget to leave your ideas as a comment to this post. You can do this by clicking on the comments link at the bottom of this post. I really value them.

Lean is about developing a system where we can deliver what customer wants, where they want in quantities they want. In the process lean thinks how to remove any waste from this system making the product or the service higher in quality, lower in cost and higher in reliability. But if you take any business regardless of they being lean or not they want to achieve the same things. They want to satisfy their customers by satisfying their needs.

In delivering the value to their customers any business owner will tell you that they need to be proactive. These business will be proactive in purchasing raw materials, proactive in planning their capacities and proactive in scheduling their deliveries and so on. They will use advance tools like ERP and use the functionalities of MRP to plan their demands and supplies. As a result they would not run out of raw materials and they will not have any capacity issues when it comes to producing what their customer wants.

Lean is very proactive in its approach too. But they do not order raw material in advance nor are they going to block capacities for possible future orders. So how lean is proactive? Lean is proactive in developing a system which will allow them to change with the changing needs of their customers. So they would not need to order RM before they actually see a real demand from their customers for an example. For me this is being reactive to the changing situations of the markets and customer needs. Lean system is very flexible so it can run with virtually no buffers, no large chunks of stocks and can change from one product to another in a matter of minutes. So this system can produce exactly what customer wants in the way they want in the quantities they want.

Reactive approach of lean will save the manufacturer (or the service provider) a huge amount of capital since there is no requirement for them to maintain higher level of inventory. This system will not produce something the market do not need making write downs a lesser problem. Low inventory levels and coupled with other simple lean techniques will make sure on time delivery and superior quality.

At the end of the day lean manufacturer will make a better product (or a service) than its traditional competitors. All these will be achieved with lesser cost making them much more profitable.

It is very good to be proactive. But proactive for what is the question. If you try to absorb the costs of changing market demands and associated risks in the name of being proactive, you will not be successful as you can be. Worst you can fail in your business. Instead if you create a system which can quickly to adjust to the changing market conditions you will be much more successful. All the popular lean manufacturing tools like JIT, SMED, Kanban(Pull system) are aligned for this purpose.