What Japan Tsunami taught lean experts?

Questions were popping up after the massive tsunami hit the Japan on the reliability of the lean systems. Many people, including lean experts had their say on the subject. One of the common areas all the critiques comment on is the high vulnerability of the lean supply chain to a disaster.  Even if the manufacturer doesn’t suffer, if the supplier does, then the manufacturer will have to eventually stop his production. Yes, there can be contingency plans in place. But still it is a bigger risk. Any risk for your supplier is a risk for you. Even a single day delay from one of your key supplier, will eventually bring you in to a halt. This is what exactly happened after the Japanese tsunami. Production is still not into full capacity in Toyota, and the full output is expected only in the early June. This is scary, regardless of whether you follow lean or not.

But the truth of the matter is, lean is not disaster proofed. It is vulnerable to any disaster just like any other system would be, or even sometimes little more. But let’s not forget the problems your system face if it runs the non-lean way.

When the system is not lean, you obviously will not be tightly coupled to your supply chain as you would do in a lean scenario.  You may be able to go on for weeks, even if you do not get anything from your suppliers. What this means is you have this stock in-house. In case of a disaster, you will do much damage as your entire inventory will be destroyed. But one positive is, if you have stocks to work with, you will not be halted by the problems hit your supplying means. For an example, if your ports are damaged, you will not suffer, but only if you or your supplier is hit, you will suffer.

This goes to show, each system has its own share of risk, depending on the disaster they face. But the truth is, while we plan for the possibilities, we should work on probabilities. Not every day there will be a tsunami. But lean brings you savings, efficiencies and improvements every day. Probably, when you select the suppliers, you may go for a tight geographical grouping to avoid the associated risks. Or you may find a way to keep your operations going with some other means. Just another possibility for improvement.

But for me the most important lesson taught by this event was the fact that nature is very powerful, and we must respect it.

Mr. Miyagi in the supermarket Part III (Final)

If You have not done already, read the part 1 and Part 2 of this story following the links.
Mr. Miyagi was just observing the customers and how they behaved. He did it for couple of days very quietly. With Richard’s permission, he entered the security room sometimes, where it was showing all the stuff from security cams. Mr. Miyagi thought this to be a nice cockpit to observe what people are doing inside the supermarket. Mr. Miyagi noted few interesting customer behavior.

After a while, Mr. Miyagi went to the customers and wanted to talk to them. Mr. Miyagi wanted to get their input to the problem store was facing. He prepared a simple questionnaire with questions like,

  •           How often do you visit this store?
  •           What are the other supermarkets you visit?
  •           Etc

But Mr. Miyagi did not ask the questions directly, just like they were in paper. He introduced himself to the customer, and while the customer was shopping, he walked with them with their permission, and asked a question when the time is right or when he observed something interesting like customer getting angry, or he is looking for the goods or he is going back to a shelf which he already went to before or when the customers were happier.

After almost a week in the shop floor, and collecting useful insights, Mr. Miyagi turned to the employees. They had few interesting thoughts too. Mr. Miyagi tried finding out the changes earlier “Lean Implementation” made. He also assessed the knowledge of the staff on lean manufacturing. In addition, he collected observations made by store employees on changed customer behavior. Interestingly, some customers were very close to the employees and in fact gave golden inputs to the employees, which were never communicated to their management or even if they were communicated never translated to actions.

Mr. Miyagi set up a session with the employees and management obviously including Richard. Mr. Miyagi went to a white board and asked employees few questions. And he took down the answers. Nobody was allowed to interrupt the other employees. They collected more input. By this time, Mr. Miyagi was very clear on the reasons to the problems faced by Richard.

Mr. Miyagi wanted to present information he collected in a simple manner to the problem. So he chooses a very simple yet very powerful lean tool, “Ishikawa Diagram”. The main diagram contained the main problem, the drop in the repeat customers with few reasons.

One of the main axis of this Ishikawa diagram contained the “Poor grouping of items in the supermarket” as the main reason. Another main axis contained, frequent stock outages, another main axis contained longer queues in cashier counters in peak times due to the reduced numbers. And there were few more.

Then Mr.Miyagi went on with a 5 Why exercise, to get to the root cause of the each problem. Successful completion of this exercise revealed some simple root causes. One of them is the lack of understanding and sometimes misunderstanding the concepts of lean manufacturing. Reduction of stock without thinking about the consequences in the big picture of customer satisfaction and profitability in long term was a classic example. In addition, it was understood that there was no customer feedback facility to get their feedback. There was a book called customer comments on a corner nobody would bother to go. And sure nobody bothered to leave their valuable input. So everyone was very happy, deceiving themselves thinking customers are happy. But it was not the reality. Not before, certainly not after the lean implementation. Mr. Miyagi knew with his experience, customer’s point of view was essential for a healthy organization.

So how to solve these issues? How can we go where we were earlier asked Richard? Well you tell me, answered Mr. Miyagi. Richard was puzzled, so are the others in the discussion. Isn’t that a part of your job replied Richard, with a slight smile on his face. Mr. Miyagi replied “It is our job, not mine. You have to do it even when I am not around. You know I will not be with you forever. So you will have many problems to solve yourselves, in the real lean way. I will show you the way; you find answers to your own problems. After all I am not the expert on your field, but you are. With the problems, are the solutions” Mr. Miyagi replied. With no other choice, Richard and the team went on with the job, job of finding answers to their own problems, the “Lean Way”.

In contrast to what they believe Richard and his team found it to be fun to solve their problems. Initially, Mr. Miyagi had to do some intervention. But with the practice, it went nice. So they found few answers to the identified problems. They decided after doing some math and calculations, this time including customers in the picture, to increase the number of times the shelf are filled each day. They thought, small batches would help in some cases but will be troublesome with the items with fluctuating demands. So they agreed on different levels of stocks for main item categories and more importantly, will measure the stock outages and customer complaints each day and will work out the requirement for the coming day to archive the optimal levels, where customers are happy and profits would not suffer. Certainly, they can increase the returning customers.

All agreed that they need to understand lean correct. Few workshops organized on the weekends. In addition, these workshops will work as team building events making them much more effective and fun. Customer feedback mechanism was understood as one of the main areas to improve on. So they appointed cashiers to get the feedback of their customers. It was the easiest point to collect data. Customers can give their feedback without spending any extra time or effort, just while their bill is prepared. When implemented, as expected, customers came out with tons of good ideas and comments. Customers loved the idea.

Richard himself came with an idea in a session to capture the details like name, address, email and so on of their customers. He pointed out this will be invaluable, as this data base can be used to keep the customers coming back. Team agreed, debated on how to do it. Finally they agreed on a solution. When the customer fills out a form with their personal information, they will receive a free gift card, which they can redeem next time they come to the store. It worked again.

There were many other improvements to the system, but one of the main introductions was the continuous improvement. Team was broken into few small sub teams; each was responsible to identify a problem or an opportunity to improve. They have to come up with a solution. This team will meet every week. All the ideas will be presented to each other in a full team meeting, and everyone will understand what the problem is and what the solutions are. Then the solutions will be implemented, measured and results will be revisited in the meeting followed.

After a month of the initial implementation of changes, Mr. Miyagi met Richard. Richard was happy, but Mr. Miyagi pointed him to some more improvement opportunities.  At the end of the time frame they agreed initially, Mr. Miyagi was happy to see all his targets were achieved. Richard wrote him a bonus check in addition to the agreed amounts for the services Mr. Miyagi offered. Everyone was happy, but Mr. Miyagi was much happier to see the improved results and smiles in the faces. He knew back in his mind, it is just the beginning, there are more to come. He was happy as Richard and his team is geared up to take the challenge just like in any good lean organization.

What do you think? Do you like the story? What are things you absorbed reading this story? Please leave your comments and press the “LIKE” button to tell the world that you liked it.