Why lean works well in crisis situations?

Crisis has almost always made lean to work. But why? Let’s discuss the possible reasons for this.

Lean requires huge amount of change. It will challenge your core beliefs. For an example you believed having work in progress is going to save you when there is a problem. But lean tells you the exact opposite. It tells you WIP is a waste. You believed you should be smart to continue your work when there is a problem in the system, till your system gets corrected. Lean says exact the opposite. Lean tells you to stop and fix the error. Put you in the shoes of people out there in your factory floor and offices. How would they feel? Will they resist lean? Surely they will.

When your organization does well, there are plenty of ways and logics to continue in the good old way. People will argue saying when everything is working fine why should you change anything? Remember management by exception? It makes perfect sense when everything goes good. Every executive and worker feels secure and their basic needs are satisfied. They get their salaries. They have no risk of losing their jobs. Everyone wants to climb the organizational ladder.

But when things are not smooth and not going well, it will throw few challenges to the people. Everyone is worried about their jobs and they want to be secure. When things got worse, when you have a crisis, this problem is much more pronounced. So everyone will try securing their basic needs. That is, everyone will try securing their job. In other words, needs will change.

This is when a movement like lean, where major changes required in organizational structures and organizational thinking, can thrive. You can now prove the good old way of doing things is not working. Nobody can challenge you. Consciously or unconsciously, people will be more receptive to your new ideas as they fear losing their jobs. Some people will want to see organization coming out of the problem. You can bring some hope to people including top management and to the shop floor workers.

Changes will become a part and partial of life when there is a crisis. People tend to learn new things quickly in these tough times. Making your organization lean is much easier in the times of crisis.

According to the Abraham Maslow theory of motivation, people are motivated by their basic needs first. When they have no job, hence no money, they are looking for money to fulfill their needs like food. When they find a way to satisfy their basic needs, say by getting a part time job, they want to have some security like having a full time permanent job. It goes on like it. But one of the most important aspect of this theory is basic needs do motivate people much more. For an example, when you have no money, rarely you will skip a job even if it is not an acceptable job in other circumstances.

In the time of crisis, people are motivated by their basic needs. When they are motivated by these lower level needs, the motivation levels are very high. This is why a system like lean can thrive in a situation where everything seems to be failing.

But will change happen if you threaten to throw people away from their jobs if they do not follow the process. I really doubt it. People will react negatively to such forces, making your implementation much more difficult.

It was not my aim to say crisis is a good thing or a bad thing. I am not even suggesting fear of losing jobs or the instability is a good thing. But I was fascinated by all the organizations thrived in these situations and wanted to look for a possible cause.

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Why lean manufacturing wins over efficiency improvement movements?

In almost every organization, sometimes so called lean organizations there is a movement to improve the efficiency of a particular process of an activity. They measure efficiency figures in %, like 80% or 90%, and generally aim for an improvement of less than 10%. For an example if they are at 80% they would want to be in 90% range within a year or a month or whatever the timeline is set to. While this looks fine and absolutely required, does this provide the ultimate outcome organizations are looking for? Do these drives contribute to a better user experience? Do they lower the costs of the products to the customer? Do they help delivering the goods when the customer wants them? In most of the cases they don’t. This is because most of these improvements happen in isolation with minimal understanding of the bigger picture. Yes, they may put hours into work and get the efficiency of the work floor by 10%, reducing the cycle time by 1 day. But ultimately they will deliver their goods to the warehouse a day earlier and the goods will stay in the warehouse a day longer. That is all they have achieved. From the customer’s point of view, there is no change, hence no value is added, instead resources are wasted in the name of improvement.
In addition, it is much better to understand what are the wastes available in the process and attack them instead of trying to squeeze an improvement in an already value adding process, thereby putting more stress on already value adding operations. As a lean thinker, you must know what is value in relation to the lean definition. Value is defined from the customer’s point of view, not from your point of view. For an example, if you think you delivered great value by increasing the production efficiency by 10%, think again, and think how your improvement is translated to the customer value. If you fail to translate your savings to the customer value, you have failed.
Let’s us have a look at the below figures on how easy or difficult it is to add value to the customer using “Improve efficiency” and with “Lean Thinking”. Before that, we all lean thinkers understand, more than 90% of the resources can be categorized as “Muda” or waste in lean terms. That is more than 90% of the resources goes without adding any value to the customer. Below figures are based on that assumptions. 
While, “Lets improve efficiency” guys work in the Small Blue area (Which is about 10% of the total area), Lean works on the larger (90%) of the green area. Let’s say you managed a 10% improvement on the Value added activities. So you will have a net effect of 1% in the full spectrum. (That is 10% of 10% = 1%).
In contrast, when lean thinker does a 10% improvement in the green area, which is 90% of the spectrum, you will get a net improvement of 9%. This is 9 times the result you achieved by increasing the efficiency. Most probably eliminating the non-value added activities will be easier than squeezing some efficiency from already value adding operation. 
Original status
Normal Process. 90% of Non Value Added Activities + 10% Value Added Activities
1% improvement by increasing the efficiency of value added activity by 10%.

10% Efficiency Improvement on Value Added Activities. Net Improvement of 1%.

9% net improvement by increasing the efficiency of non-value added activity by 10%.
10% Efficiency Improvement on Non Value Added Activities. Net Improvement of 9%.
So what is the moral of the story? 
Try attacking non-value added activities. You can get greater improvement by doing so. Above example shows how 10% improvement in non-value added activities can translate to 9 times higher improvement to the 10% improvement made on non-value added activities. Please click the “Like” button below, if you like this post. 

98% lean failures?

There are some staggering numbers published in various blogs and websites about lean failures. One of such numbers indicates a 95% failure rate, and some are as high as 98%. Recently a Reuters reported “Analysts at New York-based consulting firm AlixPartners LLP found that about 30 percent of companies surveyed achieved a 2010 goal of cutting at least 5 percent of manufacturing costs by employing lean practices such as those championed by Six Sigma, Kaizen or Value Stream Mapping..” Although this article has many points which are arguable, this post indirectly says 70% of the people implemented lean could not achieve even a mere 5% improvement in cost saving areas. But what is the truth? Can lean fail? Or can the lean failure figure be this high?
For me, I am absolutely sure lean can and will fail, in some cases. But my main concern is not that. My main concern is how people measure whether their lean implementation is a success or not? In most of the cases lean is used as a cover-up for a cost cutting process and only measure available to evaluate results was the cost cutting they managed to achieve, just like the article above does. While driving wrong KPIs, and not understanding lean correct can greatly contribute to the failure of lean, it must be noted many organizations do not have a proper way of evaluating their lean success or failure.
Ask ten executives of the same organization about their lean success or failure rate you will get ten different answers. Answers are based on emotions and “feel”, not on the fact and figures.  Yes, I agree the “feel” factor is very important when implementing lean. But it alone will not make good choices or good evaluations.
Have you ever made a process lean? In that case did you measure the effectiveness of your lean implementation against the traditional way of doing things? What are the KPIs you checked? Did you check the throughput time, WIP, machine maintenance and the customer experience for their changes after your implementation?
Although, all the benefits and losses cannot be quantified, most of them can be quantified in relation to the traditional method (or the before change status). Among few which cannot be directly quantified are the things involve emotions like worker satisfaction levels and customer satisfaction level. But you can quantify your WIP changes, Throughput time changes, changes in rejections and so on.
Without a proper mechanism of checking the real outcome, you may say 100% lean implementation do fail, while some one else say only 0% do fail. But no one will know the truth for sure.
I want you to tell me something? Does your organization have a clear way of quantifying and analyzing benefits of its lean implementation? If so what are the KPIs (Key Performance Indicators) analyzed? Please leave your answers as a comment to this post in the box below. We will discuss your answers in coming weeks. Do not forget to hit the “LIKE” button too.

In honor of Steve Jobs

Today, I am not writing anything about lean manufacturing. But, today, I am writing about a true personality of our time. A person made things possible and showed the way for thousands. Steve Jobs one of the best entrepreneurs and a good man, will no longer to announce his legendary iPhone version 5. After creating ripple after ripple in the world, he is no longer with us.

I am posting below the video from his extraordinary speech at Stanford University in year 2005. Just listen. It motivated me when I need motivation. I a sure it will do the same to you. Good bye Mr. Steve Jobs.

Few Quotes..
“…If today is the last day of my life, will I do what I am about to do…”
“..No One Wants To Die. Even People who wants to go to heaven do not want to die to get there.. “

How To Implement Lean Manufacturing

One of the main problems when it comes to lean manufacturing implementation is non-availability of literature with practical advice on the subject. There had been tons of good books written on lean concepts and tools, but only few books on “how to implement lean manufacturing”. But now there is a book with the exact title How To Implement Lean Manufacturing, and gives you real life examples and practical advise on how to implement lean manufacturing. I believe this is a must read if you are in to lean.

Author of the book is a well experienced lean practitioner “Lonnie Wilson” with nearly 4 decades worth lean experience. If you are looking for some practical advice and case studies, look no further. This book is a great source of knowledge and it is endorsed by many with 5 Star rating by real life lean practitioners. If you want to have a look, just Click This Link