Driving the wrong KPI – An efficient way to the inefficiency


I was hearing a story for few days now. No, this is not about the end of the world. This is about how a lean movement has created unnecessary issues in an organization. This particular organization, like most of the organizations opting in for lean, had high hopes about its lean movement. They have started implementing lean years back, and have seen some improvements to their processes. They have formed a central team which will be driving lean initiatives across its facilities. This central team will form the strategy and the local teams in each of the sub units will be implementing lean in their respective areas. Sounds great, isn’t it?

But there was a problem. They were not getting the results they wanted. People started their own “lean” movements within sub units. Now each sub unit is performing in their own way. Although sub units themselves may gain some advantage by doing this, for an outside observer, it is clear that organization was losing in totality. Sub units are not working in unison to solve the bigger issues now. But they focus only on their small area to make it efficient. Processes are getting sub optimized.
 
Why is this happening? Well, there might be more than one reason. But one very important reason is the way lean is implemented and driven. Each organization sub unit is made to compete against each other. Instead of coming up with a better solution in totality, each organizational element is unconsciously encouraged to do better than other, even if that meant a negative outcome at the organizational level. Each sub unit now wants to do better than other. So they stopped sharing their methods with the others. They create their own systems, which becomes unmanageable over a period of time. Even the so called best “Lean” plant may not be doing good in the big picture.

What is the take away from this story? Well you have to think critically about what you are driving through your lean initiatives. You will have to define your goals and then start thinking about methods of driving lean, especially in the case of a mature organization. Bigger the organization is, difficult it becomes to achieve the set objectives. But if managed properly and driven with a good vision and control, lean can benefit the organization in totality. If you do not drive the correct KPIs, you will be very efficient, in creating inefficiencies.

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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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.

Mr. Miyagi in the Supermarket

Apart from lean manufacturing, Mr. Miyagi was always kept very close eye on his family. Although he spent most of his time, here in US, he was in close touch with his family back in Japan. Recently, he visited them, ended up spending more than three months with his mother, brother and the sister. Yesterday, he came back to US. Mr. Miyagi’s supplies were short, so he decided to go to the nearby supermarket to get some rice and other stuff he needed.

Mr. Miyagi was visiting this supermarket frequently, probably because he doesn’t keep big inventories with him. The manager of the store knew Mr. Miyagi well as a customer. In fact Mr. Miyagi had given them some free advice before on how to improve. As most of the free stuff, although invaluable, these advices never put in to practice.

After three months, when Mr. Miyagi entered the store, he immediately noticed few changes. It looked more spacious and had more space between the racks, which Mr. Miyagi always wanted to see. He was happier, and curious. He did his shopping. On the way back to the cashier, he saw the manager of the store, Richard. Richard immediately recognized Mr. Miyagi and rushed towards him. Richard was curious to know where Mr. Miyagi was for all this time. Conversation went on for few minutes. Meanwhile, Mr. Miyagi pointed to the changes and talked about how good it felt as a customer to have more space and nice arrangement of items. The tone of the conversation changed. A disappointment appeared on the face of Richard. Mr. Miyagi was puzzled.

Richard, with his deep and concerned voice asked Mr. Miyagi “Did You like it?”. Mr. Miyagi replied “Obviously, why shouldn’t I” with his unique accent. It didn’t work for us, said Richard. It looks nice and customers feel good about the changes, but for some reason, we are seeing a drop in our repeat customers and in the revenue, said Richard. We are unable to see why this is happening. But nevertheless this happens, he added. Probably you may have new competition, replied Mr. Miyagi. Richard responded immediately, with a big NO. He said there was no new competition, around the area. Mr. Miyagi couldn’t help himself. His brain has already started root cause analysis.

Mr. Miyagi offered to help Richard. And Mr. Miyagi told him, how he was able to help a super market he used to visit with his “Lean Expertise”. Richard was stunned, and even kind of offended. With a controlled voice he said, “Oh God; that is the last thing I wanted. Do you know, all this is because this **** system. We paid more than $300,000, to get these done to so called lean experts. At the end of the day, everyone is happy other than cashiers. We are in big trouble”. Mr. Miyagi never heard something like this from any of his clients before. So he felt very uncomfortable. In addition, he had to prove Richard that his way of thinking; “Lean thinking” cannot go wrong. So he negotiated a deal with Richard. Mr. Miyagi will help the store to identify and tackle their problems. Unless, he sees a 10% increase in returning customers, and similar increase in revenue, within next three months, his services will be free. If he achieved his target, Mr. Miyagi will get a loyalty of 1% of the increased profit for the next 3 years. “But will it get even worst?”, Richard fired the obvious question to Mr. Miyagi. Mr. Miyagi personally assured Richard this will not going to happen and pointed out to him, it cannot get worse than what they have right now. Worst it can be to be back where they are. 
Negotiation happened for little longer than for an hour. Finally they settled for 0.8% of the increased profit for 3 years as royalty, if the number of returning customers improved by 12% which Richard thought is essential to keep their business in good shape. Mr. Miyagi agreed. He went home with an appointment to meet Richard in two days’ time. His lean brain is working even while he was in sleep.

While Mr. Miyagi is thinking, what do you think? Point out to possible root causes which might have created this problem to Richard. Please leave your comments.  I will see you with how Mr. Miyagi tackled the question in few days.

Read the Part II Of this Story

Lean manufacturing and Chariots Of The Gods

Recently I was watching a series of video on interesting topic “Ancient Aliens”. Now for sure that has nothing to do with lean manufacturing. I was watching some videos and somehow came through this video series and loved it.

No, I am not going to tell you what it was all about. If you like to watch it, you can do so by following this link (it is a 10 part series). Chariots of the Gods is one of the books discussed in this program. If you have any questions about the topic, this might have solved it.
There were many fascinating points in this video. But as a lean thinker, one point (probably the one point which they never discussed in the video) caught my attention. That is, people have knowledge today, and they had it yesterday too. There was no era where knowledge was absent. It was present all the way. It took many shapes and forms due to many reasons like political, environmental and spiritual.
Today, we look back and think how these “Not So Advanced” people did all these. We, with computers and satellites even find it difficult to do. How these people made pyramids, how they created the Great Wall of China, how they drew maps of the word, we wonder. In simple terms we think we are advanced and they are not so advanced.
So what is the connection to lean, you may ask. Here it is. Most of the lean consultants or change agents, take completely wrong first step in making an organization lean. They think lean, that’s all they think. They look for waste (As they should be) and lose all the nuggets of gold in the process. Not only they do not see these gold nuggets, they throw them away, sometimes with the people who owned them.  What are these gold nuggets? They are the existing practices and processes.
They were built over a long period of time. There is a huge amount of thinking gone in to them. They are perfectly working in the current set up. Being lean doesn’t mean all these have to be changed. First a good lean consultant should understand what the current best practices are. Why they work so well. And they have to evaluate them to see whether we should change them at all. Remember, non lean organizations also do exists. They do for a reason. They can even compete with the lean manufacturers. Nissans and Volvos still do compete with Toyota. By no means non lean players are “Not So Advanced” or “Stone Age” people.
This is why I am not so convinced with the idea of using Japanese terms in lean implementations. They look alien to the people and make them go into the defensive mode. They will respect you for what you know, but you will not get much as they do not follow what you know.
Marrying lean with the existing culture is one of the very important things in lean. If a “non lean” organization has a reward program to reward their employee for the best idea, marry it with the Kaizen. Call it whatever it was called earlier. If they have a routine cleaning activity, marry it with 5S, and call it what it was called earlier. Name is not so important. If they have a very simple problem tracking mechanism, do not do anything. Just let it be there. Not all need to be changed in the name of lean. I think you get the idea.
This will make the resistance to change minimal. People will love lean, even without them knowing it. What do you think? Do you agree with me? Or do you think otherwise. Please leave your comments. If you like this post, please tell it to the world by clicking the “LIKE” button below.

TPM (Total Productive Maintenance) as a waste elimination tool

Today we discuss about Total productive maintenance(TPM) as a waste elimination tool.

TPM defined as TPM (Total Productive Maintenance) is a maintenance philosophy designed to integrate equipment maintenance into the manufacturing process.

The goal of any TPM program is to eliminate losses tied to equipment maintenance or, in other words, keep equipment producing only good product, as fast as possible with no unplanned downtime. The unique feature of TPM is Autonomous Maintenance.

Autonomous Maintenance defined as Machine adjustments made by their operators who are deemed to have unique knowledge about the machines. It is a principal component of total productivity maintenance (TPM).

In TPM mainly focus 16 losses and eliminate from the process.16 losses’ are:

A Seven major losses that impede overall equipment efficiency

1 Failure losses (Breakdown)
       Losses due to failures. Types of failures include sporadic function-stopping failures, and function-reduction failures in which the function of the equipment drops below
Normal levels.

2 Set up and adjustment losses
Stoppage losses that accompany set-up changeovers

3 Cutting blade change losses
 Stoppage losses caused by changing the cutting blade due to breakage, or caused by changing the cutting blade when the service life of the grinding stone, cutter or bite has been reached.

4 Start-up losses
 When starting production, the losses that arise until equipment start-up, running-in and production processing conditions stabilize.

5 Minor stoppage and idling losses
Losses that occur when the equipment temporarily stops or idles due to sensor actuation or jamming of the work.  The equipment will operate normally through simple measures (removal of the work and resetting).

6 Speed losses
Losses due to actual operating speed falling below the designed speed of the equipment.

7 Defect & rework loss
 Losses due to defects & reworking.
 Losses that impede equipment loading time

8 Shutdown (SD) losses
 Losses that arise from planned equipment stoppages at the production planning level in order to perform periodic inspection and statutory inspection.

Five Major losses that impede workers efficiency

9 Management losses
 Waiting losses that are caused by management, such as waiting for materials, waiting for a dolly, waiting for tools, waiting for instructions etc.

10 Motion losses
 Man-hour losses arising from differences in skills involved in etc.

11 Line organization losses
 Idle time losses when waiting for multiple processes or multiple platforms.

12 Distribution losses
 Distribution man-hour losses due to transport of materials, products (processed products) and dollies.

13 Measurement and  adjustment losses
Work losses from frequent measurement and adjustment in order to prevent the occurrence and outflow of quality defects.

Three major losses that impede efficient use of production subsidiary resources

14 Energy losses
 Losses due to ineffective utilization of input energy (electric, gas, fuel oil, etc) in processing.

15 Die, jig and tool losses
 Financial losses (expenses incurred in production, regarding renitriding, etc.) which occur with production or repairs of dies, jigs and tolls due to aging beyond services life or breakage.

16 Yield losses
 Material losses due to differences in the weight of the input materials and the weight of the quality products.

Lean Tools For Apparel Industry

We have discussed many lean tools in our lean tools series. This post by our guest consultant is about the lean tools in apparel industry. Read On…

“Eight Lean Tools” defined as waste elimination tools. With lean manufacturing we mainly focus on waste. Waste defined as “Anything that adds Cost to the product without adding Value”.

Total productive Maintenance:

“The Combination of Best features between Productive & Predictive Maintenance by innovative Management strategies With total employee Involvement.”

5s :

“Through sort, set, shine, standardize and sustain create better workplace organization”.

Visual factory:

“The use of controls that enable an individual to immediately recognize the standard and any deviation from it”.

Standardized Work Process:

“It is the current agreed upon best method to complete the work in a process.”

Quick changeover:

“Team-based improvement activity that significantly reduces setup and changeover time.”

Kanban:

“A signal, usually a card, used to signal the movement or production of materials.”

Error Proofing:

“The prevention of making errors, which would result in defects and lost time.”

Problem solving:

“Using the systematic problem solving tool to sort out problem.”

Workload/Line balancing:

“Through balance workload among work station creates Continues flow.”

We will discuss each of these tools in detail in the future posts.

Lean for Apparel Industry – Part II

Thanks for the marvelous response for the last post on lean for apparel industry. Today, our lean apparel consultant is sharing a story with us. I found it really informative. I removed some names from the post to keep the contributors out of trouble. Please read and leave your comments. If you like the post let us know by clicking on the “Like Button” to the end of the post. 

A Journey from Responsibility to Passion (Story of a Planning Executive)


Before 5S, my work station was a mess. The situation was the same with my colleagues, where everyone was too busy to even think of 5S. As the Planning department we did not have much documents lying around us as in Finance and Merchandising departments, but even the little amount of documents we had were not organized. I found comfort in my own mess because I wasn’t ready to worry my head over organizing my stuff. It was difficult locating my pen, phone, Air freight forms in my own messed up work station and I spend half of the time shouting at others looking for my stuff in their work stations while it was still lying at mines.
So what changed me? To be honest, it was the news that put whole  front end departments on fire, ‘Front-End Lean Audit’. And without even my knowledge I was a member of the team which was nominated to play the lead role in implementing lean in the planning department. I was inspired and enthusiastic about my new responsibility and coincidently I was in charge of implementing 5S.
Things weren’t moving smoothly at first and I was at the risk of losing my interest about Lean. But as the dates closed in, the whole department put their heads together and drew up an action plan setting time lines to continue with each pillar of Lean. This ignited the little fire in me and under the supportive guidance of our ‘5S Guru G’ we set to work. For the first time I opened some of the ‘never explored’ cupboards in our department to witness horrifying scenes. Some contained life stories of our department stacked in and piled up. It was fun cleaning up the mess going through all the fun stuff the place held. Once everything was sorted it was just a matter of getting rid of the unwanted stuff and putting the wanted stuff in an organized manner with accordance to 5S standards.
5S is no longer a mere responsibility forced upon me, but is a passion in my life. My colleagues and bosses are also passionate about it and I consider building up that passion and changing their mindset the greatest achievement of my Lean journey. It was true we had our own little arguments, contradictory decisions throughout our journey but it was just a matter conducting proper discussions to listen to others and extract the best of their ideas.
Now the things have changed. We are entering a new world every morning where everything’s organized, clean and feels great to look at. My colleagues feel more responsible towards their own work stations and proud to see people from other departments using our department as their benchmark 5S area. Now it doesn’t take much time to locate my pen, phone and documents. It’s just a matter of identifying the need. No time is spent on searching for things now.
Wrapping things up, let me tell you that changing was hard, but the change was superb. Once changed, it will be your life’s passion; it will be your life’s discipline. So, change to feel it. Good luck! 

Lean for your industry

I hope you are doing great. Today is all about implementing lean for your industry. But before that, I am sure you enjoyed last week’s massive discount (85% discount) on popular Superfactory presentation series. You will get over 5000 slides of information worth $2,300 just for $299. This presentation series contains information covering all the aspects of lean from lean manufacturing, lean office, lean enterprise, lean leadership, balanced score cards, lean quality and so on. I honestly believe this is all you need to learn the basics and advanced lean stuff. You can get your presentation series by following this link. If you want more information just follow this link. Remember Superfactory has a 100% satisfaction guarantee. If you are not satisfied 100%, they will refund your money within 30 Days. So you are at no risk what so ever (But I think you will never ask for a refund. You will be 200% satisfied with what they have to offer). OK back to today’s stuff.
As I have always discussed, lean concepts are universal. They can be applied virtually in any situation. Lean concepts are applied in manufacturing to services to military to hospitals. This explains the adoptability of the concept. We have also discussed about why lean fails. We have identified one of the main reasons as just copying the processes from other organizations. So it is clear every organization needs its own way of using lean, even when the concepts remains the same regardless of the implementation.
My blog readers are always asking me the question “How to apply lean in my industry?” this is very valid question as every lean implementation will have different implementation strategies and processes. For my surprise though most of the questions come from readers in apparel and related industries followed by various automobile related manufacturers and people from service industries. I am curious as to why this is? But I think there is a huge force driving the lean initiative in apparel industry all over the world. Yes, I do get questions from US, UK, Egypt, India and various other countries. Probably the pressure to reduce prices, low delivery times might be driving the lean initiatives all over the world.
So I thought of publishing a series of posts explaining how to implement lean in your own industry. I will start from “Lean for Apparel”, obviously because there had been too many requests for this. I have invited one of my friends to write this series for you. He is an expert in implementing lean in Apparel related industries. I would love to give all his details, but as he is working for a consulting organization already, he wants to remain anonymous. But he will share his expertise with all of us. I think that is what will matter at the end of the day. So we look forward to the article series. One thing to note though. Although this series looks at the apparel industry, you will learn lots of stuff, even if you are not in the same industry. It will not waste your time. Learning from other is always better before you make the same mistake.
If you want to get a specific article on implementing lean in your own industry, please leave your ideas in the Suggestion Box on the site. Find the suggestion box to the bottom right of the page(It looks like the image below). Click On the Link at the top and leave your suggestion there.
If you are interested in sharing your expertise with the world, I will be able to give you the opportunity to publish your work on this blog. If you have good quality information please write to me.
Will talk to you soon with the new article series.

Easiest way to become lean

If you ran your business for a long time or if you are working on your role for a long time you know how to operate it, right? But why do you want to become lean then? Probably because you know you can do better, or because you know other organizations are doing great with lean techniques. Whatever the reason may be, you have to start somewhere.

In the lean journey, I have no doubt you should start from understanding the principles and concepts of lean. This is the part most of you are comfortable with. But when it comes to implementation, what is the most important thing to do? Where you should begin? Is it 5S, or is it visual concepts? I would say, you are partially correct. 5S is a good starting point, but only if you are prepared to do one thing. This one thing will improve your results dramatically. What is this important thing you should have to multiply the results of your lean efforts?
You should be comfortable in challenging the existing processes. You should be able to question the existing processes and find out why these practices are there. And you should be fearless to challenge them.
Most of the times processes evolve with the problems and challenges they face. Most of the solutions found for those challenges are just to solve the problem in hand, generally not thinking about the effect of the solution on the entire process. By adding change after change to the startup process, the process becomes much more complex. People generally forget the end goal in this process.
Let me give you an example. Most the fabrics used to make garments today are woven. Weaving is a practice which was there for thousands of years. The basics of the process have not changed much. I have visited few fabric mills(modern ones), and found how much of a waste they have introduced to the system just by taking issues one by one and finding solutions to each, not taking the entire process into consideration. Below is one of my observations.

When the yarns are not strong enough, they break while moving through the metallic parts of the weaving machine. The solution was to put a some coating on top of the yarn so that, it will gain some strength and will be able to solve the problem in hand. But when it comes to the next step of fabric processing, which is dyeing, this same coating gives tons of problems. So they have to remove it with high-tech machinery and chemicals and clean the yarn to the original status to apply dye material evenly on the yarn.
If you think lean, instead of trying to coat something over the yarn, you will try reducing the tension created on the machine or you will try making the yarn stronger in making the yarn itself. This will not only save lots of money wasted in making, coating, removing this coat, it will also save time, energy and precious resources like water. It will be much more environmentally friendly in operation.
Just think about all the documentation you handle day to day. Do you think all those signatures and papers or emails necessary? I certainly think we should be able to cut down all these at least by 50%. Most of these processes and documents are there not to help the entire process nor there to help the end result but just to save someone from “possible future problems”. I can go on listing. Just have a look at your processes. Ask the question yourself. You will see a completely new world of opportunities unfolding in front of you. Tools like 5 Why, Process Mapping and Value Stream Mapping will come handy in this process.
Please leave your comments to this post. I really value your comments.