Lean Management – The End of Management By Exception

As I have always emphasized on this blog lean is not just a set of tools. It is a process based on lean thinking. Management in a lean environment is not an exception. Lean management is the force behind any successful lean manufacturing implementation.

What is Lean Management?

Question above can be a tricky one to answer. But simply put lean management can be defined as using lean concepts in managing the organization. For an example managers will be looking at the value stream of the organization and question the none value adding activities continuously. They will define the value in the eyes of customers in the process, unhiding huge amount of waste in the system. A lean manager will not misuse lean to reduce their head count.

What is Management By Exception?

If put simply management by exception says “if everything is going OK, managers do not have to interfere. They will act if the system faces an exception”. This is an old management technique followed mainly by managers of larger organizations. This will reduce workload for the managers and will build a sustainable system.

Lean Management Vs Management by Exception

When it comes to management by exception, processes will run without any hindrance if they are bringing in the expected results. They will be questioned if they are not performing up to the expectations. But lean management is about continuously removing waste from the system. So even the best processes will be questioned. They will be changed and reengineered to remove waste from the system and to realize value to the customers. But in the case of failure, processes will stop immediately and problems will be solved.

In lean management, involvement of a manager is very high. A lean manager will not stop just at developing a strategies and policies, he will have to come to the work floor and make it happen. This thinking is eminent with the lean tools like “Go and See for Your Self”.

So in a lean environment management by exception is not applicable. Management by involvement or lean management is the way to go.

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.

Fool proofing in design (Pokayoke in design)

I love computers and technology. Not only because they are very close to me, but because I find them interesting. I like designs of computers and their usability. I always quote computers as very fool proofed designs. We can not plug one cable in some other socket. But I doubt this is applicable to every computer peripheral, at least I found a thumb drive which is exception for the rule

Compare two thumb drives (data travelers) on the image. What is the fool proofed design?

What do you want to keep with you? Is that the clip or the data storage part of the thumb drive?

Lean concepts and software development – Example from Yahoo! Mail

I have been using Yahoo! Mail for last four to five years. I first started using it when they offered 4 MB of storage. It grew to few hundreds MB and then to 1GB and now they provide unlimited storage. Not only the storage impressed me their user friendly interface and ability to read RSS easily and closer look to MS Outlook, possibility to synchronize are features I really enjoy. This is a great example to show how fast the internet and e-commerce is expanding. But this is not why I am making this note on my blog today.

When yahoo mail launched its new Beta test you might have found it loaded very slowly and took long time before we can do anything. Later it was fixed and on their blog they share how. I think this is an application of lean thinking (whether they knew it or not) in software development.

According the blog initially yahoo mail tried loading every feature when it is launched on the browser. So it had to take lot of time in loading. But later they have broken down the loading in to small components and then they load one by one and some on demand. This reduces the user waiting time since they see what they want to see at the beginning. Some features are loaded only they are requested. So time and resources are not wasted on loading features which are not used frequently. This made user experience much better since users started to see what they wanted faster.

Isn’t this thinking pattern goes parallel with lean way of thinking? Lean suggest to process in small batches or ideally a piece at once. And process only when they are required to be done. The net effect will be less utilization of resources, faster and flexible system. Yahoo! Mail got it correct very soon and we the users are really benefiting from that.

Lean manufacturing and teams

Team work is a popular word these days. Most of the organizations have formally formed teams to fulfill its tasks. When it comes to lean manufacturing lean and team has a very close relationship. Success of lean implementation directly relies on its teams and their effectiveness. In simple terms No team means No lean.

Building an effective team is not an easy task. It involves lots of hard work. Managing the change, training the members of the team and creating the culture of team work are not easy tasks. People are the most important resource of any organization. In this exercise of team building every organization must make sure that they do not de motivate their employees.

Do we have an alternative to team building? No is my answer. But certainly we can make the process of team building simpler. There are informal teams in every organization. They actually are very powerful in many aspects. Most often these informal teams or clicks consist of people from various departments of the organization. People in these teams have many common interests and sometimes close personal relationships as well. All these are attributes of good teams. But unfortunately these informal teams might not be useful in achieving organizational objectives. Sometimes these teams might have a negative effect on your organization. So what to do with these teams?

Simplest and best way to build effective teams is to change the objectives of these informal teams and to align them to the organizational goals. This is not easy and will not succeed every time. But if worked out these teams will perform much better than a conventionally team. Most of the traditional managers are not comfortable with these informal teams. They focus on breaking these teams down and create new teams. But in most of the organizations these informal teams are much more powerful than formally created teams. So why not just rail them to get to the destination organization wants. They will perform much better than a newly buildup teams. Lean thinkers can use these best in the transformation of a conventional organization to a lean organization. Team building is an art every lean manufacturer must learn.

Are you a lean manufacturer or a lean service provider?

There are many manufacturers in many industries. There are many service providers in our vicinity. We can identify these two functionalities distinctively. But manufacturers of today are not only manufacturers. They are service providers. They provide services to their brand owners and some cases to the end consumer.

Most of the manufacturers do manufacture for brand owners. These brand owners are generally third parties. In fact most of the brand owners are moving out from manufacturing and even services related to manufacturing such as order placement. Third parties perform all these functionalities. In this context manufacturers become service providers rather than pure manufacturers. Manufacturers will have to have good order fulfillment systems; they should have strong bases in areas like logistics even design capabilities in some cases. So if you are a lean manufacturer think again. Manufacturing is only a one competency your customers looking for. There are many other areas where you can improve on.

No matter how good you can manufacture unless you can provide good service to your customers they will not look at you positively. Customers might turn to manufacturers who can provide better services even if they are little bit weaker in manufacturing competency. Being a lean manufacturer is fine. But being a lean service provider can enhance your edge when it comes to competition today.

Lean manufacturing: A closed loop system?

If you have studied the subject of control systems, you should have studied two types of systems. They are open loop systems and closed loop systems. Main difference between these two types of systems is the feedback loop. Closed loop system has a sensing mechanism which will sense the output and compare it with the desired result. If there is a variation the system will act accordingly. Open loop systems are faster and cheaper to create and operate. On the other hand closed loop systems provide the feedback of the out put and adjust the system accordingly. But they are little slower and costly to create and operate. Below is a graphical representation of open loop and closed loop systems.

If we closely study any manufacturing system, it has many smaller systems which make the bigger system. Requirement of controlling comes up when the system has a higher tolerance level and unpredictability. So the actual output can vary considerably from the desired result. So at every stage there should be a controlling mechanism which will provide some control over the result. If the actual result is considerably different to the desired result the system will stop or give some sort of a warning. Higher the risk of this happening, there is a requirement for the feedback and hence for the closed loop systems. Of cause it is very important to stop and fix any problems when they occur. This is a very important aspect of lean manufacturing as well.

But for me the lean manufacturing is a closed loop system at very lower levels of operation. The operation is closed loop at operator level. Every operator checks their product and if there is a variation with the desired result, they will stop the system and try to fix the cause of the problem. But in the bigger picture it is more of an open loop system of manufacturing. It has a defined input. And it has a well defined output. In between manufacturing system looks at meeting these outputs with the inputs. Systems are fine-tuned so that they will give the desired results most the times. For an example raw materials are source inspected and only the quality raw material is available for manufacturing. So there is a minimal chance of problems in processing. If there is a problem with desired output system will be stopped immediately and the problem will be corrected.

Lean manufacturing, although it has a feedback path and stops when there is a problem, it always looks to operate as an open loop system. This is facilitated with standard ways of working, aligning suppliers and even customers in getting the desired result, and source reduction of problem.

If you have a different view on this please leave a comment.

Lean system – The thinking manufacturing system

Some people refer lean manufacturing systems by “Thinking manufacturing system”. Even Toyota in their websites has used this name to refer their manufacturing system. Why this manufacturing system became a thinking manufacturing system?

Many manufacturers and service providers create systems where systems are no-brainers and runs forever in the way it was setup initially. These systems will be changed in case of a failure or when there is a significant change to the system. People will follow the same routine day after day. They will perform their routine tasks over and over again. Obviously they will have the same result every day.

Lean systems on other hand have a significant difference to this approach. The system is designed to evolve day after day. Wastes will be identified and removed from the system continuously. Workers are always conscious and looking for the possibilities of improvement. Workers give the brain to the system and hence system becomes a thinking system.