Rely on Lean’s basics to recover from a crisis, prevent flatlining
Tuesday, May 26, 2020
One of the best things leaders can do in a crisis — or to get back on track with their turnaround — is to get back to the basic tenets of Lean. When times get tough, we’re inclined to seek out the next silver bullet instead of digging in to better utilize the tried-and-true methods we already have.
Instead of thinking, “These Lean concepts don’t apply to my business,” you must shift your mindset to being an active, hands-on participant in your Lean transformation. Even when you are sitting in the corner office, this starts with revisiting the fundamentals of Lean and how to manage them.
These basics include heijunka level scheduling, standard work, kaizen, just in time, jidoka, and the SQDC hierarchy. If you aren’t using these, you aren’t actually practicing Lean.
Heijunka Level Scheduling
It’s difficult and disruptive to manage a process when volume severely fluctuates on a day-to-day basis. Heijunka combats this by specifying the amount of inventory that must be produced in a given time period.
Many assume that heijunka only applies to a manufacturing operation; however, it’s applicable to an administrative process as well. For example, an insurance company that processes claims will be more efficient and easier to manage if it has a level-loaded “production” schedule of claims.
For heijunka to be effective, all functions of the organization must collaborate. This is typically done through a sales and operations planning process (S&OP) that gets critical input from sales, marketing, finance, engineering, human resources, and operations.
Most companies don’t optimize this process since they insist on managing their business from a siloed functional perspective, not an enterprise perspective. But this will lead to failure. In the Lean world, an organization must work together to optimize the entire enterprise.
Standard work is a tool that defines the interaction of people and their environment when processing a repetitive product or service. For consistency of the operation, it specifies the motion of the operator and the sequence of action.
Detailing the “best” method or process makes managing them (scheduling, resource allocation) easier. It also highlights what’s normal and abnormal — preventing backsliding and giving the necessary standard, or basis, for improvement.
Similar to heijunka, standard work applies to repetitive administrative processes, as well as manufacturing processes.
Standard work has three central elements:
- takt time;
- standard work sequence;
- standard work in process.
1. Takt Time
Takt is a German word meaning beat or rhythm. In business, it’s the rate that a customer is placing orders on a particular operation, defined by taking the available time during a production shift (usually expressed in seconds) and dividing it by the customer demand for that particular shift. For example, if there were 27,000 seconds available in a shift with a daily demand of 270 units, the takt time would equate to 100 seconds.
What does this mean? It means that if you were to stand at the end of a production line, one good part should fall off the line every 100 seconds. Not 90 seconds, not 110 seconds! Operators and related equipment need to be loaded to not exceed the takt time.
Takt time is a powerful tool for any repetitive process, whether it’s in manufacturing or administration. Running a process without takt time is analogous to an orchestra playing without a conductor.
2. Standard Work Sequence
Standard work is a tool to facilitate continuous improvement. Taiichi Ohno, the father of Lean, once stated, “There cannot be improvement without a standard.” Standard work sequence defines the series of operations performed in a one-piece flow environment.
For example, an operator might carry out this sequence in a manufacturing environment:
- unload part from machine;
- load part into machine;
- cycle start machine;
- gauge part (quality check);
- walk to assembly bench;
- assemble part;
- test part;
- pack part into container;
- walk back to first machine.
Or, in an administrative process:
- analyze insurance claim;
- check policy for eligibility;
- review adjuster’s report;
- approve claim;
- enter claim into computer system;
- process payment;
- notify insured of claim status;
- file relative claim paperwork.
The total amount of time required to perform the work sequence cannot exceed the stated takt time.
Once the work sequence is established, it’s easy to see where there are deviations to the standard work. Many times, this signals that there’s an abnormality in the process that needs to be addressed immediately, or that the standard work sequence is being violated.
3. Standard Work in Process (WIP)
Standard WIP is the amount of inventory that’s needed to allow the operator to continue a work sequence. For example, in the previous standard work sequence, the part that gets loaded into the machine allows the operator to walk away from the machine to perform subsequent work tasks. Otherwise, the operator would be idle, waiting for the machine to finish its cycle.
Kaizen is Japanese for continuous improvement.
KAI = change
ZEN = for the better
Based on the philosophy that what we do today should be better than yesterday — and what we do tomorrow should be better than today — kaizen means never resting or accepting the status quo. A way to think of it is that kaizen is a healthy dissatisfaction with the status quo.
The key to creating a kaizen culture is to briefly celebrate your successes, not become complacent, and always be taking the next step on the never-ending journey to perfection. Is there ever a time where enough improvement is enough? My initial reaction is, “NO!” However, one must assess where to place your continuous improvement efforts relative to strategic initiatives.
Just in Time
Just in time (JIT) is a philosophy and strategy to increase efficiency and decrease waste by receiving or producing goods only as they are needed, when they are needed, in the quantity that they are needed.
For JIT systems to be effective, it’s vital to produce with near-perfect quality. Otherwise, defects can disrupt the production process or the orderly flow and availability of product.
Back in the early 1900s at the Toyoda Automatic Loom Works, the concept of jidoka was born when a loom stopped due to breakage of thread. Jidoka is an automated process that’s sufficiently “aware” of itself so that it will:
- Detect process malfunctions or product defects.
- Stop itself.
- Alert the operator.
If jidoka is not utilized, a manufacturing process will continue to produce defective product until detected by an operator, which can occur too late and be costly.
The SQDC Hierarchy
Another basic I default to when looking at a client’s challenges is the hierarchical lens of SQDC. SQDC stands for Safety, Quality, on-time Delivery, and Cost.
For example, let’s say you’re debating whether or not to airship a product, at a high cost, to a customer so it arrives on time. Because on-time delivery ranks higher than cost in the SQDC model, you know it makes sense to spend the extra money to airship.
Making improvements in SQDC can also impact growth. I worked with a company in the U.K. to bring their delivery time down to three days from 28. This resulted in them blowing away their competition in terms of service, and their sales increased significantly as a result.
You may be uncomfortable with going back to these basics at first because they aren’t easy to master, and they can sometimes seem counter to traditional business practices. However, if you stay the course, these standards will help you recover from a crisis — and get further faster.
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