Lean manufacturings oversized claims

After the consultants leave, savings quickly evaporate. Are you just putting your
business on a fad diet?
Is lean manufacturing a crock? A snapshot of
companies using various process improvement
schemes to claw their way out of the recession
raises that possibility.In September, New York
based management consultancy AlixPartners LLP
released a survey of executives at more than 100
manufacturers that had started leanmanufacturing initiatives over the previous two
years. The results were disappointing, to say the least. Nearly 70% said theyd failed to
cut costs by 5%, the researchers minimum benchmark for productivity improvements
to be deemed successful. Moreover, most of those polled admitted that any savings
were temporary. Just 13% managed to sustain three-quarters or more of the previous
years savings.And yet the respondents to the survey still sounded drunk on the KoolAid: 91% considered their re-engineering efforts to be effective.That wasnt the only
hint of a disconnect between perceptions and reality. The Shingo Prize for Operational
Excellencenamed after Shigeo Shingo, the architect of the vaunted Toyota
Production Systemis awarded annually to companies that successfully implement
supposedly universal quality, productivity or other management standards, from Six
Sigma to Total Quality Management. AlixPartners determined that, three years after
receiving the prize, the recipients posted revenue growth and gross profits on par with
or weaker than their corporate peers.Most continuous-improvement initiatives focus
too much on implementing a particular checklist of program tools and processes,
rather than on basic execution, concluded Steve Maurer, managing director and
leader of AlixPartners manufacturing practice. Traditional lean and Six Sigma
programs may inspire a company to improve one step in the process, he says, but the
momentum is seldom sustained.That will come as a surprise to a lot of devotees.
Lean manufacturing became popular over the past decade as companies sought to
replicate the Toyota model that helped make the Japanese automaker the worlds
largest. Like that prototype, lean adherents strove to maximize efficiency and minimize
waste in the manufacturing process so that quality went up even as costs went down.
In the United States, Motorola developed its own system known as Six Sigma, referring

to an efficiency goal achieved when the number of defects sinks to 3.4 for every
million finished products. Like Toyotas, the program borrows martial-arts terminology;
people trained in Six Sigma earn such credentials as green belts or black belts that
make them sought after as in-house managers or outside consultants. The tao of lean
has even spread from goods production to service industries such as insurance and
public administration, and a parade of management systems with names like Kaizen,
5S and Value Stream Mapping embrace and refine its tenets. The lean principle of
continuous improvement, meanwhile, helps fuel an ongoing demand for lean
expertise.Coming out of the recession, those [manufacturers] that didnt get on the
bandwagon are getting on the bandwagon, says Henry Zupanc, a management
consultant based in London, Ont. Companies are finding out all their competitors are
using this.Theres a growing backlash against such one-size-fits-all management
systems, however. Critics characterize them as the fad diets of the corporate world.
Too often, employees fail to buy in to new programs thrust upon them by zealous
managers and consultants who seldom stick around long enough to see the results.
The criticism has been especially fierce against newer iterations of lean service and
lean health care, said to be stress-inducing, dehumanizing and vulnerable to
catastrophic breakdowns. Commentators such as BNets Matthew DeBord blamed
lean thinking for the automotive industrys supply-chain disruptions in the wake of
Japans earthquake and tsunami last March. The AlixPartners survey has just added
statistical credibility to these complaints, casting doubt on leans upside.Jason
Fleming is a believer in lean. Thats a prerequisite in his job as manager of innovation
and continuous improvement at Edmonton-based All Weather Windows. Nonetheless,
he can see where some of the criticisms are coming from, as well as how companies
can go wrong implementing the lean mindset.In 2005, All Weather decided to adopt
a lean manufacturing system. The private company brought in two consultants, both
alumni of IBM (an early convert to lean) and developed an in-house lean team
(which, with 30 members, was not so lean, Fleming chuckles). Days often started
with so-called gemba walks (after the Japanese word for real place) around the
production floor, during which staff involved in health and safety, maintenance,
purchasing, shipping and quality assurance could get an update on back orders and
machine downtime, all the while looking for ways their departments could add value
to the core activity of the business. The production process itself was mapped, remapped and relentlessly measured. Instead of sending pieces out of sequence down
a production line, workers now focused on single products in batches. The shop floor
became cleanerno more piles of window frames and doors lying around.There
were efficiencies in quality and output from the outset, Fleming says. But the
company owners were not satisfied. The improvements were limited to a single line at
a single plant, and not all employees were on board. An improvement on the factory
floor might get cancelled out by the way shipping worked. If you just work on
efficiencies in an already efficient system, youre just moving the bottlenecks around,
Fleming says. All Weather would soon acquire a second plant in Mississauga. It also

wanted to integrate lean with its distribution systemindeed, throughout the

company.So the company went back to the drawing board. It rebranded and
reorganized its multi-disciplinary lean team into a dedicated smart operations
department. It spent time soliciting ideas from line employees and supervisors. It
brought in outside consultants only occasionally, to solve specific problems, and sent
its own managers to the University of Kentucky to train with people who had worked
at Toyota.But at the same time, the company was learning that it had to come up
with its own definition of lean. Instead of producing huge volumes of standardized
products like Toyota does, All Weather was a made-to-order manufacturer serving
builders, each with different demands. Further, the Japanese production models were
designed for a monocultural environment, Fleming says, whereas his company boasts
some 40 different native tongues and 60 nations of origin among its workforce.Its
been a lot of trial and error, he says. Weve taken pieces here and there and put
together what works for All Weather Windows. The firm tries to avoid using lean
jargon like kanban (referring to the ubiquitous signage that tells employees how fast
their core operations are running). It adheres to the spirit of lean, along with a few
widely used tools such as the gemba walks, rather than any trademarked system like
Kaizen or Six Sigma. Thats the only way to do it, honestly, says Fleming.His advice to
other companies considering getting lean is, first, dont simply implement it top down.
[Employee] engagement is a huge piece, he says. That doesnt just mean training
and getting input from line staff. It includes having the CEO, president and vicepresidents turn out for gemba walks to show supervisors this isnt just something
dropped in their laps.Second, adapt lean thinking to the kind of work you do; dont
just copy Toyota or IBM. Finallyand this either discredits or willfully ignores studies
like that by AlixPartnersdont make it about targets. Technology, markets and
competition constantly change, and higher output on one line is nothing to celebrate
when worker turnover is soaring. Theres no end goal. It should be continuous
improvement, Fleming says.Dwayne Mathers, who heads up Deloitte Canadas lean
practice from an office in Kitchener, Ont., came to the discipline from the quality
movement and feels a sense of dj vu with the backlash against lean. All the things
were hearing about lean today we heard about ISO 9000 years and years ago, he
says. But I sense whats making quality programs successful will be the same things
that make lean programs successful over the long run. Those factors include putting
a person or people in charge of the initiative within the organization, making it a
significant management function reporting to the CEO or COO, making the
managers accountable, and giving them the capital and people needed to undertake
myriad small improvement projects.Its also important that companies determine
beforehand what they want to get out of a lean program. Mathers and his team focus
on four performance indicators: lead time (from order to delivery), productivity
(person-hours per product or service rendered), quality (incidence of defects or
variations) and human development (how committed employees are to improving the
process). Its all those factors together that should be the measure of whether a lean

program works, he says. If you start from the position that this is all about cost
reduction, thats almost always where lean programs fall down.Leans critics will call
that a dodge, of course. Because, for all its emphasis on measuring efficiency, lean is
more a philosophysome might say a religionthan a method for achieving certain
results. You either believe in it or you dont. Companies that are doing it well believe
in it, says Zupanc, who comes down on the side of the faithful. Its part of the
culture.

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