Lean – The Why, What and How.
I get asked all the time what is the point of lean? Why would you 'do lean'? It's actually a pretty common question and there are many many answers that people give when they are asked about it. The problem is, I think, that people forget the real reason for introducing lean to an organisation, the reason it exists in the first place, why Toyota created the Toyota Production System that gave us lean. In short, they confuse the Why with the What and the How, let me explain a little.
To get my point over about the Why let me start by asking a question. If I said ok, we are going to introduce a system to your organisation that helps you to lose money would you be interested? Of course not! Toyota wasn't either, the problem is that's the system they had. They built as much as they could and hoped they could sell it, they filled the warehouses with stock and hoped they would use it and, in post-world war 2 Japan they were until it didn't. Toyota almost went bust, owing the banks and no way to pay the banks stepped in and forced massive restructures (as they are still prone to do). Kiichiro Toyoda deciding that this would never happen again, his company had to change and come up with a way to do 1 thing. Generate Profit. Toyota would take the steps required to do what it took to never be in that situation again, they would ensure that no matter what happened they would continue to Generate Profit. And they did with exception of the recent financial crash.
So, let's all just be clear, the WHY of lean (of TPS) is to Generate Profit, nothing else, after all, why would you run a system that doesn't deliver this?
So, What is Lean? What does it mean to be a lean company to follow a lean philosophy? And it is really important to recognise it is a philosophy, as a way of thinking first and foremost. It is not, however, a religion or has a doctrine that is carved in stone and never to be challenged, on the contrary everything about lean, your understanding of it your application of it needs to be challenged daily, that's' what drives continuous improvement.
The philosophy, however, is pretty simple when you boil it down, there are only 5 principles that underscore everything about lean:
- Understand Value from your Customers Viewpoint – what do they want to pay for
- Map the value (stream) – what steps are involved in delivering your product or service
- Create Flow – make as simple as possible to go from raw material to a high-quality finished product
- Establish Pull – only build what you need when you need it, only buy what you need when you need it.
- Seek Perfection – continuously look to improve in everything you do
We have discussed these 5 principles in more detail in a previous post here:
That's all lean is, it's those 5 things, and if you look at them they come back to what? Well lets think about the inverse and the effect of that on generating profit
- Ignore what the customer wants and build what you want: Result – people won't buy what you create so it'll be left on the shelf and eventually you must write it off in loses which hits/removes the profit line.
- Ignore the value streams, do whatever you want along the way to deliver the product, have bottlenecks, lose product along the way, create conflicts within your organisation about what should happen and pile in the waste: result – things don't move quickly, conflict arises and waste is prevalent, all of what again steals cash from your profit line.
- Don't worry about flow, build in really big batches to get economies of scale irrespective of being able to sell it, hire or build larger warehouses to store it all in. don't worry about the rework, you'll get to it eventually – result – you will build a lot of one thing, satisfying some customers as a perceived lower cost while the other customers wait on their products or invest heavily in multiple lines to build the things the other customers as waiting on. The balance of the unsold products can be stored in the warehouse that costs you money, of course, that product's raw materials need to be paid for even though you haven't sold it so you borrow from the banks. Bottlenecks build up so work in progress increases as well slowing delivery: Result: you hit cashflow problems and pay the banks a lot of money, store inventory that eventually gets sold (if you are lucky ) at marked down prices to salvage some return – again, all stealing valuable money from that profit line.
- Push, build as much of each thing as you want and hope someone will buy it: Result, pretty much identical to the result of ignoring flow.
- Don't worry about perfection, focus on good enough – accept that you will have a high level of quality failures, of people issues, of process issues and that it's going to cost you more money while you run those bigger batches, buy more raw material than you really need to ensure that you can build the 120 units to make sure you get the 90 units out the customer wanted: Result the quality issues again quickly remove cash from the profit line.
The What of Lean is simple, focus on the 5 principles and you will go a long way to dramatically improving your business.
The how is strangely the things that come up when you ask a lot of people about what lean is. They will list the myriad of lean tools that can be applied to your organisation, Kaizen, Kanban, Total Productive Maintenance, 5s, Andon, Just in Time, Takt Time, Standard work, Single Minute Exchange of Die, Hoshin Kanri (Policy Deployment) Heijunka (Level scheduling) Gemba walks, Value Team Mapping, Visual Factory, Over All Equipment Effectiveness (OEE), the list can go on and on.
There are threads however that run through every lean tool in the toolbox, and it is a toolbox, you need to pick the right tool to fix the problem you are facing at that time that is specific to you, your organisation, your people, your market and your particular point in history! There isn't a drop-in solution, a cookie cutter system where you can take 2 doses of JIT, 1 of Standard work you will be fine, it doesn't work that way.
The common thread, however, is people. The most important tool in the how of lean is your people, it's your respect for your people, their expertise, their passion and pride for what they do. The people working on the real problems day in day out know the reality far better than anyone sitting in an office trying to analyse things. Every tool that lean uses is done with the people front and centre, with them as the experts. Certainly, you must teach them the techniques of the tools, where, when and how to apply them but you must learn from them as well. Every person in the organisation has a diamond of information, of knowledge, of skill that they bring to your organisation that you are duty bound to find, nurture and grow.
For me the how of lean is people, it is your respect for people, your dedication to helping them be the very best they can be every day by respecting them enough to help them get there.
What is Lean?
The next time someone asks you what is lean? Here is what you can say to them:
Lean is about respecting, helping and supporting our amazing people within the organisation to deliver value that customers want, without any wasteful processes or systems, creating and using only what is needed, when it's needed and trying to get better at doing that every day by helping our people grow and be better every day, resulting in better products, better people and delivering profits to sustain the organisation and it's people.
When we do these things, we can't do anything else but generate profit for the organisation, profit that you can use to help train your people, help buy what they need, support the environment by not wasting resources and support the causes you want to support.
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