Book Review: The Lean Turnaround

Art Byrne is an execute that has been implementing lean in several companies around the world.  He started our with GE and gained experience with Danaher Corp before becoming the CEO of Wiremold where their lean turnaround is featured in the book “Better Thinking, Better Results“.  Since leaving Wiremold Art has used lean to turnaround companies as a partner with J.W. Childs Associates.  Art brings his vast experience to the readers.

Name of the Book:  The Lean Turnaround: How Business Leaders Use Lean Principles to Create Value and Transform Their Company

Author: Art Byrne

Publication Date:  2012

Book description: what’s the key message?

Art really drives home the message about a company can only be truly lean if the leaders are setting an example and leading the way.  A lean executive does not dictate what others need to go do.  A lean executive does it himself.

Also, the executives have to transform the people.  Get everyone to buy-in from the shop floor to the executive suite.  There is no room for people that won’t buy-in.  In order to do this, as the leader you need to engage in the change and lead it.  Not support it.

Art lays out his principles to follow to becoming lean:

• Work to Takt Time
• Create one piece flow
• Utilized Standard Work
• Connect Customers to Work by Using a Pull System

What are the highlights? What works?

Art does a fantastic job of giving multiple examples of how he engaged employees and led the change even as a CEO.  This brings to life how it can be done and the thought isn’t some dream a consultant made up.

I really like how Art lays out obstacles to achieving his lean principles.  Accounting and standard costing is the biggest obstacle because it can show a negative result or cause bad decisions when doing things that are helping.  He then explains the changes that are needed and gives examples of the changes and how the finances would look different.

There are more examples of other metrics that Art recommends for a lean company.

Another powerful section of the book is how he used lean to grow businesses and profits even during tough economic times. Art even lays out a strategy for looking at companies when thinking about acquisitions.

The real life examples as a CEO and board member of companies really drives how a lean turnaround can be achieved.  A CEO must do a 180 from the traditional methods to do it and a leap of faith will be needed, but the reward is very high.

What are the weaknesses?  What’s missing?

This is a really good book, but I do see one thing missing.  Art speaks from a CEO or executive viewpoint, which is great, but what if you aren’t an executive?

One question I would like to see answered is how do lower level employees help executives want to do a lean turnaround?  Sure, one answer could be give them the book, but that probably won’t change everyone’s mind with just a single read.  How do you help an executive that seems to want to do it, do it?  Give them that final push and really start to see the benefits?

The book can also give the feeling that if you don’t have an executive leading and doing everything in the book then you might as well not go through with lean because you won’t be successful.  Art does not say that explicitly.  The book just gives that feeling.

How should I read this to get the most out of it?

I recommend this book for anyone but especially high level level executive or CEO.  Art lays out a great game plan and a compelling case for the executives to transform their work and create a lean turnaround.  Read the book straight through and then re-read it as you develop a plan to change your company.

I would also recommend it for more Wallstreet and finance people.  It would enlighten them on how to look at companies that deliver long term value to their customers.  Not just short term gains.

H&H Color Lab – American Company Growing Through Lean

H&H Color Lab began in the basement of Wayne and Shirley Haub’s residence in a suburb of Kansas City, Missouri, in 1970. Wayne and his brother, Ted Haub, owned a portrait studio that had just landed its first high school senior contract. With a background in and love for color printing, Wayne chose to install his own color processing equipment in the basement of his home.

Business increased, and so did the need for additional space and employees. What began with Wayne doing everything from his basement has grown to 165 people and 55,000 square feet of space over 40 years later.

H&H customers are primarily school/portrait/wedding photographers.  The offer a wide range of products from photo prints to books to Leather bound albums and digital products.

In 1999, H&H Color Lab started is Lean journey led by Lee Gabbert.  Lee had been with the company for 5 years at the time and was chosen to learn more about lean and teach others at H&H.  They started by reading “Lean Thinking” by James Womack and Daniel Jones.  H&H also decided to get a sensei to help them learn as they traveled the bumpy road down the lean path.

H&H Color Lab started by setting up work cells, going away from a department mentality. H&H moved to smaller batches, moving cells closer to the monuments (that they couldn’t move), standard work, and lots and lots of 5S.

Muda (waste), lead times, late work and quality all had improved. In fact, the gains from lean had now freed up space that was once occupied by manufacturing departments.  It allowed H&H to take the space and use it as a training facility to help customers from all over the United States. Thus, H&H University was born. Roughly 3,000 square feet of space was now designed and transformed into a learning center, working photographic studio with equipment, mock up photography sales room, photography studio work area, kitchen to host all day training, library sitting room with sample products that H&H produce on the book shelves and restrooms. By providing training for customers (mostly free of charge), you truly can engage in a partnership that can grow.

All of this work allowed H&H Color Lab to make a success transition from the “Age of Film” to the “Digital Age”.  Understanding their customers and providing training and education others companies do not, shows how the most important part of lean, focusing on the customer, helps you innovate, grow and thrive.

Here are results that H&H Color Lab have seen from their lean implementation.

	1999	2012	% Change
Late Orders	3,076	25	99% reduction
WIP	10,421	1731	83% reduction
Redo	5.3%	1.3%	75% reduction
% Shipped Late	49.3%	5.8%	88% reduction
Time in Plant	7 days	1.1 days	84% reduction
Sales			22% increase

Doing Laundry Teaches Us About Flow

Flow is a concept that lean teaches about how a product/service moves from beginning to end.  When the product/service stops there is a disruption in the flow.  This is when inventory starts to build between two steps in the process.

With the functional mentality, people only worry about optimizing each machine, without regard to the flow.  The thought is, “I have to run this machine as fast as I can and get as much product out as possible.”

The hard part for people with this mentality to understand is the product/service will only move as fast as the slowest operation.  No exceptions.  Period.

Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

Take a simple process like doing laundry at home.  My dryer is always slower than my washer, so when I have multiple loads of laundry to do nothing moves faster than the time it takes to complete a dryer cycle.

I move a load of laundry from the washer to the dryer and start the dryer.  Then I add another load to the washer and start the washer.  The washer always finishes at least 15 minutes before the dryer.  Instead of taking the laundry out of the washer and piling the wet clothes in a laundry basket, I let them sit in the washer.  Knowing the dryer is the slow part of the process, it would do me know good to start another load of laundry in the washer because it still won’t end before all the other loads have finished in the dryer.

This is how we should look at the flow of our processes at work.  It does no good to buy equipment or change the process to speed up a part of the process that is not the slowest step.  In the end, the product/service is still being completed at the same rate.

What is the dryer in your process?

Understanding Single Piece Flow

One of the first concepts that pops up when learning about lean is single piece flow.  This is a great concept and should be considered when it is appropriate.  Cooking my french fries might not be the time to use single piece flow, but downloading songs may be.

My wife runs a small business of her own.  She sells products online through her website and Etsy as well as events in our local area.  Selling online and brick-n-mortar poses problems from time to time.  One issue is wanting to provide a wide range of scents for customers, but not having large amounts of inventory on-hand because of the batch process of making the soaps in loaves.

After a year and a half, we think we find a solution to this issue.  Most of her requests for custom scents come through her online sales.  Typically, she has the fragrance available but can’t justify making 8 bars in a batch because the other 7 may sit for a year or longer.  She has found a mold that works very well and is the size she needs that allows her to make one soap at a time.  My wife can now fulfill the requests of her customers and offer more fragrances to her line in her online shop without the expense of carrying a year’s worth of finished product.

What about the live events to sell the inventory?

Good question.  The events are always in the Sept – Dec time frame.  So, if a customer orders a special scent in January, the rest of the finished goods would sit until September at the earliest.  She could have used the raw materials for other products.  The soaps that are high volume sellers and do well at the live events can be made in batches right before the event.  Any finished product that is leftover after the event season can be sold online.

It is a good mix of using single piece flow and batch processing when it best fits the situation.  It is about understanding your business needs and trying to meet those needs.  Not forcing everything to one solution whether if fits or not.

What makes sense for your business?

Counting Down the Top 10 Viewed Posts of 2012 – 5 Thru 1

2013 is now in full swing.  Before 2012 is too far in the rear view mirror, I thought I would recap the Top 10 most viewed posts on Beyond Lean for 2012.

New followers of the blog can use this as an opportunity to read posts they might have not seen in the past.  While, long time followers can use this as an opportunity to re-read some of the top viewed posts.

This post will count down the 10th thru 6th most viewed posts of 2012.  Enjoy!

5.  Sportscenter Has Killed U.S. Manufacturing (June 2012) – Previous Year Ranked #3 – Manufacturing is fundamental.  The U.S. has lost it’s sights on the fundamentals and is just worried about the flashy.  The U.s. needs to get back to the fundamentals in order to get back on top.

4.  Need the Mental Toughness of a Navy SEAL (February 2012) – Inspiration of a Navy SEAL got me thinking about the mental toughness it takes to create change.

3.  5S in the Office (September 2010) – Previous Year Ranked #1 – Most viewed post for two straight years now.  A look at using 5S in the office.  What is going too far and how to use 5S in the office properly.

2.  Keys to Sustaining 5S (September 2011) – Tips to help sustain (the 5th ‘S’) the gains made from implementing 5S.

AND……

1.  Why Are Lean People Seen As Lean People? (February 2011) – Previous Year Ranked #2 – Exploring the question as to why lean people are not seen as more than just lean experts.  Looking at a process from end-to-end seems like a good business practice no matter what the role.

I look forward to more posts in 2013!

Top 6 – 10 of 2012

Counting Down the Top 10 Viewed Posts of 2012 – 10 Thru 6

2013 is now in full swing.  Before 2012 is too far in the rear view mirror, I thought I would recap the Top 10 most viewed posts on Beyond Lean for 2012.

New followers of the blog can use this as an opportunity to read posts they might have not seen in the past.  While, long time followers can use this as an opportunity to re-read some of the top viewed posts.

This post will count down the 10th thru 6th most viewed posts of 2012.  Enjoy!

10. Guest Post: Selling Lean to People That Don’t Want It (July 2011) – This is a post from Joe Wilson before he became a full-time author at Beyond Lean.  Joe talks about ways to sell lean to people who are not bought into the benefits of lean.

9.   Making Leader Standard Work Visual (June 2011) – Previous Year Ranked #8 – An example of a visual board from a group I worked with.  The board makes the tasks and if they were completed by the managers visual.

8.  Dilbert Leading Transformation (July 2010) – Previous Year Ranked #10 – The Pointy-Haired Boss wants clear responsibilities and employee engagement.

7.  True Mentoring (May 2012) – This is my take on true mentoring versus fake mentoring that goes on in business today.

6.  Comparing Lean Principles to the 14 Toyota Principles (July 2010) – Previous Year Ranked #5 – The first part of a three part series where I compared the lean principles I learned from the Lean Learning Center to the Toyota Principles.  This post covers the first five Toyota Principles.

My next post will count down the Top 5 viewed posts of 2012.

Twinkies GONE!!

Hostess is filing for bankruptcy and going out of business.  There will be no more Twinkies.  I know this news is over a week old now.  I am behind.

My first thought when hearing the news was, “No Twinkies! No Cupcakes! No Ding Dongs! Ahhhhhhhhhh!”  I absolutely love all of those.  My daughter was distraught because the mini-donuts are a staple for our family as we travel on vacation.

I will miss those snacks.  I’m sure someone will buy the rights to the recipes and the brand names.  All will be good probably sometime next year.

My second thought was, “That company must have been horribly mismanaged!”

The Hostess brand of snacks were consistently much more expensive in the grocery store than comparable snacks.  Yet, people bought them up…me included.  Every time I went to the cash register to pay for some Twinkies I thought, “Wow!  They have got to be making a ton of money.”  Then to find out they aren’t.  What a shame!

With the brand recognition and the price they charged, how could you not make money.  I was going to dig into it a little bit but before I could I read Anatomy of a Twinkie by Bill Waddell over on Evolving Excellence.  It was a great post and answered a lot of questions.

From the post:

• 57% of their costs: Administrative, Overhead, Selling, Distribution, Depreciation, Other
• 28% of their costs: Ingredients, Packaging
• 15% of their costs: Factory Labor

I think that answers all the questions about mismanagement.  It is a shame.  Cut out the waste and leave what only adds value for the consumer and I bet they would have made a ton of money.  I bet whoever buys the recipes will be more efficient and make a great profit from Hostess’ demise.

Guest Post: The Manufacturing Institute

Today’s guest post is written by The Manufacturing Institute, an independent charity in the UK. They deliver a wide range of high quality education, training and consultancy services to build operational excellence in manufacturing companies – whether its through innovative thinking, lean transformation or skills enhancement. They also deliver charitable campaigns such as Make It and Fab Lab which help to improve the image of manufacturing amongst young individuals and drive grassroots innovation. You can visit their website at www.manufacturinginstitue.co.uk.

Typically, I don’t have guest posts promoting a business or organization. This one I felt was a good fit because it is a non-profit organization focusing on developing manufacturing. It is UK based, but I think what they are doing could be used by other countries to help their manufacturing efforts as well.

Companies Can Inspire, Educate and Develop Their Workforce with the Manufacturing Institute

The manufacturing industry is one which obviously demands a strong work ethic from its members, with some tasks being extremely laborious and highly skilled. With dangerous machinery, long hours and a hazardous environment all playing their part in many areas of the sector – it is of paramount important for employers to find staff who are motivated, inspired and proactive.

Training Programmes

With this in mind, the Manufacturing Institute plays a key role as an independent charity established to aid this process via a system of courses and programmes. Their work has been instrumental for firms across the United Kingdom as they look to improve, inspire and appropriately educate their workforces. The comprehensive range of training programmes available build operational excellence by encouraging pragmatic thought process, lean transformation, skills enhancement, the improvement of process and leadership development.

Make It and Fab Lab

In addition to this the Manufacturing Institute promotes operational excellence through a number of charitable campaigns such as Make It and Fab Lab. These encourage skilled youngsters to help improve the image of manufacturing as a vocation and promote grassroots innovation.

Manufacturing Careers

The Manufacturing Institute website contains a wealth of information for any individuals interested in their work and training. Whether this is youngsters looking to get into manufacturing as a career or existing manufacturers wanting to develop their already existing skillsets – the videos, documents and content at http://www.manufacturinginstitute.co.uk will make an enthralling read. One such news item which has been gaining a lot of exposure of late is the Six Sigma Green Belt, a hands on course focused on eliminating waste and increasing efficiency across the whole operation and along the supply chain.

Shingo Model & Prize

TMI are also the only UK educational partner for the Shingo Model and Prize. This outfit provides manufacturing companies with a blueprint to achieve the best possible operational excellence and also promotes the drive lean transformation, going hand in hand with the wider Manufacturing Institute ethos.

Further background to the kinds of work undertaken at The Manufacturing Institute can also be followed via the site’s comprehensive news section. This is updated on a regular basis with up to date news on the goings on at the charity as well as wider news in the manufacturing industry across the United Kingdom. Manufacturing enthusiasts can also subscribe to the TMI newsletter to ensure they do not miss a single news item.

This article was written on behalf of independent charity The Manufacturing Institute from the UK.

Apple Will Fail if Manufacturing is Moved to U.S.?

Last week, I caught a blog Why Apple Has to Manufacture in China.  I read hoping to find some practical reasoning as to why it was critical that Apple manufacture in China.  I read the post twice and I couldn’t find any reason it was critical for Apple to manufacture in China.

The post does say labor cost is not a reason to manufacture in China.

It is not an issue of labor costs. In fact, labor costs play a very small role in the equation — both for Apple and for Timbuk2.

The post compares Apple to Timbuk2, a company that makes custom bags.  Two different business models, Timbuk2′s custom production versus Apple’s mass production.  Here is what the post has to say about this.

Timbuk2 manufactures in the US because it produces custom-made bags, orderable through its handy web site, and customers ordering custom bags cannot wait for weeks for a bag to come from China by boat, while shipping by air is expensive and there would still be some uncertainty due to customs clearance. A very similar logic lies behind fashion retailer Zara’s choice to manufacture in Europe, also an expensive location in terms of labor costs. Of course, Timbuk2 does also produce many bags in China but these are mass-produced, non-customized bags, sold wholesale at a fraction of a price of a custom bag, and they are not time-sensitive.

Apple does not produce custom products and so it does not need to deliver quickly — all of its products are standard and mass-produced; just like the standardized bags for Timbuk2, so there is no reason to stay close to end-customers. Moreover, Apple does not change its assortment often — the new iPhone will probably be for sale for another year or two.

There is no need for mass producers to be close to the end-customer?!  Really?  So it is OK to spend a couple of months to get new phones to the U.S. or pay for air freight (which is quite expensive), if there is a defect in a batch of phones?  Not in any business model I know of.  That delay risks the loss of customers and costs the company more money than is needed because of the big batches that may have to be reworked or thrown out.  Also, when the life-cycle of a product is coming to an end it may cause more phones to be thrown our or discounted because of the large batches.

The post is contradicting itself because it says cheap labor is only a small part of the total cost, but then does not take total cost into consideration when looking at all the freight and inventory and possible obsolescence costs.

So why else is it important for Apple to manufacture in China?

Apple is a huge company and as a New York Times article published in January this year details, its production volumes and often unpredictable engineering changes require manufacturing flexibilities and engineering capabilities on a scale that is simply unavailable in the USA.

Exactly my point about inventory above.  The post goes on…

In China, by contrast, manufacturers can deploy thousands of collocated engineers to introduce needed changes overnight, and large supply of labor allows to ramp up and ramp down capacity quickly. There is simply no factory capable of employing 250,000 workers day and night in the USA, surrounded by flexible and capable suppliers. So the location decision isn’t really about labor costs — it’s about manufacturing risk and where that risk is best managed.

Because Apple has bad processes upstream, it is OK to disrupt the lives of thousands with no regards downstream to fix the problem.  Reminds me of the saying, “A mistake by you, does not necessitate an emergency by me.”  Again, raising the cost to produce.

To summarize:

• Mass producers don’t need to be near the end-customer
• Disrespect for people is OK when fixing a problem you created

Apple may be on top of the hill today, but 2-5 years from now they won’t be.  As competitors, like Samsung, close the gap managing cost is going to grow more important. Fixing your processes so engineering changes are not needed overnight and locating close to your end-customer so when you do have an engineering change you don’t have tons of inventory to dispose of is a great way to manage your cost.

 

Guest Post: My First Kaizen Event

Today’s guest post comes from Danielle M.  She has been a dedicated student of Lean Manufacturing methodologies since 2006. It was love at first sight when she read the motto, “Everything has a place; everything in its place” in her first copy of The Toyota Way.

As an inspector at the end of a screen printing process, I’m was in charge of making sure we didn’t ship bad products. I had always enjoyed my job, but after taking part in a kaizen event I went home less tired and made fewer mistakes, ultimately making the customers happier and saving my employer money. Best of all, it felt like I actually made a difference.

Five days of improvement

We started with a training day. Jose, our Lean Director, asked six of us to meet in a conference room: Maria from engineering, A’isha from purchasing, Pete the controller, Ted from maintenance and Gerry, who ran the press that sent me finished parts.

Jose explained that a kaizen event is a concentrated five day effort to improve a factory process. A’isha said she didn’t know anything about the factory, but Jose said the point was to get new ideas from people who didn’t know the area. He called this being outside looking in.

Once we understood our goal – to improve my inspection operation – Jose had us make a plan. We decided to spend our first day gathering data. Then we’d go to the inspection area, ask questions and capture our ideas on flipcharts. At the end of day two, we’d put together a list of the ideas we wanted to try, then we’d implement as many as possible.

As-Is data

Between us we found out how many customer complaints came in each month, how many pieces were scrapped, the number of bad parts caught and our delivery performance. None of them were very good.

Generating ideas

Gerry and I showed the team how we did things on the press line, then people asked questions and made suggestions. Pretty quickly we’d filled a whole flipchart pad!

Back in the conference room we stuck the pages on the walls and made a list of the changes we could make. The quick and easy ideas we tried straight away; Maria worked on the harder ones with Ted.

We used the 5S system to arrange my tools on a shadow board so I knew where to find everything and to see if anything was missing. We labeled everything and cleaned up the area so was a nicer place to work.

One thing I asked for was to raise the inspection table. As it was, I had to bend over, which made my back ache, and I was putting a shadow over the piece I was looking at. Ted made the change in a couple of hours, and it makes such a difference!

Ted also installed a track lighting system over the top of the bench. This was really clever because it gave me the ability to vary the light, which helped me find the defects much more easily.

Gerry suggested I turn on a light whenever I find a defect. This would be his signal to stop the press and he’d be able to fix the problem right away. Jose called this an andon light.

The presentation

When we’d finished, Jose had us present everything to management. I was worried our ideas were too simple but they seemed impressed. Arnie, the Quality Manager, did say though that the proof would be in the numbers.

Afterwards

A month later we got new data and compared it with our “As-is” numbers. Complaints were down, we were scrapping almost nothing, I was finding more defects and our delivery performance was up.

Little did I know that Jose was so impressed with my performance on the kaizen team that he would ask me three months later to consider joining him as the Lean Coordinator in the company’s transformation process. I took his recommendation to apply for the position when it opened up and soon began my own transformation process into becoming a student of The Toyota Way.

Stay tuned to learn more about my personal journey in lean manufacturing!