Lean Misunderstood……….Or Resold?

Last week I caught this article from IndustryWeek online, titled “Small Manufacturers Need to be Agile, Not Lean.

The title alone got my attention.  I had to see what the difference was.

Short story……….no difference.

Now the longer story.  My jaded perspective is that is a consultant that is trying to make money (apparently with small businesses) by trying to sell something new.   Or as I read it, Lean with a different dress on it.  I hate to call people out so blatantly but this article was just wrong.

Much of what is written about lean manufacturing simply isn’t applicable to small manufacturers, most of whom make their money by meeting specific service specifications for specific customers. When lean literature says, “Only make what the customer wants when the customer wants it,” small manufacturers say, “That’s the central facet of our business. You mean there are companies who make things nobody wants?” When lean literature talks about training everyone in lean methods and concepts, small manufacturers say, “Everybody around here is already wearing three hats. Who has the time to conduct or attend all this training?” And when the lean literature talks about . . . well, being lean, small manufacturers say, “We’re already lean. Remember that part about everyone already wearing three hats? Maybe big companies have extra people around but we don’t.”

Lean isn’t applicable to small manufacturers?  Define small.  Less than 250 people seems small to me.  My blogs last week about Milbank and Flextronics showed how small manufacturers are using lean thinking well.  They are just a couple of examples.

This author is taking make what the customer wants a little too literal.  Of course companies are making products that sell, but they make too much of it.  If the customer wants 5 then make 5 and not 10.  That is big aspect of making what the customer wants, but not the only aspect.  I have seen many small manufacturers make too much at the wrong time.  The lean thinking helps with focusing on the customer.

The real insight is when the author talks about wearing too many hats.  Lean doesn’t want people to wear more hats.  Lean wants people to wear different hats.  Think differently.  Manage differently.  Behave differently.  Not an addition to what they are already doing.

Here is more:

The value of lean tools for small manufacturers lie, not so much in their cost cutting potential, as in their potential for creating agility. A company I know has promised several of its largest customers that it will keep a month’s worth of the products it needs in the warehouse at all times. In other words, the vendor has promised the customer that it can order a month’s worth of any of the products it uses with no lead-time. If this weren’t challenging enough, the customer will sometimes order a full month’s worth of several products, then order another month’s worth of those same products within a week or two. And if all that weren’t challenging enough, the sales office often promises similar service to lesser customers. If this company implements lean, hoping for “promised” cuts in payroll, improvements in efficiency and reduced costs elsewhere, it’s missing the largest strategic use of lean: the ability to meet customer service demands while keeping inventories as low as possible. In fact, it might actually go the wrong direction if the initiatives the company takes to make it “leaner” actually diminish service. This company needs agility, the ability to meet the sometimes capricious and unreasonable demands of customers each time, all the time.

This really shows the lack of understanding or the blatant attempt to sell “agile” versus “lean”.  Lean is not a set of tools.  Lean is about the way we think and behave.  There are tools to help people change the behaviors and make problems visible, but it is not about the tools.  The first thing the author jumps to is lean as a way to cut cost.  The example he uses about the inventory is completely wrong.  Lean would never say lower your inventory so low that you are never serviceable.  The inventories should be as low as possible to expose problems but at the same time not allow you to be unserviceable to your customers.

More:

What’s the small manufacturer to do? Focus on manufacturing cycle times, inventory levels and customer service rather than cost cutting. Focus on improving efficiencies as a path toward operational excellence, not as a move toward labor cost reductions. Understand that smooth, consistent flow of information and material is more important than occasional bursts of speed. For products that have long lead-times, ask, “If we could reduce the lead-time to the customer for this product, would we realize an advantage over our competitors, even if the cost of making that product stayed the same?” Where lead-times are short because you are keeping product in the warehouse (as in the case above), ask, “Can we maintain or even improve customer service even as we reduce inventories?” All that said, make sure you know what your inventory buffers are costing you. What could the company above save in inventory if it were to ask the customer for one-day lead-time? Two days? The company may or may not decide to make changes to its promises, but it needs to know what the costs of those promises are. (This may seem to contradict my earlier statements, but giving the customer a shorter lead-time than it needs is as wasteful as keeping inventory on hand to meet a short lead-time. The company mentioned earlier sometimes risked providing poor service levels to large customers that very much needed a very short lead time in order to offer equal terms to much smaller, less frequent customers that may have been willing to have a one or two day lead-time.)

EXACTLY!!!!  This is exactly what lean thinking would have a manufacturer of any size do.  I couldn’t have said it better myself.  The issue I have is in the next paragraph he calls this agile with the use of lean tools.

Does a focus on agility rather than cost cutting require different “lean tools”? No. Workplace organization, quick setup, work standardization, pull systems, error proofing are very much a part of agile manufacturing. If anything, their connection to agility is more intuitive and straightforward than is their connection to cost cutting. (I’ve often had looks of disbelief, not to say arguments, from supervisors and operators who I told we were reducing setup times so that we could do more setups. They couldn’t see the connection between more setups and good efficiency. When I explained the advantages of improved agility on customer satisfaction, they got it.) On the other hand, a focus on agility does require a different strategic view on the part of leadership and a great deal of discipline on the part of supervisors and operators. It requires everyone to see lean initiative as a “top line” (better sales) strategy as contrasted to a “bottom line” (lower costs) tactic.

This article really got to me.  I believe the author has the right thinking of how manufacturing should be done.  Lean is about flexibility and agility.  But going against lean with lean?  It really seemed like a way to make money by dressing lean up in a different dress and then trashing the old dress to feel good about yourself.  The odd part is the consulting group the author works for promotes lean and does lean training.  So do they understand lean?  What is their training like?  I am confused by this one.

Am I off base?  What are your thoughts on this?


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Posted on October 13, 2010, in Customer Focus, Manufacturing, Principles, Tools and tagged , , , , , , . Bookmark the permalink. 9 Comments.

  1. I think that “lean” has been so bandied about (as lean tools only, or a management system, or some undefined combination) that the term itself is becoming meaningless. Certainly there have been lots of attempts at “lean” with less than transformative outcomes which also lessens the impact of “going lean”. “Lean” as a movement suffers from this lack of definition.

    So in these days of always having something new or more (is it 5S or 6S or 7S??) “agility” is another new way to describe what “lean” should have included all along. With no standard definition of “lean”, there’s no real comeback to this article.

    And there will be more… ERP products tout themselves as “lean” because they have kanbans. APS products call themselves “lean” because they have scheduling solutions for complex situations like job shops that they maintain cannot be improved with lean tools.

    The “leanwashing” will continue until either what “lean” means is completely lost or some standard definition emerges.

    Phil

    • Phil -
      You are right on. There isn’t a hard definition of lean out there. But to Mark’s point, it is hard to put a definition on lean. It is a very encompassing thought process that is hard to capture in a statement. You are right also, about there always being someone out there misusing it because of this. I think that is our responsibility to call it out when we see it to keep chipping away at that huge wall.

      I have no problem calling “lean” by another name like “agility”. I have a problem with bashing lean and then trying to sell lean in a different package. I personally don’t like the term lean, but it is the learn easily recognizable so I work with it. The term “lean” gets to the concepts and tools but not the thinking part.

      Thanks for your great comments everyone. It seems this article struck more than just my nerve.

      • Matt, I agree with you on the term “lean.” It seems to carry a lot of negative connotation (cut and slash, headcount reduction, etc., which lean of course, is NOT, but those who don’t know it well sometimes assume). A lot of lean thought leaders I’m familiar with don’t like like it, either. Mark Graban once came to our hospital and shared that sentiment and if I remember correctly, said that if he coin another term or phrase it would be “more time for patients.” Mark, if I misrepresented you I apologize. Anyway, that really struck a chord with me.

  2. Phil,

    Here’s the definition I have come up with for lean which our core lean group here at our hospital has adopted. “Lean is developing our people to deliver value to our patients in the least wasteful way.”

    There is so much to lean that it’s hard to come up with a concise definition, so it’s a very wholistic philosophy.

    Matt, I think you are dead on with your assessment of that article. You struck my cynicism bone, which likes to cut through B.S. Nice job.

    Mark

  3. Mark,

    Excellent post! I was glad to read that the author is in a position where he should know something about lean. I saw a linkedin discussion on time where a junior editor of a trade magazine asked for the typical goals of manufacturing plants. They were writing an article on goals and said that most of the readers are manufacturers. Someone chimed in and asked why they didn’t have someone who works in manufacturing write it….

    One comment about small manufacturers and the lean principal of only making what the customer wants: It does seem like common sense and many small manufacturers run to order. They would say that they only make what the customer wants but it’s not necessarily the case. I know of one case where a small packaging company decided to change the design of a container without consulting the customers. They were in a position where they felt they could force it and they knew better. They ended up having to back off at the last minute when major customers said no way. I can see those VP’s telling you they only make what the customer wants because they are make to order.

    Thanks for sharing.

    Chris

  4. Repackaging or re-dressing something is not new, consulting firms have been doing this for years! Articles like this one only add to the confusion on Lean and what it is or isn’t. This is especially concerning because we live in the age of Digital technology where any executive (or anyone else for that matter) can do a quick word search and be ‘educated’.
    Like you Matt, I was troubled and agitated by this article. What I found disappointing was the lack of ability to directly comment on this article on IW’s website.
    JWDT

  5. This is indeed another example of someone just not understanding lean before they want to go past it. I was at the first couple of agile conferences a long time ago. Agile was deemed the “beyond lean” method, but only as lean was articulated within that conference as “making the exact same thing in high volume over and over again.” This is sad to see.

  6. Good critique of the article. I haven’t read much about the Agile movement to compare it to any of the other methods and thought processes that we’ve seen over the years but, it is obvious that the author knows little about the application of the Lean Manufacturing principles. A consultant looking for that next thing and trying to get in early perhaps?

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