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.
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?
Posted on October 13, 2010, in Customer Focus, Manufacturing, Principles, Tools and tagged Agility, Flexibility, Flextronics, IndustryWeek, Manufacturing, Millbank, Tools. Bookmark the permalink. 9 Comments.