In the lean world we always stress how important a good process is to achieving results. One of my favorite graphics I have seen is the one pictured below. It shows the four outcomes of balancing process and results.
- Having a Good Process and Getting Good Results is the gold star. We know we have a solid process that will give us the good results we want.
- Having a Good Process and Getting Bad Results is half way there. We know the process works like it should. It just doesn’t give us the results we want so we need to go back and redesign the process.
- Having a Bad Process and Getting Good Results you are gambling. You got lucky to get the good results and it won’t be consistently repeatable.
- Having a Bad Process and Getting Bad Results is just not good. Nothing is working and you should start working on this right away.
I am one of the first to stress process, but as you can see it must be balanced.
When designing a process it must have the right mix of structure and flexibility because it is about understanding, learning and getting the results.
For example, when designing a manufacturing process you may be more prescriptive because of the need to get a particular assembly done correctly.
For a process around coaching or problem solving, there needs to be more flexibility. A determined process should be designed and used but it shouldn’t be as prescriptive as a manufacturing process. It allows for the person to be able to go where the problem is taking them but achieving the desired results is still extremely important.
The need to balance the importance of a good process and the getting good results is a key skill to have when teaching people about lean.
Earlier this week, I saw an article titled, “Lean Manufacturing Program Seen As Poor Investment For Most Companies.”
The article gives statistics as to how companies did with meeting their cost savings/reduction.
Most large manufacturers last year failed to reach their cost-savings targets, despite significant investments in lean manufacturing, Six Sigma, and other productivity programs as part of their overall retrenchment efforts in this tepid economy. Nearly 70 percent of manufacturing executives say that their manufacturing-improvement efforts led to a reduction in manufacturing costs of less than 5 percent, the typical minimum threshold for successful productivity programs. That’s according to a survey of manufacturing executives conducted in May and June 2011 by AlixPartners, the global business-advisory firm.
There are a lot of companies trying to implement lean. Some are doing a nice job while others seem to be L.A.M.E., as coined by Mark Graban (Lean As Misguidely Executed). So it shouldn’t be surprising that some companies think lean is not delivering what people say it will.
The article even mentions Shingo Prize winners and their results.
According to AlixPartners’ research, winners of The Shingo Prize for Operational Excellence have, after three years’ time, generated revenue growth and gross profits just on par with, or even weaker than, their peers’.
That does cause an eyebrow to be raised. The Shingo Prize has recognized how it use to grade organizations. In the last couple of years, they have revamped their criteria and awarded more on process, results, and thinking. Were these companies awarded the Shingo Prize under the new system or the old system? I don’t know.
“Most continuous improvement initiatives focus too much on implementing a particular ‘checklist’ of program tools and processes, rather than on basic execution,” says Steve Maurer, managing director and leader of AlixPartners’ manufacturing practice. “Many traditional lean and Six Sigma programs also tend to fail to institutionalize the improvements that they do generate. As a result, the cost benefits often aren’t sustainable. That was reflected in our survey, where some 60 percent of the respondents believe that half of the savings that they generated last year will be unsustainable. Only 13 percent said they could sustain more than three-quarters of the identified savings.”
I would have to say the company is practicing L.A.M.E. if results are not sustaining. A lean company values standardized work and when are made the results have a much higher chance of sustaining. If a company is focusing on implementing a checklist of tools and processes then they are not understanding lean to be about the thinking. The companies are trying to copy and paste solutions that will not fit their needs. When that happens there is no reason to believe the results will be sustainable.
Steve Pfeiffer does hit on a few very good points.
“What’s good about lean and Six Sigma manufacturing is the emphasis on process control, defect prevention, and the elimination of waste,” says Steve Pfeiffer, director in AlixPartners’ manufacturing practice. “But such programs come up short when companies decide to implement techniques without the prerequisite process discipline. And, companies that have relied too heavily on investing their capital in automation find that such projects are often expensive and slow to implement.”
Lean and Six Sigma are focused on process control. If you don’t have it before an improvement is made then you can’t expect the improvement to be sustainable or even know if you made an improvement. Steve also speaks to creativity over capital because capital investments take too long to implement and are expensive.
I don’t believe the article was intended to attack lean or Six Sigma. I think it highlights the misconception that companies still believe lean is about implementing tools and concepts and not about the thinking and understanding of their own business and how it applies to them.
As a lean community we still have a long way to go to help the masses see lean how it is intended.
For several years, I have played the role of internal consultant within four different companies. While have the same type of role, my responsibilities have changed quite a bit.
In the first two companies I was asked to execute lean tools and concepts and drive business results directly. The influencing only occurred when the business partner had natural curiosity and wanted to learn. My scale was heavily tipped to the “Do It” side, which at the time was great. I was learning myself, so this allowed me to make mistakes, learn, and then correct them.
The third company had a Six Sigma culture that was very strong and asked me to help them incorporate lean into their program. It was a corporate position. Having been heavy on the “Do It” side, I had to learn how to influence and move to the other side of the scale. For two years, I pretty much abandoned my “Do It” skills and moved to “Influence” causing the scale to tip in that direction. I wanted to learn how to influence well so I overcompensated.
My current company would like to see a balance of the two. As great as it sounds, I had to realize that by reading between the lines and then learn how to balance them. It hasn’t been easy. Sometimes the customer thinks they want a person to execute something when they really want an influencer or vice versa. Once I learned different parts of the company want different roles, it allowed me to be more direct and upfront. I can now ask questions getting to the type of role the customer wants. Once I have an understanding, I can ask directly if they want a “do it” person or an “influence” person. Now we are setting expectations upfront before the work starts. It has made for better results and less confusion between me and the customer.
Does anyone else struggle with this? How do you handle it?
Company Background / History
Milbank Manufacturing is a 3rd generation family owned and ran business. It was founded in 1927 by Charles A. Milbank. The 1920’s was a rough time to start a business but with the philosophy to provide their customers with high quality products at a fair price in a timely manner and Charles’ network of friends and determination, Milbank built a strong base of customers. Today, Milbank is the industry leader in the manufacturing of electrical meter sockets.
Milbank provides wholesale electrical distributors with quality electrical products for the utility, contractor industrial and OEM markets. Their products are divided into three platforms: Core Products (primarily meter mounting equipment and pedestals), Commercial and Industrial (electrical enclosures and commercial meter pedestals), and Power Generation (standby generators and wind turbines).
Milbank has over 500 employees and four manufacturing facilities (Kansas City, MO; Concordia, MO; Kokomo, IN; and El Dorado, AR). This post focuses on the lean efforts and success of the Kansas City, MO manufacturing facility and the Plant Manager that lead the transformation process during the last 6 years, Mr. Trace Tandy.
Trace Tandy’s Background in Lean
Mr. Tandy is currently the Vice President of Manufacturing for Milbank. His first exposure to the concepts of Just-In-Time manufacturing ocurred in the late 1980’s while working for a Tier 1 automotive component supplier. He joined Danaher in 1990 where he learned the Toyota Production System from the Shingijutsu Co.,Ltd. consulting company. Later that decade he had the opportunity to receive further training and development in the Lean principles through the Toyota Supplier Support Center (TSSC). Mr. Tandy has lead nine manufacturing sites through the Lean transformation process with the most recent site, Milbank’s Kansas City plant, winning the TBM Consulting Group’s 2010 Quest for the Perfect Engine Site Award.
How Millbank Started It’s Lean Journey
Elements of Lean manufacturing or similar philosophies had been attempted between 1998 and 2004 with little or no sustainment and with no evidence of a plan. In 2004, Milbank re-engaged with a commitment to the Lean principles on an enterprise-wide level. Milbank partnered with TBM in 2007 and began using Lean Sigma tools, including Shop Floor Kaizen Breakthrough (SKB) and Business Process Events (BPE) and later, the policy deployment x-matrix process. Employees at the shop floor level became more engaged in the improvement process and there was an unwavering commitment from top management to truly transform Milbank using the principles of Lean.
Results from Lean Efforts
Before the lean efforts, the manfacturing in Kansas City was spread across two buildings plus a third that was used for warehousing. Now everything is done in one building. Using the Lean Sigma methodology during the couse of 2007 – 2009 they were able to:
- Completed 38 SKB / BPE kaizen events
- Created a 3 year plan / vision for consolidation of the two Kansas City manufacturing sites
- Implemented a policy deployment process based on the TBM x-matrix
- Implemented a War Room / Managing for Daily Improvement (MDI) process
- Implemented visual management systems such as Leader Standard Work, Maintenance Scheduling, etc…
- Implemented U-shaped, one-piece-flow assembly and fabrication cells
- Implemented visual scheduling / shop-floor-control systems eliminating the use of MRP in many areas
- Reduced floor space utilized by over 47% (60,000 square feet of manufacturing space opened up for future expansion, no brick and motar required – eliminated the need for a 30,000 square foot remote storage facility – property was sold)
- Reduced lead time by almost 53% (reduction of 30 days)
- Improved stock availability from 90.6% to 95.6%
- Improved sales order on-time performance by nearly 50%
- Reduced FG inventory values by over 50% ($2.42 million in cash generated)
- Reduced WIP inventory by 83% ($1.14 million in cash generated)
- Improved FG Units / Employee by 12.3%
- Implemented annual cost reductions averaging $1.22 million
Milbank will not tell you they are done. In fact, they have plans laid out to improve even more over the next few years. Their mindset is to keep improving and never be satisfied.
As you can see Milbank Manufacturing is a great example of how lean is helping manufacturing in America not only stay viable but become the industry leader.