News & Views
KAIZEN'S LEAN MANAGEMENT PRACTICES CAN HELP SECURE TALENT FOR YOUR FUTURE GROWTH:
JULY
2009
Short-Term Survival and Long-Term
Success for New Zealand Businesses in the Global Economic Crisis
Using Lean Management Practices
By Danie
Vermeulen, CEO, KAIZEN Institute NZ
What does “Lean” mean and where does it
come from?
Want a systematic approach to eliminate specific types of
waste from processes, to ensure that every step does in fact add
value to the customer? This is the “Lean” approach,
which bases everything on actual customer demand; on their demand
“pull”, instead of a “push” system of
creating demand. It also strives to achieve optimal process
flow, synchronisation and workload levelling.
Lean is different from "value-added" and "non-value-added" as
it uses problem solving tools that can eliminate the root causes of
non-valued activities (waste) and their associated cost. The same
tools and techniques are also used to boost productivity, quality,
increase capacity and to shorten overall lead times.
You might be familiar with the Japanese word
‘Kaizen’, which means continuous improvement. It
includes everything that Lean refers to. However, in addition the
Kaizen approach relies on the tenet of respect for people as a
prerequisite for sustainable, long term continuous improvement. For
all purposes we use the words interchangeably.
The origins of Kaizen/Lean stem from the Toyota Motor
Corporation, with their operating philosophy commonly referred to
as The Toyota Production System. Since it’s inception in 1950
it has been continuously improving and evolving the way it
operates.
Although Lean originated in the automotive industry, from the
manufacturing industry is has been successfully delivering similar
and additional benefits to many different industries in New Zealand
and internationally including banking, health care, education,
retail and distribution.
What are the 7 common types of waste / non-value added
work businesses need to keep an eye on?
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Overproduction - making more than your customer requires or making it too early.
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Transportation - unnecessary movement of documents, products or items between processes departments etc.
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Idle/waiting time - includes non-productive waiting for documentation or information delays, machines, parts, or setting up a machine.
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Bad Quality - poor communication, errors, rejects, defects, reworking, returned products, replacement product, dealing with customer complaints etc.
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Inventory - finished goods, work in process, raw material, service documentation, clients waiting etc.
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Over processing - unnecessary process steps, duplication, over-design, excess accuracy, excess reporting etc.
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People Motion - unnecessary movement of people to perform jobs e.g. distributing reports, attending meetings and moving inventory to storage.
At what point does “Lean” develop into
“mean!”?
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When there is not enough respect for people. Employees are treated as assets whose productivity or output needs to be maximised. They aren’t equipped or encouraged to think for themselves and to work in teams. This is often referred to as the 8th waste - “wasted employee creativity”.
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Improvement objectives are too short term focused and conflicting with long term strategy.
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Improvements are made in isolation without a view of the entire framework for improvement. Disconnected “functional” improvements usually conflict with wider end-to-end business processes.
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No, irrelevant or inappropriate, measurement of improvement. Unhealthy short term expectations about the benefits of improvements initiatives may encourage measurements that are one-sided or encouraging unhealthy behaviour.
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Sporadic improvement attempts. To become truly Lean, an organisation must develop an ongoing full-time continuous improvement culture and framework.
How can Kaizen or Lean help you survive in the short
term?
Newcomers to Lean should establish their long term Lean
destination (or at least their Lean direction) and then get
everyone involved in identifying and implementing waste-eliminating
improvements. In most cases this will enable the organisation to
significantly reduce costs and to improve the efficiency of their
processes within a couple of months.
Organisations that are already on the ‘Lean’ path
shouldn’t panic and stop, but keep doing what they’re
doing. They can temporarily shift their focus to shorter term
objectives, but retain their longer term continuous improvement
framework and measurements.
Reduced customer demand should lead to reduced production to
minimising the “waste” of production and inventory.
Spare capacity should be used for maintenance and training. Slow
times also are an ideal opportunity for Lean organisations to
launch additional improvement initiatives that will not little or
no investment at a good return. For example, product, service or
process improvement does not necessarily require expensive systems
and equipment changes - it often only requires the time to get
people together to focus on brainstorming and problem
solving.
How can Lean help businesses thrive in the long
term?
The economy is cyclical and the good times will return.
Implementing and applying to a Kaizen framework and path will
ensure that companies will be ready to respond very quickly when
the time comes to increased customer demand. Capacity will be
available, machines and equipment will be maintained and people
will be trained, ready and motivated to work as teams. There will
be minimal “waste” around.
Consider the flip side. When (not if) the economy picks up
again, organisations that are not Lean or that have resorted to
“mean” tactics, understaffing and under planning will
find themselves looking for staff, training them, buying new
machines, opening new plants, etc all while pending business waits.
Naturally this is expensive and very “wasteful”.
What is the best way for your organisation to
implement Lean?
The first step is for everyone to agree and truly understand
your “current condition”. You can use a powerful Lean
technique, called Value Stream Mapping (VSM) to confirm what your
customers perceive as “value-add” and to map the value
stream with clear measurements.
A VSM can be completed within a couple of days. However, it is
crucial to do this correctly and you would need the assistance of a
skilled and experienced VSM facilitator.
Next you will use the VSM map to identify the most important
and obvious improvement opportunities and to kick off your first
short term (“quick win”) improvement initiatives.
You also need to design your future or “desired
condition”. This is where Value Stream Design (VSD) comes in.
It’s a tool to help you to agree and construct the holistic
“system” based on key Lean principles, like
“demand pull”, flow, standardisation, and workload
levelling. This future state Value Stream Design becomes the basis
for charting your Lean path.
Once you know what needs to be improved and how, the
continuous improvement cycle begins. Throughout, people should be
trained, encouraged, rewarded and supported and processes should be
measured and continuously challenged to find even better ways of
doing them.
The KAIZEN Institute’s approach is to help organisations
become self-sufficient Lean practitioners. The key is to build up
internal knowledge and skills. We believe the best way to achieve
this is to “learn by doing”. Our KAIZEN College offers
a range of public training modules that enforces practical
application and is geared towards three levels of
accreditation - Practitioner, Coach and Manager. We also
tailor-make internal training programs to support
organisations’ own Lean objectives.
Kaizen practice can foster short-term survival and long-term
success for local organisations during the current economic
downturn. KAIZEN Institute New Zealand focuses on Lean management
practices around quality, costs, logistic, staff motivation,
safety, technology and environment, to streamline and increase
efficiency within organisations, by eliminating waste and providing
a business process improvement framework.
For more information see www.nz.kaizen.com
© Copyright Kaizen Institute NZ 2009