Eliminating Wastes Is Not Just About Cost Reductions
Recently Leanovations met with a company who felt they were doing lean pretty well. So when we asked them to tell us how they were doing it, they spoke about their Labor cost reductions programs over the last few years by focusing on eliminating wastes, including some employee layoffs. It must be asked, is this company really doing lean pretty well?
So how many of you reading this article right now feels your company is doing Lean well because you are focused on labor cost reductions? Or better yet, how many of you are part of a company which is focusing on your lost revenue opportunities because you are not attacking your wastes. I ask this question a lot; my experiences lead me to believe that probably less than 5% of companies focus their Lean efforts on "lost revenue opportunities" versus focusing on labor cost reductions.
Labor is one element of your total capacity in your company, and capacity is your total time today to produce something, which includes the value added time and non-value added time (or wastes) in your processes. The cost of capacity can be calculated in various ways depending on the company's financial philosophies and operational situation. Some may count just the cost of labor and/or overhead costs. Others will look at the impact on inventory, and still others may count the impact on output (growth opportunities). Some may look at a combination of the 3. In addition to these tangible or quantifiable costs, there will be other, intangible costs. The biggest among these is likely to be the ability to provide the new profitable service levels your customers demand.
At Leanovations we recommend companies look at reducing any non-value/wastes as "Lost Revenue Generating Opportunities" along with minimizing asset risk - such as inventory, rather than a straight labor cost reduction program. We promote Lean as a "Growth Strategy", not a "Cut and Slice" cost reduction process. Organizations need to develop a culture that wants to attack wastes to create new capacities and employee skills to grow profitably, not to reduce labor costs. In order to create new capacities and skills we teach organizations how to identify and eliminate waste from the total value stream. By doing so we promote the revenue generating opportunities a company has created with this new capacity and the ability to "work on" the business by eliminating wastes, therefore we do not make the focus on labor cost reductions.
We teach companies that on average a manufacturing company charges anywhere from 3-5 cents a second for manufacturing time (which equates to $108 - $180 / Hour) and we teach that for every second we can save by eliminating wastes provides opportunities to grow the business. We also teach that if a company takes this additional capacity to go after new business, the only cost to generate new profits is basically material cost as the employees, equipment and facility costs are already on the financial books.
Those companies, who are utilizing Lean as a cost reduction program and not a revenue generating opportunity, do not understand Lean or the importance of engaging the employees to create employment stability. Companies focused on cost reductions will quickly lose the employee involvement required to create new capacities to grow and to develop a Lean Learning Culture throughout the organization. Employees usually relate cost reduction programs to potential layoffs, rather than companies who see Lean as a cultural process where the employees are engaged to eliminate wastes to free up capacity to grow the business profitably ensuring employment stability.
If you are interested in improving profitable growth and employee morale please contact Leanovations at info@leanovations.com or visit our website at: www.leanovations.com .
Sunday, March 13, 2011
Small Business Owners/Leaders Must Sell Their Passion to Create Profitable Growth
Leanovations has worked with many family owned manufacturing companies, with sales in the range of $5-$50 million annually, to implement Lean in their companies. One of the first tasks we usually embark upon is how to promote the owners' passion for the business, and desire to grow to their employees. This entails coaching the business owners and the staff on how to teach and apply Lean principals to the workforce to meet their objectives. At Leanovations, we believe that to enjoy continuous improvements at your company, you must apply "Constant Gentle Pressure" to a "Plan, Do, Check, Act" process through Lean Kaizen Workshops.
Promoting and selling a passion and vision about Lean to create profitable growth is the most important job of a business owner and leader. The Business Owner must fuel the fire of passion through leadership within every employee, and turn employees into advocates, and advocates into the disciples who promote your vision. Leadership is the key in building a spirit of co-operation, which means interacting frequently with the employees, expecting them to improve continually, reaching for a higher standard and inspiring them with a brighter future. Lean Kaizen Workshops provide employees a new level of teamwork, which will improve productivity and make profitable growth easier.
Leanovations utilizes Lean Kaizen Workshops to engage employees and teach them the importance of Lean and innovations to provide a competitive advantage and to enjoy employment stability with opportunities in the future. A Lean Kaizen Workshop is normally 5 days in length with a focused approach that brings critical resources together and empowers participants to identify problems, determine a solution, and implement the change wherever the opportunity to improve exists.
As the organization gains knowledge, experience and confidence in lean and the Lean Kaizen Workshops, it is encouraged by Leanovations to begin conducting their own internal lean training/workshops. Essentially, the role of Leanovations should be to teach, coach and challenge an organization as a whole to attain higher improvement goals, and to be a resource for further learning. If you are interested in learning more about Leanovations contact us at info@leanovations.com or call us at (860) 479-0293.
Leanovations has worked with many family owned manufacturing companies, with sales in the range of $5-$50 million annually, to implement Lean in their companies. One of the first tasks we usually embark upon is how to promote the owners' passion for the business, and desire to grow to their employees. This entails coaching the business owners and the staff on how to teach and apply Lean principals to the workforce to meet their objectives. At Leanovations, we believe that to enjoy continuous improvements at your company, you must apply "Constant Gentle Pressure" to a "Plan, Do, Check, Act" process through Lean Kaizen Workshops.
Promoting and selling a passion and vision about Lean to create profitable growth is the most important job of a business owner and leader. The Business Owner must fuel the fire of passion through leadership within every employee, and turn employees into advocates, and advocates into the disciples who promote your vision. Leadership is the key in building a spirit of co-operation, which means interacting frequently with the employees, expecting them to improve continually, reaching for a higher standard and inspiring them with a brighter future. Lean Kaizen Workshops provide employees a new level of teamwork, which will improve productivity and make profitable growth easier.
Leanovations utilizes Lean Kaizen Workshops to engage employees and teach them the importance of Lean and innovations to provide a competitive advantage and to enjoy employment stability with opportunities in the future. A Lean Kaizen Workshop is normally 5 days in length with a focused approach that brings critical resources together and empowers participants to identify problems, determine a solution, and implement the change wherever the opportunity to improve exists.
As the organization gains knowledge, experience and confidence in lean and the Lean Kaizen Workshops, it is encouraged by Leanovations to begin conducting their own internal lean training/workshops. Essentially, the role of Leanovations should be to teach, coach and challenge an organization as a whole to attain higher improvement goals, and to be a resource for further learning. If you are interested in learning more about Leanovations contact us at info@leanovations.com or call us at (860) 479-0293.
Lean is a Growth Strategy Not a Cut and Slice Process
When Lean is applied properly it creates profitable growth opportunities for a company. Lean is a dynamic and constantly improving process dependent on the understanding, involvement and engagement of all the company's employees.
At Leanovations we teach, coach and promote Lean as a "Growth Strategy", not a "Cut and Slice" cost reduction process. We help organizations develop a culture that wants to create new capacities and skills to grow profitably. In order to create new capacities and skills we teach organizations how to identify and eliminate waste from the total value stream. By doing so we promote the revenue generating opportunities a company has created by eliminating wastes, and we do not make the focus on cost reductions. Those companies, who are utilizing Lean as a cost reduction program and not a revenue generating opportunity, just do not understand Lean and will quickly lose the employee involvement required to create a Lean Learning Culture. We believe for a successful implementation of a Lean Learning Culture, it requires that all employees be trained to identify and eliminate wastes from their day to day work processes at all levels in the organization.
The best way for individuals to learn how to eliminate waste is through participating on a one week "Kaizen Team", which emphasizes employee participation on a cross functional team focused on a single subject/area. Through a Kaizen Team event participants learn by doing, developing a culture of teamwork while achieving greater productivity. Repeatedly, Lean demonstrates it works, as many companies that embrace Lean can gain 15%+ year after year growth, while the US GDP increases at a rate of 3-5% year after year. Lean is about changing principles and attacking waste in your value streams. It means totally changing the way you look at things, but once you learn how to see waste, you can eliminate it and become competitive.
Economic cycles will always mean there will be difficulties, such as the U.S. economy has experienced since mid-2008, and we will always be at the mercy of economic forces. However, those companies that are running Lean have an extra insurance policy. In a rough economy or recession, companies that are Lean will fare better than those companies who are not.
Leanovations can share a number of compelling cases of how Lean initiatives have really paid off by insulating many of the companies we are working with from economic troubles. For many the recession has actually provided new market shares from their competitors, who continue to lay off workers reducing their capacity and capabilities. The majority of the companies Leanovations is working with increased employment and sales through organic growth and now find themselves in a position to create new growth through acquisitions. Their ability to stay strong through the recession with Lean as a growth strategy has placed them in a position to acquire weaker competitors who may have used Lean tools as a cost reduction program (thus eliminating employees and capabilities to respond).
When properly applied, Lean helps to bring products to market faster which allows companies to capture more of a market share and it results in better asset velocity, which drives cash cycle conversion, and we know that in all business cycles, "cash is king." If you are interested in learning how Leanovations can assist your company, please go to www.leanovations.com .
When Lean is applied properly it creates profitable growth opportunities for a company. Lean is a dynamic and constantly improving process dependent on the understanding, involvement and engagement of all the company's employees.
At Leanovations we teach, coach and promote Lean as a "Growth Strategy", not a "Cut and Slice" cost reduction process. We help organizations develop a culture that wants to create new capacities and skills to grow profitably. In order to create new capacities and skills we teach organizations how to identify and eliminate waste from the total value stream. By doing so we promote the revenue generating opportunities a company has created by eliminating wastes, and we do not make the focus on cost reductions. Those companies, who are utilizing Lean as a cost reduction program and not a revenue generating opportunity, just do not understand Lean and will quickly lose the employee involvement required to create a Lean Learning Culture. We believe for a successful implementation of a Lean Learning Culture, it requires that all employees be trained to identify and eliminate wastes from their day to day work processes at all levels in the organization.
The best way for individuals to learn how to eliminate waste is through participating on a one week "Kaizen Team", which emphasizes employee participation on a cross functional team focused on a single subject/area. Through a Kaizen Team event participants learn by doing, developing a culture of teamwork while achieving greater productivity. Repeatedly, Lean demonstrates it works, as many companies that embrace Lean can gain 15%+ year after year growth, while the US GDP increases at a rate of 3-5% year after year. Lean is about changing principles and attacking waste in your value streams. It means totally changing the way you look at things, but once you learn how to see waste, you can eliminate it and become competitive.
Economic cycles will always mean there will be difficulties, such as the U.S. economy has experienced since mid-2008, and we will always be at the mercy of economic forces. However, those companies that are running Lean have an extra insurance policy. In a rough economy or recession, companies that are Lean will fare better than those companies who are not.
Leanovations can share a number of compelling cases of how Lean initiatives have really paid off by insulating many of the companies we are working with from economic troubles. For many the recession has actually provided new market shares from their competitors, who continue to lay off workers reducing their capacity and capabilities. The majority of the companies Leanovations is working with increased employment and sales through organic growth and now find themselves in a position to create new growth through acquisitions. Their ability to stay strong through the recession with Lean as a growth strategy has placed them in a position to acquire weaker competitors who may have used Lean tools as a cost reduction program (thus eliminating employees and capabilities to respond).
When properly applied, Lean helps to bring products to market faster which allows companies to capture more of a market share and it results in better asset velocity, which drives cash cycle conversion, and we know that in all business cycles, "cash is king." If you are interested in learning how Leanovations can assist your company, please go to www.leanovations.com .
Sunday, July 19, 2009
Lean Goes Thrift Shopping
Lean Goes Thrift Shopping
Leanovations Works with Ansonia Thrift Shop
to Create Flow and Better Serve the Customer
Business is booming for thrifts stores. A few years ago, it was stylish and trendy to wear vintage clothing, but in today’s economy, it is becoming a necessity. At a time when most retailers have seen a decline in shoppers, second-hand stores are thriving as those who have been laid-off or are worried they are next, turn to less expensive clothing, furniture and household items. Figures for national second hand stores have recently reported that revenues are up over 8%.
As thrift stores are attracting new customers, the need to spruce up the operations, have the ability to turn over inventory quicker, and be able to sort through and process all donations faster to ensure the current trend/seasonal merchandise is available at the right time, at the right quality, and at a valued price. All this adds up to needing a Lean operational excellence approach to meet customer demand.
Leanovations has formed a “Lean Partnership” to teach and coach an Ansonia CT thrift shop, “My Sister’s Place & My Sister’s Attic” which offers quality new or "gently used" clothing, furniture, and household items to the public at discount prices. All proceeds from “My Sister's Place & My Sister's Attic” support Birmingham Group Health Services Inc. The Umbrella program serving women and children affected by domestic violence. Birmingham Group Health Services Inc. (BGHS) The Umbrella program has spearheaded the fight against this epidemic and worked tirelessly to help women and children affected by domestic violence become survivors.
My Sister’s Place realized that they needed to develop a better process for sorting through donations. The goal was to create flow where possible and establishing pull for the product, where flow is not possible. By taking the donations at the receiving door in the back of the facility through their quality control system, into pricing and onto the store floor, there was a lot of waste. The team came up with a goal to establish a “Door to Store” flow concept.
During the Kaizen week, there was the traditional 5-S actions to make sure everything had a place and everything was in its place, and the need to create visual controls to not only engage the staff and volunteers, but also the donors and customers alike. The next process was for the team to establish cells to flow the product through the quality/sorting process. The Kaizen Team studied the value stream for the Clothing Product Line, Household Products, Toys, Books and Seasonal Products. The team implemented assembly cells, which sorted, cleaned, and prepared appropriate product for the store. They created a pull process for pricing the product, reducing rework, delivering through a FIFO lane to the store as customers consumed/purchased the products. Product that used to average 1-2 weeks of lead-time to go from the receiving door to store floor, due to unmanageable piles of inventory and rework loops, has been reduced to 1-2 days. Allowing the thrift shop team of staff and volunteers to ensure the right product, with the right quality, at a valued price is available to the customers at the right time.
To learn more about “My Sister’s Place” and how you may be able to support the Birmingham Group Health Services Inc. (BGHS) and The Umbrella program either through donations, volunteer work or patronizing the store and becoming a regular customer, please go to their website at: www.bghealth.org/my_sister's_place.htm
Leanovations Works with Ansonia Thrift Shop
to Create Flow and Better Serve the Customer
Business is booming for thrifts stores. A few years ago, it was stylish and trendy to wear vintage clothing, but in today’s economy, it is becoming a necessity. At a time when most retailers have seen a decline in shoppers, second-hand stores are thriving as those who have been laid-off or are worried they are next, turn to less expensive clothing, furniture and household items. Figures for national second hand stores have recently reported that revenues are up over 8%.
As thrift stores are attracting new customers, the need to spruce up the operations, have the ability to turn over inventory quicker, and be able to sort through and process all donations faster to ensure the current trend/seasonal merchandise is available at the right time, at the right quality, and at a valued price. All this adds up to needing a Lean operational excellence approach to meet customer demand.
Leanovations has formed a “Lean Partnership” to teach and coach an Ansonia CT thrift shop, “My Sister’s Place & My Sister’s Attic” which offers quality new or "gently used" clothing, furniture, and household items to the public at discount prices. All proceeds from “My Sister's Place & My Sister's Attic” support Birmingham Group Health Services Inc. The Umbrella program serving women and children affected by domestic violence. Birmingham Group Health Services Inc. (BGHS) The Umbrella program has spearheaded the fight against this epidemic and worked tirelessly to help women and children affected by domestic violence become survivors.
My Sister’s Place realized that they needed to develop a better process for sorting through donations. The goal was to create flow where possible and establishing pull for the product, where flow is not possible. By taking the donations at the receiving door in the back of the facility through their quality control system, into pricing and onto the store floor, there was a lot of waste. The team came up with a goal to establish a “Door to Store” flow concept.
During the Kaizen week, there was the traditional 5-S actions to make sure everything had a place and everything was in its place, and the need to create visual controls to not only engage the staff and volunteers, but also the donors and customers alike. The next process was for the team to establish cells to flow the product through the quality/sorting process. The Kaizen Team studied the value stream for the Clothing Product Line, Household Products, Toys, Books and Seasonal Products. The team implemented assembly cells, which sorted, cleaned, and prepared appropriate product for the store. They created a pull process for pricing the product, reducing rework, delivering through a FIFO lane to the store as customers consumed/purchased the products. Product that used to average 1-2 weeks of lead-time to go from the receiving door to store floor, due to unmanageable piles of inventory and rework loops, has been reduced to 1-2 days. Allowing the thrift shop team of staff and volunteers to ensure the right product, with the right quality, at a valued price is available to the customers at the right time.
To learn more about “My Sister’s Place” and how you may be able to support the Birmingham Group Health Services Inc. (BGHS) and The Umbrella program either through donations, volunteer work or patronizing the store and becoming a regular customer, please go to their website at: www.bghealth.org/my_sister's_place.htm
CT DEP Nationally Recognized for Their Lean Results Commissioner Gets Nominated to Federal Position in EPA
CT DEP Nationally Recognized for Their Lean Results Commissioner Gets Nominated to Federal Position in EPA
Being eco-aware does not just mean doing your bit to save the planet; it also means being able to convert Lean activities into results and real business benefits, which is exactly what the Connecticut Department of Environmental Protections (CT DEP) is doing.
Leanovations enjoys a “Lean Partnership” with the Connecticut Department of Environmental Protection (DEP), assisting, teaching and coaching Lean Enterprise Strategies and Tools via Kaizen Workshops to the CT DEP organization on a regular basis. CT DEP organization is enthusiastically embracing Lean to improve their own business processes, to improve environmental performance for the state by collaborating with other state agencies, professional organizations and businesses. The April 2009 Ecos Green Report entitled "Lean Case Studies: Continuous Improvement in State Agencies”, .By Lee D. Garrigan, Senior Project Manager Environmental Council of the States, highlighted three outstanding Kaizen Team accomplishments by Connecticut’s DEP Lean transformation:
- Evaluation of the Air Planning and Standards Division Permit Modeling Program
- Office of Long Island Sound Structures, Dredging, and Fill Permit Application
- Evaluation of the Water Permitting and Enforcement Division’s Enforcement Program
To learn more about the three CT DEP Lean Kaizen Success stories in the April 2009
ECOS Green Report you can contact Karen Caliendo, DEP Agency Lean Coordinator through e-mail at: karen.caliendo@ct.gov or go to : http://www.ecos.org and click on the April 2009 featured report or you could read about the CT DEP results on Leanovations website at: www.leanovations.com
Connecticut State Department of Environmental Protection Commissioner Gina McCarthy, known for her accessible, pragmatic and plainspoken leadership style in her four years heading the agency was a key ingredient to a successful Lean transformation. Commissioner McCarthy visited with and encouraged every Kaizen Team at the CT DEP. Due to her success and leadership approach to environmental management in her career, President Barack Obama nominated Commissioner McCarthy for a key post at the Federal Environmental Protection Agency, for Assistant Administrator for Air and Radiation.
For those who are not aware, the U.S. Environmental Protection Agency (EPA) has made available a Lean and Environment Toolkit, which is available on the website at: www.epa.gov/lean. The EPA’s intent in developing this toolkit is to enable Lean practitioners to improve both their business performance and their environmental performance by identifying and eliminating environmental wastes at their organizations. The toolkit offers practical strategies and tools for integrating environmental considerations into Lean initiatives in ways that support Lean’s focus on the elimination of waste and non-value added activity.
Leanovations teaches and coaches the elimination of environmental wastes in addition to the traditional Toyota Production Systems 7 wastes, which is inherent in all processes. What is environmental waste? Environmental waste is an unnecessary or excess use of resources or a substance released to the air, water, or land that could harm human health or the environment. Environmental wastes can occur when companies use resources to provide products or services to customers, and/or when customers use and dispose of products.
Fred Shamburg, President of Leanovations will be a guest speaker at the Northeast Department of Environmental Protection - State Park Directors Conference, on May 6th, 2009 presenting “Lean and What it Means”.
Being eco-aware does not just mean doing your bit to save the planet; it also means being able to convert Lean activities into results and real business benefits, which is exactly what the Connecticut Department of Environmental Protections (CT DEP) is doing.
Leanovations enjoys a “Lean Partnership” with the Connecticut Department of Environmental Protection (DEP), assisting, teaching and coaching Lean Enterprise Strategies and Tools via Kaizen Workshops to the CT DEP organization on a regular basis. CT DEP organization is enthusiastically embracing Lean to improve their own business processes, to improve environmental performance for the state by collaborating with other state agencies, professional organizations and businesses. The April 2009 Ecos Green Report entitled "Lean Case Studies: Continuous Improvement in State Agencies”, .By Lee D. Garrigan, Senior Project Manager Environmental Council of the States, highlighted three outstanding Kaizen Team accomplishments by Connecticut’s DEP Lean transformation:
- Evaluation of the Air Planning and Standards Division Permit Modeling Program
- Office of Long Island Sound Structures, Dredging, and Fill Permit Application
- Evaluation of the Water Permitting and Enforcement Division’s Enforcement Program
To learn more about the three CT DEP Lean Kaizen Success stories in the April 2009
ECOS Green Report you can contact Karen Caliendo, DEP Agency Lean Coordinator through e-mail at: karen.caliendo@ct.gov or go to : http://www.ecos.org and click on the April 2009 featured report or you could read about the CT DEP results on Leanovations website at: www.leanovations.com
Connecticut State Department of Environmental Protection Commissioner Gina McCarthy, known for her accessible, pragmatic and plainspoken leadership style in her four years heading the agency was a key ingredient to a successful Lean transformation. Commissioner McCarthy visited with and encouraged every Kaizen Team at the CT DEP. Due to her success and leadership approach to environmental management in her career, President Barack Obama nominated Commissioner McCarthy for a key post at the Federal Environmental Protection Agency, for Assistant Administrator for Air and Radiation.
For those who are not aware, the U.S. Environmental Protection Agency (EPA) has made available a Lean and Environment Toolkit, which is available on the website at: www.epa.gov/lean. The EPA’s intent in developing this toolkit is to enable Lean practitioners to improve both their business performance and their environmental performance by identifying and eliminating environmental wastes at their organizations. The toolkit offers practical strategies and tools for integrating environmental considerations into Lean initiatives in ways that support Lean’s focus on the elimination of waste and non-value added activity.
Leanovations teaches and coaches the elimination of environmental wastes in addition to the traditional Toyota Production Systems 7 wastes, which is inherent in all processes. What is environmental waste? Environmental waste is an unnecessary or excess use of resources or a substance released to the air, water, or land that could harm human health or the environment. Environmental wastes can occur when companies use resources to provide products or services to customers, and/or when customers use and dispose of products.
Fred Shamburg, President of Leanovations will be a guest speaker at the Northeast Department of Environmental Protection - State Park Directors Conference, on May 6th, 2009 presenting “Lean and What it Means”.
A Global Recession Creates Opportunities for
A Global Recession Creates Opportunities for
Lean Thinking Companies
Last week the government estimated that the gross domestic product fell at an annual rate of 6.1% in the first quarter, and many economists believe the first quarter of 2009 will mark the end of the recession. Given the recovery will be slow, many companies are reporting focusing on wringing additional efficiencies out of their businesses through Lean efforts and kaizen team events, rather than quickly expanding and hiring people.
At Leanovations, we believe a global recession creates winners and losers just like a global market boom. Certainly, some companies are using these times to layoff and reduce staff to make their organizations "leaner," which of course is not what Lean is.
With the steep economical challenges of today's global recession Leanovations continues to teach and coach companies to be forward-thinking and see Lean as a key to reducing waste, improving cash flow and improving operational flexibility, thus enabling them to adjust more quickly to the new realities of today's economic climate. As the world exits the recession, Lean companies become well positioned to leverage their productivity gains as volume returns, outpacing their competitors by achieving higher inventory turns, greater operational flexibility, and lower operating costs.
No one is denying that cutting costs is essential for surviving 2009, but companies who are truly embracing Lean, practice a different philosophical approach than just getting most of the costs reductions through layoffs. They look for ways to eliminate waste and improve productivity throughout the entire enterprise, staying focused as they move toward building a better Lean operational excellence and culture to take advantage of future global opportunities. This is continuous improvement with a long-term view.
Before any company makes painfully aggressive reductions, it should keep in mind and fully understand the potentially serious repercussions. For example, companies risk damaging employee morale, losing experienced and talented employees, seeing valuable employees leave on their own as they become worried they may be next to be let go, and hurting the firm's reputation as an employer of choice. During these tough economic times, many companies also lose sight of the importance of training and conducting employee-development programs, which engages the employees in the Lean-execution strategy.
Many of the companies Leanovations is working with understand the power of Lean, and the importance of keeping their people to compete globally. They are trying everything to avoid or limit layoffs by filling their open capacity by bringing back previously outsourced work, implementing flexible work schedules, such as four-day workweeks, 6 hour days, wage freezes, unpaid vacations, and voluntary furloughs. One Leanovations Lean Partner has gone to 6 Hour days, with 2 hours each day dedicated to Lean projects via mini Kaizen Teams. Another is allowing the employees to volunteer time in valuable community projects, creating a win-win environment, with a positive image for the company and providing needed services to the community. These steps help control costs but, more importantly, companies are retaining the value of their human resources.
Many companies today who understand the global impact of Lean are using this slow down period as an opportunity to redesign their skills matrix and align jobs to engage employees while protecting and emphasizing training and development programs. Adding responsibility and autonomy promote employee satisfaction, and providing the company with flexibility and the skills necessary for performing redesigned jobs, which will increase long-term productivity.
Lean Thinking Companies
Last week the government estimated that the gross domestic product fell at an annual rate of 6.1% in the first quarter, and many economists believe the first quarter of 2009 will mark the end of the recession. Given the recovery will be slow, many companies are reporting focusing on wringing additional efficiencies out of their businesses through Lean efforts and kaizen team events, rather than quickly expanding and hiring people.
At Leanovations, we believe a global recession creates winners and losers just like a global market boom. Certainly, some companies are using these times to layoff and reduce staff to make their organizations "leaner," which of course is not what Lean is.
With the steep economical challenges of today's global recession Leanovations continues to teach and coach companies to be forward-thinking and see Lean as a key to reducing waste, improving cash flow and improving operational flexibility, thus enabling them to adjust more quickly to the new realities of today's economic climate. As the world exits the recession, Lean companies become well positioned to leverage their productivity gains as volume returns, outpacing their competitors by achieving higher inventory turns, greater operational flexibility, and lower operating costs.
No one is denying that cutting costs is essential for surviving 2009, but companies who are truly embracing Lean, practice a different philosophical approach than just getting most of the costs reductions through layoffs. They look for ways to eliminate waste and improve productivity throughout the entire enterprise, staying focused as they move toward building a better Lean operational excellence and culture to take advantage of future global opportunities. This is continuous improvement with a long-term view.
Before any company makes painfully aggressive reductions, it should keep in mind and fully understand the potentially serious repercussions. For example, companies risk damaging employee morale, losing experienced and talented employees, seeing valuable employees leave on their own as they become worried they may be next to be let go, and hurting the firm's reputation as an employer of choice. During these tough economic times, many companies also lose sight of the importance of training and conducting employee-development programs, which engages the employees in the Lean-execution strategy.
Many of the companies Leanovations is working with understand the power of Lean, and the importance of keeping their people to compete globally. They are trying everything to avoid or limit layoffs by filling their open capacity by bringing back previously outsourced work, implementing flexible work schedules, such as four-day workweeks, 6 hour days, wage freezes, unpaid vacations, and voluntary furloughs. One Leanovations Lean Partner has gone to 6 Hour days, with 2 hours each day dedicated to Lean projects via mini Kaizen Teams. Another is allowing the employees to volunteer time in valuable community projects, creating a win-win environment, with a positive image for the company and providing needed services to the community. These steps help control costs but, more importantly, companies are retaining the value of their human resources.
Many companies today who understand the global impact of Lean are using this slow down period as an opportunity to redesign their skills matrix and align jobs to engage employees while protecting and emphasizing training and development programs. Adding responsibility and autonomy promote employee satisfaction, and providing the company with flexibility and the skills necessary for performing redesigned jobs, which will increase long-term productivity.
Create a Lean Office for a Competitive Advantage
Create a Lean Office For a Competitive Advantage
Manufacturing and service-related businesses are heavily dependent on office and administrative processes, which can add up to 40-70% of all costs associated with meeting customer demand. Leaning out office environments starts by engaging the employees to see the waste in the office environment and to empower them through kaizen teams to eliminate them to create a competitive advantage.
One of the most common misconceptions about doing Lean in the office is that there is a different set of Lean tools for the office. Many times organizations will say "What are the unique definitions of value and waste in knowledge work?" or "How can we do kaizen in the office when everything we do is non-standard?"
Organizations should start on its Lean Office journey by creating a Value Stream Map or Swim Lane Process Map of an entire process – whether it be a manufacturers office, service providers, government agencies, health care, etc. You will need to observe and measure, map and analyze the office’s processes like, sales quote and order handling, design/engineering processes, approvals, financial accounting and material procurement. Each of these processes can be done in a few days or up to a week.
Most organizations are shocked by the day-to-day inefficiencies that are discovered just in information flow. These inefficiencies significantly affect the total product or service lead-time and the company’s ability to create and deliver its “value-added” product or service to the customer on time, at a lower cost and with high quality.
Value Stream Mapping (VSM) or Swim Lane Process Mapping (SLPM) helps everyone to see the flow and take a hard, objective look at what it is they do every day that impacts the value stream – both negatively and positively. It also forces people to look at how they manage their gaps and handoff information.
A value stream map (AKA end-to-end system map) takes into account not only the activity of the product or service, but the management and information systems that support the basic process. This is especially helpful when working to reduce cycle time, because you gain insight into the decision making flow in addition to the process flow. It is actually a Lean tool. The basic idea is to first map your process, then above it map the information flow that enables the process to occur. Value Stream Mapping is designed to help Lean teams identify opportunities to remove waste and non-value-adding activities from processes so that organizations can produce and deliver the products and services to customers more rapidly and at lower cost.
Example of a Swim Lane Process Map with 3-M PostedSwim lane Process maps very explicitly show the organization structure, and the map arranged on a table where the rows indicate the “who” does the process step (the “who” could be an individual, a department, or an organization). The advantage of this mapping approach is when the process flows change “lanes” it indicates a hand-off. This is where lack of coordination and communication can cause process problems. It also shows who sees each part of the process. Clear distinctions can be made between the back-office, and those process steps where customer interactions occur.
Both mapping processes (VSM and SLPM) are used to identify waste and non-value added activities, which can then be attacked to create a more competitive process.
At Leanovations, we recommend starting with a 3-M post it notes on large brown paper, or use a white-board that can print a copy of the VSM or WLPM, and then moving to eVSM software program to dynamically digitize, perform calculations and track progress and results through eVSM.
Once the current and future state maps are drawn, the next steps are to create a Project Plan to prioritize implementation, a value stream storyboard and a key performance metrics tracking methodology. From there Leanovations will assist an organization to begin the continuous improvement process, teaching and showing people how to make improvements on an on-going, sustainable basis.
Manufacturing and service-related businesses are heavily dependent on office and administrative processes, which can add up to 40-70% of all costs associated with meeting customer demand. Leaning out office environments starts by engaging the employees to see the waste in the office environment and to empower them through kaizen teams to eliminate them to create a competitive advantage.
One of the most common misconceptions about doing Lean in the office is that there is a different set of Lean tools for the office. Many times organizations will say "What are the unique definitions of value and waste in knowledge work?" or "How can we do kaizen in the office when everything we do is non-standard?"
Organizations should start on its Lean Office journey by creating a Value Stream Map or Swim Lane Process Map of an entire process – whether it be a manufacturers office, service providers, government agencies, health care, etc. You will need to observe and measure, map and analyze the office’s processes like, sales quote and order handling, design/engineering processes, approvals, financial accounting and material procurement. Each of these processes can be done in a few days or up to a week.
Most organizations are shocked by the day-to-day inefficiencies that are discovered just in information flow. These inefficiencies significantly affect the total product or service lead-time and the company’s ability to create and deliver its “value-added” product or service to the customer on time, at a lower cost and with high quality.
Value Stream Mapping (VSM) or Swim Lane Process Mapping (SLPM) helps everyone to see the flow and take a hard, objective look at what it is they do every day that impacts the value stream – both negatively and positively. It also forces people to look at how they manage their gaps and handoff information.
A value stream map (AKA end-to-end system map) takes into account not only the activity of the product or service, but the management and information systems that support the basic process. This is especially helpful when working to reduce cycle time, because you gain insight into the decision making flow in addition to the process flow. It is actually a Lean tool. The basic idea is to first map your process, then above it map the information flow that enables the process to occur. Value Stream Mapping is designed to help Lean teams identify opportunities to remove waste and non-value-adding activities from processes so that organizations can produce and deliver the products and services to customers more rapidly and at lower cost.
Example of a Swim Lane Process Map with 3-M PostedSwim lane Process maps very explicitly show the organization structure, and the map arranged on a table where the rows indicate the “who” does the process step (the “who” could be an individual, a department, or an organization). The advantage of this mapping approach is when the process flows change “lanes” it indicates a hand-off. This is where lack of coordination and communication can cause process problems. It also shows who sees each part of the process. Clear distinctions can be made between the back-office, and those process steps where customer interactions occur.
Both mapping processes (VSM and SLPM) are used to identify waste and non-value added activities, which can then be attacked to create a more competitive process.
At Leanovations, we recommend starting with a 3-M post it notes on large brown paper, or use a white-board that can print a copy of the VSM or WLPM, and then moving to eVSM software program to dynamically digitize, perform calculations and track progress and results through eVSM.
Once the current and future state maps are drawn, the next steps are to create a Project Plan to prioritize implementation, a value stream storyboard and a key performance metrics tracking methodology. From there Leanovations will assist an organization to begin the continuous improvement process, teaching and showing people how to make improvements on an on-going, sustainable basis.
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