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

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”.

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.

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.

eVSM Provides an International Language for Lean

eVSM Provides an International Language for “Learning to See” the Lean Opportunities for the total Value Stream Map

Leanovations is proud to announce a partnership with GumshoeKI, headquartered in Cincinnati, Ohio, a visual communications company that developed eVSM (electronic value stream mapping) software, the easiest way to visualize the value stream. eVSM utilizes common standardized templates, which provide an international language all Lean practitioners understand. This leading "drag & drop" value stream mapping, analysis and management capability is used today around the world by 8500+ Lean practitioners for Lean manufacturing, Lean office, Lean government, Lean service and Lean healthcare implementations.

The software designed to complement the Lean implementation methodologies in the Shingo award-winning, best-selling publication "Learning To See" by Mike Rother and John Shook, provides comprehensive support for the mapping, calculations, box scores and charts. The combined capability allows Lean practitioners to draw, analyze and communicate globally Value Stream Maps using standardized templates that any Lean practitioner understands regardless of the language they speak. For this reason, over 20% of the Fortune 500 companies use eVSM, with extensive international use.

The benefit to Lean practitioners is a “Visual Net” that helps practitioners develop, think through, connect, and effectively communicate any aspect of a value stream. Visual gadgets that are "in-place" on the map and update with map data is a new innovation that really helps to "see" and make decisions about value stream characteristics. Lean calculation relating to lead time, inventory cost and capacity can be analyzed using the map data in Excel or can be created by picking data directly on the map.

Current state maps, can be easily copied and modified, to create future state maps. The maps can be combined and presented as a storyboard (or value stream board), for Lean management, complete with data on team members, targets, progress and milestones. It is easy to create and deploy standardized templates for maps, metrics, units, tables and storyboards for consistent and productive usage by Lean practitioners and be able to present them to their peers around the world making eVSM a dynamic tool for management in making strategic plans and decisions.

Leanovations helps organizations not only map their organizational Value Stream, but also map which includes the customer and supply chain linkage, creating a flow of information while establishing a pull of products. To learn more about eVSM go to www.leanovations.com .

Business Succession Planning a Must

“Business Succession Planning” A Must For 2009

Business succession planning seems to have lost its way in recent years. Maybe it is due to the stress of the economy, maybe it is because the current and next generation views business differently, or maybe it is due to the new technology that continues to create new challenges and complexity for businesses. At Leanovations, we encourage businesses to include “Succession Planning”, during their annual “Business Strategic Planning Session” utilizing Plan-Do-Check-Act Process (PDCA).

Leanovations works with a number of small businesses (including many family businesses) to develop Succession Plans. Business succession planning must include a plan for transferring the trust, respect and goodwill that built up over the years. Generally, setting up a successful business succession plan involves the following 5 stages:

1. Selecting and developing a Team of Qualified Advisors – Developing an Advisory Business Council (at Leanovations we call this an ABC Team) to provide insight into Business opportunities, decisions, planning and general counseling with qualified advisors is recommended. This may include an accountant, attorney, financial planner and some industry leaders who can help assure that your plan legally, profitably, and affordably considers the business needs and objectives.

2. Investing in People and Recruiting Talent - Investing time in developing people in key management positions, and allowing them to exercise authority and control, is vital to a successful transition. It is important when the business is closely held, such as in a family, to separate the family dynamic from the business dynamic as much as possible. For those experiences and leadership skills needed to have the business prosper, that are not evident in the current members, it is required to recruit outside individuals to these key management positions. Hiring good people and being able to retain them, always pays dividends and is an important part in succession planning. For family businesses, this often involves a tough analysis of whether family members have the skill set to run the business or whether your key succession candidates are non-family members.

3. Commitment to a Transition Plan—Once a transition plan is developed and successors identified, the owners must be committed to the concept that the business must continue to create opportunities for generations to come. Once a succession plan is in place, the owners need to communicate that plan clearly.

4. Communication -- Communication of a succession Plan gives key management and/or family successors, if a family business, a clear understanding of the path to the future, as well as any role they may play. It also allows them to begin setting future goals and objectives for themselves that support the business. Ensure key employees remain with the business during any succession transfer by sharing the plan with them, keeping everyone involved with the plan and on the same page.

5. Implementation – Having the business continue into the future, without compromising current business owners needs is the most important step (and most difficult) in implementing the succession plan. The owners must be ready to step aside and allow the successors to take over. The owners must be prepared to take on new challenges away from the business, knowing the financial future is secure. As in any other Planning process, always be prepared to adjust and modify as needed. Using the Plan-Do-Check-Act/Adjust process (PDCA) is a perfect fit for creating and developing a robust “Business Succession Plan”.

Lean Manufacturing May Qualify for Federal Investment Tax Credit - Section 41 of IRC

Lean Manufacturing May Qualify for Federal Investment Tax Credit - Section 41 of IRC

“To keep our nation leading the world in technology and innovation, we’re extending and modernizing the research and development tax credit. By allowing businesses to deduct part of their R&D investments from their taxes, this bill will continue to encourage American companies to pursue innovative products, medicines, and technologies.”

George W. Bush
While signing the Tax Relief Act of 2006 The White House December 20, 2006

President Bush’s concern for the men and women who work in manufacturing and the critical contribution they make to the U.S. economy is the driving force behind this tax relief and health care act of 2006. Manufacturers are full partners in the effort to build the future of the country in the marketplace for new products and ideas. Simply put, a healthy manufacturing sector is key to better jobs, fostering innovation, raising productivity, and higher standards of living in the United States.

Section 41 of the Internal Revenue Code (IRC), defines “Qualified Research” more broadly than some may think. Section 41 rewards manufacturers for keeping manufacturing and engineering jobs in the United States and Lean manufacturing activities may qualify!

The words ‘Research & Development” creates an image of scientists in white lab coats in sterile laboratories doing advanced research using expensive equipment and instruments. The IRS definition of eligibility under the R&D Tax Credit program is much different. Under the IRS guidelines, if you are developing, designing, testing new processes or products, or improving existing processes or products, which many Lean/Kaizen projects accomplish, your company may qualify. If your Lean/Kaizen projects have devoted resources to evaluating a new technology, investigating new materials, improving machinery or tools, developing and implementing lean manufacturing techniques, or improving the environmental impact of your processes, your company may be eligible for the R&D Tax Credit.

Both large and small companies are potential candidates for the credit. If you are doing things in your business to remain competitive in the global marketplace and designing or developing new or improved processes or products, you may be eligible for the credit. The R&D Tax Credit program is in place to reward and encourage Lean-Innovation amongst all U.S. businesses and it is particularly beneficial to the smaller companies who take a proportionally greater risk in staying competitive.

An overview of IRC Section 41

- Provides a credit against federal tax due equal to 20% of qualified research expenditures over a certain base amount plus 20% of certain qualified basic research payments.
- Net yield of credit on federal level is approximately 6.5% of qualified expenditures. (State credits may provide additional funding.)
- Companies may go back and amend returns up to three years

For additional information on IRC Section 41, please contact your tax adviser.

Despite Setback, Toyota Plans No Layoffs; Will Grow Through Lean and Innovations

Despite Setback, Toyota Plans No Layoffs; Will Grow Through Lean and Innovations

For those of us in the Lean Community who teach the Toyota Production System, the recent announcement that Toyota will lose money for the first time in 70 years is evidence that implementing Lean alone does not insure financial success. There is much more to developing a robust business plan then just implementing Lean.

The root cause of Toyota's current problem is the decision in the late 1990s to become the top global auto sales company. Toyota aggressively added capacity around the world and by 2008 had passed GM as the global sales leader. By focusing on expanding capacity to meet the sales goals, it required Toyota to borrow cash. In today’s market, this objective to become the sales leader made Toyota vulnerable with excess capacity if there was a steep drop in demand. This changed philosophy, to embrace growth and to become the biggest in sales, without regard to financial impact is not the lean way. Simply put, “Toyota lost its’ Way” of making small incremental and profitable improvements, and not to over extend financially.

A severe drop in demand, especially in North America, Toyota’s largest market, accounting for one-third of vehicle sales, and profit erosion from a surging yen were too much for Japan's No. 1 automaker. A strong yen hurts results because Toyota must convert overseas profits into the Japanese currency. With the U.S. auto sales not expected to recover until late 2009, and with the dollar already at a 13-year low against the yen, this could create additional hardships on Toyota.

Despite the setback, the automaker is still poised to stay ahead of its main U.S. rival, General Motors Corp., and be the No. 1 world carmaker in 2008. Toyota reported it sold 7.05 million cars worldwide during the first nine months of the year, compared with 6.66 million for GM for the same period. Toyota had reported strong growth in recent years, boosted by heavy demand for its innovative fuel-efficient models like the Camry sedan and Prius gas-electric hybrid.

Toyota Motor Corp., is committed to zero layoffs, and has not had any layoffs since the 1950s. This practice has become a part of their culture to ensure employment and stability for employees. Toyota announced it has no intention of drifting from its practice of avoiding layoffs for full-time employees either globally or for its 14 U.S. factories located in the South and Midwest. Instead, it assigns other tasks for employees when plants become idle, such as training or community service. Employees can also take unpaid time off. This practice has helped the automaker resist unionization at its factories; saving it from the high costs of labor plagued by its U.S. counterparts, making any U.S. layoffs by Toyota in the future unlikely.

Toyota is a relatively old-style Japanese company that offers lifetime employment, and only in recent years has hired and let go of temporary workers to adjust production.

Toyota vowed it would grow profitably through lean and innovations, this is what we call “Leanovations”, and it would return to profitability even if its worldwide sales fall as low as 7 million vehicles. The automaker will focus on hybrids and small cars, and invest in environmentally friendly technology to prepare for long-term growth.

Companies implementing Lean must continue to teach the Toyota Production System, and the foundation of Lean with smart innovations and profitable growth. It is obvious to us at Leanovations, that the Toyota executive team will reflect carefully, refocus their plans, develop corrective actions, and build a brighter future. Be assured Toyota will learn from this and become stronger, providing even better products and services. Can we say the same for the U.S. Automakers?

Two of Leanovations Lean Partners Awarded “Connecticut’s Most Successful Family Enterprises”

Two of Leanovations Lean Partners Awarded “Connecticut’s Most Successful Family Enterprises”

The University Of Connecticut’s School Of Business announced that ten family-owned businesses will be recognized, as “Connecticut’s Most Successful Family-Owned Enterprises” on November 12th, 2008. Of the ten businesses recognized, only four are manufacturers. Leanovations takes this opportunity to congratulate The Willington Companies, of Stafford Springs and Peter Paul Electronics, of New Britain, two of our “Lean Partners” for being recognized by University of Connecticut’s School of Business as “Connecticut’s Most Successful Family-Owned Enterprises” of the year. Both companies have been working with Leanovations since early 2007 developing an organizational culture that embraces a Lean enterprise, which engages and empowers employees to address opportunities to improve, through Kaizen events using cross-functional teams.

Leanovations Utilizes “Process Sensei Consultant Style”

Leanovations Utilizes “Process Sensei Consultant Style”

In the world of consultants, there are three basic styles: the Expert style, the Doctor-Patient style and the Process Sensei style. Sensei is a Japanese word for Teacher. When companies decide to begin Lean, it is highly recommended to bring in outside help using consultants that specialize as Process Sensei Consultants.

In the Expert style, the client diagnoses the issue and the consultant resolves it with little or no help from the client. The Doctor-Patient style is a bit more interactive wherein the client (patient) describes symptoms and then the consultant (doctor) diagnoses the issue and decides on the solution. Process Sensei style starts with the development of an equal “Partnership” between the client and the Sensei/consultant with the understanding that the client “owns” the problems (or opportunities as we say at Leanovations). Together, the client and Sensei/consultant form a “Lean Partnership” to diagnose the problem (opportunity), develop and implement solutions, and measure the results, working with cross-functional teams approach during a Kaizen Event.

At Leanovations, we fully subscribe to the Process Sensei style, and model our teaching and coaching after the Toyota Production System (TPS). We believe that in order to help our “Lean Partners” to be successful, we must teach and coach the Lean tools/techniques providing examples of success that they can build upon. Ultimately, we need to engage and empower the employees by asking the challenging questions designed to pull the teams together. As teams begin successfully conquering the opportunities for improvement through Kaizen events, the “successes” begin to fuel a culture necessary to sustain the gains. After all, the companies that are truly successful with Lean are the companies that understand it really is about engaging and empowering the employees. Success is 90% culture and 10% tools. To learn more about Leanovations go to: www.leanovations.com

Weak Dollar Privides Strength in Manufacturing

Weak Dollar Provides Strength in Manufacturing

American companies are continuing to benefit from a boom in exports due mainly to the decline in the value of the dollar earlier this year.

The Commerce Department that said orders for durable goods jumped 1.3 percent in July compared with the previous month, led by a big gain in demand for commercial aircraft. Durable goods, which also include cars, appliances and machinery, are under scrutiny not only because they reflect business spending, but because they are also an indicator of consumer confidence.

The strength in durable goods is just the latest indication that manufacturing is actually holding on quite well and that is a big plus in this weak economy. These upbeat capital goods numbers amid a downtrodden U.S. consumer sector indicates how helpful a weak dollar is in the current cycle.

U.S. factories saw a surprisingly hefty increase in their orders for big-ticket products in July, reflecting continued strength in export sales and a boost to business investment from the government's tax stimulus package. The July increase equaled a 1.3 percent rise in June; both months produced the strongest gains since a 4.1 percent leap back in December.

Demand for commercial aircraft shot up 28 percent in July. Chicago-based Boeing Co. wrapped up the huge Farnborough, England, international air show last month with orders for 197 planes, including a headline grabbing deal with Air China for 45 planes. European rival Airbus did even better, signing orders for 247 planes.

With Connecticut manufacturing heavily dependant on aerospace and in keeping with the State of Connecticut’s Next Generation Competitiveness Strategy to help Connecticut suppliers achieve World-Class productivity, the Connecticut Aerospace and Defense Initiative (ADI) was created. The State of Connecticut, through the Department of Economic and Community Development (DECD), made available ADI funds to assist companies in the introduction or continuation of Lean manufacturing techniques within their organizations. Companies can receive up to 50% reimbursement for the costs of Lean training and services supplied by a Registered Service Provider such as Leanovations.

Leanovations has helped many Connecticut Aerospace and Defense Manufacturers and their Supply Chain to obtain ADI funding to help offset the cost of training and coaching for Lean manufacturing techniques. To find out more about ADI’s 50% reimbursement for Lean visit www.Leanovations.com Funding Opportunities tab.

Lean is Not Lean without a Lean Supply Chain

Lean is Not Lean without a Lean Supply Chain

Many companies believe they have implemented Lean within the “4 Walls” of their factory, but have not enjoyed the benefits they expected from all the efforts and start wondering why. The simple answer is they have not developed a Lean Supply Chain, and therefore continue to suffer, as there is little or no linkage outside their “4 Walls”. In Lean terminology, this means they do not have linkage within the total Value Stream.

Many companies are struggling to find the resources to implement and sustain Lean in their own factory, and do not have enough resources to go out and train and help implement Lean within their Supply Chain. Leanovations has developed strong partnerships with a number of large corporations and family run companies to assist in developing linkage between their Lean efforts and vision with their supply base. Leanovations provides the training, coaching and mentoring to an organization’s Supply Chain, to leverage their own Lean journey more easily; which delivers better customer value, business needs and translates to superior financial performance for all organizations linked in the Value Stream.

To develop Lean suppliers, organizations need to include suppliers in their value stream mapping analysis. They should encourage suppliers to make the Lean transformation and involve them in Lean activities. Leanovations’ 7 Steps for developing Lean Supply Chains:

1) Develop a Lean Thinking Supply Chain Partnership
2) Understand Customer Value
3) Manage Demand Volatility
4) Create Flow of information and a Pull of Products
5) Implement Plan-Do-Check-Act (PDCA) Process
6) Establish Key Performance Metrics
7) Benchmark Best Practices (know the competition)

Lean Suppliers are able to respond to changes quicker due to the efficiencies of Lean processes and their quality improved to the point that incoming inspection at the next link is not required. Lean suppliers deliver on time and their culture is one of continuous improvement. The key to Lean supply chain is communications and visibility. Suppliers must be able to "see" into their customers' operations and customers must be able to "see" into their suppliers' operations.

Leanovations helps organizations map a value stream with supply chain linkage, and together create a future value stream in the procurement process, creating a flow of information while establishing a pull of products. To learn how Leanovations may assist your organization develop a Lean Supply Chain or become a Lean Supplier please visit our website at www.Leanovations.com.

Going Lean Today to Beat the Recession

Going Lean Today to Beat the Recession

Times are tough for many manufacturing companies right now, and when times get tough, many organizations look for the fastest and easiest way to save dollars, and therefore go through a downsizing. This is a natural reaction as executives try to implement damage control, and retain market share and stock values.

Leaders with a good business sense realize that layoffs should be the last resort. People are the knowledge base and true asset of any company. When people are laid-off, it builds resentment in the people who were asked to leave, and fear and mistrust in those that were allowed to stay. Productivity and innovation drop tremendously and the dedication of employees deteriorates. With this detrimental impact, it is difficult to understand how companies make the decision to layoff their talent and reduce their capacity to respond to new growth opportunities. Then as business picks up in the next cycle, many companies who have downsized will find their organization lacking in talent, and ability to respond to customer demand extremely difficult and costly. Often companies who choose to downsize will lose customers after a recession is over to stronger competitors who have adopted Lean, and created new capacity and strengthened their workforce.

Applying and using Lean training and techniques during a recession dramatically increases your capacity, problem solving abilities and business fundamental expertise without having to add more people. Implementing Lean training during a recession simply builds capacity without major capital investment and/or increasing staff levels and provides a competitive advantage for growth when the economy improves. Organizations who have adopted Lean as their operating strategy do not stop 'Lean' as a recession occurs. These companies really understand the benefits that Lean can bring in an economic downturn. Lean is a philosophy of investing in your people. This investment will provide a payback through a workforce focused on continuous improvement and innovation.

In today’s business environment, it is more important for manufacturers to explore continuous improvement and Lean operational excellence programs. They must be able to recognize the problems they face, as really “Opportunities”. This mindset is critical to a successful Lean Transformation and sustainable growth for any organization. Knowing where and how to recognize the “Opportunities” and to begin the cultural transformation can be challenging. With that in mind, here are Leanovations 8 critical requirements to address the challenges facing U.S. manufacturers today and for them to be well prepared when the economy improves with new business growth opportunities by "Going Lean Today to Beat the Recession!"

#1: Develop clear business goalsThe first step of any Lean transformation must be a clear definition and thorough understanding of the specific issues the organization will address. Once this is established, the Lean implementation plan must set a realistic timeline for the accomplishment of these objectives and provide the proper tools, skills and support required to be successful. Utilizing cross-functional Kaizen Teams is necessary for cultural change. Kaizen is a Japanese word meaning continuous improvement.

#2: Develop a Lean Leadership roleManufacturers that have successfully sustained a Lean culture throughout their organizations recognized early on that creating a Lean Leadership position within the organization was critical to the program’s success. To ensure that the investment in Lean teams delivered positive results, successful organizations purposely implemented a Lean Leadership position and initiatives along with their Lean strategy deployment.

#3: Involve factory floor personnelSustained and lasting improvements in Lean manufacturing performance requires the full commitment and involvement of everyone in the organization, especially the employees on the shop floor. Factory workers, in particular, are a source of considerable expertise. The level of employee involvement must be sincere and comprehensive. Factory workers must feel that they can make a difference and should be involved in the decision-making process.

#4: Develop real-time visibility into production performanceLean Manufacturing needs real-time and visible metrics with simple analytical tools enabling factory workers, supervisors and managers identify quickly root causes of a problem. By providing factory workers real-time visibility into production performance, manufacturers can ensure that the right people are able to take the right actions at the right time while also adding intelligence to the solutions.
A Lean environment is a Learning environment

#5: Provide information to take action quicklyA decision not followed by action, is not really a decision. While real-time visibility is essential for Lean success, visibility without action is futile. Providing factory workers with information about how they are performing not only reduces anxiety, but it also delivers the needed incentive to take appropriate and timely action. It is vital that the action for change is quick and in a manner, that supports visible accountability with senior management. Organizations must also empower factory workers to take actions that are within their immediate sphere of influence.

#6: Executive sponsorship must be a daily focusSecuring executive sponsorship is essential to the success of any Lean transformation. Executive sponsorship helps reinforce corporate vision and creates unity across cultural lines. A committed executive can set the standard for Lean and Kaizen project success. He or she has the authority to allocate resources, remove obstacles, handle contingencies and drive key decisions that ensure a successful implementation.The commitment must go beyond the initial stages of Lean implementation. It must continue throughout the Lean transformation and must become an everyday focus.

#7: Employ a practical, simple implementation processFacing relentless pressure to improve business performance; it is common for manufacturers to set high expectations for their Lean transformation. Manufacturers that have successfully embarked on their Lean journey, however, do not try to do too much, too quickly. Lean is a journey not a destination.

#8: Maintain the momentum and commitmentSustaining Lean transformation strategy requires that the people involved maintain their momentum and commitment to the goals. Organizations that utilize the Kaizen team events and honor the process are the most successful. Many initiatives start well and then quickly decline as teams become lost in other resource drains. By having Kaizen teams focusing on quick wins, and building upon success that supports the shop floor, a foundation for delivering a broad scale Lean transformation is established.

China's Plan to Innovate

China's Plan to Innovate
China is making a move to be a leader in science, medicine, technology, R&D, and energy -- and the government is leading the charge to innovate

At Leanovations, we teach and coach Lean and Innovations, which is imperative to compete globally and it is not about secret formulas; it is about strong leadership developing new business models and play-to-win strategies that encourages a true value creation. In January, China’s President Hu Jintao set the tone with his call for China to make the transition from a manufacturing-based economy to an innovation-based one.

How far will China go in its attempt to build a more modern flexible economy? In Beijing, innovation is the buzzword. Innovation was a major theme at the recently concluded National People's Congress, with the government unveiling its latest five-year plan calling for big increases in spending to nurture innovation.China is targeting a broad range of sectors, including some controversial areas such as stem cells, gene therapy, and genetically modified crops; and some areas that the U.S. has long dominated, including software, semiconductors, and space exploration. China aims to become a leader in emerging technologies such as renewable energy sources ranging from solar, hydro, and wind power to fuel cells. By 2050, China intends to surpass the U.S. and become the biggest player in the world of science.There are many reasons that Beijing wants to push the innovation agenda. One is national pride: China believes it should be a leader, not a follower. Another reason is national security. The Communist regime, does not like being at the mercy of foreigners for key technologies.There are solid economic reasons for China to reduce its reliance on smokestack industries that have devastated the environment and dramatically increased China's consumption of oil. The leadership has been searching for a new, more sustainable model for growth and with innovation the hope is that the environmental cost will be much lower."As a result, the government is aggressively boosting the profile of China's scientists and engineers. Top government officials routinely exhort scientists and business leaders to get with the program and become more innovative. The government has unveiled an ambitious long-term plan to build its innovation economy. A big part of the strategy is money: Today, China devotes only 1.2% of its GDP to R&D spending, and the government has announced its intention to boost that figure to 2% by the end of the decade and 2.5% by 2020, with the government pitching in about 40% of the total, and the private sector contributing the rest. By then, China will be spending $110 billion annually on R&D, putting the country in the same league as the U.S. and Japan.

Lean Can Insulate Manufacturers From Economic Shock – as Growth Slows in U.S. During 2008

Lean Can Insulate Manufacturers From Economic Shock – as Growth Slows in U.S. During 2008

Repeatedly, Lean demonstrates it works, as many companies that embrace Lean can gain 15% year after year, 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, and we will always be at the mercy of economic forces. An economic shock will send U.S. manufacturing into a mild recession in 2008, according to a new report from an industrial trade group. During 2008, only 10 of 24 industries expect to show growth, the report from Manufacturers Alliance/MAPI noted. 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 then those companies who are not.

Manufacturing has been one of the brighter lights in the overall U.S. economy, especially as a weak dollar has fueled rapid increases in overseas sales. With a significantly worse outlook for new housing starts; negative effects of lower home values on consumer spending; high gasoline and fuel oil prices; slower job growth; and high natural gas, prices will all contribute to a halt in industrial growth in 2008.Manufacturing production will slow significantly from 4.7 percent in 2006 to an estimated 1.9 percent in 2007 and to no growth in 2008, according to Manufacturers Alliance.
Four industries had growth in 2007: aerospace products; electrical equipment; communications equipment; and private, non-residential construction. The forecast for the aerospace industry is a continued growth, so downstream industries like machine shops, fasteners and heat-treating should continue to do well. If you are a Connecticut company who has obtained $500,000 or more of defense or aerospace manufacturing contracts over the past two years, and are interested in implementing Lean Manufacturing, you may be eligible to receive up to 50% reimbursement of the costs for Lean consulting by a qualified service provider such as Leanovations though ADI.

There is a compelling case of how Lean initiatives can really pay off and insulate companies from economic troubles. 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.

Increasing Oil Prices Require Breakthrough Innovations for American Manufacturers

Increasing Oil Prices Require Breakthrough Innovations for American Manufacturers

Soaring oil and energy costs affect Americans at home and at work. It has become obvious that high oil costs are hurting manufacturing companies who must pay more for heating and electricity. Although oil prices may dip and spike short-term, it appears oil will never be cheap again. A forecast for the next 25 years, predicts oil consumption will double in developing Asian nations to over 32 millions barrels per day creating even more demand and higher prices. U.S. manufacturing must continue to use innovations to keep a competitive edge.

It is time for America to act on our strong entrepreneur spirit to change the course of history, and put us on a path away from our addiction to oil. A massive investment in new breakthrough technology and innovations to grow our economy is required to help manufacturing companies develop a greener future.

In December 2007, due to the high oil prices, new legislation passed requiring breakthrough innovations, to produce more fuel-efficient vehicles. The legislation requires automakers to develop new technologies, materials and alternative power sources, to increase fuel efficiency by 40 percent to an industry average 35 miles per gallon by 2020. This sweeping energy legislation package mandates the first substantial change in the nation's vehicle fuel-efficiency law since 1975, despite opposition from U.S. auto companies. It is time for America to take on this challenge, which if mastered, could provide a new industrial revolution for America. If we do not take on this challenge, be assured the rest of that the world will, and the technology leadership the U.S. enjoys today will expire.

The United States, with current efficiency standards of 27.5 miles per gallon for cars and 22.2 per gallon for SUVs and small trucks, has lagged far behind the rest of the developed world. In the European Union, automakers have agreed to voluntary increases in fuel-economy standards that next year will lift the average to 44.2 miles per gallon, according to the Pew Center on Global Climate Change. For the vehicles in Japan, the average fuel economy tops 45 miles per gallon. China's level is in the mid-30s and is projected to rise, propelled by China’s government policy.

In addition to vehicles, new breakthrough innovations and technology will be required, to meet the new efficiency standards in lighting, commercial and government buildings, and appliances such as refrigerators, dishwashers and freezers, which the bill put into effect. For an example, light bulb efficiency will have to increase 70 percent by 2020.

Japan has "Deming Prize", While U.S. has "Shingo Prize"

Japan Has “Deming Prize”, While North America Has “Shingo Prize”

In Japan, the Deming Prize is a highly regarded industrial quality award named in honor of the American quality pioneer W. Edwards Deming. In the United States, we have the Shingo Prize for Excellence in Manufacturing, named for Dr. Shigeo Shingo, who helped Toyota develop its renowned production system and JIT controls. The Shingo Prize is open to North American companies and to researchers and students who further the knowledge of quality manufacturing techniques. Applying for one of these quality awards can spur an organization to achieve higher quality levels; even when an organization does not win, its managers can learn how to improve by measuring their performance against the rigorous award requirements.

The acclaimed Shingo Prize, established in 1988, awarded annually to companies that exhibit outstanding achievements in manufacturing practices, which translate into strong customer satisfaction and business results. Dubbed the “Nobel prize of Manufacturing” by Business Week in 2000, the Shingo Prize is the premiere manufacturing award in North America.

The Shingo Prize was established to promote the awareness of Lean manufacturing concepts, and is awarded to companies in the United States, Canada, and Mexico that achieve world-class manufacturing status. The Shingo Prize philosophy is that world-class business performance may be achieved through focused improvements in core manufacturing and business processes.

The College of Business, Utah State University administers The Shingo Prize for Excellence in Manufacturing. For more information about the Shingo Prize, go to www.shingoprize.org or www.leanovations.com.