LMJ Issue 10

Getting a better view

Issue 10 May/June 2011 www.leanmj.com

As lean seeps into new environments and encounters external disciplines horizons expand for the scope of lean implementations. This issue of LMJ provides some new perspectives for practitioners.

In this issue: The enemy within: David Bovis, PCC consulting, explores recent discoveries in neurology. Discover how the human mind’s reaction to challenge and change might alter your approach to organisational transformation.

To adopt or adapt; that is the question: Learn how Deutsche Bank have found ‘hooks’ for engagement in their lean programme for improvement in technology production support.

Process focus: Lean Product Development: Don Reinertsen, Reinertsen & Associates, explains the ‘dos’ and ‘do nots’ in the application of lean thinking to product development.

History and evolution of: 5-whys and root cause analysis: Steve Garnett, Simpler consulting, provides the next chapter in LMJs review of the history and evolution of the lean toolset by tracing the chequered past of 5-whys and root cause analysis.

The Lean Management Journal is supported by the Lean Enterprise Research Centre, Cardiff Business School

Dear reader, The mantra from lean thought leaders that implementations must be context-specific has become something of a dirge to on the ears of those who frequently attend conferences and workshops on the application of the methodology or who participate in the proliferation of discussion forums now zipping back and forth across the internet ether.

But the difficulty of adapting lean to a new environment, or of introducing a new way of thinking about lean within a well established programme, still seems to baffle many. This issue of LMJ looks at a few different perspectives on the ever-expanding boundaries of lean thinking as it permeates new sectors and meets with concurrent schools of thought. For example, David Bovis of PCC consulting, gives his thoughts on the connections between lean, neurology and psychology (p07).

One of the most important discussions to be had around the application of lean to new operational settings is that which is taking place across the UK public sector as the government attempts to implement swingeing austerity cuts by, for example, outsourcing public services. This has prompted earnest discussion among business improvement experts as to how services can be consistently and successfully delivered across organisational types (public, private and charitable) with widely disparate system conditions. Professor Zoe Radnor, a member of LMJ’s editorial board and newly appointed as Professor of Operations Management at Cardiff Business School, will touch on this issue in her keynote presentation at LMJ’s annual conference on June 16 - readers can find more details on this event on page 34. I hope you can join us for what promises to be a thought- provoking, if challenging, day.

As practitioners rationalise lean for application with their organisations, however, weighing up where adaptation is necessary and considering how incumbent culture will affect success, it is important not to lose sight of the need for thorough technical understanding of the lean toolkit. This includes the wider range of toolkits available in other methodologies such as 6 sigma, prince 2 management, agile and others. To my mind it has become fashionable to talk, almost exclusively, about the importance of workforce engagement and of culture change, and there is no denying that these are critical factors in the success of a lean initiative. But reading articles like that contributed in this issue by John Bicheno (p16), and reviewing presentations like the one Justin Watts of Burton Foods at has prepared for LMJ’s annual conference, have recently emphasized for me just how much there is to understand and to exploit on the technical side of lean thinking. Company boards may not appreciate the language, but programme leaders must not lapse into thinking that this means it is not important (see Brenton Harder’s comment on p06) Happy reading

Editorial

Commissioning editor – Jane Gray j.gray@sayonemedia.com

Design

Art Editor – Martin Mitchell m.mitchell@sayonemedia.com

Designers – Viicky Carlin, Alex Cole

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Jane Gray Commissioning Editor Email: j.gray@sayonemedia.com Tel: 0207 202 4890

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ma y / ju n e

05 Lean News 06 New horizons for lean thinking

Brenton Harder, Credit Suisse introduces the themes for issue 10 of LMJ. This introduction gives insight into the maturity curves of new implementations and discusses just why one size does not fit all for lean.

07 Principles and purpose The enemy within

David Bovis, PCC consulting, explores recent discoveries in neurology. Discover how the human mind’s reaction to challenge and change might alter your approach to organisational transformation.

12 To adopt or adapt; that is the question

Reuben Karuna-Nidh, Deutsche Bank gives insight into his organisation’s approach to balancing the need to adapt lean for sensitivity to culture and work with a concern for the preservation of core lean principles.

16 King of equations

Lean as a discipline is growing in scope and application with associated methodologies and spin-off disciplines emerging all the time. John Bicheno seeks to rationalise the diversity and extract what core values are being pursued by returning to one of lean’s original tools; Kingman’s equation.

22 Google go lean

Jane Gray interviews Alessandro Laureani the leader of Google’s new lean initiative to find out what challenges are anticipated on the improvement journey for the world’s most valuable brand name

contents

24 Disruptive Thinking

Jane Gray interviews some of this year’s keynote speakers ahead of the LMJ annual conference, the journal’s flagship event and a key meeting for lean practitioners and thought leaders.

28 Process focus Lean Product Development

The idea of lean being applied away from the shop floor is well established but how well is the transfer to a new environment understood or managed?

Don Reinertsen, Reinertsen & Associates, reviews past mistakes in applying lean to the product development process and explains why certain lean tenets have to be abandoned in this innovative but uncertain function.

36 The history and evolution of: 5-whys and root cause analysis

Steve Garnett, Simpler, provides the next chapter in LMJs review of the history and evolution of the lean toolset by tracing the chequered past of 5-whys and root cause analysis. His appraisal covers the tool’s creation, misapplication, derision from 5-why sceptics and his belief in the tool as an invaluable weapon in the lean practitioner’s armoury.

42 Letters and comment

Contributions for this issue come from Andrea Pampenilli, GKN; Chris Borrowdale, Cimlogic; and authors Jeffrey Liker and Timothy Ogden.

50 Book review

John Bicheno reviews Ronald Mascitelli’s Mastering Lean Product Development

51 Events

Britannia House, 45-53 Prince of Wales Road, Norwich, NR1 1BL T +44 (0)1603 671300 F + 44 (0)1603 618758 www.sayonemedia.com.

Lean management journal: ISSN 2040-493X. Copyright © SayOne Media 2011.

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04 Introducing the editors

2 0 1 1

Introducing your editors Articles for LMJ are reviewed and audited by our experienced editorial board. They collaborate on comment against articles and guide the coverage of subject matter.

Jacob Austad

LeanTeam, Denmark

Professor Zoe Radnor

Cardiff Business School

Bill Bellows

Ebly Sanchez

John Bicheno

Peter Watkins

Norman Bodek

Wendy Wilson

Brenton Harder

Dr Keivan Zokaei

Pratt & Whitney Rocketdyne

Lean Enterprise Research Centre, Cardiff Business School

PCS Press

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Credit Suisse

Volvo Group

GKN

Warwick Manufacturing Group, University of Warwick

SA Partners

More information on our editorial board, their experience, and views on lean is available on the LMJ website: www.leanmj.com 4

LMJ thought leader assumes new role Professor Zoe Radnor has taken up her new post as Professor of Operations Management at Cardiff Business School. Prof Radnor, who is a specialist in the application of lean thinking within the public sector, has moved to Cardiff from Warwick Business School and she is also a fellow of the Advanced Institute of Management (AIM).

Past research from Prof Radnor has investigated a wide range of topics but has focused on performance management and process improvement. In her new post Prof Radnor is hoping to progress with research into benefits realisation and recording for lean in the public sector.

LERC accredited organisation celebrates two years of service support Lean training providers to the service sector, OEE is pleased to be celebrating the second anniversary of its Lean Service Forum. The forum provides members, who are drawn from a diverse of companies

including specialists in energy, telecommunications, public sector and financial services, with the opportunity to discuss common challenges and share successes in the application of lean thinking. The forum holds

regular meetings where members can benefit from visits to member sites and presentations from guest speakers such as Dan Jones, founder of the Lean Enterprise Academy and Professor Zoe Radnor from Cardiff Business School.

KPMG report reveals pessimistic outlook for the sustainability of lean savings A forthcoming report from business improvement specialists KPMG shows that 95% of surveyed companies believe 90% of the lean improvement gains achieved in the recession will fail to sustain.

Ahead of the report, titled ‘Cost Boomerang’, Martin Scott, Partner, KPMG Performance & Technology said: “Only 12 months ago, most companies were singlemindedly focused on cutting costs in an all-out effort to withstand the financial crisis. Worryingly, business leaders now expect the vast majority of costs they worked hard to shed to come surging back.”

The cost of finance is the most significant source of cost increase for UK firms according to senior finance managers, and nearly 80% identify this as a driver of returning cost. British expectations over the sustainability of lean streamlining is the lowest in the EU, with just 5% of improvement being expected to stick in UK firms compared to 6.5% in Germany, 6.6% in Spain and 10% in Denmark. Overall however, it is obvious that there is widespread pessimism about lean sustainability across sectors in Europe.

NHS suffers rejection of transplanted system conditions practitioners others are seen to be “unravelling” the effectiveness of the service. A representative from the Royal College of GP’s, Dr Gerada, commented on the situation “It appears that we are moving headlong into an insurance-type model of the

NHS,” as system conditions inappropriate for a public service are imposed on the model of free service for all. The Royal College has submitted a 26 page analysis to government detailing which parts of the Health Bill need urgent review.

If you have any news that you think would interest and benefit the lean community please let us know. Send submissions to the commissioning editor Jane Gray: j.gray@sayonemedia.com

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GP’s have warned that pressure put on the UK’s National Health Service to cut costs by introducing elements of competition for certain services. While some parts of the Health Bill, which was introduced in January this year, have been welcomed by

New horizons for lean thinking Brenton Harder, MD head of operational excellence at Credit Suisse introduces the themes for issue 10 of LMJ. This introduction gives insight into the maturity curves of new implementations and discusses just why one size does not fit all for lean.

L

ean initiatives do not fail because they are bad at fixing what’s broken, but because they get stuck in their own muda and lose sight of the horizon. They invest most of their energy managing what they teach – a solution-centric focus on training, tools, and tollgates – and not nearly enough energy fostering innovation to continually regenerate and reposition the initiative.

Having spent over a decade in the process improvement field, I have observed that most quality programmes tend to follow a typical ‘S’ curve with four predictable stages: deployment, growth, maturity, and decline. After starting with a big bang in the deployment phase, they quickly grow infrastructure and deploy resources where they get the most traction in an effort to change the ‘DNA’ of the organisation.

Unfortunately, what follows in the growth phase is a myopic focus on training and projects in a race to show equitable benefit to the organisation. By the time an initiative reaches maturity, it is already in decline. In many industries, the very structure of lean Thinking with its focus on kaizen rather than kaikaku (radical improvements) can be a prescription for irrelevance for any process improvement program. When this happens, it’s too easy for an organisation to declare “success” and eliminate the program through a proclamation that “quality is NOW the way we work”. Sound familiar?

Successful initiatives continually rethink and shift their lean initiatives to proactively jump from one deployment curve to another. They understand that an organisation is seldom homogenous in its maturity, and that lean may have many different “flavors” and faces within a broader organization in response to its heterogeneous customer base. It’s not about how many people are trained or how many projects have been completed. One size does NOT fit all. For example, what works in the front office of the investment banking division seldom works in the back office of the retail brokerage department. Relevant and sustainable lean initiatives also do not solely rely on senior executive mandate. In today’s zerodefect world, the CEO office can be a revolving door of personalities and associated initiatives du jour. A lean initiative needs its own foundation of stakeholders and supporters across an organization to continually drive positive organisation change.

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To focus on the horizon requires ever-diligent situational awareness. A recent HBR article by Paul Nunes and Tim Breene calls this an edge-centric strategy. A successful initiative requires a parallel strategy to continually gauge the periphery of the market for untapped customer needs or unsolved problems. It means a continual rejuvenation of talent both in and out of the initiative, and balancing short-term project delivery with longer-term capability development. To stay focused on the horizon requires an initiative to stay true to the core of lean thinking and combine the radical creativeness of kaikaku with the continual improvement of kaizen.

Further reading:

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Paul Nunes and Tim Breene, Reinvent Your Business Before It’s Too Late, Harvard Business Review, Jan-Feb 2011, pages 82-87.

T h e e n e m y w i th i n D a v id B o v is

The enemy within Recent findings have highlighted direct links between sensory and emotional experience and structural changes within the brain. David Bovis, PCC, explores what this means for our understanding of organisational change.

H

ere is an opportunity to consider the relationship between organisational change and the human condition in more detail than ever before.

We can now contemplate the ‘people process’ with the same attention to detail historically reserved for 6 sigma and similar best practice methods in pursuit of ROI and EBITDA improvements.

These new discoveries are being hailed as breakthroughs for understanding education and mental health, but we can’t afford to allow them to become exclusive to those disciplines. The impact of modern neuroscience and psychology on our approach to change, culture transformation and the related performance of organisations cannot be underestimated.

People subconsciously oppose change … naturally

Def: Neurogenesis; The production of entirely new neurons, created by cells with stem cell like properties.

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Challenging conditions: can be considered as those that stimulate the release of hormones associated to pleasure and satisfaction, like serotonin. These hormones relate to feelings of personal satisfaction and have been shown to increase the level of neural growth in the brain.

P rinciples and

In relation to neurogenesis, the distinction between the two terms, ‘challenging’ and ‘stressful’, takes on extra meaning for those leading change as research has shown that the two have some clearly defined and directly opposing outcomes.

purpose

Organisational change is widely acknowledged to present a challenging experience to all individuals involved, both change leaders and frontline employees. It can also be considered a stressful experience.

Stressful conditions: can be considered as conditions that stimulate the release of hormones associated to fear and negativity, such as hydrocortisone. These hormones reduce the rate of neural growth but also have a compound effect as a functional element of the body’s ‘fight or flight’ response and defence mechanism.

Both of the above neural and hormonal relationships have important implications for individual performance in the workplace. Change mangers who fail to recognise these underlying connections and subsequent behavioural reactions run the risk of inadvertently creating the poor performance associated with resistance to change.

Psychological studies into challenge and stress typically focus on the effects of ‘trauma’ or sporadic and severe experience. However, in the arena of organisational change we must also consider the impact of stress that occurs chronically and habitually in order to better understand root cause and effect relationships between people and process.

Subconscious defensive reactions to stressful experiences, like opposition and blame, can be triggered by our experience of systems which we perceive as arbitrary judgement mechanisms. We react to how we are judged, and such experience forms new neural-nets, beliefs and values.

Under stress, chemicals in the brain change and people tend to lose confidence in their actions. They are cautious because of their innate fear of failure which is formed during development years and triggered when negative judgements are perceived in the present. Under stress people are at higher risk of making simple errors. They are also likely to oppose anything new that provokes discomfort.

These points make it more critical than ever that change leaders understand the importance of making organisational transformation a challenging, but not a stressful experience. The difference will have direct implications for the success and sustainability of change objectives. It is widely accepted that engagement with people is critical to the success of organisational change but very few have taken the time to look more closely or scientifically at the nuances of what this means.

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It is widely accepted that engagement with people is critical to the success of organisational change but very few have taken the time to look more closely or scientifically at the nuances of what this means.

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Changing processes or changing minds?

Perceptions, opinions, behaviours and personal performance are linked directly to our experience and vice versa.

T h e e n e m y w i th i n D a v id B o v is

This provides evidence that we can and do ‘change our minds’ – literally! Furthermore, it shows that if we are aware of the neurogenesis process, we can influence the way this change occurs, both in our own minds and in the minds of others.

Taking this into account in relation to change management means we must challenge our traditional views about leadership and who is responsible for effecting change. We are all leaders whether we want the responsibility or not and some organisations are now starting to reassess internal hierarchies to reflect this.

The rate of change

It is with the information coming from scientific studies like those discussed here, that we can start to become conscious of and consider the root cause issues that underpin the changes we pursue in business. In so doing we can dramatically improve the levels of acceptance, speed and sustainability in our transformation programmes. We can remove resistance to change.

Let’s describe this with a more familiar set of words.

Where we use this information to understand the people process, we can understand what strategic actions improve the experience of personal change in the context of organisational objectives.

Being focused only on the logic of change (tools implementation) is to be focused on only half the opportunity for effectiveness. This claim is verified by statistics from a wide range of research and reports which consistently show that, over the last 30-40 years, we have been able to do relatively little to address failure rates in organisational change programmes of around 75%.

P rinciples and

Why is this relevant? In situations that fail to provide consistent change,

Systematically pursuing physical and tangible change in our organisations, from which it is assumed people will establish different or lean thinking, can trigger thoughts and responses in opposition to desired organisational outcomes. By forcing change that subconsciously reconfirms and reinforces our internal view of the world, we can inadvertently strengthen opposition and build delay into the change process. In other words trying to speed things up logically, we often slow things down emotionally.

purpose

Your brain and mine continuously regenerate relative to our emotional environmental experience. Studies on animals have identified that regeneration occurs in particular regions of the brain at a rate of approximately 12% per month, relative to a consistent change of experience. These regenerations, primarily in the hippocampus (the area of the brain responsible for memory and fear regulation) will either change or consolidate neural structures and initial indications show that there is no difference between the animal and human brain.

via exposure to external or internal experience, we see our current neural structures strengthened and reconfirmed, making them harder to change at a rate of approximately 12% per month.

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Neurogenesis was originally identified in small mammals, but has more recently been identified in adult humans. It is the process by which new neurons form in relation to our experience of people and environment. The new neurons migrate relatively small distances and embed themselves into the existing neural network, replacing older cells.

This ensures brain mass remains largely constant and allows our neural construct, from which we act and re-act, to reflect our most recent experiences.

Here are a few of the most recent reports to highlight failure rates in organisational change and the reasons why failure persists.

Major corporate investments are abandoned within six months, 80% of the time - Gartner Group 2002 Most change programs fail, but the odds of success can be greatly improved by taking into account counterintuitive insights about how employees interpret their environment and choose to act - McKinsey ‘The irrational side of management’ 2009

Conclusion

We might say the biggest barrier to change, in many ways, is the brain itself.

However, in understanding this, we also unlock the potential to see the brain (as well as people, culture and experience) as the greatest opportunity to achieve change.

Recognising this human relationship with change requires us, as a first step, to reconsider the way in which desired outcomes for organisational change are expressed.

The greatest barrier to successful integration is cultural incompatibility. Undervaluing or ignoring the human dynamics related to an M&A transaction can prompt the departure of key talent… among the assets that made the acquisition attractive.

- Author of ‘Done Deal’ Beth Page 2006 Post-M&A organisational cultural change is a traumatic experience for organisational members. It generates resistance and contributes to M&A failure.

- Manchester Business School 2007

We are all leaders whether we want the responsibility or not and some organisations are now starting reassess internal hierarchies to reflect this

Using lean terminology:

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Understanding this, change managers will be able to focus on the reduction and removal of the 7 wastes from the process of change itself. If our approach to change in business remains unconscious of considerations around neuroscience and psychology there is a very real risk that we will continue to stimulate subconscious opposition to the change we pursue.

For those, like myself, who truly believe in the principles of waste elimination and maximising value adding ratio’s, it is obvious that ignoring change at this level is a self-generated delay! Having to rectify the scrap and rework of a process that produces a 75% defect rate is over-processing in the extreme, and pursuing a process that reduces the capability to change, is akin to overproduction; the premier waste identified by Taiichi Ohno.

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T h e e n e m y w i th i n D a v id B o v is

“The greatest Waste is the waste we do not see.” Shigeo Shingo This hidden waste is not only process waste, but is also the waste created by the attitudes we generate through the measures, targets and rewards, popular in systems that fail to consider psychology. Margaret Heffernan has addressed a cultural resistance to considering psychology within organisational change in her book Wilful Blindness which was released at the beginning of this year.

This is the change challenge for the market of change itself and it will require a big dose of ‘practising what we preach’ from change leaders everywhere. Starting with the man in the mirror can be one of the biggest stress triggers of them all.

Changing the self for the benefit of others has been the task facing mankind for millennia and it is at root of all that kaizen originally stood for. There is little wonder that organisations so often fail to fully appreciate this nuance within the rewards driven culture of the western world.

However, highlighting the benefits in performance that can be obtained by taking a broader view, including the views touched on here and the wider complexities of psychology can help us take the first steps on a stronger continuous improvement journey. We can understand neurogenesis, negative emotions and what provokes them. We can understand with more consistency and rigour what can be done to reduce those aspects of change which are not conducive to desired outcomes and we can understand how and what promotes engagement, ownership and empowerment.

This new science has the potential to get lean management working with the same spirit that sits at the core of kaizen. Where changes start from the inside and culture transformation is not only accepted but pursued and welcomed by all. E N D

Bill Bellows comments:

I am struck by the comments about Margaret Heffernan. As with her, I am a great believer that we experience a cultural resistance to considering psychology in our organisations; we need to consider how attitudes within lean communities foster this resistance to psychology with a focus on eliminating waste, scrap, rework, and nonvalue activities.

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Bill Bellows will deliver the closing keynote presentation at LMJ’s annual conference, June 16.

P rinciples and

I would add however that I disagree with the premise that: “People subconsciously oppose change - naturally.” I would offer that people consciously resent being changed. The issue here is choice; would workers be opposed to change if they could initiate it themselves, with appreciation of the impact of change on peers?

purpose

From a basic starting point; as long as all parts conforming to requirements are considered ‘good’ and ‘equally good’ – in line with the theory of interchangeable parts - then our thinking behind tolerances will be that the manner in which requirements are met is of no consequence; it might well follow that workers who meet requirements for a job description are themselves interchangeable parts. This hardly creates a framework in which workers are then motivated extrinsically to perform tasks rather than intrinsically to contribute?

To adhere or adapt; that is the question.

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We often hear that it is necessary to adapt lean principles when introducing a programme into a new environment. But how do we balance the knowledge that we must be sensitive to culture and the nature of the work in hand with the need to safeguard the integrity of original lean principles? Reuben Karuna-Nidh, director, global Head of Lean(Muri), production management, Deutsche Bank gives insight into his organisation’s approach.

A

re there certain original lean principles that need to be altered to fit into financial services or other non-manufacturing environments?

I have recently managed a lean implementation programme across the technology department of a large global financial services organisation. Lean’s origins begin in manufacturing, specifically the automotive industry. Therefore one of the potential hurdles to overcome was how to apply or adapt the lean methodology, not only into a service environment, but into a technology oriented workflow.

Adapting the language of any new methodology to the environment and organisation in which it is being applied is an important enabler for sustainability but first will affect the degree of initial adoption by participants. Translating examples and case studies to the relevant domain, can aid teams in learning about a new process and understanding how it can be practically applied to their own environment. Branding, and use of concepts and terms which the teams are familiar with or receptive to, can also have a similar effect.

However, this doesn’t always mean that you have to abandon traditional lean language. For example in our case, the term “Muri” one of the three types of waste, and a term popularized

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To adhere or adapt Reuben Karuna-Nidh

What is extremely satisfying is that all participants in this project have now fully embraced the ideology behind a number of the improvements and are using this to adopt a continuous service culture.

The programme started with tiny

P rinciples and

Implementing lean into a servicebased organisation, whether financial or another sector, often raises the question of the applicability of a methodology designed for the tangible outputs of manufacturing processes. Thinking that a service based process does not have an output is a common misconception. Invariably in any

The project we recently completed is in the technology production support group at Deutsche Bank, which provides services to several different business areas. Many of the teams were initially sceptical about the relevance of the project methodology, but were quickly surprised to discover the parallels between assembly lines and the modern technology environment they work in. For example each of the support teams are in effect representative of the various groups working in a factory, dealing with their part of the request before handing it over to another team.

The service request management system that all the teams use, is in fact the notional assembly line, as a request completes its journey, from initial logging by a user, to closure by the final support group involved in completing the final steps. Likewise, a system outage is dealt with in a very similar way a problem on the assembly line as many different support teams from different technology areas are drawn in to help to resolve it.

purpose

Adapting terminology and language is something that applies to all processes and methodologies as they are moved between environments, including, in our case, from one technology group to another. Therefore the fact that the lean methodology has its foundations in manufacturing is not necessarily a hindrance. In fact, in a number of cases the use of the original terms and Japanese terms; Gemba – visibility of problems, Kaizen - improvement, Poka-yoke – mistake proofing, helps to provide hooks and discussion points for training materials. These are terms and concepts that individuals can relate to and understand irrespective of the industry sector they are working in. Additionally, these terms help support the development of a common language and new terminology which is synonymous with the roll-out of a new process or behavioural change.

client-service organisation the request that a client makes is based on a tangible output, or specific business delivery however, often the teams providing the service are so focused on responding to client needs, particularly in high volume environments, that they forget the service they are providing is based on a business deliverable or part of an overall organisational objective.

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in the automotive industry, has been used as the name of the programme. Literally, the term means ‘overburden’ and this encapsulates the core concept that will benefit the teams undergoing the programme as waste is removed from their day-to-day jobs, freeing up their bandwidth and allowing them to focus on the activities that both they and their customers want to work on.

To adhere or adapt Reuben Karuna-Nidh

The project we recently completed is in the technology production support group at Deutsche Bank, which provides services to several different business areas. Many of the teams were initially sceptical about the relevance of the project methodology, but were quickly surprised to discover the parallels between assembly lines and the modern technology environment they work in. steps introducing the concept of lean, highlighting some of the Japanese terms. We then moved on to brand the programme, and provide customised training to each participating team, before addressing data collection and diagnosing parts of the process. A key milestone for me was to see how the teams had embraced the daily huddle process, using it to collaborate with other technology groups, and to help manage the multiple shifts they use to provide a 24/7 service to the clients.

In addition, the operational capacity benefit was around 45%. The natural expectation would be that the teams who have gone through such a big organisational shift, i.e. some of the groups had literally halved in size, would be that they felt overworked, under more pressure on a daily basis and generally demoralised. In fact the opposite was true; they felt with the new simpler, more efficient processes and the removal of waste, their jobs were more interesting and rewarding. Furthermore the client KPI’s improved in tandem to this trend. For one group their monthly SLA compliance went from 60% to 80%.

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This is this just one example and further proof, (there is plenty out there already in the services industry) of how the lean principles can be adopted across different sectors.

A little bit of tailoring and customisation does help, but fundamentally the lean principles remain the same.

The opinions or recommendations expressed in this article are those of the author and are not necessarily representative of Deutsche Bank AG. E N D

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The king of

equations

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As this issue explores the expansion of lean into new implementation environments John Bicheno takes a moment to reflect on some of the infighting that this has provoked between lean-related disciplines and methodologies.

For reconciliation he returns to one of the most fundamental lean laws.

L

ean seems to be constantly evolving, and as it does new terminology springs into being. A case in point is the phrase ‘lean-6 sigma’ which is increasingly being heard despite considerable sniping between the lean, 6 sigma, and, particularly, the ‘systems thinking’ camps.

Kingman’s equation AQT = ( (ca2 + cp2)/2) (ρ/(1-ρ)) tp AQT = average queue time ρ = utilisation, expressed as a decimal. ρ is arrival rate divided by service rate, or more simply load divided by capacity ca2 + cp2 are the arrival variation and process variation coefficients tp is the average process time, or value adding time.

Note: Lead time is the sum of queue time plus process time.

However, there is one lean theory, now often overlooked as talk of lean implementation moves away from technical aspects and unfashionable tools, which might end this conflict.

Let’s explore a little further just what Kingman’s equation (see inset) can bring to our understanding of business improvement and competitive advantage.

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T h e k i n g o f e q uat i o n s J oh n B iche n o

Kingman’s equation brings lean practitioners a detailed understanding of queue dynamics. This is important, not only because they occur so widely, in all types of business, but also because queues increase lead-time, reduce competitiveness, annoy customers, work against quality (through reduced error detection time), and take up space.

Kingman’s equation originated in the 1950’s and is applicable in both manufacturing and service.

Peter Hines et al’s iceberg model (see Staying Lean, LERC 2008) takes the view that the ‘above waterline’ tools rest on hidden, enabling factors such as strategy, leadership, behavior and engagement. But Kingman’s equation is more fundamental. These enabling factors need to rest on an understanding of natural process capability laws. Lacking such understanding will lead inevitably to low morale and performance.

This is in line with Deming’s ‘94/6 rule’ – that 94% of problems lie with the process or system, only 6% with the people. Likewise without an appreciation of the variables in Kingman’s equation, and their interactions in particular situations, a good understanding of system capability is simply not possible.

There are three variables involved in Kingman’s; arrival variation, process (or server) variation and utilisation. And these variables influence the wait times in the queue or cycle time through the process. (See Fig 1).

These are the critical variables in understanding lead time or queue time.

Figure 1 Queue time, variation and utilisation

Average queue time

High variation High uncertainty

Moderate variation

100%

This exponential graph can be demonstrated easily in a few minutes with a dice game having servers and process players. A game I detail in The Lean Games Book, reviewed in issue 09 of LMJ.

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Utilisation ρ

P rinciples and

Zero variation

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Some uncertainty

Referring to Fig 1 we can see that as long as the utilisation is less than 100%, and if both types of variation are zero the queue is zero, and lead time is simply the actual value-adding process time. Conversely, if utilisation is 100% or 1, and there is variation, the queue grows rapidly, but if utilisation tends to zero, the queue tends to zero because there are very few customers or orders.

Of course, queue length is a major determinant of total lead time. If a process takes an hour, 5 people or jobs in the queue will mean an expected delay of 5 hours; if the process takes a minute, 5 people in the queue will mean an expected delay of 5 minutes. Generally, the longer the average process time, the more important is queue length. Obvious - but worth stating.

In the Toyota system variation is ‘mura’, and utilisation is roughly equivalent to ‘muri’ or overload.

Utilisation is load divided by capacity (or arrival rate/service rate in service, or demand/time available for the work to be done in manufacturing.) Let us look at this formula for utilisation.

Note that there are three types of demand – value demand, failure demand and rework demand. Value demand is first-time demand. Failure demand is externally generated repeat demand caused by ‘not doing something or not doing something right’ (Seddon). Rework demand is internally generated demand caused by errors that are corrected internally without the external customer’s knowledge The time available for work to be done is reduced by wasteful activity. (In fact, as Ohno said, ‘activity = work plus waste’) Cutting failure demand and rework reduces the load, sometimes significantly Reducing waste (or muda) also reduces the load. Waste can cause both rework and reduce capacity, thereby affecting both numerator and denominator in the utilisation equation Toyota’s ‘muri’ or overload applies to people and machines. Note from the graph and the equation that overload begins at less than 100% utilisation Reducing failure demand, internal rework, and waste should be a priority for any service or manufacturer Utilisation, through Kingman, has a major influence on lead time. So, Kingman’s equation incorporates:

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The Toyota view of muda, muri and mura The Six Sigma view of reducing variation The Seddon insight of eliminating failure demand Insights for Theory of Constraints (TOC) The views of Hopp and Spearman from Factory Physics, Rajan Suri on Quick Response Manufacturing, and Don Reinertsen on Lean Design

T h e k i n g o f e q uat i o n s J oh n B iche n o

If we can reduce or eliminate waste, failure demand and rework, there remains value demand and value added work. Each of these has variation – arrival variation and process variation respectively.

Variation, in turn, is of two types – common cause and special cause. So, Deming and Shewhart join the game.

In manufacturing, the cost of extra capacity is typically high. Hence the option of reducing lead time by adding capacity is not often taken and managers prefer to reduce variation by, for instance, 6 sigma or standard work. But this is a tradeoff, via Kingman.

In service, and assembly, extra capacity may not be expensive and can be added incrementally, for example, by adding employees or moving them between functions.

Capacity adjustment is a good solution where demand cannot be influenced; in a supermarket, shelf stackers man the till when queues build up. But in a call centre such adjustments may result in increased failure demand.

P rinciples and

Likewise process variation is subject to many, or all, of the classic 6 M’s: man, machine, method, material, measures, mother nature. But, there are many more implications and insights, a few of which are explored below:

If utilisation is high then reducing the utilisation - say by 30% - will have a big impact, but reducing the process variation will have less impact despite being more difficult to achieve. Even if you are able to reduce process variation to zero (near impossible in service) you will still have arrival variation.

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Frances Frei, in a Harvard Business Review article, expands on arrival variation by saying that there are five types of ‘customer-introduced variability’: arrival variability (between arrivals), request variability (within arrivals), capability variability (customer skill), effort variability (how much effort has the customer made – say before airport security), and ‘subjective preference variability’ (different customer expectations).

This is useful because it clarifies what is really required in a 6 sigma variation reduction project.

We can note the implications of aiming at both high utilisation and low queues. This is only possible with very low arrival variation, very low process variation, and very little rework or failure demand. Impossible?

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Kingman’s equation brings lean practitioners a detailed understanding of queue dynamics.

This is important…because queues increase lead-time, reduce competitiveness, annoy customers, work against quality (through reduced error detection time), and take up space.

Utilisation is the big one. If utilisation is low – say 50% or less - arrival variation and process variation will have small impact. If utilisation is high – say above 80% - arrival and process variation will be of high importance. If you aim to have short delays or queues then either variation or utilisation must be small, assuming that you have already reduced failure demand.

Arrival and process variation are measured by the coefficient of variation, ca and cp. In the equation, the terms are ca2 and cp2. ca and cp are given by σa/ta and σp/tp. σ is the standard deviation. t is the mean (or average) time – or mean inter-arrival time in the case of ta. This makes intuitive sense: If the standard deviation of process time is one minute and the mean process time is also one minute, variation will be much more significant than in a process where the standard deviation is one minute but the mean process time is 20 minutes.

From this it follows that, since many service processes are longer than manufacturing processes, variation is generally more tolerable in service than in manufacturing. Hence, it is generally much more effective to focus on reducing failure demand, than it is to try to cut variation. Not understanding this is one of the reasons why many 6 sigma efforts, particularly in service organisations, are misdirected.

As Seddon has said, a service process needs to ‘absorb variety’ not eliminate it.

It is interesting that the TWI (Training Within Industry) approach to Job Instruction puts emphasis on getting the ‘key’ activities correct, but ignores standard times. This makes sense because reducing time variation is generally less critical than reducing utilisation. Utilisation is affected by errors which generate failure demand or rework.

Arrival variation is often ignored, but it has an equal influence to process variation. A steady arrival pattern will lead to lower queues and delays. Can this be influenced through salesmen, incentives, informing customers or reducing supply chain amplification?

The work release behaviour of processes immediately upstream of a bottleneck is important. If they release work steadily the bottleneck queues will be, on average, shorter than if the upstream resource releases lumpy work. (This was shown in a dramatic case study by Justin Watts at the 2009 LERC conference and subsequently covered in the first issue of LMJ. Justin Watts will be speaking at the LMJ annual conference, June16.)

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With regard to ‘buffers’ against variation, there are only three kinds: inventory buffers, time buffers (customer queues), and capacity buffers (or less than 100% utilisation). Of course, if inventory cannot be held, as in some service, there is a straight trade-off between capacity and queue time. If customer wait time cost can be estimated, there will be optimal level of capacity.

If you attempt to ‘protect the constraint’ by a time buffer, as in TOC, this can reduce arrival variation.

But it does nothing for process variation; remember that you are making a tradeoff – the increased throughput from the bottleneck against the cost of delay (of customers, or

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To identify the constraint, it is simplistic to examine only the load and compare it with demonstrated capacity. Kingman shows that overload begins at less than 100% utilisation and that knowledge of variation is particularly important at high utilisation Exploiting constraint should include variation reduction in addition to other traditional methods, like protecting it with a buffer Subordinating other resources should include looking upstream of the constraint to examine arrival variation coming onto the constraint There is much more, to explore but there is the capacity of this journal to consider…

Conclusion

Lean, 6 sigma, TOC, and service system thinking are sometimes seen as rivals. Some managers argue the merits of one, while criticising the others. Through Kingman’s equation we can see that all are useful, but not all are useful in all circumstances. The trick is to know when to apply each one, and when not to. E N D

If inventory cannot be held, as in some service, there is a straight trade-off between capacity and queue time.

References and further reading

Wallace Hopp and Mark Spearman, Factory Physics, 3rd edition, McGraw Hill John Seddon, Freedom from Command and Control, Vanguard, 2004 Donald Reinertsen, The Principles of Product Development Flow, Celeritas, 2009 John Bicheno and Matthias Holweg, The Lean Toolbox, 4th edition, PICSIE Books

The boardroom cares about sustainable results, not the technical nuances separating lean, 6 sigma, or other process improvement methodologies. For this reason it is critical that practitioners take the time to fully understand the science behind any chosen method to ensure accurate use of the tools, techniques, and arithmetic to reliably deliver benefit and lasting change.

The boardroom counts on us to get it right, so we need to take the time in the classroom to review articles like this; to analyse, study, and test our ability so that we can consistently pick the right tool for the right job.

P rinciples and

Bicheno’s article is a useful review of the science behind queue dynamics. However, we must be aware that his use of Kingman’s equation as a technical defense of lean theory would be supported only in the classroom and by committed enthusiasts.

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Brenton Harder comments:

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inventory). If you know these then there is an optimum utilisation rate. Sometimes it will be more cost effective to provide extra capacity than to increase the constraint buffer. TOC advocates the 5 steps of improvement. These steps are: identify, exploit, subordinate, elevate, and repeat. Kingman’s equation adds insight:

Google go lean

Jane Gray interviews Alessandro Laureani, global operations, processes and systems manager at Google about his hopes for the growth of a lean culture in one of the world’s most recognised organisations.

I

n March this year BrandFinance® ranked Google as the world’s number one most recognised brand, with a value of $44,294m. Considering this, and the fact that the internet service provider consistently receives queries from hundreds of millions of customers every day, it would be easy to imagine that Google is beyond the need for lean improvement.

However, continuous improvement is a mindset and with such exponentially high volumes passing through its systems and the need to protect its brand position, Google has recently decided that the efficiencies and value creation opportunities available through lean thinking are not to be missed.

Alessandro Laureani has taken on the challenge of guiding the corporation’s AdWords business unit on the first steps of its lean journey. Laureani says: “I joined Google just nine months ago. The company has only just started to become engaged in its lean-6 sigma programme and for the first stage we are focusing on the application of lean and 6 sigma in our AdWords customer contact centre; using it to improve the way we handle our frontline customer relationships.

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“In a nutshell, what this means for me is allowing people who are very busy with the task of trying to answer customer queries as quickly as possible, and to the highest standard, the opportunity to step back from their process. Obviously Google is an enormous organisation with a reputation to match. Employees are always trying to answer demand to the best of their ability but what they do not have time to do is ask why the customers are contacting them in the first place. As I see it, our first challenge will be to do some root cause analysis around what causes customers to contact us in the first place.”

Despite the daunting prospect of holding Google’s hand from the pilot stages of lean to its expansion across the enterprise Laureani is hopeful

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This latter theme of environmentsensitive leadership is one which forms the centre-piece of Laureani’s PhD studies and will also form an important part of the presentation he is due to give at an industry event in Milan in June (see box). Talking about this event Laureani says: “We will discuss the dynamics of continuous improvement from a general cultural change perspective, looking at how psychology and social science can give us a better understanding of how people react to change.

With this optimistic outlook Laureani speaks of the future of the lean programme at Google: “As we gain success with the pilot I hope that we can expand, both in terms of the number of people who are engaged in the customer contact centre, and in terms of the application of the principles in other business units. The principles can be applied anywhere, but what I would say is that while lean-6 sigma is viewed as a programme or an initiative, and spoken of in those terms, I will never view it as having been fully successful at Google or anywhere else.

“From my point of view, failure is very often not down to technical factors but to leadership and the level of engagement among people at all levels in the organisation. The focus that we put on tools is partly down to the self selection bias of lean-6 sigma leaders who are often analytical or technically oriented people. This is helpful for localised improvements but for making that step from programme thinking to establishing a lean culture you need to understand how to engage people right from senior management to the front line.”

P rinciples and

Alessandro will be a keynote speaker at A Frictionless World, a pan-European operational excellence event being held in Milan on June 9. The event is being jointly hosted by consulting firms PCC and Xonitek.

For more information please contact Allan Edun: aedun@pcchange.co.uk

Of course this is an observation that is often made by contributors to LMJ, as is the suggestion that we should share experiences in order to learn how others have approached implementation challenges. But how should we balance our efforts to learn from others with the need to appreciate that our own implementation will be unique? Laureani gives some pointers: “The first thing to remember is that you must tailor your thinking to your organisational audience. GE and Toyota are often used as benchmarks, but if you are a small or medium sized organisation there is no point in trying to implement lean-6 sigma in the way that they have.

They are massive organisations and there is little that you can replicate in a group with 200 employees, the culture is different.” E N D

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“In order to make the step from having a very successful programme to being able to claim that you have had success with lean-6 sigma you must have more than just tools mastery. Lean thinking must be embedded in the company’s culture, to the point it becomes simply the way things are done in your business. To achieve this you need leadership and you need to understand that there are different types of leadership for different applications.”

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of good progress – an optimism based on his appreciation of the company culture: “Change is part of life at Google. There is a very strong culture of innovation, people are always looking for ways to improve and they are receptive to new ideas. In comparison to my previous work experiences, this is an excellent environment for the growth of lean and 6 sigma. In other organisations the culture may be much more set in its traditions. There are some long established formats for the way things are done in some other industries and this can make it a more defensive environment than Google is.”

Disruptive thinking Why should a mature lean practitioner attend a conference on their topic of their expertise?

Jane Gray talks to those responsible for delivering the LMJ’s annual conference to get a flavour of the challenges to be addressed at an event which aims to shake up complacent thinking in the lean community.

F

or experienced lean practitioners, with regular access to the latest literature on implementation challenges and with a wealth of knowledge and in the bank, what possible use could there be for a lean conference event, the likes of which litter the portfolios of most consultancies? Such events are generally aimed at building knowledge of the lean tool kit and demonstrating structures for disseminating waste elimination techniques through policy deployment.

The LMJ conference is not for the same delegation.

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Sit back and make yourself uncomfortable

To explain why the serious lean practitioner will not be disappointed in LMJ’s annual conference, the event chairman, Dr Nick Rich, Cardiff Business School states: “If you can come away saying you haven’t learnt anything from this event, you probably haven’t been listening. As markets speed up and the world becomes more uncertain there is an ever greater role for

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innovation and being quite radical in our thinking. A lot of the speakers at this event are talking about transformations; radical changes that they have made to their business models – as opposed to continuous improvement.

“In addition, a lot of the speakers come from lean environments that are well matured. These are companies that have sustained lean – not just implemented it – and it will be fascinating to hear more about the challenges that face the mature lean organisation – not many people are aware of these.”

It is mandatory, absolutely mandatory, that lean leaders engage in opportunities to shake up their thinking. If you do not, you will get stuck in a rut, complacent in your own method, ticking boxes and not really creating any value for your customer.

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P rinciples and

Clarifying the call to action that this event puts out to lean leaders across all sectors, Rich adds: “The speakers at this event will be challenging – particularly those toward the end of the day. It is mandatory, absolutely mandatory, that lean leaders engage in opportunities to shake up their thinking. If you do not, you will get stuck in a rut, complacent in your own method, ticking boxes and not really creating any value for your customer.”

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Giving an overview of some other discussion areas he hopes will be raised at the event, Rich says: “I would really like to see how small businesses are ignoring their size and taking a greater role in the supply chain. I think it is important that companies double their improvement efforts and think beyond the factory to their supply chain. Another issue is how companies are using lean to cope better with regulation and bureaucracy.”

Rattling the cage

One of the “challenging” speakers that Rich anticipates will shake delegates out of this complacency is Dr Bill Bellows, associate fellow at United Technologies’ Pratt & Whitney Rocketdyne and president of the In2:InThinking Network, a non-profit group dedicated to pioneering organisational improvement. Speaking for himself about the limitations of many current lean implementations Bellows states: “I suspect many organisations are practicing lean because their MD said ‘go do it’, and the MD said this because perhaps his peers on the golf course made it sound good. GE’s Jack Welch was known to have evangelised 6 sigma on a golf course.

“I don’t doubt that the audience at this event will include those who are confident that their understanding goes beyond this and that they have contextualised TPS for their environment. But I would ask those individuals if they are absolutely confident that peers in their respective organisations have likewise moved on in their understanding.”

Bellows questions if there is enough being done within the lean community to create a curriculum that makes the organisational relationship with lean “accessible to people from all walks of life,” and says the largely US belief in root causality and sharing practices to eliminate waste are inconsistent with the thinking Dr Deming’s original work.

What Bellows is keen to see is a much more conscious effort on the part of improvement professionals to broaden their awareness of the different approaches available for exploration and exploitation beyond the lean community. He suggests that it is the responsibility of such individuals not to be content with the accepted wisdom of their community: “Lean practitioners tend to benchmark against themselves. That is, they benchmark within their community and they are unknowingly content to accept these boundaries.

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“I know the temptation to be like that. I was firmly entrenched, for a time, in the Taguchi community [Genichi Taguchi developed the concept of the quality loss function so central to robust design techniques] and experienced the same phenomenon of comparing notes with the fraternity on who was doing what. When I stepped back I was blown away by what was outside our tiny, insular world.

I encourage those in the lean, 6 sigma, Deming, De Bono, systems thinking, and all other organisational improvement communities to accept that they have only got a piece of a greater solution.”

Without this broader perspective Bellows asserts that companies will continue a trend of “fixing things that are broken” as opposed to innovating new business models which will give organisations the same progress trajectories that disruptive innovations have given to technology development and energy markets. Bellows will explain how

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the wealth of knowledge available across a variety of improvement communities has informed his framework for thinking; a framework without which: “the advanced tools and techniques which companies and individuals invest so much in will be underutilised, if not counter productive to the aim of the improvement efforts. Dr Deming captured this essence in his so-called Second Theorem, “We are being ruined by best efforts, not guided by Profound Knowledge”. As to Profound Knowledge, this theory of management was the essence of Deming’s last book; a need to appreciate systems, people, variation, and knowledge, plus their many interactions. ” Bill Bellows controversial provocation of lean adherents will be a highlight of LMJs annual flagship event. However, the day will

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also include contributions from speakers representing lean advancement in a broad range of industries and environments. Martyn Craske, head of lean at the Department of Work and Pensions, will share his experiences of lean leadership in a programme aiming to engage with 120,000 employees spread across 1000 locations and presentations from GKN, Burton Foods, the Royal Mint and many others will showcase a variety of best in class applications of lean learning systems, tools, culture building, performance management and strategic alignment. E N D If you would like to join us at the LMJ annual conference on June 16 please contact Benn Walsh for full conference details and booking on: 0207 401 6033 or b.walsh@sayonemedia.com

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Process focus

Lean; the mother of invention?

Don Reinertsen, president of product design process specialist Reinertsen & Associates, shows that just because you understand lean, doesn’t mean you understand lean product development

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e all know the story of the spread of lean principles. Starting in Japan and spreading around the world, lean thinking and the values of the Toyota Production System have revolutionised manufacturing.

With the appearance of Lean Thinking this revolution expanded beyond manufacturing.

But, alas, the world isn’t always friendly towards new ideas and when lean methods first arrived in product development the reception was not warm. Unenlightened engineers grimaced and complained, “You don’t understand. That won’t work here; we are not manufacturing.”

And, in fact, although some of the grimacing was due to the ineptness of the initial efforts, the engineers were right.

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Inept? Isn’t that a bit harsh? I’ll let you be the judge, but I saw lean consultants visit engineering departments and draw outlines on desks to mark the location of staplers.

This 5S approach brought great value to

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Lean; the mother of invention? process focus

Such attempts to impose lean practices in product development environments did not work because they assumed leverage for value creation would be found in the same places that it was found in manufacturing. It is not. manufacturing, but being able to find staplers quickly had no meaningful impact on product development performance and so the use of this tool was flawed.

Such attempts to impose lean practices in product development environments did not work because they assumed leverage for value creation would be found in the same places that it was found in manufacturing.

It is not. The way product development makes money is fundamentally different from the way manufacturing makes money.

Understanding what drives economic results in any environment is the first step to improving economic performance.

One key difference between manufacturing and product development has huge implications: manufacturing is repetitive; product development never covers the same ground twice. To consistently produce an identical product a thousand times in manufacturing will make you money. In design replication is 100% waste.

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process focus

This introduces a need to constantly change the recipe of day-to-day work and change introduces uncertainty. It is axiomatic that variability is a negative for manufacturing, but it is a bad assumption that what is negative in one environment will be negative in another.

In product development variability is the companion of innovation, and innovation is the engine of profit. Taking this into consideration it shouldn’t surprise you that the early efforts to eliminate product development variability had some rather embarrassing side effects.

It is axiomatic that variability is a negative for manufacturing, but it is a bad assumption that what is negative in one environment will be negative in another. In product development variability is the companion of innovation, and innovation is the engine of profit.

Today we [Reinertsen & Associates] have progressed to what we call, Second Generation Lean Product Development.

While many lean manufacturing ideas require absolutely no modification for use in product development, it is my belief that mixed with these good ideas are others that misbehave when they taken away from a manufacturing setting. These non-transportable ideas are a great danger and must be left behind.

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Starting with the positives, it is clear that reducing in-process inventory shortens cycle time. Reducing batch size is the key to reducing in-process inventory.

Reducing transaction cost enables batch size reduction. These are solid ideas which can be applied to the product development process for great advantage.

For the consideration of our nontransportable ideas however, let’s return to the single most toxic idea for product development, the idea that variability is bad. No lean manufacturing expert would question this belief; their experience repeatedly proves to them that it is true and this raises a big challenge for companies with a deep understanding of lean manufacturing to unlearn some of their core beliefs when trying to establish lean product development.

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The intrinsically high variability of lean product development, and its beneficial influence on innovation, motivates product developers to be clever in handling variability.

This can be achieved by using queuing theory, a branch of applied statistics dating back to 1909. Queuing theory lies at the core of the design of modern telecommunications systems, and it gives us deep insights into how achieve flow in the presence of variability. In fact, the more we understand queueing theory the more we realise that telecommunications systems are probably more useful role models for product developers than manufacturing systems.

Another idea from lean manufacturing requiring major overhaul for lean product development is the concept of first-in, first-out or FIFO. This is optimal whenever all work has the same delay cost and the same task duration. But, what happens when we deal with non-homogeneous work – as in product development? Just imagine a hospital emergency room that decided to use a FIFO processing. A patient with a heart attack would be told to wait while a patient with an earache was treated. FIFO is fundamentally wrong for nonhomogeneous flows. Other prioritisation approaches make much more sense. For example, in product development it is often optimum to prioritise product development work on the basis of cost of delay.

This issue of costs brings us on to the lean manufacturing belief that it is better to prevent a problem than it is to correct it. This is the foundation for our drive to minimise defects and to achieve 6 sigma quality levels. Is this appropriate in product development?

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Sacred lean manufacturing concepts like pull also break down in product development, where we must anticipate demand.

Why? Product development lead times are much longer than

process focus

Manufacturing environments favour a focus on prevention because they have long run lengths. This means the cost of avoiding a problem is paid back hundreds or thousands of times. Product development is often a one-time activity – this makes it much harder to recover the effort invested in prevention. To use a simple analogy, most of us use the spellcheckers in our word processors. If prevention was really a universally superior strategy we should teach ourselves to become perfect typists and perfect spellers. This makes no sense because the cost of prevention far exceeds the cost of correction. In fact, whenever the cost of prevention is higher than the cost of correction it makes no economic sense to prevent problems. Such ideas are sacrilege to lean manufacturing experts.

acceptable customer response times.

To prevent customers from waiting we must start working on a product long before customers ask for it, or risk being late to market. Imagine a baker using “pull” and waiting for a customer to order a baguette before they started baking it.

And this brings us to the most fundamental difference between the approach of lean product development and that of lean manufacturing. Lean manufacturing is, at its heart, a qualitative system.

Its rules are treated as tenants of faith. It is a world of ‘always’ and ‘never’. Always eliminate variability, always let the customer pull, always front-load decisions.

In lean product development there are no absolutes and this requires quantitative rather than qualitative approaches. Should we operate the CAD areas at 80% utilisation with a 2 week queue, or 90% utilisation with a 4 week queue? We can’t compare a 2 week difference in queue size with

a 10% difference in utilisation unless we can express them both in the same unit of measurement. In practice, we evaluate such decisions by translating all performance changes into their impact on lifecycle profits.

Rigorous economic decision making is one of the key hallmarks of second generation lean product development.

Lean product development is an exciting body of knowledge and probably the only management approach that can simultaneously improve cycle time, quality, and efficiency. Furthermore lean product development is rapidly evolving and therefore a challenge for companies that don’t like using ideas until they have become stable. Yet, we should recognise that there is a difference between stability and usefulness.

The original IBM personal computer was introduced in 1983. If you decided to wait for it to stop improving before you bought one, then you still be without a computer today. Consider the implications for competitive wellbeing. END

Ebly Sanchez comments:

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This article illustrates the most fundamental differences between lean product development and lean manufacturing and their impact in the overall innovation of the product creation process. The reader should however, be aware that the customer focus, which is at the centre of lean thinking, links to three important variables in lean manufacturing which in turn make it essential that lean thinking is intrinsic with product development. These variables are: manufacturing feasibility (both people related and product), parts availability and uptime (via an effective reliability and maintainability process). Making the product creation process a consistent part of the manufacturing feasibility process will secure both product quality and efficiency.

As a reference for better understanding of the lean product-process development I refer readers to the works of Prof J. Liker, University of Michigan.

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Peter Watkins adds:

Lean product development cannot use all the same methods and approaches as manufacturing and this article gives many good reasons as to why this is so.

Manufacturing methods or systems such as pull and leveling are put in place to improve the way we move towards a process target condition, not as the means of the end results themselves.

Can we still count the kind of product development described in this article as ‘lean’ even though it diverges from certain lean manufacturing tenets? Resoundingly, yes!

The number one lean principle is ‘value’ and making it flow, not simply variability reduction. Lean product development principles for value creation should focus on setting target process conditions to improve cadence and flow as well as creating reusable knowledge through set based development.

Following this article, further points readers might want to explore are the methods and processes which can be used and how they are preformed in a product development environment. Three key areas are: Visualisation of work for daily resource and demand planning. As the engineering man hours required are hard to plan it is crucial to manage resources and demand daily to see if the project needs resource support and if work is on schedule Traditional product development thinking is around gate review stages. When using lean, mini kaizen events can be helpful for making decisive action points in the process

Simplification of the use of current product development tools such as: Voice of customer, risk analysis, limit curves, component selection and design, design for assembly, design for manufacture

Peter Watkins will be speaking at LMJ’s annual conference, June 16.

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Smallpeice Enterprises is a specialist training provider in lean, lean sigma, 6 sigma, new product development, leadership & team development. Visit www.smallpeice.com or email train@smallpeice.com for further information or to request a meeting.

process focus

Don Reinertsen UK Workshops Smallpeice Enterprises is hosting the next Don Reinertsen ‘Lean Product Development’ 2-day workshop on May 19 – 20 in Leamington Spa, further events are scheduled for November 2011.

Visit www.reinertsen.co.uk to view the full programme and event details, or call +44 (0) 1926 336423.

Insight, inspiration & collaboration on your lean journey THE LEAN MANAGEMENT JOURNAL ANNUAL CONFERENCE 2011 This year’s annual conference will again feature a cutting edge seminar programme designed to challenge the most experienced lean practitioner.

Experts form industry and academia will explore the application of lean principles in environments from manufacturing to financial services, shaking lean leaders out of their everyday routines and discussing the latest approaches their research and real life programmes are taking.

No matter which sector you work in or how long your lean career, this event will bring delegates new insight and reanimate the learning curve for programme owners.

Over 15 inspirational speakers and best practice case studies including: Steve Parnell Head of Service Improvement Liverpool & Broadgreen NHS Trust

Justin Watts Continuous Improvement Manager Burtons Foods

Eugene Murphy Lean Manager Delphi Diesel Systems

Dr. David Bamford Senior Lecturer in Operations Management Manchester Business School

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The Hilton Metropole Birmingham (NEC)

16th June 2011 - 09:00 to 17:00

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In partnership with:

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Sponsored by:

THE LEAN MANAGEMENT JOURNAL ANNUAL CONFERENCE 2011 Conference Chairman

Dr Bill Bellows

Dr Nick Rich

President In2:InThinking Network

Honorary Fellow Cardiff University

Unlocking a Thinking Phenomena of The Toyota Production System Many current management practices naturally evolve towards sub-optimization while companies engaged in Continuous Improvement focus on seizing savings through an incremental "Faster, Better, Cheaper" attitude.

By contrast, Bill, an Associate Fellow in the InThinking Network at United Technologies' Pratt & Whitney Rocketdyne will illustrate the distraction that TPS and other improvement methodologies, which have been adopted dogmatically by organizations across sectors, represent. He will clarify the unifying practice of continuous investment and solution tailoring which gives TPS its foundations and challenge delegates to consider whether their own lean implementations truly respond to their own business needs.

Expanding on this theme Bill will encourage delegates to consider whether their approach to lean thinking is in fact limiting the scope of the competitive advantage available – he will ask “do we want to be able to travel down the same road faster, or should we be asking ourselves if there is a better road altogether.”

Core to Bill’s beliefs is the idea that there are missing links in the lean fraternities understanding of the connections between organization thinking and the inherent systems which affect long term performance. Attendees will learn to better appreciate how their thinking is often causing them to focus on problem solving and not see a wider array of opportunities for valuable investments.

Nick Rich was a co-founder of the Lean Enterprise Research Centre with Professor Dan Jones and the Innovative Manufacturing Research Centre (Cardiff Business School). Nick still holds an Honorary Distinguished Fellowship at the University and he continues to write and supervise his masters/doctoral students. Nick has authored five books on lean thinking and numerous papers.

Peter Watkins Global Lean Enterprise & Business Excellence Director GKN Peter is responsible for developing, directing and implementing the Lean Enterprise and Business Excellence (EFQM) approach for GKN Plc (Aerospace, Automotive, Land Systems & Powdered Metals) in over 130 facilities 30 countries with over 38000 employees. In the role he has introduced “Flow of Value “ thinking into the organisation to break through traditional management thinking, works with a team of Global Continuous Improvement Leaders to support divisional CEO’s and Lean Directors develop their Lean capability and strategic direction and operates as key member of Lean Enterprise Sub Committee (chaired by GKN CEO) to develop strategic direction on structure , knowledge and process support . Peter is responsible for deployment of following Lean Enterprise approaches: People Excellence, Business Process Excellence - (Lean Office Processes), Production Excellence, Extended Value Stream – Supply Chain.

Professor Zoe Radnor

Martyn Craske

Professor of Operations Management Cardiff Business School

Head of Lean DWP

Lean in Services: Panacea or Paradox?

This session will aim to challenge participants regarding the concepts of ‘Lean’, considering its use or intended use in service sector and, the degree which it is context-dependent. Based on research findings across the public sector including Central Government, Justice and Health the presentation will question and reflect on when, and how it is, possible and appropriate to transfer practices between not only organisations but sectors.

The presentation will introduce the ‘House of Lean’ for public services as well as consider both the success factors and barriers in the sustainable implementation of Lean.

THE LEAN MANAGEMENT JOURNAL ANNUAL CONFERENCE 2011 16th June 2011 - 09:00 to 17:00 The Hilton Metropole, Birmingham (NEC)

The DWP lean challenge was staggering. 120,000 employees spread over 1,000 locations, but under Martyn’s leadership the DWP Lean Programme has engaged the business to generate impressive results. Getting the results has taken Martyn on a roller coaster journey of building lean capability and performance in one of the UKs largest public institutions. Join Martyn as he illustrates many of the leadership challenges he has faced on his five year journey, exploring many of the methods and techniques employed in a complex environment with many layers of management and stakeholders. Delegates will also get a greater understanding of how to develop cultural alignment in your leadership to ensure your lean journey keeps to the path.

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To Register A Place Please Contact Benn Sponsored by: Walsh At:

Tel: 0207 401 6033 or 0207 202 7485 Email: b.walsh@sayonemedia.com

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LMJ Annual Conference - Closing Keynote Session

The history and evolution of...

5-whys and

root cause

analysis 5

Steve Garnett, sensei at consulting company Simpler, tracks the history of 5-why analysis through application and misapplication to define its full potential as a tool for lean thinkers.

-whys is a questioning technique used to determine the true root cause of a problem. It is believed that the fifth level of questioning addresses the true root cause of the problem in hand and provides an opportunity to intervene in a manner that will prevent recurrence - the measure of a successful problem solving effort. Going beyond this fifth level would broaden issues to societal or wider organisational problems.

When did the 5-whys technique begin?

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Sakichi Toyoda, often referred to as the father of the Japanese industrial revolution, is accredited with developing the 5-why approach during the 1930’s. His son, Kiichiro Toyoda, the founder of Toyota, adopted the method and passed it on to Taiicho Ohno, who created the Toyota Production System (TPS).

The sensei mentoring and teaching method extolled by Toyota’s founders uses the Socratic method (Benson, Hugh Socratic Wisdom.

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history and evolution steve garnett

Oxford University Press, 2000), which is the art of teaching through challenging questions. 5-whys is an example of the application of this technique, whereby the questions are applied to eliminate contradictions and test logic to get to root cause of a problem.

The origin of 5-whys may therefore be said to lie in Ancient Greece and the Socratic method. Indeed it is arguable that 5-Whys is the Socratic method’s purest application within TPS. At the heart of the subsequent history of 5-whys is a drive to keep the process simple and close to its origin. This has not proven easy and much of the technique developed around 5-why application has striven to keep practitioners true to the process.

A chequered past

5-whys is deceptively simple to understand but difficult to apply. It is paradoxically both the most basic of TPS techniques and the hardest to master. While the adverb ‘why’ is a popular child’s refrain to their parent; a word that gives them opportunity to interrogate adults well beyond their understanding of the world, it is a mistake to think that 5-Whys is correspondingly child’s play.

It is the 5-whys’ apparent simplicity that draws most of its distracters to dismiss it as a problem solving tool. If you were brought up on team oriented problem solving, 8D (TOPS), Kepner Tregoe or any other related process then 5-whys can be regarded as unscientific.

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As TPS developed within Toyota, a more refined technique was developed for 5-whys. This was primarily to maintain intent as it was deployed across the organisation but also integrated 5-why into a more structured problem solving process called practical problem solving; based around A3 Thinking. This development allowed 5-whys to be a simple shop-floor tool and was particularly important during Toyota’s period of global expansion, when its methodologies were introduced to new cultures resulting in a dilution of original intent.

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Toyota Development

evolution

Up to this point the history of 5-whys has followed two paths. In Toyota and like-minded organisations, the technique has thrived and continued to be developed; elsewhere it has taken the lean and 6-sigma revolutions of the last two decades to bring it into mainstream use. To this day there are still papers that can be found comparing it unfavorably with other critical thinking and problem solving processes.

There is generally more than one root cause of a complex problem, hence the 5-why tree

Briefly, three of the techniques developed are: Establishing three types of cause Incorporating logic integrity testing to verify the root cause Introducing the 5-why tree The three types of cause were introduced to help avoid the common failure to start 5-why questioning from the right point. The three causes are the point of cause, the direct cause and the root cause.

The Toyota practical problem solving process advocates that you begin your investigation at the point of cause, in other words, go and evidence the problem first hand and begin your questioning there. The direct cause is the symptom manifesting itself as the problem, identified by mapping or literally tracking the process upstream. The first ‘why’ should be asking the question, “why is the direct cause happening?” The root cause is as stated earlier, is the point in the causal chain at which intervention should ensure no recurrence of the problem.

Testing the integrity of the logic was introduced to confirm the root cause hypothesis on paper before cost was incurred developing and implementing a solution.

The logic test questions were: Is each 5-why statement supported by facts, data and evidence?

Does addressing the root cause prevent recurrence of the problem?

Does the 5-why logic work in reverse? Is the logic upheld if we submit ‘therefore’ in place of ‘why’?

Are the process owners, maintainers, and process operators confident?

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The Toyota practical problem solving process required each to be answered with data and where appropriate, a practical experiment.

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history and evolution steve garnett

The 5-why Tree

The 5-why tree fans out from the direct cause like a family tree. It expunges the issue often raised about 5-whys; that the linear logic discounts many possibilities from being investigated. In fact, Toyota encouraged the idea of investigating many possibilities with a view to selecting the correct causal chain or chains. An example is shown in figure one below.

This was a great application of 5-whys primarily because it was completed near to the time of the problem, with witnesses able to test the logic against facts. It accomplished two of the key intents of the process; it was completed with the staff from the area effected, and it enabled them to move swiftly in actioning devised solutions.

The intention of the all of the above techniques was to maintain the integrity of the argument during development and to arrive successfully at the truth of the matter or root cause in the same manor that Sakichi Toyoda had originally intended.

Figure 1 5-why tree used in a healthcare environment

Patient arrived 45 mins late to theatre

2nd why?

Theatre sent for patient 15 mins later than scheduled

The patient was not ready at the ward

The travel time from ward to theatre was 20 minutes

3rd why?

The staff were late to the start up meeting

The ward had run out of theatre gowns

The lift was out of service

4th why?

No consequence or discipline imposed to arrive on time

The linen store had not been replenished

The doors were jammed

5th why?

ROOT CAUSE

Poor adherence to HR procedure

The night staff’s checklist did not include linen retock

No maintenance schedule in evidence

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1st why?

DIRECT CAUSE

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Theatre One started 45 mins late

evolution

Problem witnessed @ POINT OF CAUSE

Mainstream integration

During the 1990’s Toyota and other Japanese car manufacturers expanded and their new supplier base was exposed to the ‘correct’ method of applying 5-whys. As understanding grew, the 5-whys technique began to seep into mainstream engineering and was picked up and incorporated into the 6-sigma and lean development that followed. 5-whys is now fully integrated into these tool sets at an application level across multiple sectors including the banking, healthcare and the military.

At Simpler, we have integrated 5-whys into our A3 based problem solving process. We use it in gap analysis in conjunction with Kaouru Ishikawa’s fishbone diagram. Applying our form of the A3 thinking process, we first establish the break through improvements required in the ‘true north’ dimensions of quality, human development, delivery and cost. We then identify the problems that need to be resolved to close the gap between current and the desired performance in each dimension using the fishbone combined with 5-whys. This enables us to understand the principle root causes to be addressed for transformational levels of performance improvement.

This process applies another key philosophy of Toyota’s 5-whys application - that there is generally more than one root cause of a complex problem, hence the 5-why tree. Combined with an ‘Info Centre’ (a Simpler shopfloor tool for tracking performance and daily problem solving) 5-why analysis can be deployed to the shopfloor and be the vehicle for establishing a true countermeasure culture in an organisation.

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Summary

5-whys was developed in the 1930’s as a problem solving approach that supported the Socratic Method favoured

by Toyota sensei. Its development remained largely confined within Toyota and other similarly minded Japanese organisations until their globalisation during the 1990‘s developed the understanding of the wider engineering community. During the 1990’s it became a mainstream technique in automotive engineering and became incorporated into the six sigma and lean toolsets that have subsequently been introduced to multiple sectors. E N D

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Virtual IT, real value

V Chris Borrowdale, lead software engineer at Cimlogic responds to ‘It’s a wasteful world’ by Derek Kober, featured in issue 09 of LMJ

irtualisation is one of the ways in which organisations can benefit from a leaner and greener IT infrastructure. Virtualisation enables multiple applications to run on a single server, consolidating application workloads on fewer physical servers, thereby saving money in equipment, energy, and management. Server virtualisation is a hot trend in IT, and is having huge positive financial and environmental impacts on organisations of all sizes.

The trouble is, in a competitive global environment companies have fewer resources, smaller budgets, less tolerance to downtime and are under pressure to boost productivity by getting more out of what they have. Match this with the fact that, although IT professionals have huge experience, familiarity and trust in physical servers, many have little or no real-world experience of virtualisation.

Lack of trust in new software solutions and misconceptions around the costs of implementation are creating a reluctance to learn more about available technologies.

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There is vast flexibility in terms of how much of an IT infrastructure is virtualised.

Implementation can be a staged development, in accordance with the needs of the user the the size of an organisation and more. The solution can be tailored to fit small and large organisations and change is simple to manage.

Changing to an unknown IT infrastructure, with the attendant risk of failure, contributes to the fear among many IT professionals. Putting all your eggs in one basket can seem daunting, but with the zero touch recovery features of many fully automated systems, the risk of failure is incredibly low, with virtually no risk of unplanned or planned downtime.

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The poor awareness and understanding of virtualisation technologies is preventing people from taking advantage of great benefits. Consequently there is a real need to educate and present the facts in terms of the potential business savings. Cimlogic address this problem head on by holding Open Days at our West Yorkshire Head Office which educate and demonstrate virtualisation benefits in real-world terms.

It is now the responsibility of software integrators and service providers to change perception, to educate and raise the profile of virtualisation as a low risk solution and provide more support to customers when they make the step towards Green IT. E N D

My top 5 Reasons to adopt virtualisation software: 1. Get more out of your existing resources: Pool common infrastructure resources and break the legacy “one application to one server� with server consolidation 2. Reduce datacenter costs by reducing your physical infrastructure and improving your server to admin ratio: Fewer servers and related IT hardware means reduced real estate and reduced power and cooling requirements

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5. Improve desktop manageability and security: Deploy, manage and monitor secure desktop environments that users can access locally or remotely, with or without a network connection, on almost any standard desktop, laptop or tablet PC.

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4. Gain operational flexibility: Respond to market changes with dynamic resource management

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3. Increase availability of hardware and applications for improved business continuity: Securely backup and migrate entire virtual environments with no interruption in service. Eliminate planned downtime and recover immediately from unplanned issues

Reinventing green manufacturing Andrea Pampenilli responds to last issue’s lean and green theme with insight into the approach being taken by GKN in creating a new business model which leverages established manufacturing wisdom for sustainability.

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ustainability is the legacy of the 21st century. As a concept it embodies the promise of a societal evolution towards a more equitable and wealthy world. This quest for economic and social equity has been an underlying concern of business for the past 150 years and by adding concern for the carrying capacity of natural systems, sustainability ties together the main challenges currently facing humanity.

Although the issues around sustainability are more than a century old, the concept itself was described in the late 80’s, following The Brundtland Report from the World Commission on Environment and Development. This report describes growing global awareness of the enormous environmental problems facing the planet and traces a shift towards global environmental action. Concern about the environment has made scholars and society support the development of a significant number of environmental sustainable practices, with the ultimate goal of fostering growth which respects resources and natural systems.

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Although all these practices have contributed to a new world paradigm of various sustainability alternatives for society, not many have really explored the sustainability side of existing manufacturing strategies. In other words few have looked at what it would mean to look at environmental issues the other way around; not saying to manufacturing how to behave to be sustainable, but really trying to understand how existing manufacturing practices could support sustainable business. It is in this context that the GKN project described below has been run.

Lean thinking promotes a continuous improvement culture within businesses and considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful. For decades, lean manufacturing has been considered the best way to run a manufacturing company and lean principles have been successfully applied in many other industries. Based on the analysis of customer value, lean presents a set of tools and techniques for continuously improving processes and eliminating wastes.

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How can lean and sustainability concepts be integrated and put into practice in a manufacturing environment?

Aiming to answer this question, GKN started its Lean & Green project in 2010. Supported

by Lean Enterprise Research Centre at Cardiff University in the UK and UFRGS University in Brazil, it will investigate the application of lean and sustainability concepts by developing a Lean & Green Business Model for environmental concern and business needs.

Sustainability, like lean, has a good track record of improving finance, because of the emphasis on eliminating waste.

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The GKN Lean & Green kaizen model for a production cell

Experience applying the Lean & Green Kaizen Model shows that in cell kaizen exercises combining both operators’ and leaders’ ideas and experience, and using the appropriate lean tools and techniques for identifying waste, created an opportunity of operational cost savings of about £274,000 per year in the three operational cells where the model was tested. In a world of uncertainty about the economy and environment, where many environmentally sustainable alternatives have already failed to be meaningfully integrated into manufacturing, the Lean & Green Kaizen Model demonstrates the case for a new and innovative approach for supporting the development of sustainable business with concepts manufacturers are both comfortable with and practiced in exploiting. E N D

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Integrating lean and green concepts, the model developed has the goal of including environmental processes into the business panel. The project aims to discuss existing environmental sustainable practices (like cleaner production, industrial ecology, ISO 14001) and lean and look at the benefits and gaps for achieving sustainability, considering people and cultural issues, profit and costs as well as environmental performance. The project also aims to report the findings of global application in all GKN businesses (Driveline, Land systems, Powder Metallurgy and Aerospace) across Brazil, UK and USA.

Extensive opportunities exist to save resources and money through integrating lean and environmental concepts. As a starting point GKN already started developed a Lean & Green Kaizen Model by taking a kaizen approach at a production cell level. The main objective for developing an environmental kaizen cell is to improve supporting flows (materials and energy consumption and wastes generation) and so reduce all wastes, including environmental wastes.

The target for improvement in the Lean & Green Kaizen Model is the mass-energy flows of the cell. The expected output is the achievement of improvements in thermodynamic flows (Materials, Chemicals, Water, Waste, Effluent, Energy) all of which contribute significantly to overall cell performance.

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This logic can be redesigned and integrated to form a systemic sustainability concept.

Minimising the amount of waste that is produced in manufacturing; reducing energy use, and using materials and resources in a more efficient way, can lead to financial cost savings and the reduction of environmental impacts.

Should lean tremor?

This blog, taken from the website of LMJs sister publication, The Manufacturer, questions whether recent events in Japan should change Toyota’s view of lean.

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he recent earthquake and subsequent tsunami in Japan rank among the most devastating natural disasters the world has ever seen. But along with the enormous loss of life and damage, events on and since March 11 in Japan have also dealt major blows to the country’s innovative manufacturing sector.

undermines all kinds of advanced-economy systems. Automakers are no longer selfcontained enterprises that build all the things that go into a car themselves. They are instead the prime movers of complex supply chains. In Japan, much of Toyota’s operations are now inoperable, damaged or understandably distracted.”

Ever since Henry Ford invented the assembly line, car manufacturers have focused on improving their bottom lines via a range of different manufacturing strategies.

Following the 8.9 quake and tsunami that ravaged the Pacific coast northeast of Tokyo on March 11 and left more than 16,000 dead or missing and a nuclear power plant at risk of a catastrophic meltdown, Toyota reportedly shut down the 12 plants it operates in Japan. The move effectively stalled production of almost all of its Lexus and Scion vehicles.

But it was the Japanese who developed the concept of lean manufacturing, also known as the Tokyo Production System after its creator, Sakichi Toyoda.

Lean manufacturing is a supply chain management strategy that seeks to produce high levels of throughput with a minimum of inventory by focusing on having small stockpiles of inventory in strategic locations around the assembly line, rather than in centralised warehouses.

According to automotive writer Matthew DeBord, it is a methodology that has served auto giant Toyota well. “Lean manufacturing has allowed Toyota to produce better cars and adjust more nimbly to fluctuations in demand.”

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The flipside, however, is that lean manufacturing is also highly vulnerable to exactly the sort of “catastrophic breakdown” that has followed Japan’s recent earthquake and tsunami.

“Lean manufacturing is more complex and requires more brain and communications power to operate than the old model of having a plentiful supply of components on hand. A disaster of the magnitude of the Japanese earthquake destroys and

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“Toyota also operated facilities in Japan’s north, so the lack of electricity, damage to roadways, not to mention the full-on search for survivors, is going to have an enormous impact,” says DeBord.

Fortunately, Toyota has diversified its manufacturing operations, including having a US manufacturing base for a number of years. “This means a tragedy at home won’t shut it down completely – nor starve one of its biggest markets, North America, of product. In fact, this may be the most important lesson that other automakers can draw from the Japanese earthquake: if they are able, they should attempt to base manufacturing operations in multiple markets.”

The big question, of course, is whether Toyota will change tack with its lean manufacturing strategy in order to be better prepared for natural disaster. “Obviously, as the largest automaker, any decision it makes will have repercussions for other car companies,” concludes DeBord. E N D

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Toyota under fire

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rom 2008 to 2010 the formerly stellar reputation of Toyota took a beating, first because the company lost money in the recession and then because the company suffered reputational damage over a major product recall.

As a result people throughout the world began questioning Toyota as a role model company, including lean practitioners.

In Toyota Under Fire (McGraw-Hill Professional, April 2011) we set the record straight by telling the story of Toyota as a company and giving a detailed inside look at how Toyota approached the recession, and then how it responded to the even greater threats of the recall crisis.

The recession story is relatively straightforward. Unlike so many companies who took a kneejerk approach to downsizing and layoffs, Toyota took a long-term approach; protecting and developing their most vital resource—their people. They let go temporary employees, but kept team members, despite sales drops of 30-50% for some models, and did a great deal of training and kaizen for about nine months as the economy began to recover. The result by early 2009 was better quality, safety, and productivity as well as even more committed team members and a strengthening of the Toyota Way culture globally. They were ready for action in the up-turn.

Then a tragic event occurred in August 2009 that snowballed and seemed, at one stage, like it would destroy the company’s hard earned reputation. The Saylor family in San Diego crashed their Lexus at a high speed with the car racing out of control. With four dead, speculations arose of serious defects in Toyota’s electronic drive-by-wire system.

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The forensic evidence in the police report overwhelmingly pointed to the floor mat as the source of the unintended acceleration yet, over five million recalled vehicles later, there was a clamor of speculation about the falling quality of Toyota vehicles.

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A little patience until the police report came out late in October would have revealed these claims were false. The car was a loaner from a Lexus dealer. The dealer installed the wrong all-weather floor mat, one meant for a much larger vehicle, which was not attached down to the floor clips. The same vehicle and floor mat had been lent out to another customer a few days earlier who had the same problem of pedal entrapment, but managed to free the floor mat and told the receptionist of the dealership - who did not tell anyone else.

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Jeffrey K. Liker and Timothy N. Ogden defend the Toyota way in the wake of the latest disasters which caused some to doubt the resilience of the company’s seminal lean thinking.

Toyota under fire Furthermore, other than the Saylor family accident, not one other serious accident was attributed in this period to floor mats entrapping pedals. But there was the other claim of electronic problems causing runaway Toyotas.

sales organisation in the US to a quality organisation in Japan and then to an engineering group. In addition, the people at the gemba in North America were not given the information and authority to sufficiently influence problems.

There has never been any evidence of intermittent electronics problems caused by electromagnetic interference for any manufacturer, much less Toyota specifically, and a thorough investigation by the National Highway Transportation Administration found no evidence of electronic problems in Toyotas causing sudden unintended acceleration. The actual problems that led to the 10 million recalls were:

As a result Toyota has revamped many internal processes, reorganised engineering, and engaged in a massive internal educational campaign on quality and safety. In the book we describe many of the actual changes and the results have been impressive as Toyota returned to the majority of its success in profitability, sales, customer loyalty as well as winning quality awards by the autumn of 2010. But they still have work to do to regain their halo as an exemplar for quality, safety and customer satisfaction.

1 Stacking floor mats in any vehicle, not just Toyotas, can cause the accelerator to become trapped 2 A specific design of CTS accelerators, under certain conditions, could become sticky (12 cases were found in the US but no accidents)

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3 Prius brakes were tuned so that ABS came on aggressively under unusual conditions, needlessly scaring drivers into thinking the brakes were failing (again no accidents). These were problems that Toyota took responsibility for and corrected through recalls.

When Toyota did a root cause analysis to understand why these technical problems led to such a major crisis they pointed the finger only at themselves and concluded there were some serious communication and decision making problems. It took too long to respond to customer concerns as information went from dealer to the

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They say bad things come in threes, and to add injury to insult, in the winter of 2011 Japan suffered the results of the strongest earthquake, and subsequent tsunami, in recent history. It happened in the north of Japan and Toyota is in the south so did not suffer direct ill effects on its factories.

Except, like automakers globally, they relied on parts coming from the north.

The transportation system was disrupted; some plants that produce components were seriously damaged. Furthermore, in some cases, because of damaged nuclear reactors nobody could go into the factories to fix them, and supply disruptions ensued.

Of course anytime there has been a major supply disruption, for any reason, articles start coming out questioning the just-intime (JIT) philosophy - if only Toyota bought a small city and built the largest warehouse in the world they would have plenty of parts when disasters like this occurred. There are a number of problems with this logic:

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1 In the 50 years of JIT there have been a handful of major disruptions that caused significant lost production, certainly far less than 1 % of that period of time. Toyota chooses their operating philosophy based on the normal conditions more than 99% of the time, not keeping just-in-case inventory for the less than 1%.

4 JIT is as much a philosophy as it is a tool for reducing inventory. Toyota’s main objective with JIT is to keep lead time very short so that problems surface immediately and there is constant pressure to solve problems as they occur. Inventory simply hides problems - the most fundamental sin in the Toyota Way.

2 Toyota has developed deep partnerships with suppliers and together they are as good as any supply chain in the world at problem solving. The Kobe earthquake, which led to the complete destruction of the plant responsible for making brake valves for every Toyota in the world proved this resilience when it got back up and running in less than a week. Serious disruptions and rolling shutdowns of Toyota plants will happen, but Toyota can recover much of the lost production through exploiting its in-depth understanding of process and capacity utilisation.

Toyota has stayed surprisingly healthy through these three crises, winning quality and safety awards and maintaining robust sales. Perhaps it is not a surprise since they keep huge cash reserves just for contingencies like this. Certainly the company is not as financially strong as it was and it will take time to show the benefits of working through these problems with the principles of the Toyota Way, but whether it takes months or years, Toyota will come out stronger. How?

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The decisions that made the most difference during crises are made well before troubles begin. For Toyota these decisions weren’t lucky, nor the insight of a particularly wise individual.

They were reflections of the Toyota Way culture. It is that culture that led to Toyota’s ascendency, it was weaknesses in the culture that led to weak responses to the recall crisis initially, and it was the strength of that culture that ultimately led Toyota to deeply reflect so it will come out of these crises stronger as a company in the long term. E N D

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3 The parts shortages are deep in the supply chain—not in the JIT suppliers located near Toyota plants in the Nagoya area. These are mainly batch suppliers that do not build or ship JIT. For example, one circuit supplier has a lead time to make a component of four weeks and builds huge batches so when the plant is shut down it takes four weeks just to get out the first circuit. This is a common circuit, used in many vehicles and its shortage will have a delayed impact on production.

Batch suppliers, sometimes three tiers down, have been the main problem for the whole automotive industry and it has nothing to do with JIT.

One conclusion rises to the top: turning crisis into opportunity is all about culture.

It’s not about PR strategies, charismatic leadership, vision, or any specific, individual action. It’s not about policies, procedures or risk mitigation processes. It’s about the actions that have been programmed into the individuals and teams that make up a company before a crisis starts.

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John Bicheno reviews Ronald Mascitelli’s Mastering Lean Product Development, Technology Perspectives, 2011

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his is the latest and best book from Ron Mascitelli’s highly practical series on lean design and product development. Ron is a 30-year practitioner in design management and this book is clearly focused on practitioners. Lean Enterprise Research Centre has had the benefit of association with him through his books and seminars and it is a pleasure to review his latest offering.

Over the past decade several publications have focused on Toyota’s lean design methodology. The so-called set-based approach to design has been described by Liker, Ward, Sobek, Kennedy, and Morgan – to mention the big names.

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Of course the Toyota approach has great merits. However, a fair proportion of design practitioners know that, while much of Toyota’s approach is effective it can be resource intensive. In other words, it works brilliantly for large companies like Toyota but medium sized companies often find that they cannot set aside the resources to explore a wide range of alternatives, even though this may well pay off over the longer term. Multi simultaneous project management is also not well covered in Toyota-oriented texts and value stream mapping is an over-rated tool in diverse design but not in more repetitive situations.

Enter Ron Mascitelli. Mascitelli uses two main concepts. The first is his ‘8 Rules for Capacity and Flow Optimization’ (readers will find several similarities with the article ‘King of equations’ in this issue), a pragmatic set of rules based

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on long experience which will have an immediate beneficial impact in any design office. For example, Mascitelli provides guidance on the classic question of the number of simultaneous projects which represent a tradeoff between disturbance, re-start-up time and time lost waiting for other functions, and stage gates to allow the project to proceed. These 8 rules alone merit acquiring the book.

The second strand is Mascitelli’s ‘event-driven development process’.

This takes the reader through a series of ‘events’ from market requirements to final production. This is therefore an end-to-end systems approach to lean design and new product development.

Although it is meant for practitioners concerned with new products, I believe it is an excellent alternative lean thinking framework. Along the way, various useful tools and tips are provided. Throughout, visual management and team-based approaches figure prominently.

Some of the principle events are learning cycle events (aimed at reducing waste by early exploration of alternatives), and a series of ‘3P’ (Production Preparation Process) events borrowed from Toyota but modified and streamlined. These are design 3P (aimed at manufacturability and cost reduction), process 3P (aimed at process choice), and production 3P (aimed at production logistics).

I recommend this book highly as providing THE framework for lean design and product development in SME’s as well as being highly relevant to bigger organisations. When I worked in a design office, my life would have been so different had I had the benefit of Ron’s experience. E N D

EVENTS Forthcoming events from LMJ include:

The LMJ Annual Conference

June 16, Birmingham Hilton Metropole A thought leadership event for the readership community. Key speakers will include Dr Zoe Radnor, Cardiff Business School, Peter Watkins of GKN and Bill Bellows of Pratt & Whitney Rocketdyne. Attend to see how the latest thoughts on lean principles, tools, deployment methodologies and training methods can help your organisation to avoid lean stagnation.

For delegate information on all LMJ hosted events please contact Benn Walsh (b.walsh@sayonemedia. com) on 0207 401 6033

Other forthcoming events from LMJ’s partner organisations include:

A frictionless world

Lean Leaders meeting

This event, hosted by culture change driven consulting company PCC and their US partners Xonitek, brings a fresh perspective to operational excellence. Looking harder at the thinking aspect of lean thinking the event will explore the psychology of culture change and the importance of understanding context for sustainable improvement. Keynote speakers include: Alessandro Laureani, Google and Carey Lohrenz, former fighter pilot and member of the Corps Group.

This IQPC hosted event follows on the highly successful 2010 event of the same name. The event is designed as an exclusive, applications-only strategy meeting for qualified Lean programme leaders working across the organisation. 2011 facilitators will represent United Utilities, Citi, BNP Paribas, United Biscuits and Astrazeneca. For more information please visit: www.leaders-in-lean.com.

LMJ Subscribers will receive a 20% discount to this event.

June 9, Milan

Lean for Clinicians: improving the patient journey June 15, London

This event will give practical advice from lean experts and practicing clinicians around overcoming the challenges to lean improvement in healthcare systems. Presentations will look at different aspects of engagement in lean healthcare from patient experience though to frontline ward staff. Speakers include: Professor Zoe Radnor, Cardiff Business School, Dr Steve Allde, Plymouth Hospitals NHS Trust and Dr Peter Lachman, Great Ormond Street Hospital NHS Trust and Royal Free Hospital Hampstead NHS Trust.

The Influence of Academic Research on Business and the Economy

July 5-6, London

LERC Annual Conference July 7, Cardiff

This popular annual event brings together lean practitioners and academics for a broad ranging discussion of lean implementation challenges. This year keynote speakers will include: Emeritus Prof Robert ‘Doc’ Hall, author Linus Larsson and systems thinking advocate John Seddon.

June 28, London

For more information or booking details at all LMJ’s partner events please visit

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This year, the fifth edition of the EDHEC Research Day will deal with the influence of academic research on business and the economy. The practical relevance of research and curricula in business schools has often been debated and a recent AACSB report (2007) questioned the contributions of business schools’ research to students, to practitioners, and to society as a whole.

This event will reveal EDHEC policy on the transfer of research into practice and provide a forum for practitioner discussion.

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