INTEGRATED LEAN SYSTEMS

The following article comes directly from the online course, The Toyota Way to Lean Leadership, by Dr.Jeffrey K. Liker with George Trachilis. These materials are also part of the book, Developing Lean Leaders at All Levels.

The teaching objectives for this section are the following:

1.     Communicate that processes are a delivery mechanism of value.

2.     Distinguish between organizations that focus primarily vertically versus those that focus horizontally to satisfy customers.

3.     Show how disconnected processes hide problems.

4.     Show how connected processes surface problems.

The philosophy is a broad picture of what it will take to make our company great for the long term so that it will outlive us and continue to be great. We want to satisfy customers, and we need a way to do that. We need a delivery mechanism. 

The delivery mechanism is a series of processes in your organization, regardless of whatever your organization is and whatever your customers want. For example, in Healthcare many, many processes directly affect the customer. Having surgery is a very value-added activity. Having a blood test and then quickly getting the results will add value. These processes have a direct impact on the patient. In addition, there are many supporting processes; people must prepare the operating room for the surgeon. 

There are many processes; all of them which can be improved, and they can be improved by reducing lead-time; they can be improved by reducing variation and by making predictable products that can be improved by better understanding what customers want and by providing what the customers want.

Therefore, there is a process, and there are some tools in the toolkit of Lean that will help you improve that process to better deliver value to the customers.

VERTICAL AND HORIZONTAL PROCESSES

Unfortunately, processes involving many steps make our lives difficult. The reason for this is that they cut across many departments. In a vertical organization, life is pretty good; I'm the boss; I know what I want from you; I'm the purchasing boss, and you're a purchasing agent. 

I want one thing: lower cost components that are high quality and delivered on time; that's a given. I want my suppliers to perform, but I want them to perform at a low cost. As the boss, I can measure that very easily, and I can judge you as a subordinate based on whether you're delivering.

You as a subordinate know exactly how you're measured and what you need to do is within your control. You need to get a lower price; you know how to do that; you negotiate with suppliers, and you know that you can play some games with how you categorize parts, and there are various ways to make the numbers look good even if, in fact, you haven't really reduced cost. 

Supervisors are managing people to reach the specific functional target within that chimney, and they feel in control because they're measuring and controlling a few simple things. People know the game that they need to play to make the numbers look good, and that knowledge actually creates a type of culture. It's a culture of making the numbers rise in the hierarchy, and the result is a purchasing culture or a sales culture. The customer frankly doesn't care; the customer could care less what kind of games you're playing with the suppliers. 

The customer cares about the product you deliver, the cost, the quality, the innovation, and the design of the product. They care how well they are treated when they have a problem, so they care about the service organization; they care about what impacts them. What impacts the customer is not only what is happening in one department; what impacts the customer depends upon collaboration across all departments.

For example, purchasing may be trying to get the lowest price possible for each piece and engineering is trying to solve a specific customer’s problem, which requires an exotic part that only a few companies in the world can make well. These departments will be in conflict because purchasing wants the low-cost producer and engineering wants the high-quality producer that can make this special part. Therefore, you find horizontal conflict across the value stream because of what the customer actually cares about. 

The horizontal focus, therefore, involves processes that cut across departments with a purpose in mind, and the purpose is to satisfy customers in terms of overall quality, cost, delivery, internal safety and morale. Therefore, you have a bigger set of variables to manage, and you have to work with other people, and suddenly, life is not so fun and easy.

You're going to have to think, and thinking isn't fun; it's hard work; you have to talk to other people and cooperate with them. Effort is required and the only way you can do that horizontally and actually get better as an organization is to embrace this idea of continuous improvement¾solving problems. Because problems always come up. They come up inside the chimney, inside of purchasing, but they come up big time across the company. 

Now, you want these same people who have for years figured out how gain the system, how to lie and cheat, and suddenly you want them to become honest and tell you what their problems are. This is a big cultural change. 

You also want to channel people's ingenuity--the same ingenuity that allowed them to make the numbers look good even though the process was terrible--that ingenuity is going to be used to create a great process.

The supervisors, instead of controlling people through numbers, are actually going to work with people to solve problems. You can see that this is a dramatic change. You're basically turning the organization inside out and dramatically changing the way people think, what they do, how they relate to each other, and how they think about their role in the company. 

This is not a trivial thing; the tools like value stream mapping, if used properly, can really help a group of people understand the current condition, how badly they're working together across the organization, where the waste is, and what they have to do to work more effectively and satisfy customers.

 DISCONNECTED PROCESSES HIDE PROBLEMS

Here is a way of thinking about Lean. We start by asking what the process is, and we take in some things and we put out some things, so there is input and output. Now in a traditional process, the input is actually a bundle of inputs; the bundle is a batch that is inventory.

Once again, that could be information inventory, and I have a big inbox on my email, or I'm getting reports from engineering, or test results are coming in from the laboratory or it could be a small amount of inventory, but usually it's pretty big.

Then we keep producing based on our own logic, what we have available to us, what our priorities are, and then we push off stuff, information, product, service and it waits for somebody else to pick it up and use it. Therefore, inventory goes in and inventory goes out of the process. 

MANY DISCONNECTED PROCESSES AND INVENTORY

So we can build on that and what really happens in a company is that there are lots of processes; they are all independently working based on their metrics, based on what they do; purchasing is purchasing, the stamping department is making steel parts a certain shape; the paint department is painting them; and the accounting department is generating reports. Now you have all these disconnected processes and they're all working from inventory and are all building to inventory.

There is one thing we know about inventory--we learn that from Taiichi Ohno the founder of the Toyota Production System--is that inventory hides problems. As long as I'm busy working and doing stuff and I'm not directly connected to my customer, my immediate customer, I can be happy, dumb, and ignorant.

I don't have to know that I'm not providing information in a good form, and the next process is struggling to figure out what I was trying to say and they are struggling to figure out where to find what they need. I could be ignorant of the problems and think I'm doing a great job and I'm busy. I'm fighting fires. I'm working and I'm a good person because I'm doing a lot of good work.

 Hence, the inventory and the disconnection between these processes actually hide the problems.

 CONNECTED PROCESSES SURFACE PROBLEMS

So the bigger that buffer, the more breathing room you have to solve problems and to experience delays whether it's a time buffer or a physical buffer or a buffer of a lot of different reports or a lot of different analysis results. 

When you get to one-piece flow, you're generating exactly what the next process needs, what the next person needs. You're getting exactly what you need, and when anybody stops, everything stops, and it's immediately visible, and suddenly everybody's looking at you because you stopped the process. 

Therefore, we see the problems are really visible. Now the problem could be small, medium or large. There could be a basic problem in how we schedule the whole operation. Maybe the parts aren't oriented, they are picked up wrong, they are put in the opposite direction, and therefore a quality problem arises. Now there are a lot of problems and then you have to prioritize those problems.

PRIORITIZING PROBLEMS

Part of prioritizing is not simply to work on the big problems and ignore the little problems; it's also an assignment process where we assign priority and we assign who works on the problem.

The little problems can go to the work group; the bigger problems might have to go to senior management and to specialty organizations like planning and schedules. Hence, you're sorting and you're assigning, and then people have to take on the responsibility for the problem-solving process. 

 After the problems have been surfaced and we have prioritized, and we show Hoshin Kanri there--what we'll talk about later--that's a method for prioritizing. Prioritizing involves my goals for the year; the annual plan helps me decide what I should focus on¾what's more important.

Now we're dropping problems into the plan, do, check, act, the little coins are plan, do, check, act circles and then we have this bucket of problems that are low priority, but we're going to put them off to the side, so we're not solving all the problems.

Now we’ve got to cycle through and plan, do, check, act. Then the next step is the process of plan, do, check, act; we're doing two things; one is we're improving the processes themselves to make them more Lean, more consistent, higher quality, delivering on time. At the same time, we are developing people, and people are doing the problem-solving.

If there is a visual management board and people see where they're red, where they're green, or where they're yellow, then it is clear where there are problems and that can help. The right people with the right leader can start to use the slow thinking, good type of problem-solving process, and they can potentially solve the problems. Then, fewer problems are going to bubble up because we solved the problems.

Then we're going to stress the system by actually reducing the inventory, making the processes even more connected, and now you've got a day instead of a week to deliver. Tomorrow you're going to have a half day and then you're going to have an hour, and as you compress the process, the steps become more tightly linked and the problems become even smaller.

We talk about low-hanging fruit. The low-hanging fruit are the big problems that jump out at you and, as you solve those big problems, you get into smaller and smaller problems.

Standardized work is at a very detailed level; it's dealing with very small problems whereas over in scheduling people are dealing with the very big problems. However, you eventually need to get down to those little problems to get the almost perfect quality that many companies want. 

One Minute Review

·        In order to satisfy customers, you need a delivery mechanism. That mechanism is processes.

·        In a make-the-numbers type of culture, you know exactly how you are being measured.

·        You also know how you can “beat the system.”

·        In a horizontal organization, the main focus is process and purpose.

·        People’s ingenuity is now used to “improve the system.”

·        Disconnected processes and excess inventory help to hide problems.

·        Eventually solving problems means fewer problems are “bubbling” up.

·        By making processes more connected, more problems surface.

________ The End, This was one of 75 sections of the online course. _______

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