how not to fail at lean: dealing with enterprise-wide

How Not to Fail at Lean: Dealing with Enterprise-Wide Pitfalls That Derail

Most Lean JourneysOkl h C f M f t iOklahoma Conference on ManufacturingTuesday, Sept. 21, 2010 – Norman, OK

Presenter: Richard J. Schonberger177 107th Ave., N.E., #2101177 107th Ave., N.E., #2101

Bellevue, WA 98004 USA – Tel/Fax [email protected]

Schonberger & Associates

This presentation includes research and topical materials in new Richard Schonberger book (Wiley 2008):in new Richard Schonberger book (Wiley, 2008):

Best Practices in Lean Six Sigma Process Improvement:A Deeper Look

. . . with Telling Evidence from the Leanness Studies


Lean’s Woes and Blind Spots Some in Every Company/Industry – ExamplesSome in Every Company/Industry – Examples• No recognition of/emphasis on lean’s huge

customer-side benefits; so lean treated as ;operational, not competitive, not strategic

• So many product models, parts, suppliers, customers you can’t even find the value streamscustomers you can’t even find the value streams

• Persistent, wrong-headed financial hurdles• Things going wrong everywhere all the time—and g g g g y

no systematic recording of the wrongs• 95% of lean done by 5% of company people

L l d ti b i h i d• Level-production obsession . . . when main need is for flexible reaction to yo-yo customer demand

• Lean is fat . . . in administration


Lean is fat . . . in administration• And many more

Strategy of the Firm

Lean, etc., must conform to the firm’s

Process Improvement:

to the firm s strategies

Process Improvement: Lean, 6 Sigma, etc.


Process Improvement: Lean, 6 Sigma, etc.Lean, 6 Sigma, etc.

Strategy ofthe Firm

Strategies must include

processthe Firm process improvement

(lean, etc.)


Leanness Studies 1994-2010Leanness Studies, 1994 2010Main research question: How to sustain leannessCommon hard-data measure: Inventory turnoverCommon, hard data measure: Inventory turnoverScope:• 1350 inventory-intensive companies in 36 countriesy p• All publicly-held, using audited financial records • At least 15 & up to 50 years’ data displayed on graphs• Inspection-based scoring/grading for each graph:

Positive 10-to-50 year trend, 2 points; same but lapse last 5-7 years, 1 point; negative 10-or-more-year y , p ; g ytrend, minus ½; 5-or-more-year reversal of negative trend, plus ½


10Grades for 4 Oklahoma ManufacturersInventory

Turns

8

9

La-Z-Boy (acquired by Sears, ‘07): B

Nestle Purina Petcare (sub. Of Nestle, Swiss): C

6

7 Goodyear: C+

4

5

2

3

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

Idex, parent of Corken (compressors, pumps) – Up 3.8% per year, for 14 years: A


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

Issue: What Support Does the Lean Agenda Get from Its Stakeholders?

• Strong—Operations: Visible see-and-do• Weak or temporal—Senior Executives . . .

A i it t O ti– Assign it to Operations– Treat as “head-count reduction” – Rotate out; New exec. team has other ideas;– Bored by lean, movin’ on—to other strategies

• Uninterested—Boards, investors, general publicP C ti ti fi t i• Perverse—Costing, accounting, finance, metrics

• Antagonistic—Marketing


Long-Term Lean Trends – Evidenced by Inventory Turnover Patterns Best to Worst, by Sector#

Sample SampleSampleSectors Size

1 Telecom 382 Petroleum 533 Paper 27

Sample Sectors Size

17 Retail 15518 Paper-converted products 6119 Apparel/sewn products 443 Paper 27

4 Electric 965 Wire & cable 286 Distribution/wholesaling 69

/ 282

19 Apparel/sewn products 4420 Forest products 5221 Chemicals 12622 Medical devices/supplies 6023 & 667 Metalworking/machining 282

8 Electronics 2689 Pump/hydraulic/pressure 7110 Sheet metal 67

23 Motors & engines 6624 Personal-care products 3325 Liquid/gas/powder/grains 36726 Instruments/test equipment 49

11 Vehicles (light) 3412 Machinery 14613 Plastic/rubber/glass/ceramic 24514 Semiconductors 51

q p27 Furniture 2128 Aerospace-defense 6529 Basic metal processing 6630 Food/beverage/tobacco 14114 Semiconductors 51

15 Heavy industrial vehicles 6416 Vehicular components 108

30 Food/beverage/tobacco 14131 Textiles 4332 Pharmaceuticals 80

#Positive 10-to-50 year trend, 2 points; same but lapse last 5-7 years, 1 point; negative


Positive 10 to 50 year trend, 2 points; same but lapse last 5 7 years, 1 point; negative 10-or-more-year trend, minus ½; 5-or-more-year reversal of negative trend, plus ½

Includes companies acquired/merged/dissolved/privatized in last 5 years

As of 7/27/10

Vital for Lean/SCM: Marketing/Sales Buy-ing yDominion over huge distribution stocks

• Sales/marketing tendencies– More SKU’s, more inventory; hooked on y

“bullwhip”-inducing promotions– Disinterest in lean-as-waste-removal

But Abiding interest in better service– But . . . Abiding interest in better service to customers

• Prescription: Redefine, promote lean/SCM’s strong customer-serving attributes


SKU: Stock-keeping unit SCM: Supply-chain management

Lean: Great Practice, Wrongly PresentedF W t P t C t B f HFocus on Waste Puts Cart Before Horse

WastesWastes

• Lean corrected: Customer first—i e what all• Lean corrected: Customer first—i.e., what allcustomers want, namely: continuous improvementin response time & flexibility, plus quality & value


• Waste elimination: Valued enabler, not essence

“Lean” and Close Surrogate Inventory“Lean” and Close Surrogate, Inventory

• Lean’s main benefits:• Lean s main benefits:– Reduce response time—in all things– Find problems before they fester,

b f t il f ldbefore trail of causes grows cold– Halt dependence on age-deteriorating

item forecasts• Inventory: Catch basin for multitude of

ills standing in the way of the above

But keep in mind: Reducing lead time (cycle ti ti ) i f t t i t


time, response time) is foremost—not inventory

Improving the Inventory TrendsImproving the Inventory Trends

• Inventory is an echo• Inventory reductions: Must come from• Inventory reductions: Must come from

intensive management of “basics”• Inventory reduction as managed goal fails:

– Is easily manipulated– Must be seen as result of improvements

from all parts of the greater enterprisep g p


Lean Support: From Strong to AntagonisticLean Support: From Strong to Antagonistic

• Strong—Operations: Visible see and do• Weak or temporal—Senior Executives . . .

A i it t O ti– Assign it to Operations– Treat as “head-count reduction” – Rotate out; new exec. team has other ideas;– Bored by lean, movin’ on—to other strategies




Lean Supply ChainsLean Supply ChainsInventory “Hot Potato” – Large Obstacle

What to do . . .1. Recognize: Inventory on other party’s

books just hides problems; you pay regardlessregardless

2. Demonstrate: High cost & non-cost impacts of that hidingg

3. Dilbert . . .


X XXXXX

XXXX

XXXX

XXXXX

XXX

Raw material turnover: Easily hides the truththe truth

Superior metric: Joint inventory


Balance-Sheet Gamesmanship Corrective Actions

• Intensive collaboration: Fix/simplify inter-company processes—go to the interface

• VMI (vendor-managed inventory):VMI (vendor-managed inventory):Supplier synchronizes to your usage rate—continuous replenishmentJ i t i t t i Wh t h• Joint-inventory metric: What you have + What supplier already made for you (checked by audit)

Right idea: Sockeye Supply Chain (Toronto) l i ft f “ t f i t ”


claims software for “comanagement of inventory”

Capacity Starvation

Dealing with It


Flexibly Quick Response (Lean’s Main Effect) Requires Plentiful Capacity

• Most manufacturers stingy (too lean) on production equipment—led astray by . . .

Bad metric: machine utilization– Bad metric: machine utilization– Overly financial justifications– Wrongly viewing idle equipment as wasteg y g q p

• Impacts– Can’t synchronize fabrication to assembly– Fuzzy order promising; excess lot sizes– Lost orders & customers (most vulnerable:

companies that bid on contracts)


p )

Doing Capacity Right: ExamplesDoing Capacity Right: Examples

• Precor (high-end fitness equipment; lucrative contracts with fitness centers) – Lots of idle, dedicated machining equipment, so nodedicated machining equipment, so no machining delay when big order booked

• Ashland Technologies (an American Machinist 2009 “Best Assembler”) – Excess equipment for quick customer response

• Milliken (textiles) – 25-year strategy of plentifulMilliken (textiles) 25 year strategy of plentiful equipment; thus surviving Asian low costs via quick response & small-order capability




A i it t O ti– Assign it to Operations– Treat as “head-count reduction” – Rotate out; new exec. team with other ideas;– Bored by lean, movin’ on—to other strategies




Unsung Stars of Lean – A Few ExamplesAmerican Greetings (greeting cards, etc.) Up 2.6% per yr. for 24 yrs.A d C ( t llit t l i t)* U 2 4% 27 <Andrew Corp. (satellite telecom equipment)* Up 2.4%, 27 yrs.<Applied Biosystems (life-science instruments)* Up 3.5%, 20 yrs.Cleveland: Brush Engineered Materials (2.8, 23)<; Nordson (2.8, 20)<;

Parker Hannifin (3 0 19)Parker Hannifin (3.0, 19)Cooper Industries (tools, electric generation) Up 2.5%, 30 yrs.<Heinz, H.J. (canned/processed foods) Up 1.8%, 35 yrs.< Hitachi Cable, Japan (wire & cable) Up 2.3%, 29 yrs.Hitachi Cable, Japan (wire & cable) Up 2.3%, 29 yrs.Illinois Tool Works (diverse industrial products) Up 2.9%, 23 yrs.Johnson & Johnson (med/pharma, personal-care) Up 1.6%, 22 yrs.Messer Griesheim, Germany (metalworking, other)* Up 2.8%, 29 yrs.y ( g ) p yMine Safety Appliances (gas masks, respirators, etc) Up 1.3%, 41 yrs.Philips, Netherlands (consumer electronics) Up 1.8%, 35 yrs.<Rolm & Haas (chemicals)* Up 1.8%, 33 yrs.( ) p ySkandinavisk Tobakscompagni, Sweden (tobacco)* Up 3.9%, 23 yrs.SKF, Sweden (bearings) Up 2.1%, 34 yrs.<Tennant (industrial sweepers) Up 2.0%, 34 yrs.


( ) yWoolworths, Australia (supermarkets, other retail) Up 2.3%, 22 yrs.<Xerox (copiers) Up 1.9%, 43 yrs.<

As of 7-5-10 *acquired/merged

10Cooper: Its annual report does

crow about lean etc

InventoryTurns

8

9crow about lean, etc.

Cooper Industries

6

7

Cooper IndustriesUp 2.5% per year, 30 years: +2

4

5

2

3

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

150Cooper IndustriesDays of

Inventory

120130140150

Purchased materialsWork-in-processFinished goods

90100110

Finished goodsTotal

50607080

20304050

01020

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010


1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010Year

10Three More of the UnsungInventory

Turns

8

9 Rohm & Haas* – Up 1.8per year, 33 years: +2

But . . . This is inventory reduction, not lean.Lean is: Lean Is as

6

7Hitachi Cable (Japan)

Up 1.9% per year, 28 years: +2 Lean is:Value-stream mappingKanbanKaizen events

Lean Does

4

5Kaizen eventsQuick setup5STakt timesWaste eliminationO i fl

2

3One-piece flowCells...

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

J&J – Up 1.6%, 22 years: +2


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

As of 7-5-10 *acquired/merged

L V l Ch i & I t S tLean Value Chain & Inventory Surrogate

• Lean value chain’s main benefits: Reduce response times; find problems early; makeresponse times; find problems early; make to current demand, not forecasts

• Each inventory unit . . .– Lengthens discovery time fouls causal– Lengthens discovery time, fouls causal

trail (lean/quick beats lot traceback)– Adds lead time (& carrying costs), loses

touch with customer & real demandtouch with customer & real demand




A i it t O ti– Assign it to Operations– Treat as “head-count reduction” – Rotate out; new exec. team with other ideas;– Bored by lean, movin’ on—to other strategies




From Quality Digest, May 2008, pp. 46-48y , pp

Fatigue factor: Revealed by rising, then declining inventory turns many companies

U.S.: Decline-Rise-Decline-Rise-Decline

declining inventory turns, many companies

JIT fatigueJITComplacency Lean fatigueLean

1960 1975 1995 20101985

1960s-70s: Small Japanese sample

Japan: Rise-Decline-Rise

JIT/TPS JIT/TPS fatigue JIT/TPS


The Lean Value Chain—Not Just OperationsDL f lli b l

Other

. . . DL falling below 10% of CGS while

purchased materials rising above 60%rising above 60% . . .

Calls for focus on extended supply chain

-- Ralph Keller, AME Pres.“Lean Core”

(focus on operations)

Lean supply/ distribution

p ,

operations)

De-proliferation


De-Proliferation

Cut the Complexityandand

Lose the (Money) Losers

De-proliferation: Key to cost reduction & profitability (moreso than lean in

operations, or in supply/distribution)


Profit Focused Lean PathwayProfit-Focused Lean PathwayDe-proliferation with Customer Partitioning

• Reduce numbers of: Parts (DFMA), product models, suppliers, machine makes even customersmakes, even customers

• Customer partitioning: Based on price/service, e.g., Great, Good-to-have, Barely tolerable


DFMA: Design for manufacture & assembly

Focus on Money-Making Customers y g(Partitioning)

• Queen City Steel Treating Co.: Hiked price of entry; 3 customer tiers, lowest pay more, wait longerlonger

• Rohm & Haas Emulsions: Four customer tiers• Cutler-Hammer: Customers grouped into 100%

it 80% it 60% it itcommit, 80% commit, 60% commit, no commit• Illinois Tool Works: 500 companies refocus on

20% of “everything” that make 80% of profitsy g• Nypro: Cut customer base from 600 to 31;

Omni-Circuits from 200 to 20


Long-Term Lean

Compounded Cash & Customer-Allegiance BenefitsAllegiance Benefits


24

Lean in Regression: 3 AutomakersInventoryTurns

20

22

24

Toyota: Down 3.0% per year, 16 years

14

16

18

Ford: Down10 years

10

12

10 years

4

6

8

GM: Down 6 years

0

2

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

24

Lean’s +/- Compounding EffectsInventoryTurns

20

22

24


Plus effects of long upward trend:GM & Ford—28/25 years (until 2000s)Toyota—many years (until late ‘80s)

14

16

18

Ford: Down10 years

Toyota many years (until late 80s)• Of free cash, at compound interest• Of ever shorter lead times . . . withcompounding customer/supplier

10

12

10 yearsco-dependencies along value chain

4

6

8

GM: Down 6 years

Minus effects: Inventory growth . . .GM (6 yrs.), Ford (10), Toyota (16) • Eating cash, at compound interest

Losing touch with customers along

0

2

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

• Losing touch with customers alongvalue chain, with losses compounded


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

24

Lean in Regression: 3 AutomakersInventoryTurns

20

22

24


14

16

18

Ford: Down10 years

10

12

10 years

4

6

8

GM: Down 6 years

0

2

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

Long-Term Inventory Trend

How Valid as Lean Measuring Stick?How Valid as Lean Measuring Stick?

Good for groups of companies

Usually good for single company with stable line of business (e.g., Toyota, GM)

Less so for company with changing lines of business (e.g., General Electric)( g , )


Sustainable Improvement, Best to Worst RegionsMetric: Long-Term Inventory Turnover#

SampleSectors Score Size

1 Nordic countries 68 67

RecentTrend

1 Nordic countries .68 673 United States .55 644 2 Germany/Austria .53 57 4 United Kingdom .53 73

Global Average .51 1,3685 Southern Europe .50 80 p6 Brazil/Canada/Mexico/Israel .48 94 7 Asiana/South Africa .39 120 8 Japan 39 2058 Japan .39 205 9 Benelux/Ireland .38 36

#Positive 10-to-50 year trend, 2 points; same but lapse last 5-7 years, 1 point; negative 10-

As of 7/29/10

or-more-year trend, minus ½; 5-or-more-year reversal of long negative trend, plus ½ Includes companies acquired/merged/dissolved/privatized in last 5 years


Sustainable Improvement, Best to Worst RegionsMetric: Long-Term Inventory Turnover#

SampleSectors Score Size

1 Nordic countries 68 67

RecentTrend

1 09 in ’031 Nordic countries .68 673 United States .55 644 2 Germany/Austria .53 57

1.09 in ’030.83 in ’02

4 United Kingdom .53 73Global Average .51 1,368

5 Southern Europe .50 80

1.20 in ’00

p6 Brazil/Canada/Mexico/Israel .48 94 7 Asiana/South Africa .39 120 8 Japan 39 2050 27 in ’038 Japan .39 205 9 Benelux/Ireland .38 36

#Positive 10-to-50 year trend, 2 points; same but lapse last 5-7 years, 1 point; negative 10-

0.27 in 03

As of 7/29/10

or-more-year trend, minus ½; 5-or-more-year reversal of long negative trend, plus ½ Includes companies acquired/merged/dissolved/privatized in last 5 years


What Happens to Lean’s Best?

1. They get acquired2. They survive


16Automotive Suppliers In/Recovering

from Bankruptcy

InventoryTurns

131415

from Bankruptcy

Modine – Up 4.0% per year, for 18 years 2 points

101112

Dana – Up 2.1% per year for 29 years – 2 points

for 18 years – 2 points

789 Eagle Picher – Up 1.6% per

year for 28 years – 2 points (privatized in ’04)

Each would be much worse off if not for many-year

4567 (privatized in 04) y y

compounded lean benefits

S L “ l ”234

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

So: Lean “always” saves money—but leanness does not correlate

well with strong financials


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

well with strong financials

56 Motor-Vehicle Assemblers Ranked on Inventory TrendPaccar-Kenworth* Kawasaki Heavy CaterpillarHarley-DavidsonTennantMagna Int’l.T t M t (I di )

KubotaFiat AutoIsuzuV l

DeereNissan DieselRenaultY h M t

Best

Tata Motors (India)Bajaj Auto (India)Ford MotorTerex

VolvoClaas KgaAMonaco CoachScania

Yamaha MotorsSuzuki MotorsKomatsuFleetwood EnterprTerex

Thor IndustriesHondaGeneral Motors

Scania Nacco IndustriesDaimlerNavistar

Fleetwood Enterpr.ManitowocVolkswagenHino Motors*General Motors

Hindustan MotorsNissanBMW

NavistarMillat TractorsToroMitsubishi Motors

Hino MotorsAudiDaihatsu Motors*Fuji Heavy-Subaru

JLG IndustriesPorscheMAN (Germany)

WinnebagoTrinity IndustriesPolaris

j yToyota MotorsToyota Industries*Champion Enterpr.Worst


Ashok-LeylandAGCO

Peugeot-Citroen Oshkosh TruckMazda

*Not counting 2009—very bad year *Toyota affiliates

Realizing Lean’s Strategic Essenceg g


Elevating Lean From Operational to Strategicg p gThe Terminology Factor

• Lean, lean sigma, TPS, JIT, SCM: Seen as operational/tactical (sometimes in head-operational/tactical (sometimes in headcount terms); strategic essence lost

• Strategic value shows itself in alternate term, “Time-based competition”Reference: George Stalk: “Time—The Next Source of Competitive Advantage,” (HBR, 1988), one ofof Competitive Advantage, (HBR, 1988), one of most widely cited business articles of 1980s


Summary: Not Letting Lean Sink• Why lean? Retains/builds customers—based on flexibly

quick responsequick response Generates cash flow Relies on low-cost simplicity and common sensep y

• Course corrections: Fix accounting/metrics/performance management Hit what counts: External lean; De-proliferate Fight off bureaucratic tendencies

• Strong metrics: Shortened lead times; flexible• Strong metrics: Shortened lead times; flexible response; long-term reduced inventories

Copy of presentation: Your business card or request by email


Copy of presentation: Your business card or request by [email protected]

Related Schonberger Articles – [email protected]“The Human (HR) Side of Lean,” Target, 4th Issue, 2009, pp. 54-59.“Overall Equipment Effectiveness: An Unworthy Metric,” Cost Management, May/June 09, pp. 46-48.q p y , g , y , pp“The Skinny on Lean Management: Learn Why This Process Falls Flat in Marketing . . . and Why It

Matters,” Sales & Marketing Management, Nov.-Dec. 2008, pp. 11-12“Tracking Toyota’s Position: Is This All-Out-for-Growth Automaker Losing Its Advantage?” APICS

Magazine, Sept./Oct. 2008, pp. 34-37.“The Evolving Global State of Lean ” Lean Manufacturing 2008 SME Summer 2008 pp 19-23The Evolving Global State of Lean, Lean Manufacturing 2008, SME, Summer 2008, pp. 19-23.“Lean Performance Management (Metrics Don’t Add Up),” Cost Management, Jan.-Feb., ‘08, pp. 5-10.“Unsung Stars of Lean,” Industrial Engineer, Feb. 2008, p. 22; “Faltering Lean,” Industrial Engineer,

Nov. 2007, p. 22; “Doing Off-Shore Assembly Right, Industrial Engineer, Aug. 2007, p. 26.“Japanese Production Management: An Evolution—With Mixed Success,” Journal of Operations

2 2 200 403 419Management, 25, Issue 2, March 2007, pp. 403-419.“Supply Chains: Tightening the Links,” Manufacturing Engineering, Sept. 2006, pp. 77-92.“Lean Extended: It’s Much More (and Less) than You Think,” Industrial Engr., Dec. 2005, pp.26-31.“Lean så in i Norden,” (“Nordic Countries: Lean Leaders”) Verkstäderna (Sweden), May 05, pp. 46-50“U K : Less Keen on Lean?” The Manufacturer (U K ) 2005 Lean Mfg Report April 2005 pp 5 9U.K.: Less Keen on Lean? The Manufacturer (U.K.), 2005 Lean Mfg. Report, April, 2005, pp. 5-9. “Quadrant Homes Applies Lean Concepts in Project Environment, Interfaces, Nov.-Dec. ‘04, 442-450.“Make Work Cells Work for You,” Quality Progress, April 2004, pp. 58-63.“Mandate to Grow,” Cost Management, March-April 2004, pp. 43-44.“Is South African Manufacturing Lean?” Management Today (S. Africa), Feb., 2004, pp. 22-23g g y ( ), , , pp“Canada Needs to Go on a Lean Diet,” Advanced Manufacturing, July-Aug 2003.“How Lean/TQ Helps Deter Cooking the Books,” Cost Mgmt., lead article, May-June 2003, pp. 5-14.“Your Lean Team: Use It or Lose It,” Target, cover-story article, 1st qtr., 2003, pp. 13-21.“Kanban at the Nexus,” lead article, Production & Inventory Mgmt. Journal, 3rd-4th qtrs., ‘02, pp. 1-12.


“Jack Spratt Diet: Schonberger Talks Lean with the Likes of Toyota,” cover story article, The Manufacturer (U.K. edition), Nov. 2002, pp. 34-37.

“Lean and Fat Factories,” cover article, The Manufacturer (U.S. ed.), Nov. 2002, pp. 16-19.

Lean: Deadened by Bureaucracy

Confused by Terminology


Lean/Six Sigma: BureaucratizedElevated to Management Programs

• Lots of . . . Planning/organizing with compromises (often bad) among functions & factions; remote management goals/metrics;factions; remote management goals/metrics; improvement hijacked by professional staff; jargon hype (e.g., Japanese terms)

• Less . . . Work-force involvement/process ownership; quick, low-level, low-cost implementations; innovative approaches;implementations; innovative approaches; external (supply/customer pipelines) activity

• Results: High cost, un-lean administration


Management of Lean/Process I tImprovement

D h i• De-emphasize: – Gap closure: Competitors not

global best at much of anythingg y g– Management goals . . . Distortive

hopes, plucked from the airEmphasi e• Emphasize: – Improvement against your own

performance, trend lines– Process data: All that goes wrong,

continuously gathered & recorded


Strategic Lean: Essentials• Emphasize lean’s customer-side purpose• Drive lean into supply/customer channels• Simplify through de-proliferation• Deal with misguided financial practicesg p• Combat bureaucratization of lean


10Inventory TurnoverTurns

8

9Baldor ElectricCaterpillarEatonH bb ll I

Caterpiller

E t C

6

7Hubbell Inc.

BEaton Corp.

Baldor Electric

A

4

5DC

A

2

3C

Hubbell: Up 3.0%16

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

per year, 16 years


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year


8

9TimkenSpirax-Sarco (UK)*Goodrich

Ti k

6

7Timken

4

5

CA

2

3

GoodrichD

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

Spirax-Sarco (UK): Up 2.8% per year, 24 years (overstated—based on sales, not cost of sales)


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year


8

9TimkenIngersoll RandCaterpillarGoodrich

Ingersoll Rand: Up 2.2%per year, 34 years

6

7

Goodrich

ACaterpiller

4

5

CB

2

3

Timken D

0

1

1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

Goodrich


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

23Paccar (Kenworth, Peterbuilt, DAF Trucks)

Inventory turns

19

21

Up 1.6% per yearf 41

15

17 for 41 years

9

11

13

5

7

9

1

3


1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010Year

Autos, Crucible of Lean – Best to Worst TrendsF t/MRP d i i Y k b t

2 Harley* Up 3.0%, 23 years5 Tata Up 4.9%, 15 years (slump ’98-’03)

Forecast/MRP-driven in York; but continuous replenishment at KC plant

7 Ford Up 2.1%, 35 years (very erratic last 10 yrs.)10 Honda Up 1.7%, 30 years (down a bit last 7 years)13 Nissan Up 2 6% 15 years (but mostly flat last 8 yrs)13 Nissan Up 2.6%,15 years (but mostly flat last 8 yrs)22 Isuzu Flat erratically 30 years (recent up, then flat)33 Toro Flat 35 years (down erratically, up last 7)33 Toro Flat 35 years (down erratically, up last 7)37 Polaris Flat 17 years (trending down last 9)40 Deere Down sharply ‘94-’00, up but flat ‘02-’09)48 VW Down 4.4%, 12 years (after good 16 years)53 Toyota Down 3.0%, 16 years (after up 11, flat 5 yrs.)57 Ma da Do n 2 8% 20 ears


57 Mazda Down 2.8%, 20 years

As of 4-20-10

Summary• Inventory is imperfect measure of lean; but no

others are nearly as good• Lean is hollow if strong in operations, but absent

in distribution—where lean now needed mostM i l it i ti t b t i i• Main lean pursuit in operations must be striving for making/shipping every product every day Simultaneously—in multiple cells and/orSimultaneously—in multiple cells, and/or Intermittently—through quick

setup/changeover, andp g , Through de-proliferation (fewer SKU’s, etc.)

Copy of presentation: Your business card or request by email


Copy of presentation: Your business card or request by [email protected]

how not to fail at lean: dealing with enterprise-wide

Documents