John Bull and Uncle Sam

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Manufacturing News, Source : The Manufacturer US
Published : 03 May 2005 22:19

The Manufacturer magazine’s editorial director Ken Hurst calls in some expert opinion to analyse what manufacturers are saying about their lean progress on either side of the pond

In the first quarter of 2005, The Manufacturing Research Centre simultaneously undertook two separate research exercises to examine attitudes towards lean manufacturing. Readers of the UK and US editions of The Manufacturer were approached to answer similar sets of questions, the answers to which would inform and benchmark the progress being made towards the implementation of lean principles in each territory.

Here, for the first time, we bring the principal outcomes together and succeed in flushing out some informative comparisons.

Satisfyingly from a research point of view, the results throw up enough similarities to suggest that the samples of 300-plus participants are robust. From an observer’s point of view, however, it is the differences which may prove most interesting.

The main point that our designated lean experts picked up on was that manufacturers, in the UK and the US, really ought to be viewing lean holistically rather than as a selection of disparate initiatives to be cherry picked according to the factory needs. Introducing the US report, lean guru Anand Sharma, founder of TBM Consulting and author of The Perfect Engine, commented: “I find that people define lean or continuous improvement as any one segment of all the things involved. Quite often people say lean means just doing 5S, cleaning your plate and making it look nice. To me that is like breathing air. You have to do it, but it’s not even the beginning.”

Introducing the UK report, lean evangelist Charlie Blakemore of BAE Systems Land Systems said: “Cost reduction is always going to be a key driver but lean is about more than that. It’s about speed, but it’s overwhelmingly about quality. Lean is the means to energise people to continuously look for improvement and, if you achieve that, you’ll get year-on-year savings as an automatic response.”

For the purposes of the following report, we invited 30-year ICI veteran and PICME associate Dr Roger Benson, Siemens Congleton production manager Neil Eardley, and TBM Consulting Group UK managing director Mike Serena to comment on the combined results.

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Which of the following benefits do you associate with the term lean manufacturing?

[Graph 1]

UK US

Improved efficiency and processes 93% 91%

Removal of waste 86% 87%

Reduced costs 83% 78%

Inventory reduction 78% 83%

Lead time reduction 76% 79%

Workforce reduction 25% 17%?

With a remarkably similar picture being painted on both sides of the Atlantic, Siemens’ Neil Eardley’s eye went straight to the ‘reduced costs’ line. Surely this is the root of all the listed benefits, he says. “Without doubt, it is Siemens Congleton’s goal for lean.”

Roger Benson was gratified to see that workforce reduction was at the bottom of the poll. “If lean is driven by workforce reduction it is never effective,” he says. “Increase in productivity is primarily driven by increased output and less waste with the same number of direct production staff.” The popularly perceived benefits are entirely consistent with the experience of applying lean within the process industries, Benson adds.

In TBM’s Mike Serena’s experience, there should perhaps have been some additional options. “I have found that a great many clients are very much interested in on-time delivery, especially in the aerospace industry which is traditionally late on all orders,” he says. Quality improvements are also widely sought by lean implementers, he believes.

Which of the following do you consider to be the three most important attributes of a world class manufacturer?

[Graph 2]

UK US

Responds quickly to the changing needs of its customers 61% 52%

Always strives for continuous improvement 57% 58%

Empowers employees to be involved and take responsibility 49% 47%

Product quality is of paramount importance 48% 67%

Follows lean manufacturing principles throughout the whole company 22% 25%

The most efficient factory layout and production processes 16% 8%

Maximizes shareholder value 15% 14%

A benchmark in its sector across a range of quantifiable performance measurements 11% 19%

Always meets financial expectations 11% 10%

Brings new products to market regularly and quickly 9% 6%

Management information is available in real time to aid planning and decision making 7% 8%

Has a fully integrated supply chain 6% 5%

Here, Dr Benson makes an interesting observation on the difference in the UK and US number one choices: ‘speed of response’ in the UK and ‘product quality’ for the US. As far as the process industries are concerned, he says: “In the UK, short supply chains with supermarkets at the end of them emphasise the importance of response time. In the US, with longer supply chains, quality becomes more important than response time due to the cost of returning poor quality product.”

Neil Eardley was right, however, to suggest it would have been enlightening to have been able to know which market sectors the research respondees belonged to. He added: “The three most important attributes of a world class organisation in the market segment that we operate in are to deliver a cost effective product, on time with 100 per cent quality.”

Like the UK sample, Mike Serena puts flexibility towards customers’ needs at the top of his list alongside employee empowerment – an attribute that both research audiences put a little further down their lists. “I’ve always felt,” he says, “that if a company can provide a safe environment such that the employees can produce quality products and deliver on time through continuous improvement, cost usually takes care of itself.”

Which of the following are key priorities for your business?

[Graph 3]

UK US

Cost reduction 92% 91%

Staff skills training 76% 56%

Improving quality 75% 66%

New product development 63% 59%

Optimising materials flow around the factory 60% 63%

Supply chain management 59% 60%

Reducing time to market 54% 56%

Improving maintenance 44% 37%

Investment in new production equipment 35% 30%

Optimising existing IT systems 32% 30%

Investment in new IT systems 22% 16%?

Investment in new comms/telecomms system 5% 7%?

With cost reduction the key priority in both territories, Siemens’ Neal Eardley reiterates the fact that this mirrors his own business. “In ‘EFQM speak’ this would be classed as a result. A number of the other issues would be classed as enablers to help our business achieve this result,” he says.

Dr Benson picks up the “encouraging” indication that staff training is seen as important in the UK and might push the government towards providing more investment in this area.

How much progress have you made on each of the following initiatives?

(Respondents who felt they made good progress)

Good progress

UK US

Kaizen (continuous improvement) 61% 73%

5S 60% 66%

Removal of wasteful processes 60% 62%

Kanbans 46% 62%

Quick change over (SMED) 43% 37%

Just-in-time delivery from suppliers 41% 48%

Value stream mapping 36% 52%

Total productive maintenance (TPM) 32% 26%

Extending lean principles into supply chain management 25% 31%

Extending lean principles into business processes 21% 39%

Six sigma 18% 25%

Neal Eardley’s real life experiences from his world class journey at Siemens neatly illuminate the research findings. “Kaizen and 5S are both well established in the business and have been for approximately three or four years,” he says. “Kanbans, SMED and TPM are recent additions in the past year. Value stream mapping, being at the true start of our lean rollout, we undertook in October 2004. Identification of waste and cascading lean principles into the business processes are happening at this moment in time.”

Both Eardley and Benson point to the relatively low take up of six sigma, particularly in the UK; better progress in the US may be down to its belief in high quality as an important component of being world class, Eardley adds.

Looking at some of the research’s underlying results, Benson expresses his surprise at the low priority many respondents give to TPM but is pleased to see that a number of organisations are now planning to extend lean principles into business processes. “In PICME’s experience that is where the low hanging fruit exists today,” he says. TBM’s Serena would like to see some qualitative follow-up to this part of the survey. It would be interesting to ask those who claimed to ‘have already done it’ how they know whether or not they had ‘done it’ successfully. The comparative measures could indicate an arrogance on the part of the US, he suggests; whereas the UK appears to be planning to do a great many things ‘next year’.

What obstacles stand in the way of productivity improvement at your plant?

[Graph 4]

UK US

Multiple business locations 29% 20%

Inability to quantify the benefits 38% 13%

Insufficient board-level buy-in 39% 22%

Attitude of middle management 59% 31%

Lack of understanding of lean principles 59% 37%

Nature of manufacturing facility 62% 29%

Attitude of shopfloor staff 72% 36%

Investment costs 79% 28%

Generally, US respondents saw fewer barriers to improvement than their UK counterparts. Benson notes that the number one UK impediment to productivity improvement is lack of investment – a problem that goes back 20 years and is now becoming a bottleneck. In the US, the constraints are all about education and awareness at all levels.

Eardley says it appears as though the UK is struggling with understanding the importance of lean manufacturing and gaining support and buy-in at all levels in organisations. He notes, too, the apparent paradox of UK manufacturers’ belief that investment costs stand in their way but appear, from earlier responses, to be reluctant to look for more ways of reducing costs, thus releasing further capital.

Serena has his own answer on obstacles. “I have found that the number one answer is the perceived amount of time available and a lack of on site resources to support a lean initiative,” he says. “The key element to beginning and sustaining such an effort is a lean champion who is either a key decision maker or the highest ranking manager on site. If he or she wants it to happen, then it will!”

Where have your biggest lean improvements been?

[TABLE – UK figures in numerical order, 1 being biggest improvement ]

UK US

Reduction in costs 1 2

Increased efficiency 2 1

Reduced waste 3 3

Improved delivery times 4 4

Increased customer satisfaction 5 = 8

Increased product quality 6 6

Increased profitability = 7 7

Increased staff morale = 7 = 8

Reduced stock = 9 5

Improved competitive edge = 9 11

Increased staff morale

= 9 = 8

New products launched more quickly 12 12

When it comes to evaluating the improvements a lean programme brings, UK and US views are similar at the top of the table but throw up some significant variations further down. Inventory reduction, particularly in the UK, fares poorly – a result that surprises PICME. “This is normally the number one beneficiary and, in PICME’s experience, the best KPI that lean really has been delivered,” says Dr Benson.

What level of cost savings have you achieved from lean initiatives?

[Graph 5]

UK US

Can’t measure them 25% 25%

0 - 5 % 23% 28%

6 – 10% 20% 22%

11 – 15% 19% 12%

16 – 20% 5% 6%

21%+ 8% 7%

Asked to quantify the level of savings lean manufacturing principles had brought to their organisations, a worrying 25 per cent in both the UK and the US admitted to not being able to measure them. “If they are unable to measure the savings, they are not delivering lean manufacturing,” says Benson, adding that PICME’s experience is that savings amount to around five per cent year-on-year. Eardley is less censorious in his views on measurement. “”A factor with lean is the large amount of improvements that aren’t always tangible and thus can’t easily be measured,” he observes. [I don’t believe that – ed]

To what extent are your suppliers pursuing lean manufacturing principles?

[Graph 7]

UK US

Most are well down the road 1% 7%

Some are well down the road 15% 14%

Most are looking into it 10% 13%

Some are looking into it 33% 29%

Most have done nothing 21% 19%

Don’t know/not applicable 19% 18%

To what extent are you encouraging your suppliers to improve?

[Graph 8]

UK US

To some extent 38% 39%

A little 26% 22%

Not at all 18% 5%

A great extent 17% 34%

US suppliers would appear to be doing a little better in following their customers’ lean example and the customers are working harder to encourage them to do so. “Based on your data and my experience, I would agree,” says Serena.

For PICME, Benson concludes: “There’s lots of opportunity for customers to demand that their suppliers deliver lean manufacturing. That is how Nissan has driven and improved the performance of its UK supply base.”

How close do you believe you are to being lean?

[Graph 6]

UK US

We’ve achieved lean manufacturing 1% 1%

Very close 4% 10%

Quite close 37% 26%

A long way off 57% 63%

All three of our experts were anxious to point out that achieving lean was an ongoing aspiration rather than ‘a box to be ticked’. “It’s a journey of continuous improvement that never ends,” says Benson, adding that he’s surprised that any company claims to have achieved it. Eardly admits that Siemens Congleton is still a long way off being lean despite having made good progress in some areas like 5S, Kaizen and TPM. And despite most respondents assertion that they are “a long way off”, TBM’s Serena thinks the figure should be closer to 80 – 85 per cent than the 57 and 63 per cent recorded by the UK and US surveys.

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