In the first of a two part series, Professor Peter Hines, chairman of the Lean Enterprise Research Centre at Cardiff University and consultancy S A Partners, explores how multi-site organisations can develop a durable lean approach.
Over the last 20 years of our lean journey the type of questions we are asked has evolved from “where do I start?” and “who should I involve?” to more pragmatic questions like:
• How long is it before the benefits start fading away?
• Why do people seem to have lost their enthusiasm for Lean here?
• How do you ensure continued buy-in from the workforce?
The challenges in staying lean are often rooted in a preoccupation with lean tools and a need to have a fast-track ‘hero story’ that can be produced by taking a kaizen blitz approach, rather than careful and systematic culture change, which is slower in producing noticeable results but far more durable.
Thinking of lean application in terms of an iceberg analogy to describe that it’s not what you see but it’s generally what you don’t see that’s most important, and during recent pilgrimages to Japan we learnt a lot about uncovering these unseen factors. We went to a series of manufacturing firms and what we saw on the shop floor was marvellous — we saw 5S, kanban, TPM, flow — all the typical lean tools and techniques that you read about in the many textbooks. But in addition to these tools and techniques and processbased management, we discovered that below this ‘tip of the iceberg’ there were three key people-related areas under the water that need to be acknowledged:
1 . Strategy and alignment: A coherent strategy, vision and purpose that is fully communicated and deployed throughout the organisation.
2. Leadership: Characterised by guiding vision, passion and integrity. A leader must have high energy levels, be innovative, focus on people, inspire trust, have a long range perspective and challenge the status quo.
3. Behaviour and engagement: The engagement of people on a lean journey is essential. It will predict their behaviour and your ultimate success.
The lean journey of Cogent Power, the manufacturer of electrical steels headquartered in Newport, Gwent, is a fine example of an enterprise which has sustainably implemented lean through acknowledging the importance of the above factors. Cogent Power began implementing lean in late 2003 to improve its competitiveness in the marketplace and help turn around its financial performance. Today the company has a transformed approach, with a renewed customer focus that has led to exponential sales growth and a culture of continuous improvement.
In order to meet the challenges posed by substantial pre-tax losses from global operations, a static order book with emphasis on lower margin products etc, a new managing director was appointed in 2003 to lead the business turnaround. He implemented a new organisational structure, based around a head office in the UK and three operating divisions: Electrical Steels, laminations and transformers.
When the lean project began, the culture and philosophy of the company was based on a traditional mindset driven by a culture of machine and labour efficiency. The main operational key performance indicator (KPI) was tonnes of output produced and as a result there were high levels of inventory but poor levels of delivery performance.
In the first part of this article we take a look at how Cogent Power tackled the first two ‘underwater issues’ in the Sustainable Lean Iceberg framework, Strategy and alignment and Leadership.
Strategy and alignment
A successful strategy should begin with:
• A realistic assessment of the current situation
• A coherent vision of the future
• An understanding of the transition required to bridge from the present to the future
Alignment then makes sure that everybody understands the strategy, and that everything they do contributes to the success of achieving the organisational goals. This can be checked by looking how KPIs monitor and measure progress.
A link between the KPIs, the strategy and the lean improvement projects is vital to sustainable success if there is no link there will be waste and if the link is not worked on and understood with employees then there will be lack of clarity.
Cogent Power uses ‘business cockpits’ to deploy and sustain the management process. The business cockpits are visual management systems used to display, everything that is important to running the business in all areas and at all levels. They show issues, improvement project plans, performance measures and key financial reports. They drive the day-to-day business.
The cockpits measure performance indicators such as OEE (overall equipment effectiveness), OTIF (on-time in-full), direct costs etc with particular relevance to each department. Here they have all the information that the team leaders need to manage their sections and set targets, and the information that process or functional managers need to manage their departments and the senior managers need to manage the business.
Each has a clear link to the others. The cockpits are reviewed and updated regularly.
Leadership
Poor leadership can be identified as a top differentiating factor between success and failure in sustaining lean change. A common stumbling block for leadership is that it suffers from confusion with management.
Many people talk about managing transformations rather than leading change. Leaders, should foster change whereas managers stabilise the organisation and assure that the changes are well implemented.
Leadership is not confined to the top level of an organisation; leaders can emerge at all levels and part of the role of managers is to recognise and develop potential leaders so that they can contribute to the business goals.
Cogent’s lean strategy included the reorganisation of the management team into a formidable force; highly respected, hugely influential and based on the belief that it is the responsibility of all managers within the organisation to spend time with front-line workers; going to the place where the action is happening.
This ‘Gemba’ management is a critical element of lean leadership, and crucial to sustaining lean.
Leadership is important at every stage of lean transformation, but particularly at the start and during the ‘it isn’t worth it’ phase when management typically becomes extremely unhappy as the benefits often appear smaller than the pain of gaining them, usually somewhere between 18 and 24 months after starting a transformation. It was during this period that Cogent Power recognised that the middle managers were struggling due to a top-down and bottom-up approach that neglected the middle managers, who were being asked to manage the lean transition but did not have the same level of skills as the people they were managing. To reengage the middle managers a lean management training programme was developed called ‘Living the Lean Lifestyle’. This programme focused on giving managers new skills that emphasised the change in roles and responsibilities expected of the entire leadership community as it went forward. The programme challenged individuals to continuously push themselves and their teams out of the ‘comfort zone’ and into the ‘stretch zone’ with an emphasis on the importance of values and behaviours needed to lead the organisation into the next phase of maturity. This provided fresh impetus at just the right moment for the programme.
For the rest of this article and Professor Hines’ conclusions visit The Manufacturer website: www.themanufacturer.com
1 This article is an abridged summary of the book Staying Lean: Thriving, Not Just Surviving by Peter Hines, Pauline Found, Gary Griffiths and Richard Harrison at the Lean Enterprise Research Centre, Cardiff University, 2008
