Rather than businesses dismissing lean as a concept imported from the Far East for specific application to manufacturing processes, we should be implementing the concept into all areas of business. The rewards are potentially huge, says Peter Owens of ISIS.
The history of economic thought and the study of business process is littered with the strangest looking flow-charts, graphs of every description using multi-coloured columns and serpentine curves, formulaic equations and the occasional quote from Confucius or Aristotle.
Similar to so many other attempts to conceptualise any type of human activity, explanations of the inter-dependent actions, movements of material and communication of data inherent within even the shortest of supply chains, share the same characteristics of often bewildering diagrams, baffling jargon and evermore refined theories.
Imagine then if you will, those of you not yet familiar with the varied theories of process reengineering, how complex it can be to not just explain what goes on within a manufacturer’s supply chain but then to attempt to illustrate how efficiencies within it can be made. Add to the confusion the results of globalisation which have taken effect over the last two decades and how large-scale out-sourcing has made raw materials, manufacturing locations and ultimate markets so geographically remote from each other.
In making our understanding of manufacturing supply chains more comprehensive, and our attempts to improve their efficiency more effective, our task is far from simple. But if we leave out the graphs, equations and flowcharts, perhaps the confusion can be minimised.
The particular theory of process re-engineering under consideration here is the lean concept. In brief, it is the identification and elimination of waste from a given set of human behaviour. As most will recognise, lean was originally developed to help manufacturing more efficient but by its very nature it is well-suited to an expansion of this role. The application of lean is increasingly radiating out from production processes to entire supply chains, including logistics, warehousing and distribution activities.
This is because for lean to be effective in taking waste out of existing processes, it must focus not only on the manufacturing activity but on the entire supply chain. Optimising the components of a single process does not necessarily mean that the entire supply chain will be optimised as a result. So, contrary to our aim, the ‘simple’ is becoming yet more complex.
We might now be slipping into the all-enveloping tentacles of the management consultant, who thrives on complexity, theory and integrated solutions. In many situations, of course the expert skills of such consultants will be needed as a guide through the labyrinth change and the pursuit of efficiency. However, experience of some organisations in implementing lean has followed another modern trend, this time a social one: the concept of ‘self help’.
In the retail world some fifteen or so years ago Tesco became noted for its adoption of lean. The food retailing giant learnt from the concept’s originator Toyota and the way it organised its aftermarket parts distribution system. In the supermarket chain’s retail world the first step, as a result of the lean implementation was to establish an infrastructure capable of feeding each of its stores from regional distribution centres. This system improved the on-shelf availability of products as well as the ease and cost of re-stocking shelves. It also made re-ordering from suppliers more continuous and accurate. Critically the examples of waste elimination also proliferated; deliveries could be efficiently timed; there was less waiting time to unload; no expedited shipments were necessary and much higher truck utilisation was achieved.
So here we have examples of the results of lean in the supply chain but how are these changes to the process initiated – and how simply? To answer this, in part, we have another real life example from a logistics company operating a warehouse in the eastern part of the Netherlands.
Menlo Worldwide Logistics is a subsidiary of a US trucking company called Con-way. It manages the international supply chains for a number of manufacturers in the hi-tech, electronics sector.
It actually handles the goods in a number of European warehouses including the Dutch one near Eindhoven, as well as organising and tracking them along the supply chain from manufacturing site to the customer’s ultimate destination.
For Menlo, the identification and elimination of waste is achieved through three essential lean principles: identification of value through the eyes of the customer; empowerment of the workforce; and focus on continuous improvement (CI). All three have a straightforward, perhaps simple, requirement – the commitment of people at all levels and at all points within the process. The customer’s involvement is crucial to identify their values; Menlo’s work force is pro-active and, crucially permitted to enact change and everyone’s dedication to the cause is required to ensure ongoing waste elimination.
Menlo trains its staff in the 5S philosophy – Sort, Set in order, Sanitise, Standardise and Sustain – each of these has a Japanese translation also beginning with the letter ‘S’ – lean can be neat as well as simple! Briefly, the 5S mantra can be implemented on a practical level as follows:
● Sort (Seiri) – eliminate all unnecessary tools, parts, and instructions
● Set in order / stabilise (Seiton) – there should be a place for everything and everything should be in its place. This phase is also referred to as simplifying
● Sanitise/systematic cleaning (Seiso) – keep the workplace tidy and organised. No physical waste
● Standardise (Seiketsu) – work practices should be consistent. Everyone should know exactly what his or her responsibilities are in adhering to the first 3 S’s
● Sustain the discipline (Shitsuke) – maintain and review standards. Once the previous 4 S’s have been established, they become the new way to operate
At the Eindhoven facility Menlo’s staff became engrossed in lean, volunteered ideas, formed a lean team and documented measured and defined targeted waste through a range of statistical tools. And, yes inevitably there were a few graphs and charts used.
CI then became the key to success because, while a single lean process is capable of achieving productivity gains of 70 per cent in just one week, it is the small day-to-day incremental advances that project value into the future. At Menlo a two-tier approach was taken: on the one hand there is a plan detailing the improvements in efficiency required in order to realise major gains quickly; on the other, a long-term commitment to find more waste.
Employee participation paid dividends and moreover, was essential. Although staff needed to be trained in the Lean concept, to produce efficiency measures, cost/ benefit analyses, and in problem solving skills, Lean engendered an entrenched work culture at the Menlo facility. The staff’s contribution of ideas and suggestions had multiple benefits. Not only does the customer now enjoy smoother and smarter processes, but employees also engage – a valuable factor in securing and retaining staff – while Menlo achieves impetus in the workplace to observe what is happening and make immediate changes. To have the scope to make one’s job role more efficient has universal appeal.
Simplicity is, of course in the eye of the beholder.
A detailed understanding of a concept at a practical level can make the most complex of situations appear straightforward. It is not always that simple to describe such concepts, in words or with the use of graphs and formulae, but seeing is usually believing.
Lean certainly has living examples and those that want to know more should study them first-hand.