Joined up thinking

When is lean not really lean? The shopfloor may be clean, tidy and 5S-d to within an inch of its life; the shadow boards are works of art, and the operatives are positively brimming with confidence and ideas. If, however, the new ways of working aren't making a blind bit of difference toy our bottom line or the way your customers rate you, lean has not lived up to its promise. Many manufacturers put all the basics in place but stall at the next stage. "Organisations seem to struggle to get beyond the shopfloor with lean," explains Graham Canning, principal consultant at the Manufacturing Institute (TMI). "They see all the tools and techniques as shopfloor based. So they stutter at PointKaizen, making certain improvements but not linking it to the strategic objectives of the business. The blame usually lies squarely with the company leaders: "When they talk about being supportive of an initiative, they underestimate just what that means. It needs visible, daily support. Often we ask`how much time is ring-fenced forimprovement activities?' If they give you a blank look, you know they aren't really on board. It means he and his fellow practitioners frequently come across pockets of improvement - lean for lean's sake - rather than seeing it used as a means of deploying policy across the company. So there has been considerable debate among them about how to make fundamental and profitable changes faster. "Nowadays TMI tends to focus hard on a narrow but deep approach to drive lean hard into a particular value stream, rather than go for awide but shallow implementation which can bring problems of sustainability," says Canning. The tricky, strategic bit comes in picking the right value stream. One of TMI's clients,a major food manufacturer, used value stream mapping to prioritise them. It became clear it needed to do something more than just tidy up the line; it needed to look at ways of servicing specific customers far more efficiently. It brought togetherevery function involved in that value stream- purchasing, planners, the shopfloor plus members from its inbound and outbound supply chain - in a focused lean initiative. It meant introducing advanced lean tools like level pull - a way of reconciling stable,repeatable production with unstable,variable customer demand - at a much earlier stage than would apply in a conventional, company-wide lean programme. But, says Canning, the company got far better benefits than if they'd restricted their efforts to "a bit of 5S and TPM on the line". He is adamant that businesses must go through the exercise of understanding what they truly want to do before deciding which part of lean to apply to which area of the operation. "It's not a tick box or a requirement to work through the textbook. You have to be specific about what you want and it must be firmly linked to your overall strategic plan. Ian Machan of Machan Consulting is a committed advocate of pinning lean's second steps to the voice of the customer(VOC). "Especially in difficult times, the pursuit of lean should mean more than just removing waste. Pockets of lean good practice need to extend to the customer, so that not only is the stream focused on delivering the right value but that customer sees your value stream as being better than their other choices." He points out that it is relatively easy to copy products but incredibly difficult to emulate the things that make a value stream special. Two of his clients were in just the stalled situation described by Canning: both hadbeen running lean programmes for a while,producing in Machan's words "islands of lean", but were struggling to get the benefits to their customers. Like many businesses, they were distanced from their end customer by warehouses and distribution networks so the customer's issues were not readily understood. The first company used a scientific, Six Sigma-based approach to establish what its customers saw as critical in both the service and the products offered. Having measured and quantified it, it used its customers' view of what they valued - and would pay for - asa guiding beacon to structure lean programmes: "A major benefit is that people in the factory really understand the reasons behind changes when they get real customer feedback as opposed to what sales and marketing want. The exercise flagged up a previously unrecognised issue within its customer service group. Having both relocated and reorganised, it had lost expertise. Customers' irritation was rising with staff who had to go and find answers. Secondly,products leaving the factory in good condition were arriving with damaged packaging. The company looked for the root cause, examining the design of the packaging and running transit trials. The problem turned out to be a combination: a product change that hadn't been carried through to packaging plus external transportation methods. The second company - a pharmaceutical producer - took a simpler, less scientific approach. By simply asking its customers face to face, it found the information to redirect its current lean programme. For example, it discovered that deliveries in large drums were immediately decanted into smaller containers. It was simplicity itself to do this in its own factory instead, but it was a major gain for the customer's own value stream. "The value of a lean pocket in the factory gets diluted by its distance from the customer," says Machan. "In closing that loop, VOC becomes a really useful next step to lean. Few operations can demonstrate the business advantages of centring lean programmes on the customer better than the contract manufacturing site of electronics manufacturer Exception. When the new management team of MD Richard Brighton and operations director Mark Davies arrived in early 2007 at the Calne, Wiltshire site, it was making a £500,000 loss, mainly caused by writing down redundant inventory. Despite basic lean progress, it also had - in Brighton's words -"WIP everywhere. Everyone had their own little empires - surface mount, rework, test areas - all owned by production managersand none of them linked to the end target.Nothing was visible or streamlined and customer service people were tearing their hair out trying to tell people when they would get their order. Today, turnover has risen from £17.5m to £20m, with 60-70% of the growth coming from existing customers, and the site is showing profits of over £1m. The entire ¯operation is now transformed into four business streams with 20 autonomous cell seach dedicated to a key customer. Order arrears are down to zero, headcount is down by 45 and a shared lean initiative with major customer Solid State Logic (SSL) has takenout more than £200,000 of WIP on this contract alone. It's worth taking a look at this relationship since it clearly illustrates the two-way advantages of extending lean into customers' own operations. The work with SSL was the first step Exception took in this direction and it now serves as a template forits other customer-centred cells. SSL makes extremely well-known, respected mixing desks for the music industry. Exception supplies over 90 different PCAs (printedcircuit assemblies) for SSL to configure and hard wire. Until SSL receives the last one, it can't configure the final product. Previously, a huge amount of inventory -enough to make several systems - could wait on shelves for the delivery of the last two boards. "There was no clarity of the supply chain from us to them," recalls Davies. They jointly came up with the solution of shipping an entire system in acrate straight to SSL's lineside. Takt time Exception tackled its own production imbalances through careful analysis of its takt time. Takt time is basically the rate of customer demand, calculated by dividing the available production time by the quantity the customer requires in that period. Exception used it to develop a simple, highly visual way of driving production so that all assemblies were completed at the same time. It took undersix months to jointly arrive at this practical way of working, make the changes on the ground and step over to the new system. Brighton and Davies handled the rapid transition by building the new cell in aseparate area while normal business carriedon. Although the workforce was involved,there were definite sceptics. When everything was ready, Davies asked them to down tools and come and look at their newhome: "Some people said this is great - it's orderly and we can see what we are doing. Others said I had ruined their lives! But they took ownership of it, they enhanced it and soon the other business teams were coming to me and asking when I could build their own cell. There were some "interesting conversations" with previously separate departments when they found out they were going to be working on the production floor.The resistance was short-lived: "Whenpeople can see it's working and they can communicate directly on mistakes and issues, all of a sudden you create a team with a unique identity aligned to the customer's." It established the cultural mindset that allows normal lean techniques to fall on fertile ground. "Once you have an improvement,everyone wants a part of it," reflects Brighton, "but you need a quick win to get things moving." It's a view that closelyaccords with TMI's 'narrow deep' take onlean. Brighton actually analysed the factors governing successful projects for his MSc thesis: "In every case the good ones had moved quickly and produced a tangible business success where it was needed most.Without that, you are living off the will of one leader in the organisation and his strength of character to make it happen. Do it and change it and you get a snowball effect - it's growing and growing and you can pass on ownership and get on with your next project." If you get it wrong in this production environment, the worst that can happen is that an electrician has to move a bench. There are still a few shared areas."Surface mount lines are expensive and you can't have one per customer," explains Davies. "But putting the streams in place forces detailed scheduling in the shared area which, in turn, makes you look hard at other efficiencies." To cope with the extra demand on surface mount, Exception spent a lot of time improving OEE. "In essence we also had to go back to our own supply chain,improving our changeovers and looking atthe way we procure parts," recalls Davies. "It meant a lot of rethinking to get 250 components there at the same time to support [faster throughput]. We probablyincreased the share price of Nobo boardsand pens - they were everywhere." Core cells, Today the business is totally customer driven: " The first expense for a new customer is £105 for a sign for their cell,"says Brighton. "The cells are at the core -they provide focus and simplify production.PCAs are complex enough without putting complex manufacturing processes around them." He feels this mode of working gives Exception real credibility with OEMs. Many want to reduce their own manufacturing,but only through suppliers they can trust."We deal with them in an open-book,transparent way. If they walk onto the shopfloor they can see their area with their name on it. They want to see that the company is focused on them and in control. They want their piece of real estate in a facility."Exception regularly arranges for its people to visit end customers' sites "to give an identity to what they are making".The changed focus has certainly brought results. A major customer has doubled its order volume on the strength of its highest ever satisfaction rating. It has left Exception feeling pretty confident in the face of the recession: "If we hadn't done all this work last year, it might have been a different story."