Questions to ask on a Lean Business Survey
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"What are the business issues with this product?" Inadequate return on investment?
Poor quality? Inability to meet customer ship dates? Inflexibility in the
face of volatile markets? (If a firm doesn't know what its business issues
are, how is it going to know what to improve?)
- "Who is responsible for the value stream for this product?" If no one is
responsible for anything and everyone is responsible for everything, how can
the firm improve?
- "How are orders from the customer received?"
- "Where is the pacemaker process, triggered by these customer orders?"
- "How capable, available, adequate, and waste free are assembly activities?"
- "How capable, available, adequate, and waste free are the fabrication activities feeding assembly?"
- "How are orders transmitted up the value stream from the pacemaker process?"
- "How are materials supplied to the assembly and fabrication processes?"
- "How are materials obtained from upstream suppliers?"
- "How are employees trained in lean procedures and motivated to apply them?"
Case Study:
The Acme Co. (SA) Pty is making a relatively high volume, complex component for several automotive OEM’s. The responses are from a manager responsible for Product A.
"What are the business issues with this product?"
Due to a continuing price pressure from the two customers for the product, the company was losing money even through meeting a high quality standard and shipping on-time. It followed that costs needed to be reduced quickly.
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"Who is responsible for the value stream for this product?”
The question was easy-no one! The product simply wound its way through many departments and areas – sales, production control, assembly, fabrication, purchasing – as best it could with no individual assigned responsibility for managing and improving the total flow of value. At the same time, a company wide corporate improvement implementation – the “Acme Production System” (APS) was making several interventions in Product A’s value stream to improve wasteful practices.
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"How are orders from the customer received?"
Acme was receiving a monthly forecast and a weekly schedule from its two customers for this product family, with shipping releases controlled by a physical Kanban brought by ‘milk run’ drivers sent by the customer. On the face of it, the simple Kanban for shipping releases seemed “lean”. But in looking at the actual situation it was clear that Kanban isn’t Kanban and “lean” isn’t lean. One customer sent Kanban every two hours with careful attention to levelling demand so that short-term production variations in the customer plant did not affect Acme’s operation.
The other customer sent its Kanban erratically within very wide pick-up windows, and a brief glance at the pattern of Kanban arriving showed that this customer was actually amplifying the production variations in its own plant in its orders to Acme. Acme responded to these differing customer approaches in a way that was easy to see: The despatch lane for the first customer was very short, containing only the goods being assembled for the next shipment.
The despatch lane for the second customer was quite lengthy (even though average demand was the same) and contained much more than was likely to be needed for the next shipment. This was how Acme dealt with variations in order flow while achieving 100% on-time deliveries.
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"Where is the pacemaker process, triggered by these customer orders?"
Another simple answer: There is no pacemaker. Instead Acme used a master schedule developed each weekend from the customers’ weekly schedules and sent these schedules to each of the fabrication and assembly areas along the value stream. This was inevitably supplemented during the week by planners re-sequencing orders to deal with changes in demand, material shortages and production problems with downtime. This was not at the APS process. No takt image and no ability to know within a few minutes whether operations were supporting the customer.
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"How capable, available, adequate, and waste free are assembly activities?"
As part of the APS process Acme had created an assembly cell combining a number of assembly and sub-assembly activities formerly conducted in standard sequential production lines. The Line manager responsible for the U-shaped area stated that Acme had now achieved continuous flow assembly. However a moment’s observation showed that work was poorly balanced in the cell, with little evidence of truly standardised work, and that small piles of inventory were building up between each step. In addition the Production Analysis Board next to the cell showed clearly that output was varying markedly from hour to hour. The explanations on the Production Analysis Board showed that the processing equipment was both capable and reliable but that material shortages often stopped the cell. Looking at the cell you could observe that the cell should be able to run steadily at its planned output, based on takt time, with about half the operator effort. This should have a major effect on costs.
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"How are orders transmitted up the value stream from the pacemaker process?"
A moment’s observation of the line managers in assembly and fabrication showed that a key element of their jobs was to frequently adjust the schedule to deal with demand shifts downstream and problems upstream. What was needed instead was a simple supermarket system between each key step and a simple pull system to trigger work by the upstream process only as parts were needed by the downstream process. Doing this would reduce the total amount of inventories needed and free up management attention for further improvements in the value stream.
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"How are materials supplied to the assembly and fabrication processes?"
The Logistics manager explained that because the material stores was off-site and some distance away from the assembly and fabrication plant, parts were taken by tractor trailer from the material stores and delivered to a small on-site store for disbursement to the shop floor by fork lift or pallet truck. Besides the multiple handling of parts and finished product, the system relied on the knowledge of the material handlers to get the right part to the right station. There was no Plan for Every Part showing exactly how it would be reordered, packed, shipped to stores, received, placed in location, placed in a supermarket, and distributed. A common complaint on the shop floor was parts shortages, and while indeed there were inbound problems with parts to the warehouse, having a Plan for Every Part would have eased the flow onto the shop floor.
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"How are materials obtained from upstream suppliers?"
Supplier shipments were triggered by ACME’s master schedule, which itself was being adjusted daily, shift by shift. As a result, the logistics manager was continuously working with the line managers on the shop floor and with purchasing to change orders to suppliers and keep production running. This manager seemed to be very proficient at this task, but why was it necessary? Couldn’t suppliers be put on a simple pull system with appropriate levelling so that any short term variations in the plant’s performance would not be inflicted on the suppliers? And couldn’t supplies be collected by frequent milk runs direct to the shop floor stores in small amounts rather than by the direct dispatches every few days in large amounts to the warehouse?
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"How are employees trained in lean procedures and motivated to apply them?"
ACME had only just started to get to grips with the APS. It was initiating a number of projects to bring the shop floor personnel to a level of self-empowerment and able to use the tools of ‘5S’, focussed improvement, autonomous maintenance and six sigma to bring about change driven by shop floor teams. It still has a long way to go having to yet complete the transition from top down management to self autonomous business units with a ‘lean’ driven focus.
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A scenario which is far from being close to lean!
Freely adapted from Lessons Learnt from the Toyota Production Approach
Lean Enterprise Institute
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