Lean transformation, the future

Thilak Pushpakumara CEO/Lean Management Consultant Institute of Lean Management

Lean is a business philosophy developed by Taichi Ohono in the 90`s with particular focus on manufacturing firms and later on it was developed as a enterprise - wide management philosophy.

Lean is all about people and the way they use technology to eliminate waste.

Lean provides a way to do more and more with less and less human effort, less equipment , less time, less inventory and less space while coming closer to providing customers with exactly what they need.

Lean is not a project. It is far more than a set of tools. It is a journey and a radically different way of working. Hence we call it “Lean Transformation.”

Human activity

It is any human activity which absorbs resources but create no value. Value means a specific product (goods or services and often both at once) which meets the customers need at a specific price at a specific time. According to the above definition , any organization today including Toyota has waste. We could divide all work elements in any business into two categories. It is value added and non value added activities. Non value added activities again can be divided into two elements. It is waste and incidental activities. Incidental activities mean work that does not directly add customer value, but which is currently necessary to maintain operations (e.g., small movements to reach for material that is required for assembly).

Eliminating waste

Lean Transformation is the journey towards eliminating waste, reducing incidental activities and maximizing value added activities in the business by inculcating lean thinking in every level and providing necessary knowledge, tools and techniques to think analytically to create a problem solving culture. “The most dangerous waste is the waste we do not recognize” - Shigeo Shingo(Toyota) To recognize waste we need to change the way we perceive things. It is a paradigm shift. Training and Education and creating a sense of urgency will support the paradigm shift.

The companies that intend moving towards lean transformation have to consider three major areas initially. Current organization culture, capability and asset management strategy. 5S and Total Quality Management concepts will help to build a high performance culture in the organization.

After carrying out a capability assessment we need to launch an effective training and development strategy with results based performance management system to address the capability issues in the organization.

The Total Productive Maintenance (TPM) will improve reliability of assets, optimize the cost of maintenance and operation and will change the corporate culture which supports lean transformation.

Lean transformation is not a well structured program but it needs to be customized. Copy and paste will not work. It depends on the culture, capability of employees, nature of the processes and technology, leadership and degree of sense of urgency. Involvement of everybody at every level with combination of top down and bottom up approach will support successful lean transformation.

More prominence and focus to the bottom up approach would give sustainable results. Managers or special units driving lean programs will not give results. It is not sustainable too.

Cost effective

It will become a cost effective project and not a lean transformation.

The plant management and other functional heads should take the ownership and the top leadership needs to empower them rather than empowering a special unit or few managers.

This type of structure creates conflict of interest and leads to other political issues which will block new thinking and adding new dimensions and flavours to the business.

When there is a special unit to handle lean transformation, other employees will not take the ownership of the transformation and always try to meet the requirements of the special unit.

More results can be obtained when lean is embedded into the existing organizational structure.

Lean transformation requires the integration of three elements. Operating system, management infrastructure and lean mind set and lean behaviours.

The operating system lies at the heart of a lean transformation. It`s the vehicle for adding value for the customer, and everything else in the organization is there to support it.

A good operating system takes an end to end view of a value stream, in order to create flow to the customer and minimizes the sources of losses that can occur within it.

The right management infrastructure will reinforce the lean operating system and ensure that performance objectives can be achieved and sustained. What the right management infrastructure is will depend on the operating system it is intended to support.

There is no universal solution that can be applied to every company. Lean transformation has a lot to do with how those involved perceive it. Do they trust their leaders and feel motivated, or fear for their jobs and suspect management is out to get them.

Behavioural state

Hence thinking of employees mind set and the behaviours of employees help determine whether lean transformation can be sustained over time.

Effort must be devoted to defining and developing the behavioral state that will support the transformation.

Lean transformation is supported by new technology, business process re-engineering (BPR), re-structuring, merging, value engineering, value manufacturing and value innovation.

But these involve huge investment which cannot be absorbed by the manufacturing industries in Sri Lanka today although they would accelerate the lean transformation journey.

Therefore lean transformation which focuses on existing equipment , existing people and getting rid of all waste or non value adding activities in the existing processes is undoubtedly the vision towards national productivity.