Building a business case for lean implementation

Introducing lean thinking to your staff means explaining what lean does and how it will help your business. In this excerpt from chapter 8 of the book How to Implement Lean Manufacturing, learn how to identify your goals, explain the concepts of kaizen and kanban and set up lean training programs to build a business case for lean implementation.

Table of contents:
Creating a lean implementation plan
Building a business case for lean implementation
Making the lean manufacturing management commitment
 

Step 3: Perform an Educational Evaluation

Formally Introducing the Issue

A formal introduction is often a key to getting started well. Remember, the second requisite skill of leadership--the ability to articulate the plan so all can understand it. It is worthwhile to tell the entire facility, "We are going to make a change and that change is to implement the concept of Lean manufacturing."

Many facilities make this a monster effort, with special invitations, a formalized meeting attended by all the top management, coupled with meals and motivational speakers galore. I find this degree of effort is not needed. In the end, the most important aspect of selling the issue of changing to Lean is dependent upon the continued actions of the Lean leaders and top management. If they talk Lean and do not walk the talk, no amount of up-front selling will work. On the other hand, if the Lean leaders and top management do really walk the talk, then no large selling effort is required. Either way, a mega-effort at selling is generally a waste, hence I do not recommend it.

Rather, I recommend you have two types of Lean introductory training sessions, as described in the following paragraphs.

First and foremost, an introductory session to management will need to be prepared. This group should be the key decisionmakers, usually what is referred to as "top management." This first training is the classic "Who, What, Where, When, Why" training with special emphasis on the: "What," which is the House of Lean that was created with the help of your sensei; and the "Why," which is the motivating force behind the effort. This training is often more than a one-day event. It could be the basis for a two or three-day retreat for the management team. This group needs to especially understand the House of Lean. The training should include exercises on variation reduction (the dice game in Chap. 19 works nicely), takt calculations, OEE calculations and line balancing (for these, my Lean Kit is a great tool and is available at my web site: www. qc-ep.com). This training session should be hands-on and instructional, and it must take into account both the present state of the facility and the desired state of the facility. Change, including the types and amounts of changes needed, should be openly and honestly discussed. At this point, it is unlikely that all four of the systemwide evaluations of the present state have been done, but still your Lean implementation manager and your sensei will be able to quantify this concept for the purposes of this training.

The second type of training is informational in nature and should be given to all employees on all shifts. It should first be given to those reporting to top management, next supervisors, and then to the general plant population. This is typically a PowerPoint presentation describing the House of Lean and the implementation schedule. Including ample time for a Q&A session, this usually takes about four hours, and groups can be as large as 40 and still be effective.

Specific Skills Training

The systemwide evaluations almost always create a very large list of needed training to teach the strategies, tactics, and Lean skills. The composite list will largely follow directly from the Five Precursors to a Lean Initiative, which have already been added to your Gantt chart. In addition, as you do the assessment of each value stream, training topics will almost surely be found. Once combined, these trainings will almost always include problem-solving training, training on statistical tools, and facilitation training for all in leadership positions. In addition, Lean-specific trainings are available in skills such as line balancing, SMED methodology, takt, and kanban calculations, to name just a few. It will be necessary to inventory the needed skills and teach them as they are needed to those using the tools.

Just another word on education and training: It should be focused and JIT. For example, during the implementation, if you choose to change the plant one value stream at a time, train just those people involved. Often, it is not that simple and some people may need to be trained prior to the implementation of their product; it is never perfect. The point here is to avoid the global mass training of individuals that makes good use of the training resources, yet provides the training either too early or too late. Efficiency of the training organization is not of paramount importance when compared to training effectiveness. If there is long time between the training and the implementation of that training, a large fraction of the learned material is forgotten. Consequently, it will not be effective and it is then waste, the very item we are trying to eliminate, not create.

At this point, you can also add these introductory training items to your Gantt chart.

Step 4: Document the Current Condition

Preparing a Present State Value Stream Map (PSVSM)

This document will be used to gather current information of the present state conditions for the entire value stream. This will be a door-to-door PSVSM--that is, we will start at the shipping dock and document the value stream up to the raw materials supply.

Step 5: Redesign to Reduce Wastes

Prepare a Future State Value Steam Map (FSVSM) That Will:

• Synchronize supply to customer, externally.
• Synchronize production, internally.
• Create flow (including the jidoka concept).
• Establish pull-demand systems.

This will analyze current conditions and redesign the process flow to eliminate waste. Refer to Chap. 7 for the specific technical details of this step.

Creating a Spaghetti Diagram

This diagram will show the movement of the assembly as it is constructed, and show the movement of both the people and the product. Work to reduce the movement and transportation wastes and free up floor space. Do this on a plot plan, made to scale.

Document all kaizen activities determined in Step 5 on your Gantt chart.

Step 6: Evaluate and Determine the Goals for This Line

• Determine critical process indicators (for more details on goals, see Chap. 9).
• Set specific goals for this line/product (goal #1 is to protect the customer).
• Document all kaizen activities found in this analysis on the Gantt chart.

Step 7: Implement the Kaizen Activities

• Implement finished goods inventory controls to protect the supply to the customer.
• Implement your jidoka concept as defined in Step 5.
• Prioritize and implement all other kaizen activities on the Gantt chart.

Step 8: Evaluate the Newly Formed Present State, Stress the System, Then Return to Step 1

Some Clarification on Step 8

As part of the project prescription, you will:

• Evaluate the newly formed present state.
• Stress the system.
• Return to Step 1.

To make a system Lean is a never-ending process. Each change brings about a new present state that then gets evaluated for improvement activities, which creates more changes and the cycle starts all over again. On many occasions, the system will stress itself through the unexpected appearance of quality or availability problems, for example. Sometimes demand changes will put a stress on the system. All of these are opportunities to improve the robustness of the system. Although it sounds a bit crazy at first, it is wise to stress the system yourself to see what other process opportunities may be present. A typical "stressor" for the system would be to remove a few kanban cards and see what the system response will be. The primary tool you will use to protect you from system failure will be system transparency. Remember when we said we need to create a culture that embraces change? This may be the clearest manifestation that we have changed the culture, when we start stressing the system to make it better. Recall the metaphor of the athlete in Chap. 6. How did he get better? Isn't this the same concept?

Lean Goals

Lean goals (Step 6, item 2) are always an interesting topic. The name Lean came about because, in the end, the process can run using less manpower, take less time, consume less space, and use less equipment and material investment. So often when evaluating the success of a Lean initiative, these terms are used and calculations of space utilization, and even distance traveled, are used. In the long run, these are not very meaningful measures since they typically are not a good subset of the plant goals, nor do they readily translate into key business parameters such as profits or return on investment (ROI).

Most plants already have good measures of manpower utilization. For the other Lean measures, the ones that typically get woven into the general plant goals are inventory management measured as inventory turns, and the lead time, measured as manufacturing lead time. If OEE (Overall Equipment Effectiveness) is not already a line goal, this is clearly to be added. In total, there should be five to seven goals that are the metrics to measure how the line will supply the product, with better quality, with shorter lead times, and do so less expensively.

What about Goals for the Lean Initiative Itself?

We do not favor any specific goals here beyond the goals of the project that are included in the schedule. This is for two very sound reasons:

• At some point these goals will clash with the plant goals. It is best to simply weave them into the plant goals. If the plant goals do not reflect the need to be Lean, change the plant goals.
• We want to make as much effort as we can to weave the Lean initiative into the normal workings of the plant and not make it a "New Thing We Do." Rather, it should not be a new thing, but a new way of doing the things we need to do. We want to begin immediately weaving Lean activities into the culture, which will start the needed cultural change to sustain the gains. There is no better point to start than right here.

What to Do with the Plan?

Management Review

The plan needs management review, discussion, and acceptance. This should be done in a formal meeting. This formal review is done for four reasons.

• It will show, in one document, what is going to happen and when.
• It will give top management, the movers and shakers, an opportunity to see the entire effort. They can see and comment on those things in their areas of responsibility and also those changes outside their areas, but these changes still might affect them. In short, they will have an opportunity to bring up questions.
• Any plan includes the topics of objectives, timing, and resources. This meeting will allow a check on not only those three topics, but their interrelationships as well.
• How they respond to the plan will be a reality check on the commitment of the top management. This is most important.

It is necessary to make sure, at this meeting, that everyone understands that the next step is implementation. You want to leave the meeting with the understanding that the top management understands and will support the plan, because in five minutes you will implement it.

Publish and Follow-up

Immediately following the meeting, publish the plan and put it into action.

Let the Fun Begin!

Chapter Summary

The book How to Implement Lean Manufacturing is summarized in this chapter. First, we make evaluations using the following tools:

• The three fundamental issues to cultural change, outlined in Chap. 6.
• The fourfold evaluation of the present manufacturing system, including the commitment evaluations, five precursors to Lean, ten reasons Lean initiatives fail, and process maturity (found in Chap. 19).
• The educational evaluation of the workforce.
• Specific value stream evaluations, as detailed in Chap. 7.

These evaluations, and the countermeasures, then create a huge list of kaizen activities that can be included in a Gantt chart or an appropriate project planning and tracking tool. We can then evaluate and determine completion dates for kaizen activities in the project, set specific goals for the value stream, prioritize the activities, and implement the kaizen activities. Almost always, our first two goals will be to implement finished goods inventory to protect the supply to the customer and to implement our jidoka concept. Finally, we will present this to management for review, and once reviewed and accepted, we will begin to immediately eliminate the waste.