When the Low Hanging Fruit Disappears... Sustaining Lean for the Long Term
It is inherent in human nature to get excited about anything that is new. But, as time goes on, the excitement fades and exuberance seems to go by the wayside. So, when implementing a process improvement initiative such as Lean Transformation, once the big gains are over how does one keep the momentum and avoid falling into the "flavor of the week" trap?
Ross Controls, headquartered in Troy, Mich., finds itself in this category. Ross is an international manufacturer of pneumatic valves, controls systems and safety products for the fluid power industry serving the aluminum smelting, glass, metal-forming, safety, paint and steel sectors. Luckily, it has the benefit of lean advocate and leader John Smith, Ross Controls COO, to keep the initiative rolling.
Ross embarked on a company-wide lean effort starting in 2001. To kick-start the program, the company sent 10 employees from its Madison Heights and Lavonia, Georgia manufacturing facilities to the five-day Lean Experience program at the Lean Learning Center in Novi, Mich. In 2005, Ross expanded its lean effort to include management from each of its seven overseas subsidiary operations and sent them to lean classes.
These employees, which consisted of a mix of executives, management and union representatives, came back enthused and ready to hit the ground running. Early successes included:
- 20% reduction in assembly floor space due to inventory reduction
- 80% reduction in finished goods inventory
- 30% reduction in WIP
- 60%-80% reduction in shipping errors, to name a few.
These improvements from lean allowed Ross to save 20% in space and add 20% in work to the product line with the additional cash sustaining the company through a very bleak time. But, here they are, over five years into the process. Now what?
"It is an unfortunate fact that most companies are unable to sustain the gains made during their lean journeys," says Andy Carlino, Lean Learning Center partner. "In fact, less than 37% of lean improvements and training actually produce meaningful and measurable results UNLESS there has been a complete corporate culture change to lean thinking."
"Sustaining lean is very difficult. And, let's clarify what sustaining means -- it is NOT maintaining what you have, but sustaining continuous change. People need to understand that lean is a way of thinking, it's a life changing event. It's not the tools, the rules or the principles. It's all of that added together," adds Smith
For example, Smith recently toured a facility that was proud of its lean manufacturing initiative. However, the first thing he saw when he entered the plant floor was a supervisor sitting on a stool doing absolutely nothing. Smith immediately recognized that as waste -- not only from a productivity standpoint, but also from the lack of trust and empowerment of the employees.
"If you really believe in lean, you believe in self-directed workforces where supervisors take on a new role. They become coaches, accommodators, facilitators. When I began lean at Ross, I eliminated 50% of the supervisory roles. This doesn't mean all of the people were laid off; some were put to use in more efficient ways," Smith explained.
Ross' Approach
Although many lean journeys start out with very tangible double-digit gains, as companies move further into the initiative, the improvements tend to become incremental. "We started out with 14 - 20% productivity gains," says Smith. " Now we have dropped down into annual productivity increases of 7%, which is very respectable. But, what you find is that your improvements become a whole bunch of small changes that are sometimes so subtle that someone has to point them out to you."
At Ross, any employee that has supervisor responsibility or above is required to run a specified number of kaizens or lean activities per year. Their performance (and, thus compensation), is measured on meeting these goals and objectives.
"We are also doing a lot more visual management now," says Smith. Visual management is the application of any visual aid or device that promotes safer, more efficient, and less wasteful processes. The goal in using visual management is to create "status at a glance". Visual management also helps create a standardized work environment by providing instructions, directions, reminders, etc. on how the work is to be done and what is expected.
One such tool started by Ross in 2001 was its Shop Floor Measurement Scoreboards -- one in the assembly area and one in machining. The scoreboards monitor improvements in the processes and they implement methods such as 5S (sift, sweep, sort, sanitize and sustain). "But, we had to give new life to these," says Smith. "People became numb to them. So, we revitalized these by changing some of the material and by updating them as soon as new information pops up, rather than waiting for a specified amount of time."
Key to involvement in this process is that the posting is done by the person who has "first touch" on that information. It doesn't get fed up the chain to three or more degrees of separation. With this approach, each person becomes much more engaged as an integral part of the process.
Connecting the Measurements
Smith says one of the crucial things they've done is to change their measurement system. Ross' four key areas of measurement include productivity-per-person, inventory-to-sales ratio, total cost-of-sales, and on-time delivery. Within each of these measures, Ross sets specific targets.
"We were measuring certain activities prior to lean," says Smith, "but, we weren't tying them all together. We now have a Global Metrics Team that creates our measures, whereas before each department set independent goals for its function and was not able to see how they impacted another group."
Now, all the measures are shared among the various groups and sales can see how engineering is performing its function in order to help sales accomplish its goals. There is interdependency.
Also, key to Ross' success is that the company has become much more functionally driven that it was in the past. Skill sets are shared across departments. For example, sales and marketing is now much more likely to get involved in production decisions and manufacturing has a say in preparing sales data.
The Human Factor
"Shifting areas of responsibility it where it can get tricky," says Smith and he cites an example from the shop floor. "We have schedulers on the floor that tell the machinists how many parts and what models to produce each day. I want to shift this responsibility to the machine operators. Why? Because the scheduler may not know which tools are needed to run each part whereas an operator knows he can run certain parts together because they share the same tooling and this saves time."
To make this sort of change, Smith says you need to make sure the scheduler does not feel threatened and to help them understand why this change makes sense. With the operator, you need to assure them that they have the capability to make this decision. You have to come up with High Agreement, meaning that the people closest to this activity should agree about what and how it should and can be accomplished.
Words of Wisdom
If Smith has one thought to share with leaders about to embark on a lean journey it is this: seek out the informal power -- the group of people that understand the way the company truly functions versus the formal power -- the corporate structure that defines the way the company works.
"To implement lean, yes, you need to absolutely have buy-in from the top, from the formal power," says Smith. "But the top needs to recognize who really makes the company run. These are the people who are doing the work day-in and day-out, the informal power. You then solicit the informal power to get them to recognize the need for change. If they don't come on board, then there is the possibility that you may have to replace that informal power. But, if you can get buy-in from that group, your change is much easier."
With lean, Ross has developed a company culture focused on continual process improvement helping the company to compete and win in today's global marketplace. "Today's world cannot afford people who are not competitive," concludes Smith. "There is always somebody else standing there ready to take the business."
The Lean Learning Center was founded to address the gaps and barriers that keep companies from achieving successful lean transformation. The Center has provided training and consulting to numerous Fortune 500 companies including Intel, Sara Lee, Johnson & Johnson, Northrop Grumman, American Standard (Trane), DTE Energy, Land OLakes and others. In conjunction with its corporate partner Achievement Dynamics, a provider of management consulting, the Center provides a full complement of lean transformation services and branded products. www.leanlearningcenter.com
