Lean Improvement Begins With Asking The Tough Questions

Recently, I had the opportunity to participate in an executive roundtable at the Lean Learning Center in Novi, Mich. Companies represented included Automotive Component Holdings, Federal-Mogul, Faurecia, Ford, Navistar/International Truck & Engine, and Tower Automotive. The focus of discussion was the state of the American automotive industry and how setting some Lean Manufacturing standards might bring the industry back to health.

Despite the pessimistic cloud that hangs over the industry right now, I was moved by the passion exhibited by the other executives at the event. They, like me (see Manufacturers Must Lean Forward, Not Backward), remain convinced of the potential for U.S. auto manufacturers to compete successfully in the global marketplace, and they are ardent believers in the power of Lean to drive the operational improvements needed to make it happen.

There is no shortage of energy or enthusiasm in the industry. What has been lacking -- as is often the case within individual companies -- is a unified and quantified understanding of the issues with a coordinated vision and efforts to address them.

As we did at the roundtable, we must begin by asking ourselves some tough questions:

How do we find opportunities for improvement while managing the business?

With so much volatility occurring in the industry, it's easy for manufacturers to find themselves in perpetual firefighting mode. In the midst of that volatility, strategic management concerns like Lean often slide down the slope of priorities. Ironically, though, it is during those times where Lean principles can pay the greatest dividends.

To address this issue, many manufacturers have put dedicated continuous improvement (CI) teams in place -- separate from operations. This is a solid sign of investment in the process; however, it's critical that CI teams remain connected to the day-to-day workings of the plant and work collaboratively with the plant manager to ensure that any improvement efforts are linked with compelling operations challenges.

Transforming value stream mapping from a one-time, static activity to an ongoing and dynamic process modeling of production and the extended supply chain is one very effective way to advance from merely doing Lean to truly running Lean -- day in, day out. By building a "living, breathing" representation of the value steam, manufacturers gain visibility into key metrics within processes and sub processes that enable them to pinpoint opportunities for improvement while also managing more effectively right at that moment.

In taking this approach, balancing short-terms needs against a long-term outlook becomes a much easier proposition, as your Lean practices and knowledge are put to work on both at the same time. Dynamic value stream models help you execute more predictably today, while helping your teams vision the bottlenecks and challenges to overcome for more agility in the future.

So, in essence, we manage the business everyday by driving the process to improve.

Should we be satisfied with maintaining last year's performance?

With the production cuts imposed by the Big Three along with pressures created by the rising cost of raw materials, just maintaining last year's performance is not that inappropriate a goal for many suppliers. But this question points to a larger issue of the types of incentives we provide for plant managers and other operations executives tasked with driving the bottom line.

The threats, both real and implied, of outsourcing and plant closures don't necessarily create the ideal incentives for investing in process innovation for the future. It takes a bit of "sticking your neck out" for plant managers to guide their operations to a new and improved operating efficiency. Too often, the natural inclination for manufacturing executives is to do whatever necessary to meet only the immediate need of staying in business

We faced similarly dire circumstances during my tenure as vice president of manufacturing technology for the American Standard Family of Companies during the 1990s, when we took a somewhat radical approach and created compelling incentives for plant managers to take aggressive steps to improve bottom-line performance by implementing Lean methodologies.

Doing so helped drive a coordinated vision across the organization by reinforcing the need for improved near-term business performance with concrete methods that would drive future growth and earnings as well. Clear charters were developed with solid benchmarks for everyone to work on both bottom-line and Lean capabilities together.

Lean strategy was aligned with the company's overall business strategy -- which turned out to be a company-changing and very effective pathway to improvement. Even in a time of crisis for the company, with difficult economic conditions, we aligned teams to "stretch" to even higher standards of performance.

What are the main barriers to success we face today?

The common feeling among many manufacturers today is there are so many challenges to address, we simply don't know where to begin. This leads to high-stakes Pareto Chart thinking -- looking for that one, big solution to the problem.

If there were one really big solution to the problem, we'd all probably already be working on that. The most successful Lean initiatives are not really about achieving a single business goal, such as inventory cost reduction, but are about driving sustainable process improvement and agility all across the value stream enabling manufacturers to balance multiple concerns effectively -- delighting customers, steering the business flexibly through change, with Lean cost and inventory management, while doing the job right for each of our stakeholders.

As we drill down to the root causes of those issues, we can drive a vision that will achieve multiple outcomes, not just one. The time-phased answer may actually involve some interim inventory investment while process reliability or capability is improved, with a defined trigger to re-balance that inventory upon completion of the process improvement milestone.

Creating dynamic value stream models that accurately depict the interrelationships of the many competing business concerns involved, will ensure that your teams are able to stick to the program, share a clearly quantified future vision, drive to interim progress targets, and enable a more rapid arrival at the future state, which in the end, effectively removes barriers to success.

Dave Gleditsch is chief technology officer of Pelion Systems, a provider of Lean Manufacturing solutions. Pelion's technology integrates with existing ERP, SCM, and plant-floor systems. Contact the author at [email protected]