'Most Indian managers don't know what is possible'

Q&A with James P Womack, founder-chairman of Lean Enterprise Institute, a non-profit educational and research organisation.

What is Lean Management Institute’s scope in India?

The institute has been operational from January 15, 2008 and has so far conducted Lean Value Stream Manager Development programme for manufacturing industries. This was attended by 35 senior managers from companies such as — AMD, TVS Logistics, L&T, Visteon, WABCO-TVS, ECS Limited, TI Diamond Chain, Mando Brakes, Shriram Pistons, and so on. We are following up with the managers who attended as all of them are implementing Lean in their companies. It also did In-house Lean & Value Stream Mapping training for TESCO Hindustan Service Centre, a BPO serving TESCO’s back-end processes world-wide.

The implementation is in progress here in at least two major value streams. The gains are initially coming in reduced cycle time for processing, higher productivity and improved quality. The management summit, meanwhile, brought home the fact that Lean Management has moved beyond Lean Production, into the domain of Lean Solutions where the objective is to make the process of consumption hassle-free for end consumers. Lean Solutions are about delivering to customers exactly what they want, when they want, where they want and doing it profitably and in a sustained manner.

Several companies — including the big US car companies — have tried to emulate the Toyota Business Systems model. But have they been successful in organising their value chains efficiently?

No, but many companies have done very well copying parts of the five-part Toyota/lean business system which consists of product and process development, fulfillment (from customer order back to raw materials and through manufacturing to delivery), supplier management, customer support, and enterprise management. For example, Danaher, the most successful American manufacturing company of the past 35 years (far more successful than GE), has copied Toyota’s strategy deployment system.
And the American car companies have now created very competitive factories after such a long lag that they are drowning in high costs due to pension obligations and low prices due to a generation of designing and building truly awful products. And Tesco in the UK has done a truly brilliant job of copying Toyota’s fulfillment system from its suppliers through its stores to its customers.

One of the major issues with the Toyota Way is that it depends on an optimum infrastructure delivery environment, like in Japan, Europe or the US and, therefore, has less relevance for India. Do you agree?

I always find this argument very curious. I can’t help but suspect that some Indian managers are hoping it is true so they can say, “Thank goodness! Now we don’t have to change the way we manage!” All I would ask any Indian manager to do is to think through the Toyota/lean principle of supplying small amounts frequently to customers at every point along a value stream.
This is the sequence of value creating activities running from raw materials into the hands of the end customer. Does the fact that roads are clogged and often undependable mean that Indian firms should instead make enormous batches of items, build up enormous inventories of goods at every step, and ship infrequently in the largest possible vehicles?
Toyota/lean practitioners instead determine a “standard inventory” of items at every point along a value stream, designed to guard against upstream disruptions in supply and downstream surges in demand, and then ship small amounts frequently using multi-stop milk runs with smaller vehicles. The result is that the total lead time and inventory costs fall dramatically while the quality goes up, even though the value streams are not as ‘lean’ as they would be in Toyota City.

India has been innovating with variations of lean manufacturing for some years now — how do you assess these efforts?

On my last trip to India, I witnessed the best manufacturing operation I’ve seen in the world outside of Toyota City. It was at one of the TVS Group plants in the Chennai area. After talking with the management and the workforce I had to reject the hypothesis that Indian firms cannot implement and sustain “lean” systems. I only wish that every Indian manager knew this fact — there are no excuses due to special Indian conditions — and then decided to act on it in their own operations.

What impressed you at the TVS plant?

The team at WABCO-TVS (manufacturer of vehicle control systems) has done a brilliant job of scanning for lean knowledge, bringing a few experts for a short period and learning everything they knew, and then incorporating it into their business system, from policy deployment to factory operations to supplier development — an extremely impressive achievement.

The benefits of lean management are well documented, but what are the pitfalls when companies implement them?

The problems are never with the workforce. They are always with the management. And the greatest management barrier in India is simply that most managers don’t know what is possible. Indian managers could be changing their own working lives, the lives of their workforce, the prospects for their companies, and the standard of living for the whole country if they only understood the basic lean principles.
Some Indian managers seem to like theory in the conference room more than practice on the “gemba”, the place where value — in engineering, sales, production, purchasing or any other activity — is actually created. What was striking about the WABCO-TVS case was the amount of time the managers spent looking first hand at their core processes and engaging the workforce in taking action.

Source: http://www.business-standard.com/india/storypage.php?autono=332447

Lean Misconception-1

There are many misconceptions that relate to the lean approach and undertaking this approach to changing the design and operation of the firm implies certain choices. One of the common issues is the sense of urgency it creates among the workers. It is said to be that it creats so much of pressure that it could squeeze water from a dry towel. Is that true?

Nick Rich et al. explains this in their book "Lean Evolution: Lessons from the Workplace" as follows:

"The amount of stress that workers face is a reflection of the design of any system (a management responsibility) and is not typically associated with a lean working environment. The lean approach is to get the best out of people – not to flog them to death. The latter was the mass production and scientific management approach which was reinforced by ‘piece rate working’. Lean businesses are careful to develop and integrate their core workforce and to promote co-destiny of worker and business. Much of the HR systems of lean companies is devoted to the promotion of ‘harmony’ and ‘joint interest’ in managing the business. As you will see during the remainder of this book, most lean methods lower stress and improve morale, and need workers to be involved in the change process. That is not to say that the lean way is a utopia but that, typically workers are not ‘flogged’ or stressed to the point that they leave (a waste of training and development investment made by the company in problem solving and technical skills).

Further, if you are lucky enough to visit a company that is engaged in lean production, cellular working, housekeeping and problem-solving groups, ask these workers whether they would go back to their old ways of working. You will find that few will answer ‘yes’ and wish to return to the old days of being treated as a pair of hands that are unattached to a brain. But no matter what we write here, you can only judge for yourself by asking and studying some of the cases we will present in this book. For senior managers, the lean approach is based upon business growth and support for the flexible deployment of the core workforce throughout their working lives. It is silly to believe that lean companies would treat their workers, who have enjoyed high levels of lean awareness and training investments, as a variable cost that is simply employed and unemployed at will. Lean companies recognise their investments in people and therefore, to increase the competitive capability of the firm, seek new markets and new types of products to make. Such an approach is one of growth, not the meanness associated with ‘de-layering’, ‘downsizing’ and losing workers with highly valuable and transferable skill sets."

Excerpts from the book : Lean Evolution : Lessons from the Workplace ( Pg No : 20)

Lean Production Saves $300 Million

Manufacturing efficiencies from ongoing training and implementation of DaimlerChrysler Corp.'s lean-production system generated an estimated $300 million in favorable impact for the company in the last two years. As part of the company's continuous-improvement activities to reinforce the philosophy of "leading change" in its manufacturing facilities, it has conducted 55, three-week manufacturing leadership training (MLT) sessions at 54 facilities worldwide, since 1998. Each MLT activity is designed to improve quality and flexibility, while eliminating waste and excess cost, and yielded an estimated average of $500,000 in favorable impact for the company for each facility, or a total of $25 million-- all part of the company's $300 million efficiency gains.

"Continuous improvement in manufacturing never stops. We can never get to a point where we're satisfied or we stop learning, or we'll lose our competitive edge," says Gary Henson, executive vice president-- manufacturing. "Our challenge in manufacturing is how we continue to motivate and train all our people to look for opportunities to improve. MLT helps do that. Change is never easy, but we've got to be willing to find a way to raise the bar a little more every day."

The Joint Activity Operating Principles (JAOP), as the production system is referred to, represents both the philosophy, human infrastructure, and measurement tools the company uses to produce vehicles at its manufacturing facilities worldwide. After the operating principles were introduced and implemented in 1994, the company was faced with the challenge of reinforcing and training continuous improvement within its operations. DaimlerChrysler Corp. created this training to empower its workforce to not only accept change, but to lead change. The "leadership" aspect of the company's MLT activities sets its approach apart from other operating-system training.

"In our MLT activities, we have to demonstrate the tangible results of leading change at all levels of our manufacturing operations," says Theodora (Tedi) Casasanta, director of the continuous-improvement group. "If I'm an operator and I've been performing a process in a certain way for a long time, why would I want to change? We have to show better, more efficient, easier ways for operators to do their jobs. Whether it's workstation organization, error-proofing a process, visual management, or material handling, we have to look for the right reasons to want to change."

Based on the success of its MLT activities, many suppliers are now participating in similar training activities. In fact, other non-automotive-related organizations are benchmarking DaimlerChrysler Corp.'s operating principles for best practices to apply to their own operations.

Jefferson North

Similar to all of its manufacturing facilities, Jefferson North Assembly Plant-- home of the Jeep Grand Cherokee-- conducts its business using the operating principles. Rather than merely a way to assemble vehicles, they represent the way the company does business and maintains a lean "extended enterprise" system. It begins with core values and beliefs, the philosophical principles from which decisions are made. From there, the system analyzes the "how," identifying the enablers and subsystems needed to execute the work (like human infrastructure, balanced schedules, value-added activities, and robust processes). It then identifies ways to support those processes, tools for implementation, and standardized measurements to gauge effectiveness.

The operating principles give team members at the facilities the big-picture framework from which to operate, at the same time providing standardized methods and repeatable processes. The end result can be tracked and improved by focusing on safety, quality, delivery, cost, and morale, internal gauges to which each team member contributes. Because continuous improvement is one of the core beliefs, the process never stops.

All DaimlerChrysler's manufacturing facilities use the operating principles, evidenced in high-quality products, well-organized workstations, standardized processes, ability to use visual management, efficient material handling, flexibility, and commitment to training.

Synergies with Germany

During the PMI (post-merger integration) process, DaimlerChrysler began working to formalize a common production system, a set of rules and principles governing manufacturing operations worldwide. A common framework was put into place as the result of benchmarking production systems of the former Chrysler Corp. (Chrysler, Dodge and Jeep products) and the former Daimler-Benz (Mercedes-Benz and smart products).

Although the concepts of these systems are very similar, the terminology and nomenclature were different. In order to ensure consistent and accurate communication of terms and principles, the company began work to develop a common production system. The Chrysler group facilities use its "operating principles" to govern production, while the Mercedes-Benz plants use its own "Mercedes-Benz production system," and the differences in the two systems relate to specific conditions, cultures, and nuances in producing the different brands.

The framework of this production system was developed by benchmarking 250 best-practice manufacturing examples from individual facilities worldwide. A team of engineers, human resources representatives, union representatives, trainers, executives, and suppliers completed a worldwide benchmarking study of operating systems. At different operations worldwide, the company studied the areas of human infrastructure, standardization, quality focus, just-in-time delivery, and continuous improvement.

Source : http://www.sme.org/cgi-bin/get-press.pl?&&20002551&June

Lean Manufacturing Model

The search by manufacturers for solutions to the rigid rules mandated by their MRP systems has led many to the techniques of Lean manufacturing. Lean manufacturing methodologies are not new technologies for the millennium, but are, in fact, a compilation of many of the techniques manufacturers have used in the past and are familiar with. The difference is the consolidation of these techniques into one set of powerful methodologies and their application. Achieving Lean goals using one-piece Lean manufacturing methods is essentially a line-balancing methodology used in conjunction with a series of kanban material-handling techniques. Mathematical models are created and iterated until the optimum utilization of manufacturing resources is identified.

Specifically, the Lean manufacturing methodologies are a series of techniques that allow product to be produced one unit at a time, at a formulated rate, while eliminating nonvalue-adding wait time, queue time, or other delays. Product is pulled through the line, in response to actual demand as opposed to being pushed through by the launch of orders based on the output of a planning system. Thought of in terms of a pipeline, discrete product can be made to move through the manufacturing processes without stopping. If product can move without stopping, it can be thought of much like liquid through a pipeline. This metaphor of moving product through a pipe is the source for the term flow.

If only the actual touch work time required to produce a product through its various manufacturing processes were summed, that time is almost always shorter than the time required to route batches of products through a factory one department at a time . Typically, the sum of the times required to route product through manufacturing becomes the customer-quoted lead time. Often, this customer-quoted lead time becomes a self-fulfilling prophecy to the detriment of achieving customer satisfaction. The Lean manufacturing methodologies consider all the other times associated with moving "lot-sized" orders through manufacturing as "nonvalue-added" time. Lean seeks to eliminate this nonvalue-added time.

The goal of Lean manufacturing, then, is to establish and design a manufacturing line capable of producing multiple products, one at a time, using only the amount of time required to actually build the product. The techniques of Lean manufacturing seek to reduce the nonvalue-adding wait, scheduling, and queue times to zero. The resulting, often significant, reduction in manufacturing lead time is the basis for all the associated benefits of Lean manufacturing.

A Lean manufacturing line requires that a rate of flow through the pipeline be established. The rate at which work progresses through the factory is called a flow rate or Takt. The "flow" of a product is achieved by causing all of its work tasks to be grouped and balanced to a calculated formulated Takt time. Takt time establishes a relationship between volume and the time available to produce that volume.
Takt time, in most cases, is expressed in minutes or percentage of a minute.
Regardless of the total time necessary to produce a product, its total time is divided into elements of work equal to its Takt time. A single unit of work (a Takt time's worth) is performed by a person and/or a machine. The partially completed unit is then passed to the next resource down the line, where another "Takt" worth of work tasks is performed. The unit of work progresses sequentially through all the manufacturing processes until all of the required work has been completed

Lean manufacturers can choose to change the output of the line to closer match the mix and volume of customer requirements. With a line designed to produce products using a formulated Takt time, the Lean manufacturer has the ability to regulate the "rate" and, therefore, the output of the line. This rate must be determined every day based on that day's customer requirements.

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This ability to change output rate every day, driven by changes in customer order requirements, is a powerful tool for managing both work-in-process and finished goods inventories. With this capability, a manufacturer is no longer forced to commit its manufacturing resources to a schedule driven by a questionable forecast of future demand.

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excerpts from the book: LEAN Manufacturing Implementation: A Complete Execution Manual for Any Size Manufacturer
Author: Dennis P. Hobbs