2 companies take the first steps to a Lean organization: Part 1 of 3

Here is a look at two companies as they begin the Lean effort. Each company had its own reasons for undertaking the effort, its own priorities and its own timetables.

Background on Company A

Company A is a cut flower grower that until recently (last three years) has undergone very rapid growth. The growth has been achieved by market penetration, not acquisition. With this growth, the company has been forced to rely more on its employees doing their jobs rather than management involvement.

As competition has increased, Company A is faced with price/cost pressures. Complicating its particular situation is the growing demand on the labor pool in its area. It has become difficult for Company A to maintain its employment level and almost impossible to expand it. The labor force is virtually all Mexican and speaks, with the exception of a couple of supervisors, no English.

Priorities: One of Company A’s major priorities is to become more productive with its current work force, not for the reason of reducing it, but more to be in a position to expand the business with the same number of people.

One of the main reasons Company A began a Lean initiative had to do with expanding its buildings and installing a conveyor system. After learning about its basic principles, officials decided that they should pursue Lean and perhaps not spend other money.

Background on Company B

Company B is a nursery landscape operation in the Midwest. It’s the largest of its type in its state and one of the largest in the country. The company has been operating for more than 20 years and has sustained growth through expansion of its products and the associated market penetration.

A major issue for Company B is the availability of labor through the Federal Government Plan 502B system. Every year labor has become more difficult to access. Most of the labor is Mexican, speaking some English, while most management is from the immediate area.

Priorities: The major reason Company B saw a need for Lean was the accessibility of labor. Officials recognized that with the increased difficulty in obtaining workers, and continued growth, the company needed to become more productive with fewer people.

Starting a Lean effort

In both cases, the companies decided to start a Lean effort with educational sessions. Company A sent a cross-functional group through the basic elements of a Lean system by active participation in a simulated manufacturing operation. Members included people who’d be involved in the first kaizen (continuous improvement) event.

Company A wanted to determine whether it could better optimize the space it had (the option being a building addition) and whether it was necessary to purchase a conveyor system. Because the project was preselected, it was easier to choose the employees who would work on it.

Company B, due largely to its size and the lack of a language barrier, chose the same mini-simulation but included all management, supervisory and support personnel.

Both companies held sessions over a two-day period. Each session provided the participants with the opportunity to have a “common experience” from which they could discuss the applicability to their operation as well as better understand the purpose of the projects.

The difference in approach at this stage was driven largely by the organization’s size, potential language barriers and the predisposition (or lack of) an initial project. These differences are common; there is no right or wrong approach to education as long as it fits the company’s culture.

Company A selected its first project, while the team with Company B needed to determine one. After the sessions, key leaders were gathered to discuss target areas. The need to be less reliant on labor was discussed with Company B and each person was asked to identify the top three areas for improvement. The results were listed and discussion was held on each. After the discussion period, each employee ranked the list and the results were summarized. The ranking resulted in a clear direction for the first three projects.

Assigning team members

After the initial education of key leaders and contributors is completed and the projects are selected, team members need to be identified. This would seem to be relatively straightforward, but it’s crucial to success.

Each team should have six to eight members with people from the area studied, its supporting roles (i.e., material handling, scheduling, etc.) and at least one person with no affiliation with the area (accounting functions are very good here). The outsider should ask questions that would not occur to people doing the job each day.

You can include a naysayer as team member. This can be done very effectively (and should be done during the series of kaizens), but needs to be approached cautiously. If the naysayer has a very dominant personality, provide a counterbalance. The naysayer must have some level of openness and respect for others on the team.

What is waste?

One of the main tenets of Lean is that “Successful companies eliminate WASTE (what all successful teams eliminate).” In very general terms, waste is any activity that does not add value from a customer’s perspective. The customer doesn’t want to pay for these activities.

Since most of us see our functions as important, it’s sometimes very difficult to label what we do as non-value added. Nonetheless, successful companies have been able to break down the personal perspective of jobs and objectively evaluate the worth of tasks from the customer’s standpoint.

Once this basic definition is accepted, examples of waste and the categories it occurs in can be identified by people having a reasonable amount of experience in Lean. It is relatively easy to detail the average level of improvement (i.e., 50 percent improvement in productivity, 60 percent reduction in space used) that companies experience in the Lean transition as well as specific company achievements.

- Roger Fisher

Roger Fisher is president, R.S. Fisher Inc., (330) 650-4774; fr34@aol.com; www.rsfisherinc.com.

{sidebar id=1}

In part 2, we’ll look at the steps the companies took to work through their projects and the difficulties they encountered.

April 2008