Lean results are real, but it takes a commitment

In previous articles we’ve followed the progress of two companies as they begin to develop a culture built around the principles of Lean business operations. Company A is a cut flower grower and Company B is a nursery and landscape operation. Company A started with some specific areas of concentration they wanted to start with; Company B wasn’t as specific but did realize the need to improve.

In the May article, the companies dealt with selection of team members, the definition of their projects including the scope of activity and measurable goals, and selection of tools applicable to each specific project. There was also a review of the general flow a kaizen (continuous improvement) event takes from Day 1 to conclusion. During this event, the team members usually experience a range of emotions as they work to attain the goals set for and by them.

Here is a review of the results each company achieved during their first kaizen event.

Company A

60 percent reduction in the number of people pulling orders for packing.

67 percent reduction in the number of packers.

33 percent reduction in the number of material handlers.

Improved quality (to be measured over time)

Company B

25 percent reduction in crew size.

90 percent increase in crew output.

Overall improvement of 150 percent in output per worker.

These results were achieved during a kaizen event lasting less than one full week and involving six to 10 people. As noted before, there are doubters who need to be brought along as well as key players who are given a chance to develop the skills they already have and acquire new ones.

The results are real

The question coming out of any kaizen event is: Are the results real? While the changes have been made based on real numbers and data generated by the participants, it is not unusual that people question the results. This is, quite simply, because of the magnitude of improvement the results suggest.

Look again at what the two case study companies achieved. Do you think that Company A anticipated that it could do the same amount of work with two-thirds of the people it had prior to the kaizen event? Do you think that Company B expected it could achieve a 150 percent improvement in output per worker? The answer to both questions is no.

Coming out of the first kaizen, the biggest problem a lot of companies have is coming to grips with the expectations they have for improvement. In general, companies think of improvements in terms of 10-15 percent. When they see numbers significantly larger than that, it causes them to think twice about what they’ve been doing and what they need to do.

This is a key point in the evolution of the management and the culture. It is important that the leadership of the company commit to the results as presented by the team(s). Even though the numbers may seem remarkable, they are based on data and experiences the team had during the kaizen. As such, the first response to situations that arise needs to be “let’s find out why we’re not hitting the target” rather than “I thought those numbers were too good to be true”. Commitment to achieve the results presented begins to lay the foundation for continued improvement and the culture of Lean.

After a kaizen

Let’s take a look at how the two case study companies handled the time after their first kaizen and the challenges that were presented.

Company A

During the first week after its kaizen, the results in the pick and pack area were a significant improvement from the before-kaizen level but well short of the results detailed in the summary presentation. Productivity improvement (bunches/person/hour) was about 40 percent. They had targeted 60-plus percent.

Part of the reason for the lower-than-expected improvement had to do with the fact that a new methodology was implemented. The employees were controlling the number of carts used in picking and defining the storing/staging points for those carts. This made the timing of delivery, completeness of orders and quality of materials much more critical than before. Any interruption caused immediate problems. This meant the employees had to fix their problems right away rather than get to it later.

In the old system, which had extra people and extra carts, if something went wrong, it could be handled by the extra resources in the system and no one ever knew of the problems. In the new system, if someone didn’t do their job, it caused difficulty for someone else downstream. And that difficulty became visible very quickly. Adjusting to this system was difficult, but the employees kept at it.

About midweek, the supervisor in the area, who was a doubter during the kaizen event, decided that he needed one of his people back. To the credit of the officials on the management team, they did not react as so many do. They did not put a person back in the system right away using the logic “we took eight people out; even if we put one back we’re still seven ahead.” All too many times this is what happens.

While it sometimes becomes necessary to re-evaluate the manpower, it should only be done after careful examination of what has changed in the area. The management of Company A sat down as a group, went through the situation using the same tools as the kaizen team, and came to the conclusion that with a minor change to the distribution of work there wasn’t a need to add a person. Moreover, they identified a means where they might be able to reduce an additional person. While they didn’t make that reduction right away, they did eventually.

Over the next several weeks, management and the employees had some ups and downs, but the situation eventually stabilized and the employees even exceeded the kaizen targets. The key is that the employees committed themselves to hitting the targets by continuing to use the tools of the kaizen to evaluate the situation. As they went along, this enabled them to identify and implement additional improvements. Every doubt was examined using data and facts rather than emotion and anecdotal evidence.

Company B

The situation at Company B was somewhat different. In short, the employees reached their improvements almost immediately. They made the system changes the kaizen team had recommended and enforced the required disciplines. As a result, they achieved their goal numbers.

However, there was some difficulty with team members. The new system was reviewed with them and the logic for the changes discussed. Coming out of that session, everyone knew what was expected of them and what roles they played.

The difficulty was not in the system but in getting people to use it. The new system required people to log results in a very visible spot every 30 minutes. The results were simple in nature and easy to understand. The process should take about 30 seconds.

There were two reasons for the difficulty. The first is that this represented a change. It was not part of the employees’ daily routines, not a habit. This isn’t unusual and just takes time and reinforcement to implement.

The second reason for the difficulty is one of concern that occurs a lot. It has to do with how people interpret the reason for the data. Any time you ask someone to display the rate at which they are working there is going to be concern. Employees are being measured and their performance is published. Here is where management/leadership comes in. It’s important to understand that information can be used in one of two ways. It can be used as a tool to diagnose, assist and improve. Or it can be used as a weapon to intimidate, threaten and attack. How management uses information goes a long way to helping or hurting the culture of continuous improvement.

Company B took the information derived from the kaizen and attempted to apply it to other locations in its system. While incorporation was successful in some areas, there were problems in others. Much to the employees’ credit they did not take initial failure as a signal that the system didn’t work. Rather they took the approach that they needed to gather data in the same manner as before and identify where the differences were. By taking this approach they were able to gain additional improvements and further expand their gains.

Making a commitment

The success of these two organizations is a result of their commitment to the concepts, tools and practices of Lean business operations. Both companies have gone on to have several more kaizen events. They are now conducting their own “mini-kaizens.” They understand enough of the tools and have practiced the principles enough that they are beginning to become self-sufficient.

The process changed both companies. They no longer view more people as the solution to all their problems. They rely on data and facts to make their decisions. They understand by taking the waste out of the system (extra inventory, extra carts, extra people, etc.), they can quickly see the problems in their system. They also understand that they must fix those problems now; not at some point in the future.

Both companies strengthened their organizations. They have put in place a culture where performance is measured and rewarded. Their people have been given tools to better understand work and how to improve it. Each company speaks a unifying language because their employees talk about value added and waste in terms of the customer and improving their companies.

Finally, their customers have benefited. Because of the changes to the system, the company can provide and the customers can expect more reliable delivery information and consistent quality levels. That works for both the customer and the companies.

The next step

While the results these two companies accomplished may seem startling at times, I assure you they are real and have been achieved. In most case they have actually been exceeded.

Your effort to implement these same concepts can meet with equal success if you are committed to the principles and consistently apply them to all aspects of your organization. Good luck in your efforts.

- Roger Fisher

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

June 2008