The future’s bright, the future’s Lean

Andrew Nicholson
By Andrew Nicholson, Managing Director of Nicholson Consultancy Ltd

After more than three decades of applying Lean in the West, perhaps the most important thing – and one that we’re still learning – is that Lean is a philosophy and a way of life, not just a set of tools and techniques.

I strongly believe that Lean has a bright future as it is more relevant now than it’s ever been in today’s fast-changing, quality-driven business environment.

We seem to live in a society where many citizens have a deep distrust of politicians, government and business.

In response, many of us actively seek out people and organisations we feel we can trust, whose values and objectives we share or at least feel we have some common cause with.

This is one reason why I believe that genuinely Lean organisations will survive and prosper.

In my opinion, organisations that value an open, learning culture and have respect for people – one of the key tenets of Lean – will almost naturally adopt Lean as part of their way of doing business.

Because they learn, Lean organisations will adapt and improve, and most will ultimately succeed.

Their employees become genuinely engaged, they “buy in” to the values of their organisation and they continually ask “What’s the Lean way to do this?”

Customers receive real value from a Lean organisation and are actively consulted – even directly involved – in future developments. They also “buy in”, becoming loyal followers, advocates or even zealots.

We’ve also learnt that Lean means much more than just Lean Manufacturing.

Although many manufacturers first use Lean tools and techniques in their production facilities, those who “get it” soon realise that there’s a lot more to manufacturing than production or assembly.

They go on to apply Lean across every area of their business, and then on through their Supply Chains, forming long-term partnerships with others who share their values and who also “think Lean”.

And Lean is spreading far beyond manufacturing. Healthcare, law enforcement, government and the military, software development and education are just some of the many areas where Lean principles are transforming traditional ways of working.

I see this as a continuing trend: applying the Lean philosophy to more and more organisations and sectors, and ultimately to more and more aspects of our daily lives – another reason why I believe that Lean has a bright future.

Finally, and particularly important in an economic downturn, we’re understanding that Lean is not about cost-cutting, outsourcing, off-shoring, down-sizing and lay-offs.

On the contrary, most of our clients are using Lean to grow, to in-source and to re-shore.

They understand that the true meaning of Lean is about delivering Value: truly understanding their customers’ needs, providing them with more and more genuine value, and exceeding their expectations.

Pulling all of this together then, into what you might call a Lean Mission Statement, I’d say that today’s Lean pioneers understand that their future success requires the marshalling of Purpose, People and Processes, to deliver value to customers, to employees and to stakeholders.

That’s why I see a bright future for those who truly embrace Lean. And in my next blog I’ll explain how this combination of Purpose, People and Processes is driving the future success of Lean organisations.

What opportunities does the Circular Economy offer Lean Manufacturing?

By Andrew Nicholson, Managing Director of Nicholson Consultancy Ltd

A fundamental shift is taking place within a range of industries, not least, the manufacturing sector.

The traditional way of working has been in a linear fashion where resources are obtained, shaped into products, used and disposed of.

However, as raw materials diminish and become more scarce or expensive, businesses are turning their attention to making the most use of what is available.

As a result, a new model is emerging that has been dubbed the ‘Circular Economy’ where products are remade, resold or recycled in some cases many times over.

The circular economy is all about doing more with less and minimising waste with new products assembled from materials obtained from old ones through reclamation, remanufacture and recycling or the operational life of a component is extended through refurbishment.

So does this offer any opportunities for the ‘Lean Manufacturer’?

In my opinion, the answer is most definitely yes.

From an efficiency point of view, it does not matter whether what is being used as the basis for a product is from an original source or is reusing or recycling materials.

Any type of manufacturing can be scrutinised and fine-tuned so that wastes of time and effort are eliminated from the entire process – which means from the minute a customer’s order is received to the delivery of the finished product.

The scope for employing lean principles will widen as they easily and effectively can be applied to industries that decide to embrace the Circular Economy as part of their operations.

Indeed, the values and ideology behind Lean Manufacturing and the Circular Economy are comparable. The Circular Economy is about minimising waste through reusing components rather than disposing of them while Lean is about making sure that time and effort is not wasted during the manufacturing processes.

These demonstrate the compatibility of Lean and the Circular Economy. And as the Circular Economy grows, which I believe it will, the use of Lean has the potential to expand proportionately.

What have we learnt from 30 years of applying Lean in the West?

By Andrew Nicholson, Managing Director of Nicholson Consultancy Ltd

Lean works best when everyone in the company – from the chief executive to the most junior member of staff – buys in to the strategy, and benefits from it.

This is easier said than done as it is human nature to resist change and to want to hang on to the status quo.

For lean to succeed the entire workforce has to be involved from the very start.

People need to feel that they are central to the introduction and implementation of lean and that it is not merely a ‘pie in the sky’ diktat from above; another management initiative imposed without any employee involvement.

Many people’s first reaction is to ask – ‘what’s in it for me’. I have learnt that this sort of question should not be dismissed as a selfish response and should not be sidestepped with a ‘for the greater good of the company’ reply.

Tackling this question head-on is the best tactic. Show people how embracing the principles of lean will make their job easier; that it will be a case of working smarter, not harder in the future.

Employees should be encouraged to contribute and it must be shown that their ideas and suggestions will be listened, taken seriously and acted upon. Think about starting with some short, sharp ideas workshops. Use “Ease and Effect” to prioritise employee ideas and make sure you get some “quick wins” to show the benefits.
Another lesson is that one size does not fit all. Every firm has elements of individuality which have evolved due to its history and how its products have been refined and developed. This is often what helps it stand out in the market-place.

Just as a doctor would not give the same pill to different patients with different symptoms, the same applies to lean manufacturing.
An off-the-shelf lean package will not do – what works for Toyota might not work for you! Solutions have to be tailored to an individual company’s operation and relevant goals need to be drawn up.

Partnering with the right outside help is essential in the early days. Managers and employees have experience and knowledge about the way their company works and lean practitioners are experts in the principles of lean. Embracing a partnership approach ensures that a company uses the right lean tools and techniques that exactly meet its individual requirements, and that skills and knowledge are transferred into the business.

And last, but not least, it has become apparent during the last three decades that lean does not just apply to industrial giants, but can be relevant to and employed by small and medium enterprises in pretty much any sector who want to improve their processes and operations.

Lean Start-Ups: are they possible?

The short answer is “Yes” it is possible to start Lean and stay Lean. Here’s how:

It is important to keep it simple and stay organised. This can be achieved by adopting Lean 5S principles, which is a system to reduce waste and optimise productivity through maintaining an orderly workplace and using visual cues.

This includes making sure anyone can find anything quickly and easily. Keep things simple and visual – can people easily see at a glance what’s OK and what isn’t?

Focus on the following main three business areas:

• Sales – getting the work in / engaging with the customer
• Operations – getting the work done / delivering
• Finance – managing the cash, funding the growth

Employees should be made aware of how they fit into the company structure and what their contribution needs to be to make the business run smoothly, effectively and efficiently.

To achieve this:
• Write down each role and give it a name or a description
• Write down the main purpose of the role and exactly how its provides value to the customer
• Outline “what a good job looks like” – the best way / tricks of the trade, and pitfalls to avoid

Next draw up a grid with the roles along one side and people’s names along the other. For each job show with an R who is Responsible, with a D who Deputises, and with an A who Assists so employees know at a glance what their duties are.

Regular communication is key. For at least one hour each week talk about what’s going well, what’s not going well and what ideas you have to make things better.

By consensus, pick one improvement idea that is easiest to implement, has the highest impact and is affordable. Agree who will make it happen, and when, and get on with it.

Hire slowly, fire quickly. Be clear about values, expectations, Do’s and Don’ts. With new staff, have a one-to-one review for 15 minutes each day, then one hour per week, then one hour per month.

Make a conscious decision to retain or part company at the end of the first day, the first week, the first month. If it isn’t working in the first month, it probably never will. Let people take risks, make mistakes and fail, but expect them to learn and not to repeat their mistakes.

Do the absolute minimum required to add value for the customer – everything else is waste. Keep it simple, keep it electronic, and automate it.

Store data in only one place, share it and organise it so that anyone can easily find what they need.

Seriously consider scalable, cloud-based “pay as you go” systems. Use non-proprietary open systems where you can.

Similarly, do the absolute minimum that you need to do with a new product or process to see if it works. This is what Silicon Valley entrepreneur Eric Ries calls the MVP – the Minimum Viable Prototype.

Experiment quickly, fail early, learn as you go and keep on learning.

The key to Lean is the improvement cycle Plan-Do-Check-Act. In a start-up the most important thing is to get along the learning curve as quickly as you can.

Therefore, you need to cycle through these stages as quickly as you can. You’ll need some sort of plan to start with, but also be prepared to be flexible. This is because the reality is likely to be different from your original plan, so you have to learn as you go.

Have a tight control on costs by keeping fixed overheads to a minimum, outsourcing non-core tasks, “paying as you go” and avoiding long-term tie-ins.

Continually question the reasoning behind any action plan. Always ask yourself ‘does this add value for our customer’, ‘does it make us more profitable’, and ‘does it make things easier for us?’

Manage the cash every day, without fail. This can be easily one by using a simple spreadsheet.

The Lean process is all about keeping it simple, focusing on what matters, learning quickly what works and having the courage to ditch what doesn’t.

Do we all have to fail before we can succeed?

The value of going Lean is easy to quantify: in forensically examining a firm that is experiencing problems, Lean experts can identify what is going wrong and suggest solutions for the workforce to put in place.

But what if it is a new company, that doesn’t yet need a solution?

At a recent summit from the Lean Enterprise Academy, Lean guru Jim Womack summed it up like this: “Is it possible for an organisation to start up Lean from Day One, or must an organisation grow until it becomes inefficient, and only then learn from its mistakes?”

This challenge helps us re-examine the Lean principles we use every day at Nicholson Consultancy and realise their value as independent tactics that are transferrable to a number of situations.

We might think that the simple answer is to learn from other people’s mistakes, but current thinking is that Lean is situational – we can transfer the skills, but we need to tailor our approach for each organisation and each unique set of circumstances.

The question of where Lean fits into a business strategy mirrors various conversations I’ve had recently with friends and colleagues who are business owners and entrepreneurs.

We’ve all made many mistakes over the years and most of us would like to think that we wouldn’t repeat them. But how do you get it right until you’ve had the experience of trying it and getting it wrong?

The challenge is to create a business that is Right First Time – and having done that to keep it on track so that it never needs major work. Of course, there will always be improvements to be made because the manufacturing landscape changes so often, but an appreciation of Lean strategies can be a solid foundation to build on.

This is an interesting approach that many Lean practitioners and their potential clients will have missed out on. Let’s get the message across that Lean is not only a repair option, it can also be one of the first things on the list when a new business is being planned.

Maybe we don’t have all the answers and maybe we can’t get everything perfectly right from Day One, but surely there’s more than enough experience and accumulated knowledge out there now to at least aim for “More Right than Wrong, Most of the Time!”

Not the snappiest of slogans, but maybe it’s what we should be aiming for.