~ FREQUENTLY ASKED QUESTIONS ~

~ Lean Manufacturing ~

What is Lean manufacturing?

Lean Manufacturing is the continuous and systematic process of identifying and eliminating the inefficiencies or "wastes" in manufacturing operations.  Waste or "Muda" stems from bottlenecks in either information flow, material flow, or both.  In many operations, up to 90% of the activities performed by employees are non-value added, meaning that the customer is not willing to pay for these activities.  Lean manufacturing transforms the factory floor and the company culture so that waste can be systematically identified and eliminated.

How does Lean Manufacturing work?

Lean Manufacturing relies on the application of a variety of techniques, depending on what the specific situation calls for.  However all initiatives depend on the following:

1.       Value Stream Mapping: a detailed and in-depth look into the way in which resources and products flow on your plant floor identifies areas of waste (non-value added activities) provides a solid road map of where to perform (Kaizen Burst) improvement projects.

2.       Willingness to Change:  the entire process depends upon management and workers? willingness to change.  New policies, procedures, equipment, etc. will be implemented, but unless they are enacted with workforce training and enforced by management expectations, all of the hard work work will be for naught.

Why should I implement a Lean Manufacturing initiative?

In short, to make more money!  By eliminating wastes and inefficiencies, the unit cost for making your product will drop.  Usually, the throughput and capacity are increased, Work-in-Process (WIP) is reduced, and items get shipped sooner with a higher on time percentage.  In all, you will be able to 1) maintain existing business, 2) grow your business by adding new clients, and/or 3) change your selling price.  For example, a factory that manufactures twice as much product for the same overhead fixed costs can simultaneously reduce their selling price while increasing gross margin.

When should I implement a Lean Manufacturing initiative?

Most companies only consider a Lean Manufacturing initiative when problems arise: a bottle neck, costs too high, Gross Margin not high enough, faltering sales, no profit or annual losses, etc.  Many plants have been saved from certain closure by a Lean Manufacturing project.  There is nothing wrong with that, and Lean Manufacturing can help.  A better idea though is to solve the problem BEFORE it becomes a problem.  What would your Gross Margin look like if you could ship twice as much product from the same factory, without increasing overhead costs?  Rather than being reactive, be proactive.  Either way, your company will feel the effects of saving money and increased capacity, both of which present the potential for improved sales.

Why is training only direct labor employees insufficient?

Training of workers in lean manufacturing techniques is just one facet of the initiative.  Actually, the lean training needs to start with the CEO and continue down the chain to the worker on the assembly line.  Why?  Lean Manufacturing requires a change in thinking, philosophy, and the operational attitude of everybody in the company.  Without that change in attitude at the top, workers learning Lean Manufacturing initiatives will not get the necessary support.  Nor will the measures be consistent with the desired actions on the plant floor.  Lean Manufacturing is not just a technical initiative, it is also a cultural initiative.

Why so much training for executives?

Significant cultural change must occur in the organization in order to improve efficiency.  Such change must come from the top.  Therefore, executives will need knowledge, dedication, and enthusiasm for the on-going projects.  Further the Lean Manufacturing Initiative affects everyone at the plant, not just the production workers.  Through training, Executives get prepared for such change so they can embrace it, set expectations, and lead everyone else through the change until the new culture has been established.

What results can I expect?

Many manufacturers who are not capital intensive and have mostly manual operations can expect to more than double their capacity with very little, if any, increase in Overhead and Fixed costs.  If the extra capacity can be sold (a sales and marketing challenge) then the extra capacity is essentially "free", resulting in substantial changes to the top line, gross margin, and the bottom line.  If your company is not growing sales, then the elimination of waste should produce double digit percentages of reduction in labor and material costs.  In most cases, the payback on the cost of the Lean Initiative is typically less than a year, and often less than 6 months.

Why doesn't everybody "go Lean" if it is as simple as it sounds?

The principles of Lean Manufacturing are simple.  The hard part comes from the fact that Lean requires change.  Everything, from the assembly line to the core belief system deeply integrated in the company culture, is subject to change.  New behaviors, habits, and ways of thinking, must be established.  During a Lean Manufacturing Initiative, everybody in the company feels these effects.  As such, everybody must receive Lean training.  A company cannot go Lean if only management or only workers back it.  This is also why not everyone will start a Lean transformation, and why so many more who do start come up short.

What is the best approach to make this change successful?

Due to the deep changes needed most companies cannot implement the work themselves.  Most companies need someone to help them through this difficult time of change.  A person called the "Sensei" (Japanese for "teacher") trains companies through the process while holding them accountable until the new habits form.  The internal champion keeps the company focused on the overall objective and keeps the company committed to the result when the going gets tough.  The Sensei is usually a consultant hired from outside of company ranks.  Some consulting firms, such as SMI, act not only as a Sensei, but a step beyond.  Rather than just guide you with advice, we work with you on the plant floor during implementation.  We offer training in addition to an in-depth study of what your company needs to do in order to effectively implement a Lean Manufacturing Initiative.  Eventually, the entire Lean initiative becomes self-sustaining and self policing.  At some point the consultants get out of the game and the company becomes self-reliant, operating autonomously in a Lean Manufacturing fashion.

How is Just-In-Time (JIT) different from Lean Manufacturing?

JIT describes the practice of receiving many frequent deliveries of parts in small quantities rather than in one large shipment.  In truly lean companies, part delivery does not occur much earlier than a day or two before it actually gets used.  As such, JIT is an outcome of Lean Manufacturing, not an alternative.  Further, JIT is not even a tool or a process of Lean Manufacturing.  JIT works only when everything else on the plant floor has gone Lean.

What about U-shaped work cells?

The work cell arrangement is also an outcome of Lean Manufacturing, where work cells are configured to maximize the efficiency of the worker.  As such, U-shaped works cells represent only one arrangement out of many possible arrangements.  Organizing a workcell into a U-shape as a self-standing project does not make a factory lean.

~ Strategic Planning ~

WHAT is Strategy?

It is the response of an organization to its ever changing environment, which allows it to survive, and even thrive and prosper.  It is focus, which is the selection of specific markets and activities, to the exclusion of other possibilities.  Thus, the simplest definition:  Strategy is deciding what not to do.

WHAT is Strategic Planning?

Strategic Planning is the systematic process by which a company develops a strategy.

WHO should do Strategic Planning?

Every company should have a strategy, which should be regularly maintained and upgraded.  Any company that does not have an up to date strategic plan should make arrangements to develop a plan.  Companies that do not have an internal strategic planning department or function should engage a strategic planning consultant to facilitate the planning process.

WHY do Strategic Planning?

Without a strategic plan, the entire effort of the company can be misdirected, and new market opportunities are lost.  Thus, while the cost of not doing a strategic plan cannot be directly measured, the opportunity cost is high, and often determines if a company will survive or not.

HOW long does Strategic Planning take?

A draft plan can usually be produced in 10 to 20 hours of meeting time engaging the executives of the company.  Advanced preparation for the meeting is necessary.  Over the period of 2 to 4 months, a credible plan can be developed in a crude framework.  After that, much market research and Business Intelligence/Competitive Intelligence (BI/CI) will be needed to fill in the details.

How are both Facility Planning and Lean Manufacturing strategic initiatives?

Anything that goes onto the calendar with a 10 year impact is automatically strategic, just by default because of the nature of the decision long term and its long term consequences.

How is Facility Planning strategic?

If you are getting ready to go into a new facility, and it's a larger one, it is likely that you're going to have to sign at least 7 year or a 10 year lease for that facility.  Basically, you're making a 10-year decision and you have no idea what's going to happen to the economy over a ten year period of time.  Things that will affect the economics of that decision are: inflation, deflation, monthly payment, property taxes, yearly maintenance bill, etc.  Making a mistake at the front end (by paying too much) literally adds extra expenditures to the bottom line every month for the next 10 years.  That means, automatically, that decision is strategic.

How is Lean Manufacturing strategic?

The long term expectations of Lean Manufacturing initiative are strategic mainly because of the long term benefit they can bring to a company.  Literally, the successful execution of a lean manufacturing initiative can mean the difference between the company surviving over the long term versus dying out at some point a few years down the road.  If you are going to spend your money once on training the workforce, on reorganizing the plant floor, on buying new equipment and new machinery, redesigning your product, establishing a new supply-chain: these are all undertakings that require an expenditure of money and if done correctly, they can have a positive financial effect for a very long time.  If done incorrectly, you can spend all your money and get nothing as a result, which means that then you've spent all that money and not only have you not realized the savings, you've got nothing for it.  So, that way, lean Manufacturing initiatives are strategic.

Can I do Facility Planning or a Lean Manufacturing initiative without a Strategic Plan?

Sure you can.  People do it all the time.  However, the strategic plan provides a very important context for the other strategic decisions that need to be made.  Typically, a strategy for a company involves redeployment of resources, tackling new markets, coming up with new products or services to serve those markets, and those factors become the drivers for all the changes that are about to take place as the organization rises to the challenge to meet those needs.  Let's say that the strategic plan calls for the doubling of manufacturing output to serve the needs of a growing market place.  How can this be done quickly?  Do we need a new facility that is twice as big?  Maybe not if certain other things are done.  Do I need to engage in a lean manufacturing initiative?  Probably.  The Lean Manufacturing initiatives usually yield improvements in the double digit percentage points all the way up to two or three times the capacity, usually because there's so much waste on most manufacturing plant floors.  Most of this waste is invisible.  So yes, we can do new facilities or lean Manufacturing initiatives without a strategic plan, but it is hard to stay committed to those initiatives when there's no clear purpose for them.  If driven by strategic goals and objectives, then the desire to implement either a new facility in or to implement lean manufacturing plan becomes very firm and strong.  This leads to the strong commitment that is needed to travel the difficult path.