No one is ever really Lean; even Toyota has significant work beyond the manufacturing floor to be Lean. This chapter gets to the “heart” of why we wrote this book; many companies think they are currently “Lean,” and aren’t even close.
It is common to hear, “Oh, we have improved enough! We don’t need Lean anymore.” Many have checked the Lean box and are looking for the next fad. Many companies are re-packaging Lean, similar to what Six Sigma did with Total Quality, under different names such as World Class Manufacturing, but in reality, there is no world beyond Lean.
Even the Shingo organization, the highest recognition one can receive today, realized it needed to revise the Shingo model to focus more on building a Lean culture, learning organization, and sustaining. It is a journey many have been on since the 1980s with only less than 20% of companies really having tangible results to show for it. For those that really understand Lean, it is a journey of continuous improvement that never ends.
Top Ten Lean Questions for the CEO
If you answer no to any of these questions you still have much opportunity to improve. Please note: If you score less than a three on question #1 then you probably cannot realistically answer the rest of the questions.
1. Rate your understanding of Lean from one (low) to five (high).
2. Who owns Lean? Are Lean goals part of the annual and long-term strategic objectives? Do you have a Lean Implementation Roadmap? Is it current?
3. Do you utilize Hoshin planning techniques? How do you overcome complacency and drive the compelling need to change? Do you have a detailed vision of the next level you wish to obtain?
4. Do you drive Lean through the line organization or a kaizen promotion office (KPO)? Do you have a communication plan, training plan, and resource plan?
5. Is your company in the top 10% of peers in terms of financial performance? Are all major business systems, to include HR, quality management system, finance, and IT, integrated with Lean?
6. Are incentives plans aligned with Lean objectives? Do they drive ongoing continuous improvement activities?
7. Do you have a learning organization? Is standard work built into your ISO documentation?
8. Is a continuous improvement process in place and supporting the company vision? Are employees trained in continuous improvement and Lean principles? Are employees engaged in improvements at all levels?
9. Are Lean principles integrated in products and services delivered to the customers?
10. Does the leadership team fully support Lean or are they engaged and driving it?
Regarding Assessments: Do You Know What You Need to Know?
Many times, audits and assessments are created or scored to make the company, area, or department look or feel good or they become all about seeking a good score. This should not be the purpose of a Lean assessment. Lean assessments should be all about surfacing problems, eliminating waste, and driving continuous improvement. Remember that an assessment is a snapshot in time; its importance lies in its objectivity and truth.
Assessments should be leveraged to provide a roadmap to grow, learn, and improve. It is critical that organizations have internal mechanisms to audit and gauge what is occurring real time within the organization, to walk the walk, and continually improve and progress as they embark on deploying Lean.
The next challenge with every Lean assessment is terminology. If you don’t know what the words mean (i.e., visual controls, heijunka, mistake-proofing, one-piece flow), it is hard to gauge how Lean you are. Even with the level 1–5 scales with descriptions for each level, we find problems. There is no real benefit in scoring unless one has a very objective measure to score against. The preference is assessments that can easily be answered with yes or no questions otherwise scores could lead to gaming the system without focusing on real improvement.
Lean Assessments
Assessment can be defined broadly as an appraisal, or evaluation, with respect to worth. Many companies have progressed to what we might call Lean lite or Lean show places. This is in part because most companies don’t truly understand Lean, and associate Lean with clean workplaces with taped-out areas, labeled bins, etc.
Immediate signs of problems include operators going to shelves to obtain their own materials or moving their parts to an aisle for inspection and sit-down assembly jobs where the work is totally imbalanced. We will explore why this is as we investigate various scenarios one might encounter at a typical Lean company today.
A Lean maturity path provides the steps toward a Lean mature organization from realization (having a compelling need to change) to Lean adoption (which is very rare). A sample Lean maturity path is listed in the following (see Figures 6.1 and 6.2).
Figure 6.1 Lean maturity path. (Source: Protzman, Charles. The Lean Practitioner’s Field Book, Productivity Press.)
Figure 6.2 Lean maturity grid. (Source: Protzman, Charles. The Lean Practitioner’s Field Book, Productivity Press.)
Leaders often think they understand what needs to be improved; however, the assessment will provide an objective view of the company, from an independent auditor’s viewpoint. Most companies use external auditors to perform financial audits during the yearly business cycle and for ISO 9000 compliance costing US corporations billions of dollars; yet, many firms are reluctant to spend funds for a Lean assessment that could provide insight to additional savings, higher inventory turns, faster cash conversion, and ultimately better customer and stakeholder satisfaction.
Assessment Categories
The assessment needs to cover all aspects of the enterprise. There are various methods to conduct the assessment. Typical assessment criteria include1 the following for Manufacturing or Office (Transactional):
■ Management effectiveness
■ People and organizational culture
■ Sustainability components
■ Equipment
■ Value-stream flow
■ Organizational results
The size and complexity of the company may warrant combining certain functions or expanding the list; however, the key elements should be part of the assessment process.
Evaluating or Assessing a Company
When evaluating how a company is performing in Lean, one must look at assessing Lean within an organization in three categories of activities:
1. Strategic
2. Core operations that are subdivided into learning to see and work process improvement
3. Knowledge incorporation, sharing, and performance
Lean Assessment Tools
There are a variety of Lean assessments tools that can be applied both horizontally (across the organization) to attain how widespread Lean spans and vertically (down) to assess if what was implemented is being practiced. In most cases, if assessments occur, it is because organizations have leveraged consultants to assess the level of adoption or created an internal mechanism of auditing at the area level and/or organizational level. They can range from completing questionnaires to formal on-site multi-day to several-week assessments depending on the size of the organization.
Lean Assessment Questionnaires
The goal of the following assessments is to show you that, for at least every company we have assessed to date, none are close to Toyota. Even Toyota has taken a few steps backward since Ohno-san passed away. Take the Lean assessment quiz below:
1. Do you plan, predict, and measure your production output? On an hourly basis? How well do you do? Are you 100% accurate?
2. Do you continuously improve your manufacturing and transactional standards? Do you have real standards? Written down? With times for each step? How often do you revise them weekly? Monthly? Quarterly? Yearly?
3. Do you have 400 inventory turns each year? Do you have 100? Do you have 20? Do you have 6? Do you have four?
4. Do you have >20% total overall productivity gains per year? How about 6%? How about 1%?
5. Is your operator (shop floor or office worker) morale over 90%? How about 50%? Do you even measure it?
6. Do your operators (shop floor or office workers) have control over 20% of their pay? 10%? 6%? Do they know your current business outlook? Do they know your latest three to six months bookings status? Do they know the industry trends?
7. Do you have >95% customer satisfaction? Do you measure it? Do you know if your customer is telling you the truth or are they telling you what you want to hear?
8. Do you have 100% on-time delivery? If yes, is it to the customer’s requested date?
9. Could you react instantaneously to a 20% increase (or decrease) in customer demand? How many full-time permanent people would you have to hire/lay off?
10. Is your production system flexible enough to re-prioritize customer orders? Within the same day?
11. Can you walk around the office or production floor and immediately know what is going on? Do you know if they are on plan (i.e., meeting the schedule)? Without asking anyone? Do you know if there is a problem anywhere in the organization? Without asking anyone?
12. Are people accountable in your organization? Of do you have to constantly follow up?
13. Do you have a written standard work or work standards, for everything you do? When was the last time they were updated? Is everyone trained in them? How often are they updated?
14. Do your frontline employees know your organization’s top five goals? Do they know your top five customers? Do they know your top two competitors? Do they have goals that are directly tied into (connected to) your goals?
15. Do you have discipline in your organization? Do you have a chain of command? Do people follow it? Can your people, the next management layer level down, take you to the next level your organization is shooting for? If not, do they know? Do they have a one-, three-, and five-year development plan with necessary actions to fill any gaps in their skill sets?
16. Do you still push for end-of-the month numbers? Do you pull orders in from future months to make the numbers? Do you have separate numbers you report to corporate? (If you are a corporate staff reading this, it should tell you something.)
17. Do you have a learning organization? If so, how do you know? Do you know what a true learning organization is? Do you use plan–do–study–act (PDSA) or some other problem-solving model religiously? Do you truly root-cause problems/mistakes so they never come back?
18. Do you know the three components of standard work? Do you have leader standard work that you personally follow? How much time do you personally spend on the floor when you are in a plant? 100%, 75%, 50%, 25%, or do you get your debriefings via PowerPoint presentations?
19. Do you listen to your employees’ ideas or do they go into a suggestion box? If you are the CEO, can an employee or a customer get a hold of you directly?
Please notice that the word Lean is hardly mentioned anywhere in the questions themselves. Are you Lean? Do you have room for improvement? The hardest part of any assessment is being honest and if we are not brutally honest in our assessment, we cannot improve.
Listed in the following are self-assessment questions focused on a shop floor work areas. This is the “Are you really Lean” test—do you have any of these present?
1. You have some work stations that do one-piece flow but subassemblies are produced in batches or lots and brought to the line.
2. Your two-bin system bins are filled more than capacity or both are empty. Your workstations are up against the wall and materials cannot be replenished from behind.
3. The final line is Lean but subassembly lines are scheduled by MRP.
4. Your tools are on shadow tool boards not at point of use.
5. Your Lean lines have WIP caps or squares for kanbans in-between each station or operator.
6. Your Lean lines are one-piece flow but the operators are sitting down.
7. Your operators get their own parts or have to check their parts prior to assembly.
8. Your lines are station balanced.
9. You have standard work but it is not always followed.
10. You have a suggestion box for ideas.
11. You have more than a day’s worth of material on the line.
12. The planner starts jobs on the line that are short parts.
13. The supervisor or team leader cannot train the employees on the line how to do the jobs.
14. Operators build more than one of any components at a time or more than needed for one final unit.
15. Not all team members are cross-trained on the line.
16. The team leader spends less than 50% of their time on continuous improvement.
17. All problems are relayed to the supervisor or manager who promptly supplies the needed corrective action.
If you answered yes to any of these questions, your company is not as far along as it could be.
Office Assessments
The question that should always be asked is, “Is what I am doing adding value to the end customer?” If the answer is no, we should review each step to ERSC. The opportunity for improvement should be larger than manufacturing, since there are often higher-paid individuals working in transactional departments.
Listed in the following are self-assessment questions focused on work areas with contributions from Mike Hogan and Amol Ashtikar.
1. Do you know your top five customers? Do you have a way to collect VOC?
2. Are you using any TQ, Six-Sigma, Lean, initiatives? Do you have Lean (i.e., standard work) built in to your policy and procedures (i.e., where it is audited as part of ISO)? Do you utilize process diagrams, flowcharts, etc.?
3. Do you have value-added percentage goals for both the process and for the operator flows separately?
4. Are your office Lean objectives tied directly to your strategic plan?
5. Do you or does your staff have influence on goal development? Do you have Hoshin Kanri or other goal-deployment plans in place? Does it flow from the top executive to the front-line worker? Do you play catch-ball during the process? Do you feel goals are arbitrary?
6. Do you have Lean (i.e., standard work) built in to your policy and procedures (i.e., where it is audited as part of ISO)?
7. Do you process-flow from start to finish?
8. Do you have a current state, ideal state and future state value-stream map for the process in place?
9. Are clear roles and responsibilities established?
10. Do you actively use a suggestion or idea system? Is your organization set up to solicit and implement all frontline staff (office and shop floor) suggestions, i.e., daily kaizen? If so do you measure the number of ideas, ideas implemented, ideas rejected, etc.?
11. Do you have visual controls in place? Can I determine the status of each office area without asking anyone any questions?
12. Do you have process-focused metrics in place? If so, how many?
13. Do you have weekly, daily, or just monthly production meetings?
14. Do you still have an end-of-the-month or end-of-the-week push?
15. Are you measured on developing your people? Is there a plan to upgrade education and skill set(s) of the staff?
16. Do you have a succession plan in place?
17. Do you use TWI Training methods? Do you have any training methods that are hard-wired?
18. How do you capture customer requirements (i.e., specifications, terms and conditions) and how do you align those into contract?
19. Do you have the process of contract review? How do you ensure those requirements are met?
20. Are you measuring (or do you measure) the on-time delivery of product/on-time service?
21. Do you have skill matrix/competency matrix for your people?
22. Are your people encouraged to highlight any problem or failure without fear?
23. Are your people skilled enough or trained in basic root-cause analysis and problem-solving?
24. How do you measure customer satisfaction/delight?
25. Do you an effective process to resolve customer complaint? And how fast it is resolved?
26. Did you have any repeated complaint from the same customer or similar complaints from other customers?
27. How do you measure service levels?
28. Do you have a process to measure internal customer satisfaction (or inter-departmental collaborative index)?
29. Do you conduct internal audits to monitor Lean activities (i.e., 5S, kaizen, and other processes)?
30. How do you promote total employee involvement in Lean journey? How are you engaging your employees?
31. Is there a reward and recognition mechanism?
32. Does your performance management system effectively capture Lean objectives as KPI?
Management should use the assessment result as a tool to help drive the Lean journey. Lean has a high probability of being successfully deployed if it is viewed as strategic and is driven from the top by the CEO and board level that have established a compelling reason to engage in Lean. Management must become fully engaged in the Lean process to be successful and the CEO should be the executive sponsor. Executives and managers should have bonus programs tied to Lean and not just typical financial metrics such as revenue and margin (profit). Lean must become embedded as a key component of the long-range strategic plan, and used to drive value into the company’s business delivery system.
Every year, one of the five strategic plan goals should be focused on Lean and Lean should be a necessary component of all the other goals. Leaders must understand that Lean is a journey and, even after many years of work, will always have more opportunities to achieve and sustain. Even Toyota has taken over six decades to attain the level of Lean maturity it has achieved, with many lessons learned and setbacks, even recent ones, along the way.
Note
1. Assessment criteria furnished by Professor James Bond via personal correspondence April 2013.