One of the biggest challenges faced by organizations is trying to separate the Value from the Waste. Even in my own firm we are so focused on "what we've always done" that it takes tremendous discipline to really listen to the voice of the customer. Part of this I believe is a basic, protective instinct that keeps us from facing the cold, hard reality that most of what we do is in fact Waste.
But I recently rediscovered a technique for distinguishing Value from Waste that I have stumbled across from time to time throughout my career; The Emergency. The premis is simple; people in a burning building very quickly figure out what matters and what doesn't. All of a sudden when your house is on fire the dirty dishes in the sink, the dust on the mantle and the clothes in the dryer become much less important than getting out alive. And the same is true in any organization. When nothing is metaphorically burning there is all the time in the world for things like proper documentation, documentation reviews, documentation modifications, more documentation reviews, more documentation modifications, final documentation reviews, documentation approvals and thorough documentation archiving. You get the picture.
But when there is a crisis equivalent to the building being on fire all that goes out the window and people tend to focus on what really matters (Value). A crisis can take many forms, but the ones that are most useful are the ones caused by customers. These can include a sudden rush order, an unexpected change in delivery date or order specification, or even a critical quality issue. When this happens it's all hands on deck, the documentation reviews are forgotten and everyone focuses on resolving the emergency.
As a management consultant working in a new organization such emergencies make great sources for improvement ideas. Once the dust settles and the crisis has been averted it is very useful to start from the critical tasks performed during the emergency and work outward. That means asking the question "why do we do this?" for anything that was not done during the crisis. There will always be certain "risks" that were taken that probably should not have been. But if you really challenge much of the non-crisis tasks you will find that most of these fall into one of the following categories: "Weve always done it that way" or my favourite "One time five years ago we had a problem so we put this fix in place."
Over my career I have had the opportunity to work in a number of software development environments. Any of you familiar with this industry in general and ITIL in particular will appreciate the incredible number of checks and balances that go into developing, testing and deploying software. And there are good reasons for this, especially when you are dealing with critical applications that can not go down. But one of my pet peves with ITIL has always been the seeming lack of customer awareness from the Change Management group. There is not a project manager anywhere in IT that does not cringe at the thought of getting a Request For Change (RFC) approved by Change Management.
Now I am not saying that all Change Managers are sadistic egomaniacs who's sole purpose in life is to compensate for their shattered dreams of becoming customs agents. Because I would never say that. But like any good auditor they all believe if they do not find at least one reason to reject an RFC the first and second time it is submitted then they have not done their job properly. Just sayin'
To make matters worse most 'effective' Change Management departments take great pride in their rigorous RFC approval cadence. "Cadence" by the way is a fancy way of saying "it's my way or the highway." The idea of a "cadence" is that in order to get a Change approved one needs to comply with a rigid series of deadlines for approval. And if at any point your Change gets out of cadence, say because you forgot to dot an "i" or cross a "t", then you have to go back to the beginning and start over, usually the following week.
All of this is put in place under the banner of protecting the client or User from reckless software developers who unfortunately do enjoy finding and fixing bugs far more than they do writing perfect code in the first place.
So how do we separate the Value from the Waste in such a critical process? Enter the eRFC. The "e" in this case stands for "emergency." And as the name implies this is a change that is needed immediately if not before. Usually either something has gone wrong with a piece of hardware and the Users are being impacted. Or a defect with the software has been discovered and it has to be fixed right away.
In this case a few amazing things happen. The first is the usual testing procedures are usually tossed out the window and the modified software is tested in just one environment called "EBF" which stands for Emergency Break Fix. This simplified environment is kept just for emergencies and is supposed to match the Production environment to allow changes to be fully tested before exposing them to any Users. This is in contrast to the normal testing process that can involve as many as eight lower environments in which the code must be tested (don't ask - the explanation is very complicated and highly technical).
But by far the most amazing thing that happens is that Change Management's precious cadence gets thrown out the window. The owner of the Change is still required to provide all the necessary proof that the Change has been properly documented and tested. But the approvals are done on an 'as needed' basis. That means all the approval meetings normally scheduled on a weekly basis now get an "e" put in front of them and they are scheduled as soon as everything is ready for review and approval. Yes this would be what Lean practicioners call "Pull Scheduling."
And for those of you worried that the level of scrutiny is lower for eRFCs I can assure you just the opposite is true. Following the usual Change Management cadence there can be as many as 20, 30, 40 or more highly complex RFCs batched for approval. Even with two hours scheduled these meetings are a free-for-all at best. In fact I once had two RFCs approved at the same meeting where the titles of the Changes and the descriptions had been accidentally interchanged by Change Management. But because everything else seemed to be in order no one even noticed. shhhhh
On the other hand for an eRFC when the meeting is called there is only one Change to review. And in a relatively short period of time everyone at the meeting can focus on what is involved, ask meaningful question, and ensure with confidence that everything is in order. In this way I have seen eRFCs go from initial submission to executive approval in a matter of hours.
So I ask you, why not make all Changes go through the eRFC process? With today's mobile technology it is possible to convene meetings and get approval almost instantly. The level of scrutiny is much more focused and accurate. And the customers end up getting what they want when they want it.
Think about the last customer crisis you had in your organization. What could you learn from that?
Monday, October 3, 2011
Tuesday, August 2, 2011
My First Lessons in Business...
Throughout my career I have had the privilege of working with many brilliant business people. Some of these were my colleagues and even my staff, but most were my clients; some of whom, I am humbled to admit, still read my blog.
Despite being their consultant and (in most cases) trusted adviser I can say that I have learned something from each and every one of my clients. I learned early on in my career that "owning the company" may require luck and fortunate timing. But it also requires that special mindset to see what others do not and then make it happen. It is this characteristic that I admire most in the people I work for. And this characteristic that I strive to always improve in myself.
Of all the lessons I have learned over the years I learned two of my most important lessons from my very first client, although I did not realize it at the time. Jim was what consultants would call the "worst type of client you can have." That was because he hated having us there before we had even begun. We had been brought in by his General Manager to help "fix" the factory. But as far as Jim was concerned he paid his managers to do that. I have no idea how they talked him into investing in what would be my first ever consulting project, but he was not happy about it and he let us know from the very first day.
You see Jim was the epitome of an entrepreneur. Jim didn't just see the potential of dry-erase markers. Jim put fancy doors on his whiteboards and then proceeded to put them in virtually every meeting room in North America. Jim didn't invent the wheels he put on desks and dividers to make them easy to move around. He envisioned transformable office spaces while everyone else was still building walls. And Jim didn't see the internet as just a great way to send email. He brought to market one of the first whiteboards that allowed people to share their work on line with virtual offices all over the world.
So what could an engineer with an MBA so fresh the ink hadn't yet dried on the diploma possibly learn from someone like this? Well back to how much Jim hated consultants.
It was late one night and I was down in our project office located right next to the factory. Most people had gone home for the night, but I was still there writing up a study I had conducted that day, deluding myself that I was somehow adding value. All of a sudden one of Jim's staff appeared in the doorway. "....Kevin, right?" he asked. I nodded, trying to figure out what I had done to upset Jim this time.
"Listen a bunch of us are upstairs giving Jim a hand with a project. Do you think you could help? We could really use you."
I nodded again and got up to follow the person upstairs. Suddenly I imagined the partners at my firm hanging on my every word as I described how I had managed to sell a follow-on project in Jim's Sales and Marketing department worth ten times what the first project was worth. As I hurried upstairs to the hallowed halls of the Jim's domain I pictured the partners smiling and wringing their hands as they anxiously watched me sign the papers making me the first junior partner in the young firm's history.
When at last I followed the fellow who had plucked me from obscurity into a room I saw a dozen people sitting around a large table with Jim seated at the far end. His eyes lit up as I entered. And he brightly explained that "...all these envelopes have to be stuffed by 10:00pm so that the invitations to the upcoming Sales conference could make it to the courier on time."
My dreams of instant partnership vaporized before my eyes. And as I pulled up to the table and started licking envelopes and stamps I realized my story of how I sold our next project would probably have to wait too.
The group chattered happily as they went about their work. Being from the factory I had little to add to the conversation until suddenly Jim addressed me directly. "So Kevin..." he began, "tell me what I'm getting for all the money I'm spending on your guys down there in the factory."
Lessons Number One: At first I thought about the study I had been writing up less than an hour ago. But as I looked around the table at everyone waiting for my answer I realized that telling this client that I had discovered that "there was 27% lost time in Assembly due to looking for missing parts" provided no Value whatsoever. Ironically it would take me almost 15 years to digest this simple lesson and allow me to reinvent my own management consulting company. Instead I babbled something equally non-Value added about streamlining processes, properly scheduling jobs, and installing a Resource Plan.
Lesson Number Two: Jim listened for a minute or so and then pointed his finger at me and said "those [guys] down in that factory had better get it through their heads that this is first and foremost a marketing company. And if they can't keep up with me then I'll find someone who can." Once again, it would take many years for this lesson to sink in.
I might have been a brand new consultant at that point, but even I knew when to shut up. I probably mumbled something in agreement and then went back to stuffing envelopes. However as I sat in that clean modern room with it's fancy lighting surrounded by office types who probably didn't even know how to find the factory I remember thinking to myself "...Doesn't this guy realize that without a factory he wouldn't have anything to sell?" I didn't know it at the time, but Jim had just given that know-it-all engineer-come-management-consultant the golden key to success in any business.
Since those days I have gone on to complete dozens of project in every industry imaginable. And I would like to tell you that I left Jim's marketing department that night inspired by his wisdom. But in truth it took me better than a decade, many successful projects, a number of spectacular failures including the bankruptcy of a 65 year old company under my watch, and the blood, sweat and tears associated with the start-up of my own business to fully grasp the wisdom of his words.
I still recall the "4 Ps of Marketing" from my MBA days. The job of Marketing is to identify the right Product, Place, Price and P-distribution. In other words find out what the customer Values and make sure they get it. Back then I remember the people in Jim's factory being so hung up on what they could do and couldn't do. And every time Jim's Marketing team would change a design because they found a feature that customers liked better it would send shock waves through the manufacturing process and generate piles of obsolete WIP.
That isn't to say that there aren't companies out there, very successful companies, that aren't first and foremost marketing companies. It's easy to think of famous technology companies for example that have been built on and thrived on innovation. But make no mistake, any that aren't focused on the market are living on borrowed time. It might take a week, a month, a year or longer. But eventually someone is going to come along and offer your customers a better product at a better time or a better price or a better place. And by the time you realize it, it's probably too late.
I should mention that in recognition of me staying late to help stuff envelopes Jim invited my fiance and I, along with several other guests, to spend the day on his boat out on the Toronto harbor watching speedboat races. And all of us found him to be a most generous and charming host that bright summer afternoon. It was with sadness that I learned of Jim's recent passing. It was fitting that the news came from none other than my very first consulting manager on that project all those years ago who is now a good friend and business colleague.
So the next time you erase the marker from that whiteboard in your office, stop for a moment and ask yourself "what do my customers really Value and am I giving it to them?"
Despite being their consultant and (in most cases) trusted adviser I can say that I have learned something from each and every one of my clients. I learned early on in my career that "owning the company" may require luck and fortunate timing. But it also requires that special mindset to see what others do not and then make it happen. It is this characteristic that I admire most in the people I work for. And this characteristic that I strive to always improve in myself.
Of all the lessons I have learned over the years I learned two of my most important lessons from my very first client, although I did not realize it at the time. Jim was what consultants would call the "worst type of client you can have." That was because he hated having us there before we had even begun. We had been brought in by his General Manager to help "fix" the factory. But as far as Jim was concerned he paid his managers to do that. I have no idea how they talked him into investing in what would be my first ever consulting project, but he was not happy about it and he let us know from the very first day.
You see Jim was the epitome of an entrepreneur. Jim didn't just see the potential of dry-erase markers. Jim put fancy doors on his whiteboards and then proceeded to put them in virtually every meeting room in North America. Jim didn't invent the wheels he put on desks and dividers to make them easy to move around. He envisioned transformable office spaces while everyone else was still building walls. And Jim didn't see the internet as just a great way to send email. He brought to market one of the first whiteboards that allowed people to share their work on line with virtual offices all over the world.
So what could an engineer with an MBA so fresh the ink hadn't yet dried on the diploma possibly learn from someone like this? Well back to how much Jim hated consultants.
It was late one night and I was down in our project office located right next to the factory. Most people had gone home for the night, but I was still there writing up a study I had conducted that day, deluding myself that I was somehow adding value. All of a sudden one of Jim's staff appeared in the doorway. "....Kevin, right?" he asked. I nodded, trying to figure out what I had done to upset Jim this time.
"Listen a bunch of us are upstairs giving Jim a hand with a project. Do you think you could help? We could really use you."
I nodded again and got up to follow the person upstairs. Suddenly I imagined the partners at my firm hanging on my every word as I described how I had managed to sell a follow-on project in Jim's Sales and Marketing department worth ten times what the first project was worth. As I hurried upstairs to the hallowed halls of the Jim's domain I pictured the partners smiling and wringing their hands as they anxiously watched me sign the papers making me the first junior partner in the young firm's history.
When at last I followed the fellow who had plucked me from obscurity into a room I saw a dozen people sitting around a large table with Jim seated at the far end. His eyes lit up as I entered. And he brightly explained that "...all these envelopes have to be stuffed by 10:00pm so that the invitations to the upcoming Sales conference could make it to the courier on time."
My dreams of instant partnership vaporized before my eyes. And as I pulled up to the table and started licking envelopes and stamps I realized my story of how I sold our next project would probably have to wait too.
The group chattered happily as they went about their work. Being from the factory I had little to add to the conversation until suddenly Jim addressed me directly. "So Kevin..." he began, "tell me what I'm getting for all the money I'm spending on your guys down there in the factory."
Lessons Number One: At first I thought about the study I had been writing up less than an hour ago. But as I looked around the table at everyone waiting for my answer I realized that telling this client that I had discovered that "there was 27% lost time in Assembly due to looking for missing parts" provided no Value whatsoever. Ironically it would take me almost 15 years to digest this simple lesson and allow me to reinvent my own management consulting company. Instead I babbled something equally non-Value added about streamlining processes, properly scheduling jobs, and installing a Resource Plan.
Lesson Number Two: Jim listened for a minute or so and then pointed his finger at me and said "those [guys] down in that factory had better get it through their heads that this is first and foremost a marketing company. And if they can't keep up with me then I'll find someone who can." Once again, it would take many years for this lesson to sink in.
I might have been a brand new consultant at that point, but even I knew when to shut up. I probably mumbled something in agreement and then went back to stuffing envelopes. However as I sat in that clean modern room with it's fancy lighting surrounded by office types who probably didn't even know how to find the factory I remember thinking to myself "...Doesn't this guy realize that without a factory he wouldn't have anything to sell?" I didn't know it at the time, but Jim had just given that know-it-all engineer-come-management-consultant the golden key to success in any business.
Since those days I have gone on to complete dozens of project in every industry imaginable. And I would like to tell you that I left Jim's marketing department that night inspired by his wisdom. But in truth it took me better than a decade, many successful projects, a number of spectacular failures including the bankruptcy of a 65 year old company under my watch, and the blood, sweat and tears associated with the start-up of my own business to fully grasp the wisdom of his words.
I still recall the "4 Ps of Marketing" from my MBA days. The job of Marketing is to identify the right Product, Place, Price and P-distribution. In other words find out what the customer Values and make sure they get it. Back then I remember the people in Jim's factory being so hung up on what they could do and couldn't do. And every time Jim's Marketing team would change a design because they found a feature that customers liked better it would send shock waves through the manufacturing process and generate piles of obsolete WIP.
That isn't to say that there aren't companies out there, very successful companies, that aren't first and foremost marketing companies. It's easy to think of famous technology companies for example that have been built on and thrived on innovation. But make no mistake, any that aren't focused on the market are living on borrowed time. It might take a week, a month, a year or longer. But eventually someone is going to come along and offer your customers a better product at a better time or a better price or a better place. And by the time you realize it, it's probably too late.
I should mention that in recognition of me staying late to help stuff envelopes Jim invited my fiance and I, along with several other guests, to spend the day on his boat out on the Toronto harbor watching speedboat races. And all of us found him to be a most generous and charming host that bright summer afternoon. It was with sadness that I learned of Jim's recent passing. It was fitting that the news came from none other than my very first consulting manager on that project all those years ago who is now a good friend and business colleague.
So the next time you erase the marker from that whiteboard in your office, stop for a moment and ask yourself "what do my customers really Value and am I giving it to them?"
Monday, July 18, 2011
Size Doesn't Matter, Despite What Accountants Tell You
I have spent a lot of years working in many different companies in many different industries. And one thing I have noticed is that departments with the biggest assets are the most difficult to work with when it comes to implementing Lean. I used to assume this was because it took big men with lots of testosterone to run big machines. And these sorts of "men's men" tended to be strong-willed, opinionated.and set in their ways. But during a recent discussion with a colleague about his challenges working in a large press shop at an automotive manufacturer another reason occurred to me; accountants.
My colleague and I were discussing his efforts to implement Lean thinking in this particular press shop. And in particular the tendency of the operators to over produce parts each shift in order to get their Parts per Hour up.
For the benefit of those who have never been in a press shop allow me to describe the scene. To start with presses are used in a variety of industries where metal parts are made. As I have described in the past, presses do to flat sheets of steel what your teeth do to a stick of chewing gum. These machines, that range in size from a household appliance up to and including behemoths much larger than a house, essentially do the same thing. Their "jaws" continually open and close as sheet metal is fed in one side, and formed parts fall out the other.
In an automotive press shop stamping presses can be massive. And it is truly a humbling feeling to stand next to one of these beasts as it chews up sheets of steel up to a quarter of an inch thick, and spits out massive parts used to make hinges, car frames, and even entire body panels. And despite the multitude of safety equipment designed to protect the people who work with these animals, one has the distinct feeling that a 6,000 ton press the size of a building wouldn't even notice a finger, a hand or even a whole person who happened to get "bit."
The other thing you notice about stamping presses is that they are fast. A typical press will "bite down" on its steel meal once every second or faster. So depending on how many bites it takes to make a finished part, it doesn't take long to fill a bin or a rack with metal parts ready to be welded, painted and turned into a car. In fact cycle time is one of the factors that drives up the cost of these pieces of equipment well into the millions of dollars. And that's where the accountants come in.
Whenever a company makes a capital purchase there is usually some sort of justification for the expenditure that has to be approved by someone entrusted to make these decisions. When a decision needs to be made to buy a new microwave oven for the lunchroom this is relatively straightforward. Usually a manager is authorized to approve such a purchase.
As the cost of the new asset goes up, however, so too does the required "justification" for the expenditure. And this makes sense. In theory any purchase of new capital should cover the Weighted Average Cost of Capital (WACC); another fancy accounting term used to make investment decisions. Or the purchase should not be made and company capital should be put into other purchases with a higher return on investment.
So how do you justify spending five million dollars on a brand new 6,000 ton stamping press? Well it's relatively simple. You figure out how many parts you are going to make on the press over its operating life, and divide that number into the cost of the press. For example if a company plans to make five million parts on a five million dollar press, then in simple terms each part "absorbs" one dollar of the capital cost. Again accountants and finance people can make this much more complicated but for this discussion this will do.
If the purchase is approved then the next few months are filled with lots of excitement and anticipation in the press shop. A whole bunch of people, usually from a foreign country speaking an exotic language, will set up groups of trailers and begin working on installing the new press. A select few members of the purchasing company, usually young engineers and seasoned operators, will be assigned to work with the foreigners to assist with the project and learn how to operate the new piece of equipment. And these people will assume a certain level of awe and respect from the rest of the employees who watch the proceedings from their workstations and secretly wish they too could be involved in the exciting new project.
Eventually the press will be ready to run for the first time. For this occasion a lot of people wearing clean white hard hats who normally never even go out to the press shop will start to hang around. And on the big day the entire company will be invited to witness the start-up of the new machine. Speeches will be made about how the new equipment represents the company's "investment in the future." There will be handshakes all around. And finally someone will hit the magic start button. The crowd will gasp as the mighty motors roar into action. And everyone will cheer as the massive jaws start to chew noisily into the fresh flat steel for the very first time. And for a few minutes, or at least until the little sandwiches and cold drinks are gone, everyone will be filled with a sense of pride and optimism.
And here's where it all goes wrong. I explained earlier that when the original decision to purchase the new press was made it was decided in this case that every part would earn $1 towards the $5,000,000 purchase price. Well now it's time for this machine, and its managers, to start paying their way. All of a sudden smart rational men who clearly understand that Over Production is one of the 8 deadly wastes will lose their Lean minds. Instead of producing just the number of parts needed for the weld shop on any given day, they will become intoxicated on the notion that it isn't metal parts dropping out of the press, but rather piles and piles of shiny new $1 coins. In fact they start to see not bins and bins of Work In Process stacked to the ceiling. But rather bins and bins of countless coins and treasure.
Their schedulers will try in vain to make them stop. But drunk on their new found ability to generate untold riches for their department they will yell "faster! faster!" to the frantic press operators. Eager to obey their task masters the operators will forgo die changes (and preventive maintenance) in order to feed the massive beast.
All through the day and all through the night the madness continues. In fact if the press manager walks out into the press shop and notices one of his beasts not eating he immediately demands an explanation. Each morning reports are produced and those who haven't kept their asset-intensive pets eating are called to account.
Huge production runs are justified in the name of "productivity." Warehouses are built, rack are set up, and faster and bigger material handling equipment is justified and purchased all in the name of covering the cost of the presses.
Eventually, sometimes, the situation reaches a crisis. At some point it will be time to pay for the orgy of over-production. Either the material handling department will finally put its hands up in despair and explain that it can no longer manage the massive amounts of inventory. Or the downstream production department's complaints of continual parts shortages will become too loud to ignore. Or the very same accountants who turned the presses into figurative cash machines will start to raise issues about working capital tied up in inventory. Or the sky-rocketing costs of scrap and obsolete inventory, a guaranteed byproduct of over-production.
So the next time you are talking to someone who has spent his life around huge capital assets such as presses, blast furnaces or even airplanes. And you are trying to convince them that, despite what the accountants say, they need only ever produce exactly what their customers need. Do not attribute their resistance or apparent lack of understanding to a hormonal imbalance brought on by years and years of exposure to more horsepower than most of us will see in a lifetime. But rather understand that theirs is a mindset forced upon them by the relentless urning to financially justify their assets no matter what the cost. And to them there is no sound more deafening than the sound of silence.
My colleague and I were discussing his efforts to implement Lean thinking in this particular press shop. And in particular the tendency of the operators to over produce parts each shift in order to get their Parts per Hour up.
For the benefit of those who have never been in a press shop allow me to describe the scene. To start with presses are used in a variety of industries where metal parts are made. As I have described in the past, presses do to flat sheets of steel what your teeth do to a stick of chewing gum. These machines, that range in size from a household appliance up to and including behemoths much larger than a house, essentially do the same thing. Their "jaws" continually open and close as sheet metal is fed in one side, and formed parts fall out the other.
In an automotive press shop stamping presses can be massive. And it is truly a humbling feeling to stand next to one of these beasts as it chews up sheets of steel up to a quarter of an inch thick, and spits out massive parts used to make hinges, car frames, and even entire body panels. And despite the multitude of safety equipment designed to protect the people who work with these animals, one has the distinct feeling that a 6,000 ton press the size of a building wouldn't even notice a finger, a hand or even a whole person who happened to get "bit."
The other thing you notice about stamping presses is that they are fast. A typical press will "bite down" on its steel meal once every second or faster. So depending on how many bites it takes to make a finished part, it doesn't take long to fill a bin or a rack with metal parts ready to be welded, painted and turned into a car. In fact cycle time is one of the factors that drives up the cost of these pieces of equipment well into the millions of dollars. And that's where the accountants come in.
Whenever a company makes a capital purchase there is usually some sort of justification for the expenditure that has to be approved by someone entrusted to make these decisions. When a decision needs to be made to buy a new microwave oven for the lunchroom this is relatively straightforward. Usually a manager is authorized to approve such a purchase.
As the cost of the new asset goes up, however, so too does the required "justification" for the expenditure. And this makes sense. In theory any purchase of new capital should cover the Weighted Average Cost of Capital (WACC); another fancy accounting term used to make investment decisions. Or the purchase should not be made and company capital should be put into other purchases with a higher return on investment.
So how do you justify spending five million dollars on a brand new 6,000 ton stamping press? Well it's relatively simple. You figure out how many parts you are going to make on the press over its operating life, and divide that number into the cost of the press. For example if a company plans to make five million parts on a five million dollar press, then in simple terms each part "absorbs" one dollar of the capital cost. Again accountants and finance people can make this much more complicated but for this discussion this will do.
If the purchase is approved then the next few months are filled with lots of excitement and anticipation in the press shop. A whole bunch of people, usually from a foreign country speaking an exotic language, will set up groups of trailers and begin working on installing the new press. A select few members of the purchasing company, usually young engineers and seasoned operators, will be assigned to work with the foreigners to assist with the project and learn how to operate the new piece of equipment. And these people will assume a certain level of awe and respect from the rest of the employees who watch the proceedings from their workstations and secretly wish they too could be involved in the exciting new project.
Eventually the press will be ready to run for the first time. For this occasion a lot of people wearing clean white hard hats who normally never even go out to the press shop will start to hang around. And on the big day the entire company will be invited to witness the start-up of the new machine. Speeches will be made about how the new equipment represents the company's "investment in the future." There will be handshakes all around. And finally someone will hit the magic start button. The crowd will gasp as the mighty motors roar into action. And everyone will cheer as the massive jaws start to chew noisily into the fresh flat steel for the very first time. And for a few minutes, or at least until the little sandwiches and cold drinks are gone, everyone will be filled with a sense of pride and optimism.
And here's where it all goes wrong. I explained earlier that when the original decision to purchase the new press was made it was decided in this case that every part would earn $1 towards the $5,000,000 purchase price. Well now it's time for this machine, and its managers, to start paying their way. All of a sudden smart rational men who clearly understand that Over Production is one of the 8 deadly wastes will lose their Lean minds. Instead of producing just the number of parts needed for the weld shop on any given day, they will become intoxicated on the notion that it isn't metal parts dropping out of the press, but rather piles and piles of shiny new $1 coins. In fact they start to see not bins and bins of Work In Process stacked to the ceiling. But rather bins and bins of countless coins and treasure.
Their schedulers will try in vain to make them stop. But drunk on their new found ability to generate untold riches for their department they will yell "faster! faster!" to the frantic press operators. Eager to obey their task masters the operators will forgo die changes (and preventive maintenance) in order to feed the massive beast.
All through the day and all through the night the madness continues. In fact if the press manager walks out into the press shop and notices one of his beasts not eating he immediately demands an explanation. Each morning reports are produced and those who haven't kept their asset-intensive pets eating are called to account.
Huge production runs are justified in the name of "productivity." Warehouses are built, rack are set up, and faster and bigger material handling equipment is justified and purchased all in the name of covering the cost of the presses.
Eventually, sometimes, the situation reaches a crisis. At some point it will be time to pay for the orgy of over-production. Either the material handling department will finally put its hands up in despair and explain that it can no longer manage the massive amounts of inventory. Or the downstream production department's complaints of continual parts shortages will become too loud to ignore. Or the very same accountants who turned the presses into figurative cash machines will start to raise issues about working capital tied up in inventory. Or the sky-rocketing costs of scrap and obsolete inventory, a guaranteed byproduct of over-production.
So the next time you are talking to someone who has spent his life around huge capital assets such as presses, blast furnaces or even airplanes. And you are trying to convince them that, despite what the accountants say, they need only ever produce exactly what their customers need. Do not attribute their resistance or apparent lack of understanding to a hormonal imbalance brought on by years and years of exposure to more horsepower than most of us will see in a lifetime. But rather understand that theirs is a mindset forced upon them by the relentless urning to financially justify their assets no matter what the cost. And to them there is no sound more deafening than the sound of silence.
Monday, July 4, 2011
Still don't understand Lean? Spend a long weekend at an amusement park
When people, including myself, try to teach other people about Lean they often ask their clients to "imagine yourself as an order going through your organization." The idea is to get people thinking, not from the perspective of "this is how we do things here," but rather from the perspective "what do we do that adds Value?"
Of course if you are looking for a more personal way to relate to Lean there is the often cited example of taking a trip on an airplane. Anyone who has traveled this way can readily relate to the difference between Value and Waste. And they can easily imagine what it feels like to have shockingly little of the former, and scads of the latter.
Being the passionate devotee of Lean that I am I recently noted, not for the first time, another fantastic example of what it feels like on a personal level to be a "product" going through an organization's Value Stream. And in fact you will see that even my 11 year old kids quickly grasped the concept of Value vs Waste.
The location: America's largest indoor water park. The date: 4th of July Weekend. The result: the perfect combination of "personal experience" Value Streams and more customer demand than you can any organization could ever want.
As always I will start with defining Value from the customer's perspective. This is relatively straightforward since I happened to be the customer, or the one paying the bill. In this case my definition of Value included the following:
For those of you like me who have never seen one of these in real life allow me to explain. The idea is to simulate surfing. They do this using a large, wide curved ramp roughly the shape of a wave. Then they blast water up this ramp to make a thin wide wave. You then jump onto the "wave" using a boogie board and voila, you're surfing.
If this does not sound like the most amazing ride ever then I am not describing it properly. But if you do not believe me, just ask the dozens and dozens of people willing to wait almost an hour for a one minute ride.
Sensing that the Value was starting to turn into Waste I decided to ask my children "so do you want to know what Daddy does for work?" I won't say this completely replaced racing down a 1,000 foot water slide in terms of Value, but they were desperate enough to answer "OK."
"Well" I began, "what Daddy does is help companies figure out how to do a better job making their customers happy.
"That's so they can get more customers, right?" my daughter added.
"And make the owners richer!" my son piped in with a smile.
I allowed myself a fleeting fantasy of a double MBA graduation ceremony involving an unprecedented double valedictorian address sometime in the not so distant future.
"In fact you're both right" I said. "So to do that the first thing I do is help companies figure out who their customers are.
"That seems easy, why do they have to ask you?" I was quickly asked.
Fighting back the urge, as all consultants do more often than not, to justify myself I responded "Well it's not always so simple." "For example in here who do you think the customers are?"
"We are!!" they both shouted above the noise of the rushing water.
"Nope" I said. "I'll give you a hint. The customer is usually the one who pays the bills."
This stumped them for a minute and I realized that they still lived in that wonderful world where everything is free and there are no such things as taxes.
"Who is paying for us to come here?" I prodded.
"You and mommy?" my daughter asked more than answered.
"Close enough" I thought. And to my kids "that's right, I am the customer.
"But what about us?" my son asked, not liking where this was going.
"Well you're the most important part" I assured him. "Because the next thing I do is help my clients figure out what it is they do that their customers like. So for here, what do you think I want them to do?"
A little consideration, and then from my son "serve you beer?" Definitely the makings of a brilliant marketer.
"Well yes" I admitted. "But what else? Think about why Mommy and Daddy brought us here in the first place. Do you think this was our first choice for a vacation?"
More thinking. And then my daughter said "because we wanted to come here."
"Exactly" I agreed. "To Mommy and Daddy this place is doing the right thing when we are having fun and you two are having fun."
"That still doesn't seem very hard to do" my son pointed out. I could see he was going to give some poor managing partner fits one day.
"Well let's keep going then" I said. "So tell me what about this place do you think is fun."
"Everything!" they agreed happily.
"Oh really? So was it fun to spend all that time trying to find our locker only to find out that the key did not work and we had to go back and wait in line to get another one?"
"No that was boring" my daughter frowned.
"And was it fun when we had to wait so long for our breakfast and then the waitress brought you the wrong thing and you decided to eat it anyway because we wanted to get to the water park?"
"No that was disgusting" my son grimaced.
I moved in for the kill. "And do you think it's fun to wait in these line-ups?"
They didn't have to think about this. "No" they both agreed.
"So even a place like this does some things that its customers don't like. So just imagine how many more things a company that doesn't have water slides but only has offices or factories does that their customers don't like"
They had to think about that. And then from my son "OK so how do you fix things?"
"Well after we figure out who the customers are and what they like and don't like the next thing to do is to measure how often the company does the right thing and how often they do the wrong thing. Let's think about this Flowrider ride as an example. When would you say the company is doing the right thing?"
"When someone is on the ride" from my daughter.
"I would agree with that. And when do you think they are doing the wrong thing?" I asked.
"When you wipe out?" my son joked.
"I don't know about that" I said. "Even the wipe outs look pretty fun."
They looked around but couldn't think of anything. So I asked "have you been having fun on the ride for the past half an hour?"
They thought about it, and then "standing in line is no fun!"
"But how can you fix that?" my daughter asked looking a little worried that we might leave without getting a chance to ride.
"Well the first thing to do is measure the good things. So how do they measure the good part on this ride? Look around."
"They looked and then my son said "They have that clock at the back that starts at one minute for every new person. That's your time limit."
"Exactly!" I said. "So if each person has one minute, and you are the 15th person in line, how long should it be before you get your turn?"
"15 minutes!" he said happily.
"Well if everything was running perfectly I agree. But do you think everything is running the way it should be?"
We all turned to watch what was going on. A new person was standing at the top of the 'wave' and one of the two lifeguards was explaining to them how to hold the boogie board and how to jump onto the water. The clock had not yet started.
A minute or so went by and the person was still considering the instructions and presumably trying to get up the nerve to jump onto the wave. The clock still had not started.
Finally my daughter said "hey, their time should be up by now but they haven't even started the clock!" She was starting to see the waste and did not seem to be happy about it.
Another minute or so went by. Finally the person jumped onto the wave and was promptly swept off the board and back up to the top. The clock finally started to count down their 60 seconds.
"They took like five minutes before their turn even started" my son pointed out. "That's not fair."
"How many people could have gone in that time?" I asked.
"Five of us could have gone if they kept the clock going."
"So would you say the company is doing the right thing only one minute out of five in this case?"
Immediately suspicious of anything resembling math while on vacation from school my kids looked at me sceptically. So I continued. "If you got only one out of five on a test what percent would that be."
"20%" my son answered. And then "but we don't want to do math on our holiday.
I had to laugh. "OK but just so you know we could say that right now the company is only doing the right thing according to its customers 20% of the time, right?"
Not wanting to encourage any more math talk they chose not to answer. So I moved on. "So how do you think you would help this company do a better job?"
"Just push the people into the water?" my son suggested. They both laughed at this. And I thought about my own clients who had come up with similar ideas.
"Why doesn't the girl at the top teach the next person how to do it while the first person is on the ride rather than wait until they're done?" my daughter asked with wisdom beyond her years.
"That makes sense" I agreed.
"Or they could have two lines going, one from either side" my son chimed in.
"Well as long as it's safe" I pointed out.
"Or what about having a sign-up sheet so small groups of people could show up at designated times?" I suggested enthusiastically.
Blank stares. OK maybe it was too soon to get into Short Interval Scheduling. But we eventually got our "one minute turns." And the rest of the day was spent going from one Value Added activity to the next. And when the water park wasn't adding Value not only could my kids recognize it, but they had a steady stream of both creative and silly ways to make things better. Just like any customers would.
Of course if you are looking for a more personal way to relate to Lean there is the often cited example of taking a trip on an airplane. Anyone who has traveled this way can readily relate to the difference between Value and Waste. And they can easily imagine what it feels like to have shockingly little of the former, and scads of the latter.
Being the passionate devotee of Lean that I am I recently noted, not for the first time, another fantastic example of what it feels like on a personal level to be a "product" going through an organization's Value Stream. And in fact you will see that even my 11 year old kids quickly grasped the concept of Value vs Waste.
The location: America's largest indoor water park. The date: 4th of July Weekend. The result: the perfect combination of "personal experience" Value Streams and more customer demand than you can any organization could ever want.
As always I will start with defining Value from the customer's perspective. This is relatively straightforward since I happened to be the customer, or the one paying the bill. In this case my definition of Value included the following:
- My kids are being safely entertained
- My wife and I are as relaxed and comfortable as you can be inside the worlds largest indoor water park
For those of you like me who have never seen one of these in real life allow me to explain. The idea is to simulate surfing. They do this using a large, wide curved ramp roughly the shape of a wave. Then they blast water up this ramp to make a thin wide wave. You then jump onto the "wave" using a boogie board and voila, you're surfing.
If this does not sound like the most amazing ride ever then I am not describing it properly. But if you do not believe me, just ask the dozens and dozens of people willing to wait almost an hour for a one minute ride.
Sensing that the Value was starting to turn into Waste I decided to ask my children "so do you want to know what Daddy does for work?" I won't say this completely replaced racing down a 1,000 foot water slide in terms of Value, but they were desperate enough to answer "OK."
"Well" I began, "what Daddy does is help companies figure out how to do a better job making their customers happy.
"That's so they can get more customers, right?" my daughter added.
"And make the owners richer!" my son piped in with a smile.
I allowed myself a fleeting fantasy of a double MBA graduation ceremony involving an unprecedented double valedictorian address sometime in the not so distant future.
"In fact you're both right" I said. "So to do that the first thing I do is help companies figure out who their customers are.
"That seems easy, why do they have to ask you?" I was quickly asked.
Fighting back the urge, as all consultants do more often than not, to justify myself I responded "Well it's not always so simple." "For example in here who do you think the customers are?"
"We are!!" they both shouted above the noise of the rushing water.
"Nope" I said. "I'll give you a hint. The customer is usually the one who pays the bills."
This stumped them for a minute and I realized that they still lived in that wonderful world where everything is free and there are no such things as taxes.
"Who is paying for us to come here?" I prodded.
"You and mommy?" my daughter asked more than answered.
"Close enough" I thought. And to my kids "that's right, I am the customer.
"But what about us?" my son asked, not liking where this was going.
"Well you're the most important part" I assured him. "Because the next thing I do is help my clients figure out what it is they do that their customers like. So for here, what do you think I want them to do?"
A little consideration, and then from my son "serve you beer?" Definitely the makings of a brilliant marketer.
"Well yes" I admitted. "But what else? Think about why Mommy and Daddy brought us here in the first place. Do you think this was our first choice for a vacation?"
More thinking. And then my daughter said "because we wanted to come here."
"Exactly" I agreed. "To Mommy and Daddy this place is doing the right thing when we are having fun and you two are having fun."
"That still doesn't seem very hard to do" my son pointed out. I could see he was going to give some poor managing partner fits one day.
"Well let's keep going then" I said. "So tell me what about this place do you think is fun."
"Everything!" they agreed happily.
"Oh really? So was it fun to spend all that time trying to find our locker only to find out that the key did not work and we had to go back and wait in line to get another one?"
"No that was boring" my daughter frowned.
"And was it fun when we had to wait so long for our breakfast and then the waitress brought you the wrong thing and you decided to eat it anyway because we wanted to get to the water park?"
"No that was disgusting" my son grimaced.
I moved in for the kill. "And do you think it's fun to wait in these line-ups?"
They didn't have to think about this. "No" they both agreed.
"So even a place like this does some things that its customers don't like. So just imagine how many more things a company that doesn't have water slides but only has offices or factories does that their customers don't like"
They had to think about that. And then from my son "OK so how do you fix things?"
"Well after we figure out who the customers are and what they like and don't like the next thing to do is to measure how often the company does the right thing and how often they do the wrong thing. Let's think about this Flowrider ride as an example. When would you say the company is doing the right thing?"
"When someone is on the ride" from my daughter.
"I would agree with that. And when do you think they are doing the wrong thing?" I asked.
"When you wipe out?" my son joked.
"I don't know about that" I said. "Even the wipe outs look pretty fun."
They looked around but couldn't think of anything. So I asked "have you been having fun on the ride for the past half an hour?"
They thought about it, and then "standing in line is no fun!"
"But how can you fix that?" my daughter asked looking a little worried that we might leave without getting a chance to ride.
"Well the first thing to do is measure the good things. So how do they measure the good part on this ride? Look around."
"They looked and then my son said "They have that clock at the back that starts at one minute for every new person. That's your time limit."
"Exactly!" I said. "So if each person has one minute, and you are the 15th person in line, how long should it be before you get your turn?"
"15 minutes!" he said happily.
"Well if everything was running perfectly I agree. But do you think everything is running the way it should be?"
We all turned to watch what was going on. A new person was standing at the top of the 'wave' and one of the two lifeguards was explaining to them how to hold the boogie board and how to jump onto the water. The clock had not yet started.
A minute or so went by and the person was still considering the instructions and presumably trying to get up the nerve to jump onto the wave. The clock still had not started.
Finally my daughter said "hey, their time should be up by now but they haven't even started the clock!" She was starting to see the waste and did not seem to be happy about it.
Another minute or so went by. Finally the person jumped onto the wave and was promptly swept off the board and back up to the top. The clock finally started to count down their 60 seconds.
"They took like five minutes before their turn even started" my son pointed out. "That's not fair."
"How many people could have gone in that time?" I asked.
"Five of us could have gone if they kept the clock going."
"So would you say the company is doing the right thing only one minute out of five in this case?"
Immediately suspicious of anything resembling math while on vacation from school my kids looked at me sceptically. So I continued. "If you got only one out of five on a test what percent would that be."
"20%" my son answered. And then "but we don't want to do math on our holiday.
I had to laugh. "OK but just so you know we could say that right now the company is only doing the right thing according to its customers 20% of the time, right?"
Not wanting to encourage any more math talk they chose not to answer. So I moved on. "So how do you think you would help this company do a better job?"
"Just push the people into the water?" my son suggested. They both laughed at this. And I thought about my own clients who had come up with similar ideas.
"Why doesn't the girl at the top teach the next person how to do it while the first person is on the ride rather than wait until they're done?" my daughter asked with wisdom beyond her years.
"That makes sense" I agreed.
"Or they could have two lines going, one from either side" my son chimed in.
"Well as long as it's safe" I pointed out.
"Or what about having a sign-up sheet so small groups of people could show up at designated times?" I suggested enthusiastically.
Blank stares. OK maybe it was too soon to get into Short Interval Scheduling. But we eventually got our "one minute turns." And the rest of the day was spent going from one Value Added activity to the next. And when the water park wasn't adding Value not only could my kids recognize it, but they had a steady stream of both creative and silly ways to make things better. Just like any customers would.
Monday, June 27, 2011
He Shoots! He Adds Value!
Lean Rule Number 3: Maximize Value and Reduce or Eliminate Waste.
Lean Rule Number 2: Define Value.
Lean Rule Number 1: Identify your customer.
Who is the customer of a hockey team? The fans? They buy the tickets. Let's go with that.
What do the fans value? Winning? Fights? Big hits? Goals? Great saves? Great action? Good plays? Beer? Loud music? Loud cheering/noise? Exciting atmosphere?
What do they not value? Losing? No action? Bad goals against? Getting outplayed? Boring atmosphere? No goals for?
So what does the Value Stream Map look like for a fan? Maybe something like this:
1) Quickly purchase ticket at a reasonable price
2) Take a simple and safe trip to the game
3) Experience a safe and exciting atmosphere inside the arena. Lots to see/do/eat/drink
4) Sit down in comfortable seats with a great view of the action
5) Home team wins the face off
6) Home team completes one or more good passes
7) Home team scores a great goal (Go to Step 5)
8) Home team wins
9) Enjoy a simple and safe trip home
So one question is do fans value good defense? Or is good defense simply a necessary non-value added activity that the home team is forced to do whenever something goes wrong with the value stream?
What other Lean principles apply to a hockey game? What about backlog as opposed to flow? Maybe passing is not value added? Maybe this equates to moving inventory around. It is necessary given the constraints of the current process. (200 foot ice surface). Consider that too much passing without a shot on net makes the fans restless and they will usually start chanting "shoot, shoot, shoot." Maybe what they really mean is "value, value, value."
What about over production? Is it value added to see a lopsided game where the home team wins by 10 goals? Chances are in this case the team has invested in too much in talent or capability. Is this similar to the waste of having too good quality?
Whether they think about it this way or not good coaches (leaders) will break the game into a series of plays (Value Streams) designed to create value (goals). They will then spend hours going through game film trying to identify causes of waste (turnovers, goals against) and work with their teams to continually improve their processes to reduce waste and increase quality.
Furthermore teams will use quality measures (time of possession, shots on goal, turnovers) to manage their process (game) in real time to minimize waste and maximize value to the customers.
So what is your role on your team? Are you the general manager who sets the strategic direction and assembles the appropriate resources? Are you the coach who is responsible for the design and execution of the value stream? Are you a forward responsible for passing and scoring goals? Are you on defense goalie responsible for identifying and resolving defects? Are you up in the booth providing information and feedback on the process?
I find people get so caught up in trying to justify their roles on a team by calling what they do "value added." When what we should be doing is finding ways to spend less time performing our usual non-value added tasks and more ways trying to find alternative ways to add value.
Going back to a hockey game if we buy that scoring goals is adding value and stopping shots is non-value added then consider what really good defense and goalies do. Not only do they stop opposing players and shots on their own net (non-value added). But they become an integral part of the offense. Talented goalies will be able to stop the opposing team's shoot-in behind the net, then pass the puck to one of their defense (value add) who in turn will pass the puck to a forward (value add). The better they perform the Value Stream the more time they spend adding value (passing) and the less time they spend on non-value added tasks.
Blocking shots hurts. Winning feels good. Think about it.
Lean Rule Number 2: Define Value.
Lean Rule Number 1: Identify your customer.
Who is the customer of a hockey team? The fans? They buy the tickets. Let's go with that.
What do the fans value? Winning? Fights? Big hits? Goals? Great saves? Great action? Good plays? Beer? Loud music? Loud cheering/noise? Exciting atmosphere?
What do they not value? Losing? No action? Bad goals against? Getting outplayed? Boring atmosphere? No goals for?
So what does the Value Stream Map look like for a fan? Maybe something like this:
1) Quickly purchase ticket at a reasonable price
2) Take a simple and safe trip to the game
3) Experience a safe and exciting atmosphere inside the arena. Lots to see/do/eat/drink
4) Sit down in comfortable seats with a great view of the action
5) Home team wins the face off
6) Home team completes one or more good passes
7) Home team scores a great goal (Go to Step 5)
8) Home team wins
9) Enjoy a simple and safe trip home
So one question is do fans value good defense? Or is good defense simply a necessary non-value added activity that the home team is forced to do whenever something goes wrong with the value stream?
What other Lean principles apply to a hockey game? What about backlog as opposed to flow? Maybe passing is not value added? Maybe this equates to moving inventory around. It is necessary given the constraints of the current process. (200 foot ice surface). Consider that too much passing without a shot on net makes the fans restless and they will usually start chanting "shoot, shoot, shoot." Maybe what they really mean is "value, value, value."
What about over production? Is it value added to see a lopsided game where the home team wins by 10 goals? Chances are in this case the team has invested in too much in talent or capability. Is this similar to the waste of having too good quality?
Whether they think about it this way or not good coaches (leaders) will break the game into a series of plays (Value Streams) designed to create value (goals). They will then spend hours going through game film trying to identify causes of waste (turnovers, goals against) and work with their teams to continually improve their processes to reduce waste and increase quality.
Furthermore teams will use quality measures (time of possession, shots on goal, turnovers) to manage their process (game) in real time to minimize waste and maximize value to the customers.
So what is your role on your team? Are you the general manager who sets the strategic direction and assembles the appropriate resources? Are you the coach who is responsible for the design and execution of the value stream? Are you a forward responsible for passing and scoring goals? Are you on defense goalie responsible for identifying and resolving defects? Are you up in the booth providing information and feedback on the process?
I find people get so caught up in trying to justify their roles on a team by calling what they do "value added." When what we should be doing is finding ways to spend less time performing our usual non-value added tasks and more ways trying to find alternative ways to add value.
Going back to a hockey game if we buy that scoring goals is adding value and stopping shots is non-value added then consider what really good defense and goalies do. Not only do they stop opposing players and shots on their own net (non-value added). But they become an integral part of the offense. Talented goalies will be able to stop the opposing team's shoot-in behind the net, then pass the puck to one of their defense (value add) who in turn will pass the puck to a forward (value add). The better they perform the Value Stream the more time they spend adding value (passing) and the less time they spend on non-value added tasks.
Blocking shots hurts. Winning feels good. Think about it.
Sunday, April 10, 2011
Most of us have never added any value...and that's a good thing
Lean methodology for improvement starts with and is firmly grounded on the concept of Value as defined by the customer. The very first thing any individual or organization must do when starting a journey of Lean is identify their customers and use the Voice of the Customer (VOC) to tell them what constitutes Value.
This idea sounds simple enough. And you do not need an MBA to appreciate that is also makes sense. But consider then what it means from a practical perspective.
Lean practitioners further define Value added steps as anything that changes the following attributes of a Product:
So how does an integrated steel mill add Value? Using the above "3Fs" criteria consider the following simplified process:
So what is the problem? Everyone who has read up to this point now knows enough to walk up to any integrated steel mill and at least get them started on their journey to Lean.
Allow me to point out the problem.
I spent five years working as an engineer in the coke ovens of a major integrated steel company. And as I look back on those happy days spent completing one technical project after the other I am forced to acknowledge that, given the above Value Stream, I did not add one single scrap of value the entire time I was there. I never operated the machines that loaded the coke into the coke ovens. I never ran the rolling mills that flattened out the strip of steel. And I never pushed the buttons to make the steel go through the coating baths. Never mind adding Value 80% of the time. Or 50% of the time. Or even 5% of the time. I'm talking Z-E-R-O Value over the entire five years I worked there.
....this is the point where usually my fellow engineers jump to my defense claiming that all the technical projects I completed added Value through improved yield, reduced raw material costs, and in one colossal example of profound Waste, I helped the company migrate their perfectly good Information Systems from a DOS platform to a Windows environment.
Well let's listen to the VOC...
"Hello Toyota. We would like to ask your opinion on something. We're trying to figure out if an engineer named Kevin is adding any value here. Well he just finished a big project to switch all our databases and reporting systems from DOS to Windows. It's really quite impressive. We can make all sorts of graphs and reports on just about anything you can imagine."
"...does he run the coke oven to make the coke? ...well no."
"...does he run the blast furnace to make the iron? ...uh, again no."
"...does he run any of the equipment in the rolling mills? ....sorry no. I don't believe he does any of that stuff. But back to this Windows based information system. Did we mention how impressive it is? The graphs? The real-time production data? Queries?"
"Ok that's great. We appreciate your time. And yes your coil of steel will be ready for delivery by this afternoon as requested. Bye for now."
Fortunately for me none of my bosses ever listened to the Voice of the Customer.
As you can imagine when I begin the journey of Lean with any client and I introduce this concept, to say that I am met with resistance would be a gross understatement. I have never actually been physically struck by anyone at a client site. But I have had people scream at me in rage at the notion that nothing they or anyone else does adds Value. And I am certainly not unsympathetic. Trust me I know first hand how demoralizing it can be to realize halfway through your professional life that most of what you thought you have accomplished has been Waste. Keep in mind I have been an engineer, a senior executive and a management consultant. Not a lot of opportunities to generate Value in any of those lines of work.
So how do we come to terms with this frustration and heartbreak?
Well the first option is to not ask me or any other Lean consultant to help you with your Lean journey. Instead you can ignore your customer, unilaterally designate thousands upon thousands of steps within your Value Stream as Value-Added based on the criteria that "you've always done them" or "you need to do them" or you "can't imagine ever not doing them." You can imagine how popular I am in overhead departments such as HR, Research & Development, Finance, Quality and so on.
Then you can put in place improvement initiatives to squeeze out what little Waste is left (by your narrow definition) and have large company meetings to celebrate your paltry incremental successes. You can also take great comfort in knowing that you are not alone. The vast majority of your competitors are choosing this exact same strategy.
Or....you can decide to not be like all of your competitors. You can make the decision to maximize your chances of significantly improving your processes by putting everything, no matter how long you have done it or how well you think you do it or how much you think you need to do it, under the VOC microscope. And then no matter how painful or frustrating or demoralizing it is, you can listen to the Voice of the Customer when designating process steps as Value-Added or Waste.
So back to the steel company for a minute. What would this mean for the company that gave me my very first opportunity as a professional. Let's review the process again and roughly estimate how many people would be adding Value at any given time according to the Value Stream. The following are extremely rough estimates for how many operators are required at any one time at each step. And by operators I mean people who are actually pushing the buttons and running the huge machines required to make steel.
Now consider that at the time I was working there the company employed roughly 10,000 people. If 5% of them were on vacation or away from work at any given time that would mean that on day shift at least the company was somewhere in the neighborhood of 12 / 9,500 x 100% = 0.12% Efficient. The pessimists in the group would throw up their hands in despair. The Lean devotees would rub their hands with glee at all that potential Waste to reduce or eliminate.
My point here is obviously not to spare people's feelings and pat them on the back for doing such a great job by artificially inflating their Value Added process steps. My point is to help people give themselves the greatest opportunity to succeed by putting everything on the table.
As a final note consider this. Within the steel industry there are companies operating what are called "mini mills." These smaller operations produce the same flat rolled product as the large integrated mills but with even fewer steps in their Value Streams. They do this by recycling scrap steel and building their mills in one continuous stream (Flow). This in turn allows them to have as few as 3 operators do what it takes 12 in the process described above. With competitors like this out there why on earth would anyone want to limit their opportunity to improve?
So how much Value did you add for your organization's Customers today?
This idea sounds simple enough. And you do not need an MBA to appreciate that is also makes sense. But consider then what it means from a practical perspective.
Lean practitioners further define Value added steps as anything that changes the following attributes of a Product:
- Form or shape of the product or components
- Fit or assembly of the product or components
- Function or what the product or components are able to do
So how does an integrated steel mill add Value? Using the above "3Fs" criteria consider the following simplified process:
- (Change Form) Heat coal in a coke oven for 18 hours to remove everything but the carbon to produce coke
- (Change Form) Mix the coke and iron ore pellets in a huge blast furnace to produce molten iron
- (Change Form) Blast the molten iron with oxygen to produce liquid steel
- (Change Form) Cast the liquid steel into a continuous caster to produce a long red hot strip of steel
- (Change Form) Roll the strip of steel back and forth through a series of rollers to create an even longer and much thinner strip of steel
- (Change Function) Run the strip of steel through a series of coating baths to coat the strip with rust inhibitors such as zinc
- (Change Form) Roll it up in a coil
So what is the problem? Everyone who has read up to this point now knows enough to walk up to any integrated steel mill and at least get them started on their journey to Lean.
Allow me to point out the problem.
I spent five years working as an engineer in the coke ovens of a major integrated steel company. And as I look back on those happy days spent completing one technical project after the other I am forced to acknowledge that, given the above Value Stream, I did not add one single scrap of value the entire time I was there. I never operated the machines that loaded the coke into the coke ovens. I never ran the rolling mills that flattened out the strip of steel. And I never pushed the buttons to make the steel go through the coating baths. Never mind adding Value 80% of the time. Or 50% of the time. Or even 5% of the time. I'm talking Z-E-R-O Value over the entire five years I worked there.
....this is the point where usually my fellow engineers jump to my defense claiming that all the technical projects I completed added Value through improved yield, reduced raw material costs, and in one colossal example of profound Waste, I helped the company migrate their perfectly good Information Systems from a DOS platform to a Windows environment.
Well let's listen to the VOC...
"Hello Toyota. We would like to ask your opinion on something. We're trying to figure out if an engineer named Kevin is adding any value here. Well he just finished a big project to switch all our databases and reporting systems from DOS to Windows. It's really quite impressive. We can make all sorts of graphs and reports on just about anything you can imagine."
"...does he run the coke oven to make the coke? ...well no."
"...does he run the blast furnace to make the iron? ...uh, again no."
"...does he run any of the equipment in the rolling mills? ....sorry no. I don't believe he does any of that stuff. But back to this Windows based information system. Did we mention how impressive it is? The graphs? The real-time production data? Queries?"
"Ok that's great. We appreciate your time. And yes your coil of steel will be ready for delivery by this afternoon as requested. Bye for now."
Fortunately for me none of my bosses ever listened to the Voice of the Customer.
As you can imagine when I begin the journey of Lean with any client and I introduce this concept, to say that I am met with resistance would be a gross understatement. I have never actually been physically struck by anyone at a client site. But I have had people scream at me in rage at the notion that nothing they or anyone else does adds Value. And I am certainly not unsympathetic. Trust me I know first hand how demoralizing it can be to realize halfway through your professional life that most of what you thought you have accomplished has been Waste. Keep in mind I have been an engineer, a senior executive and a management consultant. Not a lot of opportunities to generate Value in any of those lines of work.
So how do we come to terms with this frustration and heartbreak?
Well the first option is to not ask me or any other Lean consultant to help you with your Lean journey. Instead you can ignore your customer, unilaterally designate thousands upon thousands of steps within your Value Stream as Value-Added based on the criteria that "you've always done them" or "you need to do them" or you "can't imagine ever not doing them." You can imagine how popular I am in overhead departments such as HR, Research & Development, Finance, Quality and so on.
Then you can put in place improvement initiatives to squeeze out what little Waste is left (by your narrow definition) and have large company meetings to celebrate your paltry incremental successes. You can also take great comfort in knowing that you are not alone. The vast majority of your competitors are choosing this exact same strategy.
Or....you can decide to not be like all of your competitors. You can make the decision to maximize your chances of significantly improving your processes by putting everything, no matter how long you have done it or how well you think you do it or how much you think you need to do it, under the VOC microscope. And then no matter how painful or frustrating or demoralizing it is, you can listen to the Voice of the Customer when designating process steps as Value-Added or Waste.
So back to the steel company for a minute. What would this mean for the company that gave me my very first opportunity as a professional. Let's review the process again and roughly estimate how many people would be adding Value at any given time according to the Value Stream. The following are extremely rough estimates for how many operators are required at any one time at each step. And by operators I mean people who are actually pushing the buttons and running the huge machines required to make steel.
- Heat coal in a coke oven for 18 hours to remove everything but the carbon to produce coke (3 operators)
- Mix the coke and iron ore pellets in a huge blast furnace to produce molten iron (4 operators)
- Blast the molten iron with oxygen to produce liquid steel (1 Operator)
- Cast the liquid steel into a continuous caster to produce a long red hot strip of steel (1 Operator)
- Roll the strip of steel back and forth through a series of rollers to create an even longer and much thinner strip of steel (1 Operator)
- Run the strip of steel through a series of coating baths to coat the strip with rust inhibitors such as zinc (1 Operator)
- Roll it up in a coil (1 Operator)
Now consider that at the time I was working there the company employed roughly 10,000 people. If 5% of them were on vacation or away from work at any given time that would mean that on day shift at least the company was somewhere in the neighborhood of 12 / 9,500 x 100% = 0.12% Efficient. The pessimists in the group would throw up their hands in despair. The Lean devotees would rub their hands with glee at all that potential Waste to reduce or eliminate.
My point here is obviously not to spare people's feelings and pat them on the back for doing such a great job by artificially inflating their Value Added process steps. My point is to help people give themselves the greatest opportunity to succeed by putting everything on the table.
As a final note consider this. Within the steel industry there are companies operating what are called "mini mills." These smaller operations produce the same flat rolled product as the large integrated mills but with even fewer steps in their Value Streams. They do this by recycling scrap steel and building their mills in one continuous stream (Flow). This in turn allows them to have as few as 3 operators do what it takes 12 in the process described above. With competitors like this out there why on earth would anyone want to limit their opportunity to improve?
So how much Value did you add for your organization's Customers today?
Wednesday, March 16, 2011
"Share a ton" of Lean Brilliance
Does anyone reading this ever worry that they might wake up one day and suddenly realize that they finally know everything they are ever going to know in their life? That no matter what happens going forward they will never ever learn another thing? I'm not saying that happens very much to me either. But every once in a while I discover such elegant brilliance hidden right under my nose that I am shocked and profoundly humbled into realizing just how little I actually know.
Such was the case for me the other day when I checked into my hotel - something I've done thousands of times over the course of my lifetime.
Those of you who know me or read my blog will appreciate the fact that, while I certainly do not know everything, I do pride myself on being able to see Value and Waste in just about any environment, process or situation. And my mind is constantly thinking of ways to apply Lean principles just about anywhere to try and maximize Value and minimize Waste. No surprise there. So imagine my shock when a certain hotel chain, who shall remain nameless since I can't afford a legal department, managed to turn one of my most cherished Value Proposition upside down.
It happened like this. I was going through the "Preferred" (a.k.a. Lean) check-in process that had actually started a few days earlier when I had conveniently made my reservation on line. Everything was happening smoothly which meant my reservation was in order, my information was on file, and my room had even been upgraded. Not exactly Value in the strictest definition, but certainly fairly minimal Waste by any standard.
And then I was asked if I "wanted to participate in their Green program." I immediately assumed this meant declining the morning newspaper outside my door in exchange for fifty cents off my room charge, something I had seen in the past. But was I in for a surprise. The person behind the desk explained that their Green program meant that for every day that I declined room cleaning service I could choose between $5 off my bill or 500 hotel loyalty points.
I will take a second to explain something to those of you who do not spend at least 100 nights a year in hotel rooms. For those of us who do, hotel loyalty points, like frequent flier miles, are as addictive as any drug you can think of. If you want to fully understand what these points mean to frequent travelers I highly recommend renting the movie Up In The Air staring George Clooney. Suffice it to say I would have probably agreed to sleep in the parking garage as part of their Parking Garage program in exchange for 500 loyalty points.
Of course I immediately agreed to sign up for any program that gave me free points. And I quickly completed the check-in procedure and hurried away from the desk, 500 points in hand, before they changed their minds. I had made it almost to the elevators when the enormous significance of what I had just been a part of began to sink in. Before I walk you through what this particular hotel chain had gone through in order to come up with this idea, first consider the typical process for a hotel. It would go something like this:
So just imagine the commitment and dedication to Lean thinking it must have taken for someone to say "....wait a minute, I have a question. How much Value do guests really get from us cleaning the rooms every day while they're off at the beach or attending meetings?" Just imagine the backlash that person would have received from hotel management, the sales and marketing people and especially the folks who carefully and lovingly clean the rooms and fold the fresh towels into those cute little animal shapes? Who could possibly question the Value to the guests of coming back to a neatly made bed and fresh animal towels? In fact that sounds like an idea so ridiculous only a consultant could think of it.
But wait. Remember my reaction when offered the choice between a neatly made bed and free hotel points? I couldn't wait to log into my account, calculate how many more points I was going to collect, and gloat over my great fortune. Clearly if asked whether or not I was receiving more Value the answer would have been a resounding "yes!"
And it gets better. What does the hotel get from this alternative process (minus Step 9 above)? For starters they have to spend less time cleaning repeat rooms which leaves more time cleaning rooms to be turned over. That means a shorter cycle time between orders and better asset utilization. You can't really rent out a dirty room. And in addition to that they also sink the loyalty barbs even deeper into a customer who spends tens of thousands of dollars a year on hotel rooms. And even when I come back with my family and use the loyalty points for "free nights" you know there will be room service and restaurant charges that go straight to the hotel's top line.
The point of me telling this story is not to impress anyone with this particular process change. I recognize that only the most rabid pursuers of Value among you will truly appreciate this example. The purpose of me telling you this is to remind you that Opportunity is everywhere. It's in the Waste that you can see. But also in the Value you thought your customers could never live without. Never ever stop asking "what if we....?"
Such was the case for me the other day when I checked into my hotel - something I've done thousands of times over the course of my lifetime.
Those of you who know me or read my blog will appreciate the fact that, while I certainly do not know everything, I do pride myself on being able to see Value and Waste in just about any environment, process or situation. And my mind is constantly thinking of ways to apply Lean principles just about anywhere to try and maximize Value and minimize Waste. No surprise there. So imagine my shock when a certain hotel chain, who shall remain nameless since I can't afford a legal department, managed to turn one of my most cherished Value Proposition upside down.
It happened like this. I was going through the "Preferred" (a.k.a. Lean) check-in process that had actually started a few days earlier when I had conveniently made my reservation on line. Everything was happening smoothly which meant my reservation was in order, my information was on file, and my room had even been upgraded. Not exactly Value in the strictest definition, but certainly fairly minimal Waste by any standard.
And then I was asked if I "wanted to participate in their Green program." I immediately assumed this meant declining the morning newspaper outside my door in exchange for fifty cents off my room charge, something I had seen in the past. But was I in for a surprise. The person behind the desk explained that their Green program meant that for every day that I declined room cleaning service I could choose between $5 off my bill or 500 hotel loyalty points.
I will take a second to explain something to those of you who do not spend at least 100 nights a year in hotel rooms. For those of us who do, hotel loyalty points, like frequent flier miles, are as addictive as any drug you can think of. If you want to fully understand what these points mean to frequent travelers I highly recommend renting the movie Up In The Air staring George Clooney. Suffice it to say I would have probably agreed to sleep in the parking garage as part of their Parking Garage program in exchange for 500 loyalty points.
Of course I immediately agreed to sign up for any program that gave me free points. And I quickly completed the check-in procedure and hurried away from the desk, 500 points in hand, before they changed their minds. I had made it almost to the elevators when the enormous significance of what I had just been a part of began to sink in. Before I walk you through what this particular hotel chain had gone through in order to come up with this idea, first consider the typical process for a hotel. It would go something like this:
- Guest makes a reservation
- Guest arrives at hotel
- Guest is assigned a room
- Payment terms are arranged
- Key to room is provided
- Guest goes to room (eats, works, watches TV, sleeps, gets up, showers, etc.)
- Guest leaves room
- - If guest checking out them room is cleaned, towels replaced, etc. - go to Step 10
- - If guest not checking out them room is cleaned, towels replaced, etc. - go to Step 11
- Guest returns key and pays bill - END
- Guest returns to room - go to Step 6
So just imagine the commitment and dedication to Lean thinking it must have taken for someone to say "....wait a minute, I have a question. How much Value do guests really get from us cleaning the rooms every day while they're off at the beach or attending meetings?" Just imagine the backlash that person would have received from hotel management, the sales and marketing people and especially the folks who carefully and lovingly clean the rooms and fold the fresh towels into those cute little animal shapes? Who could possibly question the Value to the guests of coming back to a neatly made bed and fresh animal towels? In fact that sounds like an idea so ridiculous only a consultant could think of it.
But wait. Remember my reaction when offered the choice between a neatly made bed and free hotel points? I couldn't wait to log into my account, calculate how many more points I was going to collect, and gloat over my great fortune. Clearly if asked whether or not I was receiving more Value the answer would have been a resounding "yes!"
And it gets better. What does the hotel get from this alternative process (minus Step 9 above)? For starters they have to spend less time cleaning repeat rooms which leaves more time cleaning rooms to be turned over. That means a shorter cycle time between orders and better asset utilization. You can't really rent out a dirty room. And in addition to that they also sink the loyalty barbs even deeper into a customer who spends tens of thousands of dollars a year on hotel rooms. And even when I come back with my family and use the loyalty points for "free nights" you know there will be room service and restaurant charges that go straight to the hotel's top line.
The point of me telling this story is not to impress anyone with this particular process change. I recognize that only the most rabid pursuers of Value among you will truly appreciate this example. The purpose of me telling you this is to remind you that Opportunity is everywhere. It's in the Waste that you can see. But also in the Value you thought your customers could never live without. Never ever stop asking "what if we....?"
Tuesday, March 8, 2011
Lean in the Kitchen
As a devoted practitioner of Lean, and more recently a Lean devoted practitioner of Lean I am constantly looking at the world around me for signs of Value and Waste. And if there was ever any doubt as to the extent of my obsession it was never more apparent than the other day while helping my wife prepare lunch in the kitchen.
Leaving the culinary talent and creativity to my wife I am content to follow orders and carry out simple tasks. On this particular occasion my wife asked me to “ball a couple of watermelons.” For those of you, like me, who wouldn’t ordinarily know what this means allow me to describe the Watermelon Balling Value Map:
- Using a large kitchen knife cut the watermelon in half
- Using a balling tool scoop out individual melon balls and 'tap' them into a suitable container
- When the container is full seal it properly
- Store the container in the refrigerator
There are a few more subtleties than that but you get the general idea, both of how simple the task is, and my general level of aptitude in the kitchen.
Happy with my task I set out to 5s my workspace. Again for those of you not familiar with watermelon balling I will give you a list of tools and materials that you will need:
- · Watermelon(s)
- · Large kitchen knife – preferably sharp
- · Cutting board – the one used for fruit, not the one used for cutting meat
- · Balling tool
- · Container for the melon balls with lid
It was at this point that I made my first mistake. Eager to get going I quickly cut the first melon in half and then, without thinking, I reached for the second and cut it in half also. Why not, I thought. I already have the large knife in my hand. This will save time.
As I type I can feel with shame the ‘tsk tsk’ looks coming from the Lean practitioners reading this. For the rest of you allow me to explain my classic ‘batch and queue’ mistake. Instead of allowing my product (melon balls) to flow through my Value Chain, I had incorrectly made the decision to run all my WIP (work in process) through Step 1 before moving on to Step 2.
“So what” I hear some of you thinking. “It’s a kitchen not a factory. And besides as you pointed out you saved the non-value added steps of setting down the knife and then picking it up a second time.
So picture the scene if you will. I had a cutting board that was approximately 30cm x 50cm. And the rule in this and most kitchens is all material must be cut on a cutting board. As soon as I cut both water melons I now had four rather large half water melons that were dripping juice and had to therefore sit on my cutting board. This meant there was little or no room left for me to maneuver the melons around in order to use the balling tool to scoop the melon balls and tap them into my container. Not to mention that I had immediately introduced unnecessary waste associated with trying to keep all the melon juice on the cutting board while ensuring that the wobbly melon halves did not roll off the counter thus introducing considerable quality risk as well.
As bad as it was, it was about to get worse.
As soon as I started balling melons, as evidenced by the ‘tapping’ sound of the balling tool on the side of the glass container, my wife came by to do a schedule check on me. And it was lucky she did. Again I hear some of you in the crowd thinking to yourselves “...why is she micro-managing him? He’s been trained. He’s a good employee. If he has a problem he will come and get her.” Those would be the husbands, not the wives who know better.
Peering over my shoulder my wife exclaimed “what’s wrong with the water melon?!?”
Quickly going through the entire water melon balling process on which I had been trained I tried to see what she was seeing. The balls were more or less round. All of them were in the container. And I had not dripped any melon juice on the counter. So far so good I thought.
“What do you mean?” I asked.
“The melon is orange on the inside” she explained.
I looked closer and had to agree the inside of the melon had a decidedly orange tinge. But since I had not been trained on quality inspection I had no idea just how much orange was acceptable. Apparently this was too much.
My wife conducted a few more quality tests including gingerly tasting one of the melon balls I had produced. After making a face and quickly spitting it out into the sink the decision was final; QA was shutting down the line.
So what are the lessons here? First of all I talked about how product (melon balls) should have flowed through my process rather than filling up my work area with bulky WIP. But more important than this, had I produced just one melon ball at a time for my customer I would have prevented all the waste associated with an entire bad production run. Doing it my way I could have potentially balled up both melons, carefully stored them in the container and then placed them in the fridge. In this scenario the quality issue would not have been discovered until sometime later when my customer went to serve them to her family. By that time the root cause of the quality issue would have been virtually impossible to identify. Were the melons in the fridge for too long? Or was there a problem with the supplier (grocery store)?
Fortunately as I mentioned before my wife is an expert Active Manager when it comes to her kitchen. Not only did she ensure that I clearly understood my process. But she was intuitive enough to conduct a timely schedule check on me as soon as she heard the signal that product was being produced. By stopping the line after only a few melon balls had been produced she was able to re-apply her resource (me) to another job that would in fact result in food appearing on the table (Value).
Anyone see any of the other types of waste created or prevented?
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