Is the hype and the stores of great returns from Lean projects true? What kind of returns / improvements have you seen from Lean? ​

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There is no doubt that there have been many examples of dramatic returns from Lean projects. While we can’t vouch for every project report you have read about, we can assure you that the vast majority are likely true. 

Estimating / calculating benefits without accurate baseline data or an understanding of the business can be difficult. The following represent the benefits most typically experienced by our clients that have engaged a Lean effort.

Reduced Costs:

• Increased Productivity / Reduced Labor / Overtime (25 to 100%)

• Reduced Inventory Levels (20 to 50%)

• Improved Quality / Reduced Cost of Poor Quality (Waste, Scrap, Rework) (25 to 50%)

• Reduce Capital Requirements (5 to 35%)

• Improved Safety – Cost of Lost Time (5 to 25%)

Improved Customer Satisfaction (Internal & End Customers):

• Increased Order Fulfillment Rates

• Reduced Customer Lead Times 

• Improved Quality 

• Increased Customer Satisfaction (Consistent and Reliable results) 

Improved Culture:

• Improved Associate Culture Scores 

• Increased Associate Retention / Reduced Turnover and hiring cost (20 to 50%)

• Increased Associate Empowerment and Engagement

• Increased Rate of Improvement / Number Continuous Improvement Events

 

 

What's the difference between Lean, Six Sigma and Lean Six Sigma? ​

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Lean is the common name for the Toyota Production System (TPS), it is a comprehensive Leadership Philosophy / Culture with the goal of creating an integrated system to accomplish business objectives that drive a competitive advantage, by delivering the most value from your customers’ perspective while consuming the fewest resources. It is guided by a set of Lean Values, Lean Principles and Lean Capabilities that provide prescriptive guidance for how to improve your business. Lean has many best practice tools that are used to bring these values, principles and capabilities to life in different business environments. While Lean started with Toyota 100+ years ago, it has now been successfully implemented in multiple industries and types of businesses, E.G. Everything from mining, healthcare, financial services, government procedures, and many others

 

Six Sigma is the use of teams that are assigned well-defined projects that have a direct impact on the organization's bottom line. Training in "statistical thinking" at all levels and providing key people with extensive training in advanced statistics and project management. The key people are designated "Black Belts" become the leaders of the teams. A significant effort is put into “statistical training” to create “Green Belts” and “Yellow Belts” to assist the “Black Belts” with their efforts. The philosophical perspective of Six Sigma views all work as processes that can be defined, measured, analyzed, improved, and controlled. Processes require inputs (x) and produce outputs (y). If you control the inputs, you will control the outputs. This is generally expressed as Y = f(x).

 

Lean Six Sigma (LSS) was created in an attempt to combine these two movements and create a blended idea. In an LSS world, Six Sigma focuses on reducing process variation and enhancing process control, whereas Lean drives out waste (non-value-added processes and procedures) and promotes work standardization and flow.

 

The Differences:

Lean Six Sigma was fundamentally created by Six Sigma people that understood that Six Sigma was struggling to address business environments that are not highly repeatable and not able to be described well by statistics, but with little understanding of Lean. There is no better example of this lack of understanding than the limiting of Lean’s contribution to the removal of waste and promotion of standardization and flow. While these are undeniable results of Lean activities, Lean is a much more comprehensive approach to running a business. 

While both Lean and Six Sigma can be successfully in the approach, there are some key difference:

• Six Sigma is descriptive in nature, it makes heavy use of statistics to describe problems and to validate the significance of a solution (must be “statistically significant”). 

• Lean in contrast is prescriptive in nature, it uses the values, principles and capabilities to provide guidance on how to improve the business. This typically results in less waste (reduced costs) and improved customer satisfaction. While advanced Lean organizations make good use of measurements and statistics, they do not rely on the statistics for validation. In Lean validation is gained through “practical significance” rather than relying on statistically significance. 

• Six Sigma is expert driven, it makes heavy use of belt system and relies heavily on Black Belts to solve the most important and largest problems. Black Belts are generally judged by the scope / impact of their projects and therefore focus their attention on only the biggest issues. They are often assisted by local staff (often called Yellow or Green Belts), but largely the solutions come from the outside and ownership with the local team is often an issue. 

• Lean is associate driven and believes that the people responsible for doing the job are the experts and responsible for improving the process. This philosophical difference has big impacts in ownership, engagement and moral. In a Lean culture the workers own the process and the improvements and are driven to make it successful. Another impact is that problems are addressed more quickly when they are smaller and more manageable. 

• Six Sigma uses a problem-solving process known as DMAIC (define, measure, analyze, improve and control). While it provides a good structure for measuring and monitoring statistical change; it provides little direction for how to make the actual improvements. Because of this focus on statistics, Black Belts report high rates of projects that are not “completed” because statistical significance is not achieved. 

• Lean uses a problem-solving process that is based on the Deming Wheel – PDCA (plan, do, check, act) Cycle. It is iterative and self-correcting and always results in a solution that achieves either “practical or statistical significance”. The simplicity of the process allows all workers (experts) to participate in the problem-solving process and results in more projects which are delivered faster. The scientific nature of the process (define the hypothesis, test the hypothesis, check the results, act on the results) ensures that the results are significant. Another important difference is the role the Lean Principles play in this process. They provide guidance in two key areas, 1) determining the root cause and, 2) in defining the best countermeasures to address the root cause(s).   

• Six Sigma is most effective in highly repetitive environments (like high volume manufacturing) where statistics are most effective. If the business has a lot of variability, the application of statistics becomes more difficult. At best, the process slows down and at worst the problems in these types of processes are ignored. 

• Lean can be applied to all types for businesses with equal levels of effectiveness. When the environment is high repetitive (like manufacturing) Lean uses many of the same statistical tools as Six Sigma. But Lean also has the values, principles and capabilities that can drive significant improvements; even if the process can’t easily be defined with statistics. Lean does not just apply to operational processes, Lean also has methods and tools to address business activities as diverse as strategic planning (Hoshin Kanri), product design, and human resource development.   

 

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Is Lean in supply chains, warehouses, or offices different than manufacturing? ​

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Perhaps the biggest mistake companies make is to apply manufacturing tools and techniques to non-manufacturing environments. The fundamental Lean Values, Lean Principles and Lean Capabilities are the same for any type of business process whether on the shop floor or in the office. The same Values, Principles and Capabilities are applied, but the tools and techniques that are used, are often designed specifically for the type of work and can seem to vary dramatically. 

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Which KPIs (Key Performance Indicators) are most important in Lean? ​

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The KPI’s which are most important, very much depends on the type of business you are in and the stage your business is in along your Lean journey. Selecting the correct metrics for your situation is key. It is very possible to have too many or the wrong metrics which will add bureaucracy and misinformation to the organization.    

One of the first steps we recommend is what we call KYB (Know Your Business). This is the start of the process to establish a set of metrics that are accurate and effective. Initially the two most important pieces of information are:

• Demand / Volume – What is the demand from your customers? How work much is coming from your suppliers? Without a true understanding of this data, how can you properly plan the resources required to meet this Demand? By gathering this data, clients often learn things about patterns and trends that previously they believed to be unpredictable. 

• Productivity – The rate at which work is completed in relation to the labor effort to complete the work. This requires a firm grasp of the different types of work you do, the amount that you have completed and the hours of labor you committed to complete the work in that period. Without a complete understanding of Productivity, you will not be able to accurate assign resources (in nearly every case the tendency is to over allocate resource, typically by more than 15%). 

Once this two basic metrics are established, we recommend following the SQDCM model for establishing the main set of metrics. Where S=Safety; Q=Quality; D=Delivery; C=Cost; M=Moral. The SQDCM model provides a well-rounded set of metrics. The actual metrics in these categories will develop over time as the organization develops. 

  

 

We are an ISO shop; can we still use Lean?

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ISO is afamily of quality management system (QMS) standards that are designed to help organizations ensure that they meet the needs of customers and other stakeholders, while meeting statutory and regulatory requirements related to a product or service. Many of the concepts of ISO align well with the Lean Principle of Standardized Work, and the problem-solving processes that drive Continuous Improvement. ISO carries a heavy administrative burden, but we have worked with multiple companies to design a process that is both effective, while still adhering to the ISO Standards. Integrating ISO and Lean takes full understanding of both concepts to be successfully. 

 

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Does implementing Lean mean that we will be laying off a lot of associates?

 

A core Lean Value is Respect for People. If people are in constant fear of losing their job it is not respectful and does not allow them to contribute to their fullest potential. While improvements often lead to improved productivity and a reduced need for the number of associates, you should never see layoffs as part of a solution. In fact, we often recommend a guarantee to the employees that no one will lose their job due to a Lean improvement. We know the issue of overstaffing needs to be addressed and we typically recommend the following ideas: 

1. reallocating productive people to new value jobs that likely were neglected in the past;

2. allowing the staffing levels to drop through natural attrition (as people leave on their own, don’t replace them). 

Generally, these techniques can adequately cover the need to reduce resources from the improvements, and also provide a constructive and positive environment that is sustainable into the future. Process improvements will also result in utilizing fewer resources, or less overtime to perform the same amount of work.

 

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What are the most common mistakes you see with Lean implementations?

What are some Best Practices leading to success? 

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At Lean Quest many of us have been working to implement Lean for more than 30 years, we’ve seen many mistakes and seen what successful companies do. Here is a summary of some of the key points:

Most Common Mistakes:

• A lack of involvement from the leaders of the organization. Simply blessing the efforts and providing the funding is not enough. Leaders must take an active role in the efforts. Leaders must lead through deliberate role modeling, teaching and coaching. The Leaders cannot abdicate the responsibility to an operational team or individual.

• A lack of resources. Leaders must allocate the necessary resources for success; human resources, budgetary resources and the necessary coaches. Lean programs always more than pay for themselves with savings. Leaders have to view this allocation of resources as an investment. 

• Spreading too quickly, “a mile-wide and an inch-deep”, outpacing the resource pool and the organization’s ability to properly absorb the changes. Also defining a scope that is limited to an area or type of problem; not allowing the improvements and learning to flourish. Leaders must have a firm grasp of their organization’s ability to absorb change and work to expand that over time by building the resources and stories of success that will power the expansion.

• No overall strategic direction for the Lean implementation. An approach that is very tactical and not looking at the entirety of a value stream. While individual improvements may be achieved in multiple areas, there needs to be an overall direction that ties them all together.

• A lack of process focus. Too often Leaders accept results from their team (or parts of their team) when they know the process wasn’t followed correctly. While some justify actions like this, with comments resembling, “well it worked”. These weaker processes are not sustainable and deeming them as acceptable undercuts the culture they are trying to achieve. Leaders must become champions and coaches of the new ways of working.  

Keys to Success:

• Establish a steering committee of key leaders from across the organization. This committee will provide sponsorship, guidance, resources and a link to the strategic plans of the organization. In addition, they will also review the metrics that will determine the success of the initiative. By meeting, at least monthly, this committee can determine when best to engage the activities themselves and how best to pace the initiative across the organization. 

• Building a team of internal coaches that can provide the coaching, resources, and training to the leaders of the organization. The team of internal coaches should be small, but mighty. It will set the standard for the organization and provide the other leaders with the base of knowledge needed to advance the Lean journey. This team must NOT become a team of experts that make changes for the leaders. They must be the coaches / sensei for the leaders. They will become the experts that acquire knowledge from the outside and develop the capabilities across the organization.

• Develop a sustainable implementation plan. A successful implementation plan involves a reoccurring pattern of creating a model implementation area – (pilot), sustaining the success in the area, and then spreading the success to other areas. This allows the organization to focus its resources and learning. As the capability of the organization grows this pattern will be repeated at an ever-increasing place.   

• Provide the necessary resources and budgets. A best practice in this area is a “lend ahead program”. Lean always results in lower costs and reduced need for resources, but sometimes this requires a “priming of the pump”. By providing resources (budget and people) in a “lend ahead program” that can be applied to an area of focus, once this area become self-sufficient, the additional resources (numbers not names) can be shifted to the next area. Through this process the “priming of the pump” is recaptured and used again in the next focus area.  

  

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How would an engagement with Lean Quest be different than an engagement with a “big consulting” firm? 

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Lean Quest designs their client engagements to be pull based. This results in a process that optimizes client learning and development rather than consultant utilization rates. A typical engagement design, involves periods of intense coaching followed by periods of self-discovery and learning, followed by additional follow-up coaching session to addresses issues and questions. This process is repeated over and over again as required by the client to achieve their objectives. Each of these iterations of the process are focused on delivering value from operational improvements. The duration of the coaching periods, and frequencies at which they repeat, is determined by the needs of the client (pull). 

Another difference is the level of experience within the Lean Quest team. The Lean Quest team is made up of only experienced coaches with either direct training within Toyota or extensive training by Lean Quest resources. Working with Lean Quest you will not get a partner and a team of young inexperienced consultants. You will only be working with experienced consultants / coaches.  

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Do all Lean Quest Resources have Toyota experience? 

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Almost all Lean Quest resources have experience working for Toyota and learning directly from the Toyota Sensei Masters (master teacher). Those that did not worked directly for Toyota, have worked in other Lean organizations and have been developed by Lean Quest resources to have a deep understanding of the fundamental thinking and concepts behind lean.  

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How long is the “typical project / engagement”? 

 

There truly is no such thing as a “typical project”. 

Some engagements are simple training and / or assessment exercises

On the small side projects can be as short as a week or two. These are typically well defined and designed to address a specific problem. 

On the large side projects can involve a full cultural transformation are months or years to complete. 

No matter the size of the project, knowledge transfer is key to Lean Quest’s approach and every project involves the development of client resources.  

   

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How do we get started? 

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We have found the most effective way to get started is a combination of seeing the opportunities and understanding how to address them. To accomplish this, we often start with an initial 4 or 5-day engagement that embodies these ideas - step 1. This starts with an assessment of the current operation using one of a couple Lean assessment tools. This allows the leadership team to view their operation through a different set of lenses, so they can see opportunities that they typically don’t see in their daily activities. We follow the assessment with a couple days of training using one of our Lean simulation training activities – step 2. This will allow the leaders learn new concepts and envision the future. The final step is to establish a plan to address the opportunities identified in step 1 using the new ideas and concepts learned in step 2. Using our years of experience with Lean implementations, we help to create a plan that is both efficient and effective. The plans typically have a variety of tasks, some that the team can address themselves, and others that may require additional assistance and coaching.   

 

 

Has Lean Quest worked outside of manufacturing? 

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Nearly all of Lean Quest’s work has been outside of a manufacturing environment. The great experience we gained establishing Lean across the Toyota Service Parts Network has naturally led us to Supply Chain and Distribution types of engagements. However, as you know, not all supply chains are the same. We have worked in in a wide variety of supply chains and distribution networks, including:

• Service Parts

• Grocery 

• Mass Market / Big Box Retail

• Fashion Retail

• Furniture 

• 3PL (both supporting the 3PL provider and client contracting with the 3PL)

• B2C – Internet 

• B2B

• Assembly / Manufacturing Synchronization Points 

• Government / Defense  

• Reverse Logistics 

In addition to supply chain / distribution we also have extensive experience working in industries that would be considered “white collar” in nature like insurance, financial services, banking, scientific labs, inventory management and system development.   

  

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Is Lean Quest willing to engage us in a train-the-trainer program?

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Our years of experience has taught us that Lean is not something that can be done to you. It must be a cooperative effort between Lean Quest and the clients’ leaders. The transfer of knowledge through a Train-the-Trainer program is a fundamental part of Lean Quest’s approach. This knowledge transfer can range from a full-scale-self-generating capability development program, to one-on-one coaching with our local leadership team.  

 

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Is coaching / consulting required? Can’t I just do training or read a book?

 

Training and knowledge are vitally important but aren’t enough on their own. To create the speed of change and momentum required to sustain a successful Lean implementation journey, coaching plays a key role. Coaching brings the experience required to accelerate the pace of learning and change. While coaching is often provided by consultants, don’t confuse the typical “consulting engagement” with coaching. In a typical “consulting engagement” the consultants come in and make changes to your organization. In a coaching relationship, the coaches provide knowledge, advice and guidance to support the change efforts within your organization. Lean is not something that can be done to you. Lean is something you must learn to do for yourself. To sustain a Lean culture, you must become self-sufficient over time and coaching is an important part of this process.