First, Do No Harm! Michel Baudin. Consultant. MMTI â Manufacturing Management & Technology Institute www.wefixfactories.com. Palo Alto, CA, USA. Abstract.
First, Do No Harm! Michel Baudin Consultant MMTI – Manufacturing Management & Technology Institute www.wefixfactories.com Palo Alto, CA, USA Abstract The implementation of lean manufacturing should never result in a drop in delivery, cost, or quality performance, even in the short term. Lean manufacturing does not belong in the long list of initiatives that promise breakthroughs and turn out to be mirages. Lean manufacturing is not the result of a marketing brainstorm in a consulting firm; it is instead the outcome of 50 years of effort by several generations of manufacturing engineers, managers, and operators. Its implementation requires work, creative thinking, and persistence, but pays off in steady, cumulative and accelerating improvements in performance. A well thought out, carefully planned implementation bootstraps itself, with part of the savings from pilot projects being ploughed back into new ones, whose outcome in turn is used in part to bankroll even more projects. This process cannot be jump started by throwing money at it, because the key resource is not money but a skilled and experienced workforce. In management, implementing lean manufacturing should never be given priority over meeting customer commitments. The project management know-how and the analytical problem-solving tools exist to make internal changes that improve performance without hurting delivery, cost, or quality.
1. Introduction: A dangerous juncture for lean manufacturing Last year, the CEO of a well known, large manufacturing company, actually used the company’s lean conversion program as an excuse for red ink in the annual report. He blamed the radical changes made in the manufacturing system for glitches, and promised that the benefits would start accrue the following year. We have also heard the idea voiced by engineers from companies experiencing a rocky implementation that such an outcome was to be expected in the chaos and revolution of lean conversion Contrast this with aircraft seat maker B/E Aerospace, which started converting plants to lean manufacturing in the fall of 1999, with guidance from consultant Kei Abe. The most visible measure of success is that the stock price has more than tripled, from about $7 to $23. According to the company’s latest 10-K, “the operating inefficiencies resulted in delayed deliveries to customers, increased re-work of seating products, claims for warranty, penalties, out of sequence charges, substantial increases in air freight and other expedite-related costs.[…] We believe we have now resolved the problems we encountered in our seating operations.” (See [1]). While impressive, this is the result of a year and a half of hard work and it is the normal outcome of a successful implementation, well thought out, planned and executed. This last example is the way it should be, and is in every thoughtfully planned implementation. The alternative can only result from a reckless, damn-the-torpedoes approach to implementation, based on an insufficient understanding of the company’s business, on the systematic application of a few implementation methods, regardless of relevance, and on a focus on appearances and processes, rather than results. As the lean manufacturing message spreads wider, it is also diluted and altered. In some cases, the simplifications and changes are legitimate and creative adaptations of concepts from the automotive industry to different contexts. Often, however, they merely reflect misunderstandings, and they lead management to underestimate the level of commitment and effort required, and consequently fail to achieve the performance improvements they should. This development stands to impact more than the companies in which they occur. Over time, it may in fact poison the well for lean manufacturing. As more CEOs use failed lean initiatives as an excuse for poor performance, they will scare others away, who will then forfeit their opportunities.
First, do no harm!
Draft 1, 7/14/2001
1 of 9
2. Lean manufacturing for results Some companies are driven to lean manufacturing by competitive pressure; others, in response to customer audits. The differences between these two types of motivation are summarized in Table 1. Customer audits Motivation Competitive pressure Getting the right checkmarks Objectives Market share, profits, etc. Activity-driven Implementation process Results-driven Table 1. Motivations for becoming lean Companies in the first column do not attempt to implement systematically all the features of lean manufacturing that can be found in the books. Instead, they focus on specific projects that, by eliminating waste in one area, improve one or more dimensions of manufacturing performance, without degrading any other, as described in [2]. Once successful internally, these companies commonly attempt to pass on the approach to their supply chain. Unfortunately, they commonly do it in a way that places their supplier in the right column of Table 1, which does not always makes them successful. In principle, supplier support, as practiced by Toyota, provides an economic incentive to suppliers: the customer gives free consulting in exchange for price reductions amounting to a fraction of the cost savings achieved by the supplier. The way most customers do supplier support, however, is by sending auditors with checklists to examine the supplier’s practices and score them on the basis of how many are “lean.”
Check
Points
Score
Table 2 shows an excerpt from such a checklist. The message from such a checklist to the supplier is that, in the eyes of the customer, being lean means doing certain activities in certain ways. This message is reinforced by using the scores to designate the suppliers as “not lean,” which is an endangered species, “partially lean,” or “lean certified.”
0 2
1
Visual cues clearly displayed Is the floor marked? No floor markings Floor marked, but markings ignored Floor markings followed
5
No location identifiers Equipment organized, but no set locations
0 5
Are machine locations identified?
Equipment has designated locations
10 15
Total score Table 2. Excerpt from an audit checklist
37
5
6
This approach can be used blindly on suppliers ranging from machine shops to assembly houses, but it is misleading and dangerous, because it ignores the specifics of each company’s business. It is quite possible to score 100% in the audit while going bankrupt. A supplier can be criticized for holding a year’s worth of a raw material that is in fact an alloy bought in small quantities from a single-source overseas supplier, whose terms cannot be challenged. Or points can be deducted for not having mistake-proofed processes that are in fact not ready for it. If the supplier is struggling with basic process capability issues, worrying about preventing human error would be premature. For managers in the supplier company, becoming “lean certified” is just something you have to do to retain the customer. It is a cost of doing business, like ISO-9000, unrelated to actual performance. When viewed in this light,
First, do no harm!
Draft 1, 7/14/2001
2 of 9
lean manufacturing is unlikely to yield for the supplier the kind of improvements the customer is experiencing as the result of an implementation driven by business needs. On the other hand, it would be impossible to staff supplier support departments with members able to do for 200 or more suppliers the kind of kind of analysis that an enlightened management can do for the customer company, with or without consulting help. There is a genuine need for a systematic way to audit suppliers, in which manufacturing engineers can be trained quickly and that, at the same time, doesn’t mislead the suppliers as to the nature and intent of lean manufacturing. Engineers in a lean manufacturing company should know how to recognize waste when they see it, and suppliers can only benefit from a transfer of this skill. The customer’s engineers cannot presume the solutions to the supplier’s problems. They can help the supplier become aware of their existence, show what they did in their own plants to address similar issues, and then let the supplier figure out how to adapt the concepts to a different environment. While this happens, the supplier’s performance is measured exclusively in terms of price, delivery and quality, with prices expected to come down by an agreed upon ratio every year. How this is accomplished is the supplier’s business. At his discretion, it may or may not involve cells, quick setups, visual systems, Kanbans, Andon lights, etc. The supplier is judged not on how many of these tools are used but how much improvement is achieved in supplying parts, which is the reason for the business relationship in the first place. Waste symptoms checklist Overproduction Making parts "just to keep busy" Exceeding run size between setups Excess volume due to rounding up Waiting Operator waiting for machine Machine waiting for operator Operator waiting for materials Transportation Pallet transport between operations Too large carts on line side Layouts based on space available Process Exceeding the spec Steps added to fill time Inventory Stocks with unkown purpose Stocks with obsolete parts Raw mat'ls stocks too high WIP stored in warehouses WIP encroaching on work space Stores of "almost-finished" goods Motion Detrashing at line side Multiple handling "Washing machine" picking Locating tools Fetching and replacing tools Trips to tool crib Defectives Insufficient process capability No line stopping mechanism Scrambled sequences Error-prone equipment Error-prone methods
Table 3. Waste identification checklist
First, do no harm!
Draft 1, 7/14/2001
3 of 9
3. Of Breakthroughs and Bootstraps 3.1. R. Schaffer’s Breakthrough Strategy When we read in [3] and [4] Schaffer’s view that successful change programs begin with results, which he formulated for business in general, we found that they closely matched what we had found effective with lean manufacturing. He is highly skeptical of programs that start by spending months elaborating detailed 5-year road maps or by putting the entire management hierarchy through 40 hours of classroom training. His “breakthroughs” instead are small, targeted projects that can be started with no prerequisites and represent both a local and a global improvement. His measures of success, also, are neither about what practices are followed nor about the number of Kaizen blitzes completed. They are not about what is done, but about what good it does. Schaffer is critical of activity-driven programs, that are predicated on the idea that if everyone in the organization does a certain number of “right things,” and that benefits automatically accrue if you stay with it long enough, even though they are impossible to predict at the outset. In Section 2 above, we described how a mistaken approach to supplier support can make even Lean Manufacturing as a whole activity-driven. TQM is an example of an intrinsically and openly activity-driven program in manufacturing, as evidenced by the fact that the Malcolm Baldridge award was almost entirely based on process compliance, with actual product quality counting for only one seventh of the score. Starting such a program requires managers to take a leap of faith that Schaffer advises against. Even if the claims are true and results start showing after two years, that is an eternity in American business. The chances that the program will survive management changes that long are slim. By contrast, a program based on the breakthrough strategy produces a steady flow of short-term measurable improvements, which never goes out of style and enables the program to maintain management support. The situation would be perfect if all of lean manufacturing lent itself to the breakthrough strategy, but it doesn’t. While cell conversion of a process segment, or setup time reduction on a machine qualify as breakthrough projects, 5S doesn’t. A cell conversion or a setup time reduction project has a deep affect on a small area within the plant that can be quantified in terms of WIP reduction, labor productivity increase, and other parameters. Implementation only requires a small number of volunteers in the target area, and leaves the rest of the organization alone. 5S, by contrast, sprinkles small doses of improvement throughout the plant, which can be documented through before-and-after photographs but are not quantifiable a priori. 5S involves everyone from plant management to temporary workers in activities specified in the first three S’s, with management enforcement, as specified in the last two S’s. The benefits are real, but accrue over time, and starting 5S implementation does require a management leap of faith. In dismissing all activity-driven programs as wastes of time and money, Schaffer goes too far. There are improvement programs that are worth carrying out but do not lend themselves to the breakthrough strategy. The valid conclusion that remains from his analysis is that such programs are much more difficult to implement successfully, because they require an uncommon steadiness of purpose in management. The conclusion we can draw is that, when a plant starts its lean conversion, it should focus first on those aspects of lean manufacturing that lend themselves to the breakthrough strategy, and postpone activity-driven projects until the initial successes have strengthened the organization and given management the steady hand that it needs. In the case of 5S, for example, it is much easier to start a plant wide program once a substantial fraction of the floor has been converted to cells, and cell team members have gained some experience with the work content of the five S’s, without calling it by any special name, as part of normal cell operations. Many consultants, most notably Hiroyuki Hirano, in [5] and in other writings, disagree with our conclusion and argue that 5S is the first step of lean manufacturing implementation. Since where to start may be the most critical question to answer for a successful implementation, it cannot be ignored. Our reasons for not starting with 5S are not just theoretical. [6] is a published account of the Boeing experience. In [6], engineer Patrick Smith recounts the experience of a company that committed to 5S as the first step and describes what is left of it six years later. One of the issues he brings up is what happens when you redesign an area after implementing 5S. It is one thing to tear down an old and messy line to replace it with a new and better one, and another to first spruce up the old line before you tear it down: it is demoralizing to the individuals who have worked at cleaning and organizing it.
First, do no harm!
Draft 1, 7/14/2001
4 of 9
3.2.
Bootstrapping and Lean Manufacturing
Bootstrapping in general is business development out of retained earnings. Applied to a lean manufacturing implementation, it means funding projects out of the savings generated by previous projects, and it is not a foregone conclusion that it is the right way to proceed. While bootstrapping has grown many medium-size, owner-operated manufacturing companies over decades, it cannot generate the explosive growth that, for example, venture capital supports. It is a legitimate question to ask whether lean manufacturing in a factory should grow at the pace that self-financing supports or instead like a hot startup. With bootstrapping, an investment in the tens of thousands of dollars in two or three pilot projects produces savings in the hundreds of thousands within three to four months, without degrading performance in any way. Part of the savings is ploughed back into more similar projects, whose outcome in turn is used in part to bankroll even more projects. A year or two into this snowballing effect, the changes are beginning to engulf the entire factory, while its performance steadily improves. This process is too slow for impatient managers. They want to jump start it by throwing more resources at the process faster. After all, why limit yourself to the number of projects that can be funded by the results of the previous ones when you can afford to take on more right away? In practice, however, throwing money at lean manufacturing to implement it faster doesn’t work. Managers who want to move fast, should ponder that money spent quickly is rarely spent wisely. If you can afford to, you can organize dozens of Kaizen blitzes with beginners leading beginners, or even with experienced consultants leading beginners, and you will at best get Kindergarten-level lean manufacturing. The resource that is pacing growth is not money but skills. A fact that is lost to management in many companies is that there is more to making a shop floor lean than can be taught to in one day of training at the start of a Kaizen blitz. Designing and reviewing a layout, for example, requires not only the mastery of lean manufacturing techniques, but also the ability to combine them with an understanding of the workload structure, the physics and chemistry of the process, and equipment characteristics. Being introduced to work combination charts through a classroom exercise is fine, but to use these charts to improve productivity, one must often change not just task assignments but operation sequences, which can only be done with an understanding of what happens during these operations. There is also more to laying out machines than arranging paper dolls around a U-shape. One must also work around required clearances and maintenance access requirements. Getting good at these activities takes practice. Pilot projects not only demonstrate the potential of lean manufacturing, they also grow an initial cadre of skilled implementers. As the pilot projects end, their teams are disbanded, and the members seed the new project teams to propagate the knowledge they just acquired. This is not to suggest that the implementation should be conducted at a leisurely pace. Project teams in successful implementations are, and should be, under pressure, and feel that they have “not quite enough time” to do the work as they would like to. There is, however, a line that should not be crossed, between applying a healthy level of time pressure and not showing the proper respect for the technical and managerial difficulties of the projects. By their very nature, pilot projects are carried out by people who have never done anything of that nature before. They cannot proceed as quickly as if they were experienced, and the outcome cannot be as good, but it must be good enough to show the way. Deciding when they have reached that stage is among the most difficult tasks of implementation management. If you do it too early, then you will propagate mistakes that will be harder to correct when replicated ten times than on a single pilot project. But if you wait too long, you postpone reaping benefits unnecessarily.
4. Lean manufacturing as the second priority, behind delivering product Implementing lean manufacturing should never be given priority over meeting customer commitments. The project management know-how and the analytical problem-solving tools exist to make internal changes that improve performance without hurting delivery, cost, or quality. The stringent availability requirements of cell equipment are well known, so you overhaul the machines before you move them. You plan moves to interrupt production for the shortest possible amount of time, and you build a "window" of inventory just before you start, to allow downstream operations to proceed. You know you will make mistakes, but you plan your projects to keep these mistakes small and to prevent them from affecting your customers. This is the approach that has made lean manufacturing successful, and it is anything but "shoot first and ask questions later."
First, do no harm!
Draft 1, 7/14/2001
5 of 9
A well-known metaphor for the effect of reducing WIP is exposing rocks by lowering the water level. If you take it literally, as shown on the left side of Figure 1, it may lead you to make reckless changes that disrupt production. The rocks under the water are problems that are covered up by inventory, such as defective parts or unreliable equipment. Reducing inventories is tantamount to lowering the water level and thereby exposing the problems/rocks. The main result of turning rocks into reefs, however, is shipwrecks/production stoppages. We don’t believe that it is necessary to hurt production in order to expose problems, but that they should be identified and solved prior to reducing inventories, as shown on the right side of Figure 1. In addition to its intrinsic economic value, the reduction in inventory then serves as a means to lock in the gains.
Figure 1. Reducing inventory and exposing rocks On the right side of Figure 1, you may also note that the smaller rocks at the bottom of the lake are still there. They represent the opportunities for the next round of improvement.
5. The “Current State Map” Tar Pit Another approach that some of our colleagues have recently started advocating is starting the assessment of every plant by drawing a “current state map” of material and information flows, also known as “value stream map” (See [7]). The rationale is that it gives you a basis from which to start and assess improvements. It is similar in concept to a recommendation that was found in books on functional specifications for software systems 20 years ago: the first step in specifying a new system was supposed to be documenting and modeling in detail how the old one worked. Even Tom de Marco, by far the best writer on the subject, initially recommended this in [8], before he realized that it was leading the analysts into what he later called the “current physical tar pit,” where they could work forever without reaching closure. Likewise, value stream mapping of the current state, in most factories, is both exhausting and futile. Mapping convoluted flows of materials can be useful on a sample basis, to convince management that there is a problem, but it is a daunting task if you extend it to the entire plant. For information flows, you would not only need to map the usually dysfunctional formal system, but also the informal bypasses and favor banks that individuals have set up in order to get product out. Logical though this task may seem, you may never be able to extricate yourself from it once you start. In fact, the very requirement that it be done may be a delaying tactic on the part of managers who oppose changes on the shop floor. An assessment is necessary when starting the lean conversion of a plant, but it must be properly scoped to avoid turning it into a six-month project during consulting fees flow out while no implementation occurs. We propose the following guidelines: • The most important output of an assessment is the identification of where to start, including which pilot projects should be started, what benefits can be expected of them, how they should be executed, and who should be in charge.
First, do no harm!
Draft 1, 7/14/2001
6 of 9
•
•
The road map beyond pilot projects should not be overly specific. It should contain an estimate of the business benefits of lean manufacturing for the plant, the time it should take to transform it, both on the shop floor and in the support functions, and the structures that need to be put in place in management to support the different phases of implementation. On the other hand, it doesn’t need to specify who will work on which projects in the machine shop 18 months from now. Even in a large plant, the assessment should be completed in a matter of weeks, not months. Otherwise, the plan becomes the work and the chances that it will lead to actual changes dwindle.
Mapping, of current or future states, is just an analysis tool, to be used as needed. It is not always necessary, and it is rarely sufficient. For pilot projects, we look for the following characteristics: 1. It must address an issue that is key to the company’s business. If it is conducted on an activity that is nor perceived as a problem, success will not have the desired impact. 2. The must be no pending process technology issue. If the process is unstable or new equipment must be bought, then it is not a good target for a pilot project. 3. It must have a long enough economic life. There is no point in focusing a project in an activity that will be discontinued within 6 months. 4. The line manager in charge must be enthusiastic and see the project as a career opportunity. 5. The scope of the project must be such that it can be carried out within a single department by a single team with minimum help from and impact on other departments. In an office furniture case, it played out as follows: 1. Drawer pedestals are a key product that the company is losing market share on, because of high prices. 2. The process is mostly manual assembly, and the parts for this product are smaller, lighter, and easier to handle than for desks, conference tables or bookcases. 3. Economic life is not an issue: the company plans to keep making this product as far as it can see. 4. The opportunity was identified by the operations manager, who is in charge. 5. Initial improvements can be made entirely within the assembly team. Support from Materials Management will be needed later on, but not immediately. This is a perfect choice for a pilot project. It is technically tractable, and the stakes are high, the perfect combination. It provides an opportunity for success, and that success will be noticed. Ferreting out such projects can be simple or hard, and requires considerations beyond materials and information flow mapping.
6. Tailoring implementation methods to project content A common mistake is to center the implementation of lean manufacturing on a particular method, measuring progress by the number of times it has been applied. The reality is that lean manufacturing has many components, with different technical and managerial contents, requiring contributions from different parts of the organization over different durations. Whether you use a Kaizen blitz, a problem-solving circle, or a team of engineers and managers has, of course an impact on group dynamics, implementation lead time, and probability of success, but these considerations should be second place to the content of what needs to be done. Let us illustrate this point through a few examples: Case 1. Changing the layout involves little more than rearranging furniture. It can be done in a few hours, and mistakes corrected equally fast. Technically, a Kaizen blitz is feasible. It still has to be conducted carefully and with follow-up because, if the production team does not understand or accept the changes, it is equally easy to undo them. Case 2. You need to move heavy machinery requiring foundation work. It takes several weeks to do, costs tens of thousands of dollars, and the correction of mistakes is equally costly in time and money. Prudence then dictates that the design itself be mulled over and reviewed carefully for several weeks. This precludes a Kaizen blitz and requires instead a team with strong engineering skills led by a manager with enough clout to secure the assistance of other resources from Facilities, Safety, etc. over a period of about three months. Case 3. Putting the finishing touches on a cell involves locating hand tools on machines, modifying fixtures, installing tower lights, setting up cutting tool replenishment, writing and posting instruction sheets, and setting up a bulletin board. This is a multitude of small tasks, for which most of the knowledge is in the minds of the operators. This cries out for a continuous improvement approach centered on a small group of volunteers from among the operators meeting once or twice a week to gradually whittle down the task list. First, do no harm!
Draft 1, 7/14/2001
7 of 9
Case 4. You are changing the wage system to align it with lean manufacturing. While there is no technology involved, it deals with people’s livelihoods and is a sensitive subject. The issues have to be thrashed through with all stakeholders. The intent and the specific changes have to be communicated carefully to all affected personnel. All the above cases occur in the course of most lean conversions, and the appropriate implementation method falls out naturally from an analysis of what needs to be done, how long it takes, whose input is required and whom it affects.
7. Conclusions and key messages We have given many examples of mistakes in implementation strategy that do commonly result in making performance worse rather than better. As I believe we have shown, these mistakes are avoidable. The key points are as follows: Message 1. Message 2. Message 3. Message 4. Message 5.
Implement lean manufacturing for the right reasons. Pursue business results. Don’t do it to humor customer auditors. Apply the breakthrough strategy to develop your skills base, and bootstrap plantwide implementation from successful pilot projects. Then proceed to activity-centered projects like 5S and TPM. Never give anything priority over shipping product, but make lean manufacturing the next priority after that. Don’t get bogged down in analyzing and modeling the current state. Focus instead on deciding where to start, and don’t spend more than two to three weeks on the initial assessment. Let the content of projects drive the implementation method. Don’t try to apply the same method to every project.
8. Biographical Sketch Over the past 14 years, Michel Baudin has been consulting for such clients as Honda of America, Canon Virginia, Boeing, Raytheon, Unilever, MetalEurop, the CIADEA automotive group, and Hoechst on lean manufacturing implementation, and for hightechnology companies like Hewlett Packard, Intel, Motorola. Winbond, and National Semiconductor on production scheduling, process transfer from R&D to production, and computer system architecture for manufacturing applications. He also designed the MS/X OnTime production scheduler marketed by Tyecin Systems and led the EU-funded INRECA research project. Michel Baudin is the founder of MMTI, the Manufacturing Management & Technology Institute in Palo Alto, CA. His prior experience includes being a director of the Menlo Park Technology Center of Teknekron Corporation, leading a group at Schlumberger/Fairchild that designed, tested, and supported maintenance management, production scheduling, and quality control software that is in use in semiconductor factories; giving technical support for CIM installations in Japan on behalf of Consilium corporation; and implementing the OPT scheduling system in two General Motors factories. Mr. Baudin is author of Manufacturing Systems Analysis, with Application to Production Scheduling, a textbook available from Prentice Hall. His academic background includes a Master's Degree in Engineering from the Ecole des Mines, Paris; graduate work at the Hahn-Meitner Institut of Berlin; and research at the University of Tokyo. He is an instructor with UC Berkeley extension and a faculty member of the University of Dayton's Center for Competitive Change. Michel Baudin is fluent in French, Japanese, and German, and is learning Spanish.
References 1. 2. 3. 4. 5.
B/E AEROSPACE INC, 10-K filing, 05/24/2001, Item 7. (http://him.tenkwizard.com) "Lean Production: The end of management whack-a-mole, by Michel Baudin, 3/16/99 (http://www.mmtinst.com/End_of_management_whack_a_mole.html) Robert H. Schaffer, 1988, The breakthrough strategy, Harper Business, New York Robert H. Schaffer, 1992, Successful change programs begin with results, Harvard Business Review Hiroyuki Hirano, 1987, JIT Factory Revolution, Productivity Press
First, do no harm!
Draft 1, 7/14/2001
8 of 9
6. 7. 8.
Patrick D. Smith, 3/8/2001, Rumor about Boeing, http://groups.yahoo.com/group/nwlean/message/665 Mike Rother and John Shook, Learning to See, LEI, (1999) Tom de Marco, Structured Analysis and System Specification, Prentice Hall, 1978
First, do no harm!
Draft 1, 7/14/2001
9 of 9
