Friday, March 30, 2012

How to Create a Culture Where Problems are Good

It is nice to see managers "managing by walking around".  Asking how things are going. "How bout them Mets?" Have you ever seen a culture where there is only one answer to the question, "how is it going?". And that answer is GREAT!!!  I often think about "The Emperor’s New Clothes" which was first published in 1837. Because he was emperor, he could walk around naked, and all of his subjects (employees) should tell him how great he looks in his new suit. (The emperor was told that anyone who didn't see the "non-suit" was "helplessly stupid" so even the king himself convinced himself he saw a  suit).

The people doing the work know you are naked. They've shared that fact with their co-workers and families, and in many cases how to fix the situation. So how come they can't share this with their emperor?  They don't trust him:

1. Fear- People think if they bring up "negative things" they will get blamed and fired.
2. Not Listening- They already told you and you didn't do anything. Have you ever heard co-workers saying, "I tried to tell THEM that 3 years ago and THEY didn't listen."  
3. People do not want to appear inept or stupid, so they adopt the "I just work here mentality."

This is all symptomatic of an US vs. THEM culture.  Once you make a REAL effort to get people together on a regular basis (P2 = Develop your People and Partners) people start to talk openly about problems. It is important that all emperors attend these regular get togethers. 

The old suggestion box with a lock and key doesn't work.  In addition to on time delivery, customer complaints, defects, rework, etc., the best way to make PROBLEMS visible and the root of your organizational learning is by developing your people and partners!  Make it a point to get groups together to talk about problems often and regularly. Toyota uses the number of employee suggestions to measure MORALE. 

So, do "your people" tell you you're naked?

Wednesday, March 28, 2012

Problems: Man's Best Friend

My best friend... besides problems, my dog Tessie waiting her turn for the bowl from my other best friend Minnie.

 Hunky dory is the sworn enemy of all Lean thinkers. That condition where all of our problems are hidden. We try not to think about them, definitely not talk about them. When someone asks, "how are things going?". We love to answer, "Great!" or "Wonderful" or "Just Hunky Dory". Lean leaders can't live i n that world at all. No matter how fast or smooth processes appear to be to the untrained eye, they see problems. We call this a "healthy disrespect for the current condition". Where others may see hunky dory, we see chaos.Where others may see "great!" we see a huge learning opportunity. This is the final P in the P4 Business Strategy: "Elevate your Problems and make them the curriculum of your organizational learning." 

This is alot easier to do when everyone has bought into the 3rd P-The Right Process will Produce the Right Result. What this means is people don't need to hide their problems anymore, because the blame game has been turned off. 

There are so many great sources of these wonderful problems in our organizations:
1. Customer complaints (you have to be willing to hear the voice of the customer). Just because they're not complaining doesn't mean they're happy, go find out!
2. "Employee" complaints-do you want to know what is wrong with your processes? Go ask them! They know, because they are the world's leading experts for their processes. They do it every day! Just because they're not complaining doesn't mean they're happy. (remember the emperor with no clothes?).
3. Product returns (see #1), defects, rework or scrap data.
4. Injuries-hits or near-misses. Bending, twisting, reaching, and lifting may all be great problems to address in processes.  

How do we build a culture where people throughout our organization are continuously digging for problems and solving them forever vigorously in their processes? Instead of ignoring them just to ship orders? We'll take that on next blog.

Monday, March 26, 2012

Last word on P3 The Right Process will Produce the Right Results

In my previous blogs, I have tried to caution you about running amok around the organization with your toolbox looking to use them on other people's process. Remember that as a lean leader, it is DISRESPECTFUL for me to fix your process. So, how do I go about using my new tools? 

Work to make 2 concepts clear throughout the organization.....FLOW and PULL. Imagine an order coming from your customer, and moving at a set pace through the company, without stopping. Like an assembly line, it comes in one door and "leaves" when you deposit the check in the bank. Pull is how fast this assembly line is moving. The orders are never waiting anywhere. When a person finishes working on one, the next one shows up "just-in-time". This is a place we can probably never get to, but we can all continuously work, in small steps toward that goal.  Imagine a world where your customer gives you an order, and it moves through all of the value streams in your organization, from order entry to production to shipping to invoicing, and every process adds value only, not defects, over-processing, waiting, transport, motion, inventory, etc. This is the goal. Every second of non-value added time has been eliminated, and customers are lined up outside because we are the fastest in our industry. 

All of our lean tools help us get to FLOW and PULL. Either by helping us see or eliminate one or more of the 8 wastes. Before improving any process (kaizan), start by STANDARDIZING it. Watching a video of a process together is a great way to standardize. Value stream mapping is another great way for everyone to come to agreement on the current condition. DON'T map their process. Teach the process owners how to use the tool, and let them do it, and answer their questions. Let the process owners identify the opportunities for improvement. Help people seize these opportunities using A3. (I will cover A3 in a future blog). As the usefulness of additional tools becomes apparent, teach them! Continue to do this until people understand which tools make sense and are comfortable using them.

Friday, March 23, 2012

Going from Resident EXPERT to Dumbbell - A Good #Lean Leader

In a LEArNing organization, there is a large population of people with a spirit of experimentation and an eye for small, continuous improvements. This results in people hacking away at process TIMES by using the tools to SEE and remove waste in their own processes. This distribution of brainpower is not conventional wisdom. Conventional wisdom is that bosses get the air conditioned office and good parking for a reason-they're the really smart ones. Many times, when crises arrive, people go right to these experts to get answers, I confess that in my company, I was one of those "experts". A line of people were at my door waiting to get my answers. It took me quite awhile on our lean journey to realize that I was an anchor! In the way, a roadblock. When I spoke, people's brains clicked off.  A room full of people would stop arguing and debating (both good things) when I decided it was the right time to put in my "two cents". The room would go quiet, all eyes came my way, and I would offer what I thought. Naturally, I was the smartest guy in the room. I was there the longest, had the biggest office, and parked the closest to the door. 

Somehow, one day I finally noticed that all thinking stopped when the expert spoke. I made up my mind to stop talking. Or, better yet, not show up. When people came to my office for wisdom, I answered by asking questions.  It worked! Then, when I decided to show up at the meetings again, I shut up and once in a while asked a question. Problems got solved in new, unique, innovative ways based on the consensus of all the brains in the room. Remember, managers manage the current condition, leaders motivate others to get to the target condition.

As an ordained lean consultant,  I've been given the opportunity to work with many smart companies that do hard things very well. I am a polymer chemist by trade. I am no longer PLAYING dumb. I am dumb. So I HAVE to ask questions. As a result, I can truly be an outsider looking in, people have been patient with me, and my tools are probably at their sharpest. 

So, the lesson for the day.....Can you become the dumbest guy in the room (will your ego allow it)? Or do you have to have all of the answers?

Wednesday, March 21, 2012

What I Learned NOT to Do With the Tools (Falls under Respect for People)

The 3rd P in the P4  is , of course, "The Right Process Will Produce the Right Result." That is one of our core beliefs, because it always takes people "off the hook". We no longer look for scapegoats. All we need to do is fix the process using a whole toolbox full of lean tools! Today, I'd like to share some mistakes I made early on with my new found tools.

Let me start with another core belief. It is DISRESPECTFUL for me to fix YOUR PROCESS!! Early on, I was a newly crowned Lean Champion (certified, or should I say certifiable). I couldn't wait to run around the company and use my tools to fix every process I ran into. Mapping, 5S, Point of Use Storage, etc. I pulled them out of the box and used them on your process. When the dust cleared, it was no longer your process, it was mine; except I moved on and you were stuck with it. DON'T DO THIS!! 

Once people begin to see waste in their processes, often the "old way" seems silly, almost comical. "WHY did we do it that way for so many years?" Yet, sometimes there is a tendency to defend the indefensible. BE PATIENT with this. If a process is making alot of rework or scrap for example, chances are there will be resistance to change even if the results stink. NEVER SNAP! Instead of saying, "wake up, this process stinks", say "what would happen if we tried this." We are trying to develop a willingness to experiment. Tell people that we can always go back to the old way if we try this and it doesn't work.  Early on, I might have snapped once or twice, which sabotaged our progress!

Also, don't worry about form. Coach function. Especially with A3 and Value Stream mapping, there are no points given for style. Encourage people to "just have at it". The intention doesn't have to be a map suitable for framing, but a visual indicator for improvement opportunities. Cross outs, blood or grease are OK. 

5S is a good first tool, because it is usually a great launch pad for the others, from a teaching standpoint. Unfortunately, I started with value stream mapping, which can be intimidating to some. Sort-Set-Shine-Standardize-Sustain is cool because I can segue into POUS, mapping and kanban (why do we have so many stored here?)

Slow down and teach people the why of the tools and the spirit behind them and how to select the right tool for the problem at hand. It is great curriculum for your LEARNING Organization. Don't unleash yourself or your lean department on people to fix their processes!!

Monday, March 19, 2012

The 3rd P: The Right Process will produce the Right Result and VICE VERSA

We've discussed the first two Ps over the last few blogs:
#1. Philosophy or Purpose- Why are you in business?  Figure that out, make sure it has to do with helping people and not merely money. If you help, money comes!
#2. Develop your People and Partners- The best investment you can make is in the people you have hired. Build leaders everywhere in your organization by striving to becoming a LEArNing Organization.

Today, we'll look at P#3, which is a pretty fun one-"The Right Process will Produce the Right Result". This has got to be a core belief in your organization. Conversely, the wrong process will produce the wrong result! This core belief removes all "finger management" in your business. Finger management is the finger pointing and blame placing that typically occurs when something goes wrong. Instead of the "5 Why", people practice the "5 Who". This has always seemed ironic to me, because very seldom is it that the people DOING the work are the people who CREATED the process. They're usually stuck doing someone's "wrong" process!

This P is where we have some fun playing with our Lean tools. As you know, Lean is nothing more than time management. The tools help us SEE and remove time from our processes. The time we will be removing will be in the form of 8 wastes, Defects, Overproduction, Waiting, Non-used people, Transport, Inventory, Motion, and Excess Processing.  Remember nirvana for us is to receive an order, and watch it move through the entire enterprise at the perfect pace (pull) and to the customer without stopping (flow).  Sort of an assembly line. These 8 wastes keep us from nirvana. Unfortunately 90% of all processes are infected with some of the 8 wastes. And, other than the lowest hanging fruit, they are invisible. WE know they're invisible, because they happen every day, every shift. Our Lean tools are what help us see them.

Much of what we talk about in P3 is great curriculum in out LEArNing organization (see the blogs for P2). 

Next up: What I learned NOT to do with the Tools (falls under Respect for People)

Friday, March 16, 2012

Obstacle to becoming a Learning Organization: Fear

In previous blogs we discussed the first major obstacle to becoming a learning organization, too busy. There will never be a time when everyone has time to learn together. So make the time. And be stubborn about it! 

In this edition, we'll discuss the another obstacle-FEAR.  Our goal is to evolve into a learning organization so that we can Develop our People and Partners (P2, my favorite P).  

It is possible there is a fear of failure. On the part of the teacher (you) and the students (your employees). Your fear is that we are investing a lot of money to get big groups of people together to start the process of learning together.  What if they don't like it?  What if it was a waste of time? What will I talk about? The fear your students may have is that they may not get it or they heard there would be quizzes. This fear can manifest itself as silence, ambivalence or anger. When we began our company-wide learning sessions, it was quickly evident by where people sat that some perceived themselves as smart, and others perceived themselves as either dumb or dis-interested (in the back row). Participation in the early weekly lessons was not great. Many looked at the wall or the ground instead of making eye contact with me. It took many months before I actually saw some eyeballs.. The prevailing sentiment early on was "why do I have to be here". Stay with it!!!  Persistence is the key. The NEW way of doing business is that we are a learning organization, and part of what we do together is learn.

Make your learning a safe place for people. In our case, we did give "take home" quizzes each week, based on a chapter of Lean Thinking or The Toyota Way. I check in with people during the rest of the week to find out how they are doing. I help them with quiz questions they may be having problems with. Many times I would do the entire quiz if it meant I could spend time with a person in our company.  I believe in giving quizzes, because it allowed me to know who needs help. Once people get used to taking the open book tests, then we moved to closed book in class, and people corrected them in class themselves. By our 3rd or 4th month of classes, everyone took the quiz and handed it in, and I corrected them. Then part of my standardized work would be to hand them back out to everyone, and go over any questions they missed.  By this time, people understood how important learning was to the future success of the company, and they realized what the purpose of the quiz was. In class, they were not only showing me their eyeballs, but actually having fun. Kidding each other. Tutoring each other. The one hour per week flew by. The dynamics changed. Self imposed limitations were lifted. People became better and better readers, quiz takers and learners. People who always sat in the back sat in the front. Departments that always sat together spread out. People learned to love and respect one another. This showed up in their continuous improvement activities all around the company. Plus they were used to being and learning together. 

My fears were unfounded. Your curriculum can be lean tools, your company philosophy, books or articles, whatever. People will give you feedback so you will get better and better at it. Challenge others to take the reins when you're on vacation! Never let a week go by without this learning together as an organization. Sooner or later, everyone will understand that they are VITAL part of a learning organization!!!

Thursday, March 15, 2012

CONNSTEP CMC Roundtable Event - March 15, 2012

Bill spoke at the CONNSTEP Connecticut Manufacturing Coalition Roundtable Event yesterday on the topic of LEAN as a Business Strategy vs. a Department. There were 20 people present at the Roundtable and a few live tweets were posted during Bill's presentation. Here is a photo that was posted to Twitter yesterday during Bill's talk!

"Operational excellence (LEAN) causes market disruption. If it doesn't, your not doing it right!" -Bill Greider
"Trust your employees and the trust will be returned..." -Bill Greider on Leadership

Full Video of Bill's Presentation: Lean as a Business 
Strategy vs. a Department

We apologize you can not clearly see the slides in the presentation, if you wish to view the slides at any point please contact P4

We would like to thank CONNSTEP for having Bill speak at the Roundtable and those who attended! Additionally, if you are interested in having Bill speak at an event please contact P4 directly via email, phone or Twitter.

Wednesday, March 14, 2012

Obstacles to becoming a LEARNING Organization #1 Too Busy

Last time I suggested making an investment of at least 1 hour of training or teaching every employee in your company EVERY week. The overall objective is to transform your business into a learning organization, and the payoff is in people solving problems together every day. Learning is hard work that takes conditioning just like physical work. The more we work at learning, the better we get at it.

But who has time for all this learning. Not many organizations have spare people these days, and people are busy trying to satisfy customers. Unfortunately, lean thinkers know that 90+% of any process is one or more of the 8 wastes. So, naturally, our people are too busy doing waste. Unless we teach them to see it in their own processes and systematically, continuously, eliminate it.

In my company, when we started our lean journey, we always had trouble getting people to stop working for an hour to learn together. We called this "being a mouse on a wheel". Working feverishly, but not moving forward! Can't we all spend one hour per week working on our business vs. working in our business? People would come running into our weekly class late, out of breath, complaining they didn't have time. Very rarely could we get EVERYONE together in the beginning, because someone was always busy working through waste to get stuff done. Finally, it occurred to me that we can all go on vacation for an entire week, and when we come back, our business is still there! Thriving! Doing fine! Without us! So I asked everyone to pretend they were taking a one hour vacation each week. Then I convinced them that being out of breath and working through chaos is not a positive thing. Start acknowledging the people in your company that get the work done WITHOUT the shortness of breath. Those are the folks who are "masters of their domain". When you start your learning sessions, take attendance and keep track of who came late (this is a "respect for people" thing). Do it in class and call out names. People need to know it is important to you.

Monday, March 12, 2012

P4 Lean Strategy:P2- "Develop your People and Partners-pt.1-Getting the Ball Rolling"

P4 Lean Strategy is kind of like riding a unicycle, tapping your head, rubbing your belly, and chewing gum at the same time. It's not easy and takes practice. We covered the first P , Philosophy or Purpose last week. Why are you in business? What is the one thing you are great at? (Hopefully, the reason for being isn't just money)

Next is my favorite P, Peopl/Partners which really means "Develop your People/Partners". It is probably the P where there is an investment needed. In people. After all, isn't your business really about the relationships between you and the people in your company? The relationships between your people and your customers?  And suppliers? And the community? How market disruptive do you think it would be if every person in your company was smarter at every position? How many times have you heard or read marketing material that says "our people are our greatest resource? How much time on a DAILY basis do we spend developing them? 

Toyota's Taiichi Ohno said that the biggest compliment you can give any organization is that it is a learning organization.  A great lean champion is 50% learner and 50% teacher. I promised myself  I would devote at least 1 hour of training per week to every employee in our company (~80 employees). Every week. Week in and week out. The curriculum?  I bought 80 copies of Lean Thinking by Womack and Jones. Handed them out and assigned everyone one chapter per week to read and gave them the quiz for that chapter. Every Wednesday, I got everyone together for an hour, and we talked about the chapter and did the quiz, and reviewed it in class ("open book").  I spent 30-60 minutes every day going around and asking people if they understood the reading and if they had questions, etc. For the first 3 or 4 months, the Wednesday meetings were like root canal surgery. 1/3 of the people had read and done the quiz, 1/3 faked it in class, and 1/3 refused to do anything. I recruited the first 1/3 to help me tutor the last 1/3. This first 1/3 was a cross section across departments! We didn't give up. People threatened to quit, saying it's not their job to read and do quizzes. We responded by telling them the people that read & do quizzes get more bonus and the folks who chose not to might get less bonus!  That helped get more people active. The first 1/3 became my Lean Beret. We'd meet once per week and plan the following week's Wednesday meeting.. We planned 5S activities, value stream mapping exercises, building planes with legos, picked training videos, planned field trips to lean companies, etc. When we finished Lean Thinking, we moved onto The Toyota Way. Same plan, except, the quizzes were closed book in class.  We bought Spanish versions of the books, and even brought in tutors to help people read better! We DEMONSTRATED that it was IMPORTANT. By the middle of the Toyota Way, we were pretty good at it. The biggest obstacles were people didn't have time and they perceived themselves as non-learners. Both were overcome. After The Toyota Way, we read The Goal, It's Your Ship, Jump Start Your Business Brain, and Inside the Magic Kingdom. Then we developed our company university, which I will discuss later. Lessons I learned:
1. Start now and  be the most persistent person you know.
2. Learning is hard work and takes conditioning. The more you do, the easier it gets. Keep that in mind when working with your "I just work here" people. Be prepared for backlash. Reward your early adopters by asking them to help you.
3. The real POWER in P2 is getting your organization used to learning together. Groups thinking, debating, arguing, laughing, etc. From different departments, all together. People become confident and voice their opinions freely and openly.
4. Make learning part of working for your organization. 

Here is a terrific article that directly relates to mistakes, business leaders sometimes make by Forbe's Alex Knapp: 
Five Leadership Mistakes of the Galactic Empire It is 100% worth the read!

Next up, Part 2 of P2, Develop your People and Partners-WE don't have time to learn! 

Friday, March 9, 2012

P4 Lean Strategy: The First P- Philosophy (or Purpose)

Why are we in business? What do we do better than anyone? What are we offering the world? Why do you go to work every day?  Try a quick experiment. Go ask someone you work with why we are in business. If the answer you get is "Duhhhh, to make money, stupid", then you have some work to do as a business owner, manager or LEAN Champion.  If making money is your reason for being, you'll never be happy, because there will never be enough money. My mom told me that when I was 14.

When thinking about identifying your company's "reason for being", I'm not talking about fancy mission statements. To illustrate, my company made the decision that we wanted to become a learning organization. This is a far cry from a "manufacturer of polymeric flooring materials". It also created a windstorm of new activities over the next 5 years as pursuit of this goal became a major part of our business plan. 

Here are some simple starting points that I've seen work well:

1. Why was the business started?  Often, when people start a business, they are passionate about solving a particular problem, or by making people's lives better somehow. Very seldom do people start a business "to make as much money as possible for me at the expense of all others."

2. What are you known for? Fast delivery? The best Technical help? Great innovation? The longest lasting product? Helping out in your community? Whatever it is, let people know in words and in actions! 

3. What are your management beliefs? A good friend of mine asked his employees to bring in photos of spouses, children, parents, friends and he posted them onto a prominent bulletin board in their facility. If you ask people at his company why they are in business, they point to the board! They work hard,  please their customers and go the extra mile for them!  Another friend called all of his people to a "mandatory" meeting and in a somber tone fired all of his employees and after 30 seconds of shock, immediately rehired them all as partners. His management belief was that he could not run the business alone. He immediately went to work on a profit sharing plan based on people's ownership qualities, as judged by their peers.With "ownership" as a philosophy, business results improved exponentially, as did the quality of life for all of his stakeholders.

This could be the hardest "P" of the four. Be patient but persistent, but come to agreement as an organization. Don't make it a task for the marketing department. But, when you figure it out, make sure you let people know about it-teammates, customers, suppliers, family members. Let me know too!! If you don't let people know why you are in business they will assume it is for you to make money for yourself!

Wednesday, March 7, 2012

P4 Lean Strategy- "1P Seems Really Hard, How Do I Implement 4P's At Once?"

Many of us, when we started trying to apply lean thinking to real life, naturally were very excited about using our newly acquired tools. Imagine coming home from Home Depot, running into the house with a bag of 5 or 10 new tools, and rushing around the house pulling them out of the bag, hammering, cutting, sanding, edging anything that isn't standing still. Also imagine trying to recruit family members and friends to join in!  Next imagine frantically looking to use your new tools on their stuff! And then, when they finally tell you to get the heck away from them, you label them as "anchor draggers".

Luckily for my company, I came to my senses very quickly (maybe 2 months in). The revelation for me was when our company president and I re-arranged our shipping department with the help of some reluctant shipping guys. We got to use 5S, POUS (Point of Use Storage), the concept of flow, spaghetti diagrams (a bunch of our new fun tools! Yeah!!!!) When the shipping work re-started and chaos resulted, I heard through the grapevine the following exchange:
Employee #1-"why are we having trouble shipping stuff this week?"
Employee #2 (who participated in the tool party)-"I don't know, go ask Bill".

That was lesson one in RESPECT for PEOPLE. It is not respectful for ME to fix YOUR process. Over the next 5 years, we developed a business strategy that eventually became known as P4. Four things need to be in your mind at all times (this takes discipline). It is sort of like riding a unicycle, patting your head, rubbing your belly, and chewing gum at the same time. With practice, you can do it. Today, I'll do a brief summary of each P, and then dig into each one, giving examples, in subsequent posts. So, here they are:

Philosophy/Purpose- "Why are we in business?" In most cases, it is not merely to make money. Why was the business started? If you haven't figured this one out, everyone will assume your sole purpose is to make as much money as possible for yourself.

Develop your People & Partners- "People are our #1 asset" How many times have you heard this? How much time do you invest in training and developing them every day? Why are they STARS when you hire them and No GOOD a short time later? What did we do as leaders to develop them to a point where we need to let them go?

The right Process will produce the right result-conversely, bad processes yield bad results. Here is where we get to use our fancy bag of tools! Yeah!!! But, it is also a core belief.

Make our Problems as visible as possible and the curriculum for our organizational learning. The key mindset here is "No problems is a PROBLEM". When we say we have no problems, all it means is that they are hidden, we can't see them, or we haven't looked hard enough. There are many things in our business that are in the way and hide our problems. 

Well, that is the Readers Digest version of P4 and how it applies to your business!. When all 4 components, are kept in the front of your mind, you will slowly transform your business into a fun place of beauty with incredible cash flow, and engaged and interested teammates. I promise.

Next P4 Blog- Some great real life examples of the first P-Philosophy

Monday, March 5, 2012

February's P4 Blog Posts in 5 Minutes!!

Before moving on to what the heck P4 is, i thought it would be a good idea to bring everyone up to speed regarding what's been covered in the last 10 P4 Blogs.

The first 6 blogs were a look at the target condition of a Lean organization based on what happened at my company:
1. Strong during tough economic times (sales down 21% in 2008, no layoffs, small profit!)
2. Little or no people turnover (people don't leave companies that are learning organizations)
3. MIND set change: more ownership (figure out how to get it done)  than employee-ism (I just work here)
4. There is greater prosperity for all stakeholders (people make more because we don't throw bodies at spikes in demand).
5. We're becoming market disruptive-customers (happy!) and competitors (not happy!) are talking about what you're doing.
6. Trust and Respect for People is demonstrated between "managers" and "employees"-the walls come down.
7. There is little or no operational chaos and very little of the emotion that comes with it. People can do many different jobs.
8. There is less scoreboard watching and you are driving your car using your dashboard. (Monthly financials are like driving your car using the rear view mirror).

Then, blogs 7-10 were dedicated to metrics and what to measure on those dashboards.
5 common dashboard data point mistakes:: too many, no connection to the process, people don't know why, they are written in stone, or the wrong units are used.  Next, in the past 3 blogs, a "starter kit" of metrics was suggested based on thorough-put, inventory and operational expense (stolen from the book, The Goal).

 That was February! They say (here in New England) that March "comes in like a lion and goes out like a lamb". The P4 blog, it will come in like a lion and go out like a charging rhinoceros! Next up is the P4. What is it and why should I care? Have a great day & thank you as always for following!!

Friday, March 2, 2012

The LEAN Dashboard - TIO: "Operational Expense"

Over the past 2 P4 Blog posts, I have suggested a starter set for metrics based on "The Goal". Specifically, "TIO", or thorough-put, inventory, and operational expense. I've suggested things I used at my company for the T and the I, today, I'd like to look at what we did with "operational expense".

One of the most influential lean teachers I've met is a dentist in Jacksonville, FL, named Sami Bahri. DR. Bahri defines lean as "a way to do more with less: less human effort, less time, less equipment, less space while coming closer to providing customers with exactly what they want."

I interpreted operational expense as human effort. When we started our journey at my company, I considered human effort the O. Overtime hours each week had no real correlation to demand. Overtime is OK when we are faced with demand that is extraordinary, it cannot be part of a job description. Unfortunately, people get used to it and work it into their personal budgets and lifestyle demands. For most of us, our people costs are our biggest operational expense. In the beginning, I used this dashboard entry as a measure of hours of labor to achieve demand. It was a weekly metric on all of the value stream dashboards. It caused an uproar, because folks become dependent on the extra hours. This is where you need to use every bit of TRUST equity you have built. Eventually, we were able to increase sales ~ 60% in a 4 year period without adding more people by eliminating the 8 wastes in our processes. What SHOULD this mean to the people who are doing 60% more (without overburden)? More money!! People were making more money in 40 hours than they used to make in 65 or 70!
Tie total human effort into thorough-put by dividing units made by total human effort (in hours). For us, it was pounds produced divided by total hours worked in the value stream. 

DON'T be in a hurry to build colorful, beautiful dashboards. Build them over time and have them reflect the progress of your problem solving. 

Hope I've helped some or given you some ideas. Thank you for all of the feedback. Next week, I will share what the P4 means and how it can jump start your lean thinking.