More than being a management tool, Lean is a culture that needs to be fully accepted and adapted by people for success. The real challenge is how to address people’s issues… Even Toyota, considered to be benchmarked for Lean practices, still finds itself grappling with people’s issues trying to bring relevant behavioural pattern changes needed to accommodate them in their culture. Jayanta Roy, an industry expert with 10 years’ experience in production, analyses the critical factors for successful implementation of Lean.
History has proven that change is vital for survival, but it is also true that change only comes when there is a crises, creating the need for change… shaking people out of their comfort zone. A crisis is now building up in the garment manufacturing segment and upfront companies need to take a stand and go for Lean manufacturing to identify and eliminate waste, and which requires commitment and strategic changes for successful implementation.
Leadership Vision: It is critical to ask the leadership a fundamental question – Is he willing to take tough decisions if the need arises and choose long-term goals over short-term benefits? Lean should not be taken as short-term cost cutting strategy but should be embraced as a way of doing business. Garment manufacturing by its nature is a labour-intensive industry, therefore investing in people and processes will pave a long way.
Measuring KPI (Key Process Indicators): People perform based on what they are measured and how often they are measured. Key KPI drivers of Lean behaviours include:
Safety – How safe is the workplace? How serious are we about employee safety and even if so do we have a good understanding for reducing injuries?
A safety calendar prominently displayed and updated regularly and transparently on a daily basis by team leaders or supervisors to track days of safe working, near misses, minor injuries and major injuries helps to educate everyone, show management concern and build an atmosphere of trust.
Quality – Rework requires additional resources contributing to additional cost, eating up into profitability. Focusing on First Time Through across the entire value stream and improving on it will shorten throughput time and free up resources. An organization with a culture of doing Root Cause Analysis and fixing problems involving people will go a long way in improving productivity and profitability. Two of the measures indicating quality are First Pass Yield and Cost of Rejection.
Delivery – Maintaining fewer inventories will shorten the throughput time and also bring problems to the surface much more quickly, compelling to fix it. If done properly and consistently in a methodical manner it will start to show benefit, for e.g. a 25% improvement in throughput time in a month would mean that earlier where an order, which used to take 30 days can now be completed in 22.5 days. It means that the company can take more orders for the balance 7.5 days and can improve its turnover ratio thereby improving its cash flow situation.
Cost – As opposed to traditional way of measuring cost through standard costing, where the philosophy is that profit comes from full utilization of resources and hence measurements are based on labour efficiency and machine utilization, which is a driving behaviour to produce more, leading to increase in inventory. It is for this imperative reason that value stream costing is adopted for decision making to sustain the Lean culture.
One perspective of value stream costing is that profits come from maximizing flow on pull from customers, which is a driver to eliminate inventory. Imagine what a company could do by reducing an inventory pile up from 15 days to 2 days in terms of people, delivery time, and floor space and so on.
One of the ways of calculating cost is cost per unit. However, the most important thing is that cost per unit needs to be calculated from a value stream perspective and not from a generic point of view. What this means is that cost per unit should not be considered in isolation without taking throughput time into account and the benefits accrued out of it. It is possible that cost per unit may go up by using additional manpower to improve the flow which might also reduce the defects simultaneously, considerably improving the throughput time, resulting in available time at our disposal although the improvement has happened in terms of turning out the goods faster and better, but as per standard accounting the cost per unit has increased and hence improvement has not happened.
Morale – If the employees’ morale is high, they would present themselves for the job regularly. Hence a good measure for ascertaining employee morale is Employee Attrition & Absenteeism Percentage and Employee Satisfaction Survey.
Gemba Walks: How much is the value stream manager in touch with the actual work processes? Does he spend quality time at the place of actual value creation…? Gemba walks are about ‘Management by Walking Around’ and not to intimidate but help the workers. It is essential for value stream managers to spend as much as 20% of his daily working time (could be on a hourly basis) on the shop floor, observing the process, asking questions about the processes, interacting with people and doing process conformity to collect a lot of valuable inputs.
Standardisation and Process Stability: One of the pre-requisites for Lean practices to sustain is process standardisation and process stability. Process standardisation does not mean that improvements cannot happen anymore, but what it means is that processes should not be changed very frequently. If a better method exists then standardise it and then improve on it and after the improvement has happened, again standardise it and so on.
Employee Involvement: Leadership vision alone is not enough to make an effective change in culture if employee support is not there. To make an effective change in culture and more importantly to sustain it, an open and participative style of management is needed, where both operators and staff can substantially contribute and learn from each other rather than a controlling or a bureaucratic style of management. The management working to engage the operators in problem solving make them a part of the decision making process. Recognition after successful completion of improvement projects, tied to specific goals should be duly awarded.
One of the most crucial thing is that the operators should never feel threatened about losing jobs arising out of their improvement efforts indicating a reduction in the number of headcounts, but rather they should feel proud about implementing the findings with proper support. In such cases maturity from management needs to be shown, as any effort otherwise will backfire and all improvement activities will come to a halt. Some means of taking care of the excess resources could be to let natural attrition take care of it, look at the possibility of bringing back the outsourced jobs in-house if any, and look at the possibility of starting a new line if the market demand exists.
[bleft]One of the most critical challenges in implementing Lean is the human factor as experts believe that tools constitute only 20% and the other 80% is culture related[/bleft]
Human Resource Policies: Organizations do not change… People do. One of the most critical challenges in implementing Lean is the human factor as experts believe that tools constitute only 20% and the other 80% is culture related. Organizations are compartmentalized – someone is responsible for production, someone is responsible for quality, someone else is responsible for sales, and so on with each of the functional heads responsible only for their own department metrics. In such a situation it so happens that every ‘function’ tries to perform its best for its own metrics, resulting in some of the metrics of some function outperforming others causing conflicting and unbalanced situations from a value stream perspective, e.g. a production functional head will only be concerned about his utilization percentage without being bothered about the time of cash flow coming in for the goods he is making. Similarly, a person responsible for purchase might be more biased towards reducing cost of materials rather than the specified quality. Because of this approach the problem in the system remain from low productivity, delayed lead times to more utilization of resources due to poor quality of materials.
Hence what is required is de-compartmentalization or breaking down of the barriers between various departments or functions and forming a cross functional team aligned with common goals and objectives, from top to bottom. One of the ways of doing this is through ‘Hoshin Kanri’.
Strategic HR policies need to be put into place catering to different levels. Though employee recognition without monetary terms continues to be one of the biggest motivating factor, performance reward systems needs to be put into place at the operator’s level for learning new skills or cross training, imperative of Lean manufacturing.
Formal Training and Mentoring: Companies committed to change the culture and implement Lean practices should preferably use the experience of someone from outside the organization, experienced mentor along with internal change agents and strong leadership skills is necessary to initiate the transformation process.
Price Pritchett in his book Resistance: Moving Beyond the Barriers to Change, defines the 20-50-30 rule, wherein he states that some 20% of the people are “change-friendly”, another 50% sit on the fence trying to figure it out which side to take while the remaining 30% are the resisters. These 30% are antagonistic toward change and often deliberately try to make it fail.