Moving To A Truly Lean Culture by Jolito Ortizo Padilla

Rectruitment, Selection and Training and development are too important to be treated as separate activities hived off to a human resources department.

Jolito Ortizo Padilla describes how to fully embrace a lean culture within a company.

Are you a lean organization or just an organization doing lean? This is an important question and there is a difference. Most companies are just "doing lean"-kaizen systems are up and running in some areas, the 5S methodology has made the place look tidier, work is being done on quick set-ups at a few crucial points, there are some current state value stream maps in place and, maybe some future state maps too. This is all fine-everyone has to start somewhere and you will certainly realize some improvements.

But it is not enough . Doing lean "stuff" here and there will not get your flow time down to a few days or hours . It will not reduce stock to 15 days or less and it will not improve the productivity of your value streams by hundreds of percent or enable you to beat the competition on customer delivery.

To make such step-changes in performance an organization needs to do more than just use lean tools. It has become a truly lean organization and that means changing the culture to a fully lean philosophy. Moving to unknown territory is always a scary prospect, but the good news is that the first step to moving a truly lean culture is simple; the senior management team just has to understand and fully embrace two fundamental truths about lean. First , that lean is a growth strategy , not a set of tools and not a cost- reduction strategy, and second that profitability in a lean organization is related to the rate of flow through the value streams.

Lean is a Growth Strategy
Waste is removed and processes are improved through people working together using structured problem solving techniques. Together they will improved flow, reduce scrap and rework , speed up set-ups and changeovers, reduce batch sizes and increase productivity. All this means that the capacity of value streams will be greatly increased. In short, you will be able to get more out of your value streams-or,to put it another way, meet current levels of demand with fewer people.

But you cannot reduce the number of people you employ. The quickest way to kill lean is to sack the very people who have worked to make improvements. This means that your overall costs will remain largely unchanged. You can reduce overtime, minimize the use of temporary staff and save money on scrap costs, but these are relatively minor short term cost improvements. Big savings remain out of reach : you can't reduce the number of employees and you can't reduce overheads.

The only way you can really profit from the greatly increased capacity that lean delivers is to grow the organization.You can do a great deal more profitable work with the same people and the same overheads and the only way to realize this benefit is to grow sales, develop new products and reach new customers and markets. This takes time , but lean is a growth strategy , not a cost -reduction strategy. Work needs to start straight away to develop plans that will profitably fill the additional capacity that lean activities generate.

The Rate of Flow
Let us assume that before lean improvements you can meet a customer order within four weeks and you produce 4,000 items in that four weeks. Through lean improvement you reduce your flow time so that you can now produce the same 4,000 items in two weeks. That gives you two weeks of free capacity that you can now profitably sells. Apart from any additional material cost, this extra capacity is virtually pure profit. Lean , as we saw above , is a growth strategy and we can double the profitability of the value stream by doubling the rate of flow. In fact, the profitability is more than doubled as overheads remain largely unchanged.

Developing a Lean Culture
Once a senior management has accepted the fundamental truths of the lean approach , the culture can begin to change . everything that the organization does must focus on these truths and this in turn creates a need to change the organization in two aspects:
- System structure and policies
- Organizational behaviours
First, if we look at internal systems, structures and policies , most traditional organizations have developed many are the antithesis of lean and generate non-lean behaviours. Examples include:
- Management bonuses based on output rather than flow to customer demand.
- Promotion based on individual performance rather tha team performance
- Individual incentives rather than team incemtives
- "Buy more, pay less" sales policies rather than policies designed to
encourage regular steady purchasing
- Different prices for different customers rather than fair , clear pricing
policies
- Accounting reports that emphasizes production efficiencies rather than
measuring and improving the flow of the whole value stream
- A preponderance of departmental projects and initiatives rather than a focus
on improving the value stream
- A focus on shareholder returns at the expense of customer value.
To create a truly lean organization , organization systems, structures and policies must be reviewed to ensure they support the lean philosophy. They must support the five principles of lean:
- Focus on value for the customers
- Organize by value stream
- Value is created by clear unimpeded flow through the value stream to the
pull of the customer
- Empowered people add value and improve flow
- Pursue perfection to continuously improve customer value and flow.
Unless the organization's systems, structures and policies support lean throughout the business, then the lean effort will ultimately wither.

In terms of organizational behaviours , the explicit behaviours of management must fully support lean and encourage problem solving and improvement. A number of lean tools contribute to the effort to change organizational behaviours to support the lean philiosophy.

Lean Performance Measures
As mentioned earlier , traditional measures of performance -such as machine or labor efficiency , or variances on standard cost-do not support the lean philosophy. Instead we need measures of the performance of the whole value stream. We measure quality , flow time ,customer satisfaction , stock and on-time delivery for the complete value stream from order entry to delivery in order to allow us to work together to measure , manage and improve the whole process.

Visual Management
Hiding lean performance measures inside the system motivates nothing and involves very few people. A key principle of lean is the visual presentation, review and improvement of data in the orkplace. Cell measures are displayed on cell board and reviewed at daily cell meetings and are the focus of cell improvement. Value stream measures re discussed at weekly meetings and are the hub for value stream improvementprojects and kaizen events. Strategic measures for all value streams in the organization , are the focus of senior management review and strategic planning.

Creating the People Value Stream
Recruitment, selection and training and development are too important to be treated as separate activities hived off to a human resources department. They are activities that serve all the organization's value stream. It maybe argued that the people value stream is as important as any revenue operating value stream.

The role of the people value stream is to attract people with the right characteristics who will contribute , to develop people so they have the capability to do quality work everyday, to engage people so that they willingly set about improving their work through rigorous problem solving and to inspire people so that they are committed to the organization and will continue to learn, grow and do their best. As much effort should be put into defining and optimizing this as any other value stream.

Management Standard Work
Leaders change culture by making it safe to reveal problems and by demonstrating their commitment to lean improvement. Management standard works provides a vital tool for cascading this visible commitment to all managers, supervisors and team leaders.

The culture of mutual trust to support creativity , problem solving and teamwork ensures your lean effort is sustained must be created and supported by all managers Leaders must lead by example, regularly and consistently, which is the purpose of leader standard work. Management standard work includes daily, weekly and monthly checklists for managers at all levels, including daily cell meetings and plant walks, weekly value stream meetings and improvement activity, and monthly planning and review of strategy development.

maangers at all levels must visit the value streams regularly and visibly support the lean journey through involvement in improvement activity and encouragement of team working and problem solving.

Continuous Improvement
The pursuit of perfection is one of the core lean principles and successful continuous improvement relies on every employee being willing to call attention to problems. Rather than allocate blame , managers must focus on improving process. Leaders create a culture for continuous improvement by their actions and through communication, training and development:
- Team members must thorougly understand the standard
- Team members must be alert for deviations
- Team members must be motivated to signal problems, without fear of reprisal,
confident they will listened to and supported.
- Team members must audit the application of standard work
- Team members must be close enough to respond to a problem immediately
- Team leaders must be trained to support the application of rigorous problem
solving techniques with team members.
- Team and individuals should be rate not on how well they solve a problem
but on how well they apply the problem solving process.

Planning
The organization's commitment to lean must be reflected in its planning processess. The annual budgeting circus must be replaced with approaches that focus on the five lean principles.

Leaders must engage people at all levels in the organization in order to focus their energy on applying lean principles to everything they do. Lean planning methods, including strategy deployment , provide a structure to do this and should be implemented as a matter of priority from senior management level.

As you begin your lean journey you should try some kaizen events,map your value streams, work on quick changeovers and spread 5S across the entire organization. These are all good training exercises for people at all levels.

As lean takes hold , management commitment become vital . Once senior management understands the lean truths, it must develop the organization's systems , structures and policies to support lean and must use lean tools to develop organizational behaviours. Applied visibly, consistently abd fairly , these approaches will build a management team that displays the behaviours of truly lean managers.
And how will you kno you have created a truly lean culture? Of course it is an ongoing process, requiring constant feedback and reinforcement , but good indicator would be when you can pick any employee and get an honest and positive response. "Do you feel safe to reveal problems?"