Tag: Change Leadership

LEAN Can Save Lives!

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September 17, 2009
by David

I love hearing about how LEAN strategies can do more important things than just help companies make more money.  Watch this video (or read the transcript) of Bill Moyers Journal for 9/11/09 where he interviews Dr. Jim Yong Kim, a public health expert and the new president of Dartmouth College.   Without mentioning LEAN by name, Dr. Kim  explains how LEAN thinking can improve healthcare, and how it (along with other strategies normally associated with industrial efficiency) should be implemented in U.S. Hospitals.

While there are many articles and posts out there discussing LEAN in healthcare, I just like the way this explains it.

Some quotes from the transcripts, with my comments interspersed [in italics and in square brackets].

BILL MOYERS: Why are we talking about the American health care system as a crisis? What’s wrong with our health care system?

DR. JIM YONG KIM: My own particular take on it is that I think for many, many years, we’ve been working under the fantasy that if we come up with new drugs and new treatments, we’re done.

The rest of the system will take care of itself. In my view, the rocket science in health and health care is how we deliver it. And unfortunately, there’s not a single medical school that I know of that actually teaches the delivery of health care as one of the essential sciences [sic]

[in other words, Dr. Kim is saying that high-tech innovation alone is not enough to make us excellent. The same can be said for many manufacturing facilities.]

DR. JIM YONG KIM: Well, just think about a single patient. So a patient comes into the hospital. There’s a judgment made the minute that patient walks into the emergency room about how sick that person is. And then there are relays of information from the triage nurse to the physician, from the physician to the other physician, who comes on the shift.

From them to the ward team, that takes over that patient. There’s so many just transfers of information. You know, we haven’t looked at that transfer of information the way that, for example, Southwest Airlines has. Apparently they do it better than any other company in the world.

[The same way we gain efficiencies by LEANING the flow of materials and of information in our facility.]

DR. JIM YONG KIM: It means how do you evaluate clinical outcomes? How do you understand variation in doctors’ practices, for example? And ultimately, how do you fix the problems? So the group at Dartmouth Institute does all of that. We look at variation. You know, why is a Medicare reimbursement rate, you know, almost a third in the Mayo Clinic area, as opposed to Miami?

[Measure results.  Analyze variation. Improve procedure.]

DR. JIM YONG KIM: Well, I’ve noticed over the years that when it comes to our most cherished social goals, not only do we tolerate poor execution, sometimes we celebrate poor execution. Sometimes it’s part of the culture. You know, these folks are trying to solve this terrible problem. They can’t keep their books straight.

They really don’t know what they’re getting. They don’t measure anything. But they’re on the right side, so that’s okay. I think we’re in a different time.

[Tolerating waste as a cultural problem.]

: ALL, Change Leadership
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Dumping your waste upstream isn’t LEAN — another view

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May 27, 2009
by David

Last month I wrote a post, “Dumping your waste upstream isn’t LEAN“, giving an example of how one large American company I know (and have left unnamed) has been bullying it’s vendors into accepting the costs of wasteful stocking in order to lower it’s own costs and leadtimes, while actually raising their own costs in less obvious but more significant ways.

This month, Bill Waddell of Evolving Excellence gives another example– none other than General Motors. Anyway, for another (more skillfully written) take on a similar issue, go to his post here.

: ALL, Change Leadership
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“Good” reasons to be wasteful!!!

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May 12, 2009
by David

Yesterday I visited a small factory owned by a friend of mine. I had visited the facility once before, when times were good and they had more orders than they could keep up with.  As I said, business was good, but the harder they worked the more they had issues with delivery, quality and cash flow.

During that first tour, I was chatting with my friend’s production manager. Pointing at the mountains of semi-finished goods on the factory floor, I explained that in those mounds were hiding defects (later to be discovered by customers), clogging the production cycle (impacting delivery), and tying up his boss’s cash (needed for sales, marketing and other investmens).  Reducing the WIP, I argued,  would be a solid first-step in turning the place around.

To my surprise, the production manager seemed well versed in LEAN. He understood how to balance the production on both sides of the bottleneck, and how to eliminate non value-added steps in the process.  He understood the value of JIT and Jidoka.

“All good stuff”, he said.  “But we can’t implement it here.”

Why? Because they were too busy for LEAN or JIT.   If they tried he explained, it would slow the process flow, resulting in even more delivery problems.  Yes, in principle it’s a good idea.  But not here.  Not now.

That was during the good times. Yesterday’s visit showed a much slower factory, with much fewer workers and lots fewer orders. Some things, however, haven’t changed. There are still piles of WIP on the factory floor, and (not surprisingly) they are still having quality, delivery and cash-flow issues. Once again, I broached the subject of LEANing the production flow, and once again there was a “good reason” not to. Whereas before they were “too busy” for LEAN, now there was “not enough work” to go LEAN. Now the thinking, it seems, is that if they go LEAN and utilize their labor (and other resources) efficiently then some people wouldn’t have enough work to be kept busy.   (I mentioned to him that the workers who were idled by balancing the line could be employed in his factory’s 5S efforts, but that didn’t go over too well).

This I’ve heard before.  LEAN makes sense.  It’s good stuff.  But not here.  Not now!  Here are some lame excuses to maintain waste in the production cycle:

  • People need to be kept as busy as possible. That’s the only way to be efficient. (Actually, processes need to be efficient– not people)
  • It works for Japanese and westerners, but for cultural reasons, Chinese can’t understand/implement/accept it. (Total bullshit.  LEAN works just fine in China)
  • LEAN production looks less busy and active, and people will think they don’t have to work hard. (Not really.  People are smarter than that– especially the workers who can see first hand how productive their team has become).
  • You will need to hire lots of additional people to do the clerical work required for LEAN. (Not true.  And if there were “extra work” to do, it could be done by some of the people made temporarily redundant by balancing the line).
  • People want to do the same repetitive tasks over and over all day.  It makes them feel like experts. And the longer they perform that one task, the quicker and better they become.  (I doubt it.  But even if it did make them faster, it wouldn’t make production faster or any better.)
  • LEAN is great if you have large production runs, or if all of your items utilize similar process steps. But our low-volume/high-mix model can’t be LEAN. (100% wrong.  LEAN is great for low-volume/high-mix production.  LEAN makes your facility flexible and agile).
: ALL, Change Leadership, Labor Issues
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Dumping your waste upstream isn’t LEAN!

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May 7, 2009
by David

LEAN is about reducing waste and adding value.  Adding value for shareholders and customers is important, but to be truly successful in the long run, an organization should strive to add value to all of its relationships, benefiting its employees, its community and, of course, its vendors.

Here’s an example of a “LEAN” organization that didn’t get this point:

The China manufacturing subsidiary of a Really Big Corporation  (we’ll call them “RBC” for short) purchases small volumes of manufactured components from it’s vendors.  In order to cut inventory costs and reduce lead-times to almost zero, it requires its vendors to stock both excessive amounts of raw materials  and also a fairly large quantity of it’s finished goods (which are the customer’s components).

The strategy is, in the narrowest sense, successful.   RBC holds almost no component or material stock, and yet, whenever RBC needs one or one thousand components for it’s manufacturing, they are always on-hand immediately.  Zero Stock!   Zero Leadtime! And if RBC has a spike in demand it’s no problem (for them)  because their vendors have been commanded to hold lots and lots  of raw material on-hand.  Just in case. (Better safe than sorry, I always say)

OK, they’ve added value for the shareholders; cash flow is improved and the risks associated with stocking is drastically reduced.  And they’ve added value for the customer, because lead times are reduced and flexibility  is enhanced.

The problem is that RBC has not really reduced waste, it has just dumped it upstream, which is as smart as pissing into the wind (or tugging on Superman’s cape).   Because the waste that RBC has driven out of its internal material flows has now shown up as liability on the balance sheets of its vendors.   And make no mistake, the waste is flowing back to them– as a result of waste dumping, RBC cannot command the  price reductions in might, because vendors are raising prices in an effort to  offset the cost of carrying  so much slow-moving inventory.  In some cases valuable vendor relationships, costly for RBC to initiate and develop, are in jeopardy, meaning that they will likely  spend time, money and “bandwidth” to find, qualify and train new vendors.

The sad part is, it doesn’t have to be this way.  RBC could have achieved a most of its objectives without unduly burdening its vendors by working with them to set up reasonable and fast-moving buffer stock procedures.  How this is done would vary from vendor to vendor, but to a certain extent, it can be accomplished.  An added benefit is that the vendors who were not versed in LEAN could have learned some valuable inventory management techniques.

Don’t worry too much– RBC will be just fine (they are, after all, Really Big).  In addition, I understand that they are open to learning, and may change their ways.   I write about it because I hate  to see otherwise respectable and forward-thinking companies giving LEAN a bad rap with this type of implimentation.

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Will China suspend the Labor Contract Law?

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January 22, 2009
by David

AS AN EMPLOYER IN DONGGUAN, I HOPE NOT

There’s more rumbling in the press about the possibility of China suspending (or choosing to ignore) the year-old Labor Contract Law (LCL). The following, from a recent  Wall Street Journal article (subscription required) suggests that the Dongguan City Government may be supportive of this effort, as it may help to mitigate the impact the downturn is having on enterprises operating there.

To aid businesses, Beijing has permitted local authorities to freeze minimum-wage levels and to reduce or suspend employers’ social-insurance contributions.

The vice mayor of Dongguan, in Guangdong, says many employers hope the central government will suspend the Labor Contract Law, and his office has sent that request to Beijing. “We can’t ourselves halt the implementation of a national law,” says Jiang Ling.

Giving business such leeway could ultimately undermine trust in the still-developing rule of law, says Andreas Lauffs, a partner at the law firm of Baker & McKenzie who focuses on Chinese labor issues.

As an employer in Dongguan, I hope this doesn’t happen for at least two  reasons.

It helps keep an even playing field:
While the LCL may be flawed (I don’t think the open-ended contracts are reasonable) it does help to ensure that the rules are stated, contracts signed, and that the existing Labor Law is followed.  That means that those of us who WANT to follow the law are not so easily undercut by those competitors who can take advantage of the murkiness of unenforced laws.

Happier, healthier community:
Those of us who live and/or work in areas where migrant laborers abound would like to see them develop into a happier and more satisfied population.   If my workers are happy but the workers in the surrounding factories are not, the entire community suffers.

Just my 2 cents worth.

: Labor Issues, Southern China
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Tool Seduction: It’s not as sexy as it sounds!!

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September 16, 2008
by David

“Are you using the tools, are are the tools using your company?”

Industry Week ran this great column by Don Schmincke, Co-author of High Altitude Leadership.  Generally it is a spot-on discussion of how initiatives in manufacturing can die a slow death by “tool seduction”.  From the article:

In manufacturing, managers typically look for tools to help. Tools like team training, continuous improvement, process engineering, quality programs, culture alignment, leadership development, or other methods. The problem isn’t with the tools; it’s in how management relates to them. Is your company using the tools, or are the tools using your company? If the latter, you may be infected with Tool Seduction.

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Q&A: How to Handle Change-resistant Team Members

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September 4, 2008
by David

Turnaround in Process: Resistance is Futile

Recently, on Linked in, I answered a questions about how to handle extremely change-resistant team members. I’d like to share it here as well.

In my experience here in China Turn-around situations, I find that extreme resistance by some team members is the rule, not the exception. While it is difficult to generalize how to handle it, generally some combination of the following strategies are used:

  1. Being patient, understanding the objections, and working through the objections with that person, ensuring that he or she understands why the change is being made, and giving a reality check on how really small the risks are when put into perspective.

  2. Showing everyone that the change will happen, and that ultimately, resistance is futile, so it is better to embrace the change rather than resist it.

  3. Removing team members who fail to respond to 1 or 2 above, and letting everyone know why that person was removed (fired, re-assigned, etc.).

  4. When change is successfully implemented, reward the team, let everyone know not only how much value they’ve added, but also how much their own value has improved.

  5. Monetary incentives are usually not a bad idea. They are not always appropriate, but sometimes they are.


One other thing: I would make two classifications: those who are “resistant” and those who are “obstructionist”. The latter tend to leave the organization long before they’ve seen the change implemented.

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