Knowledge Fulcrum

Over the years, I’ve discovered that what makes LEAN so illusive isn’t that it’s a complex idea, but that it’s a simple idea that happens to be hard to implement.

LEAN – the name commonly used to describe the Toyota Production System -  is the systematic removal of waste from any system on a constant and never ending basis.   When I first started to study the Toyota philosophy, I struggled to see where I could find the kind of improvements that would generate the kinds of results I had read about.  That’s where I went wrong.  LEAN is about creating a rhythm where everyone in the organization is trained to see the small things.  Small things, when observed alone, seem insignificant – but when compounded over time and across many people — small things add up fast.

Here’s a a perfect “real world” example:

In my last company, we operated call centers where we conducted primary research studies for organizations.  On any given shift, an agent would work on an average of 3 different projects.  Because of how the software was originally developed, in order to change to another project, an agent would need to alert a floor supervisor to be “moved” to the next program.   This required the agent to get up and walk to the end of the floor to alert the supervisor.   For 12 years this was “standard procedure.”  No one ever stopped to think about what the cumulative “cost” of having the agent get up and request a change actually was.

When we started our LEAN journey, we began to look for small things that were simple to correct.  We started to measure everything we could.  Eventually someone decided to measure the average time it took an agent to “change” projects.   It was an average of 1.2 minutes.  Not all that significant, right?  But when seen in the context of the entire organization and over the entire year, the numbers began to add up very fast.

Average # of Agents per Day – 250

Average # of Study Changes – 3

Number of Working Days per Year – 350

Average Time per Study Change – 1.2 min

Average Cost per Agent ($11.20 loaded) – $0.1867/min

Total Cost to Change Studies each Year = 250 X 3 X 350 X 1.2 X $0.1867 = $58,810.50

The solution was simple.  We made cardboard “signals” that agents would raise when ready to change studies.  These “signals” alerted the floor supervisor, who then changed them over on the system.   In 24 hours, we were able to reduce the average change over time from 1.2 minutes to just .23 minutes.   That simple solution resulted in a net savings of $47,538 a year.  It only cost us a few dollars in card stock and a 15 minute training for every employee.

LEAN is not about BIG improvements.  LEAN is about seeing the business in a different way and constantly making small changes that overtime create significant savings for the business.   Now more than ever, we all should be thinking LEAN.

Now that the layoffs have happened – you’ve re-organized the work as best you can, you’ve cut all non-essential expenses from your business, and it’s clear that your remaining work force is working harder than ever.  Now what?

Ironically, I’ve discovered that the best time to implement a Continuous Improvement (CI) Program is during a time of crisis.  A significant amount of time and energy is usually spent demonstrating why CI Programs are important and why everyone needs to be on board.  During a time of crisis the need is already clear to everyone.

When you begin to implement your own CI Program, you will not just be developing habits that will reap benefits for years and years to come – you will provide your staff with what might be a new found sense of control and hope.  It’s already clear to everyone in your organization that what has worked before may not necessarily work in the future.

For the purposes of this blog – I am defining a CI Program as any formal performance improvement initiative that is being led by a team of people in your organization to identify and remove unneeded waste.  Think of it more as a way of thinking rather than a state you are trying to achieve.

The first step will be to start to “see” together.  By this I mean that it’s important that everyone recognizes the types of waste that exist in your organizations (don’t worry — it’s in every organization) and be able to remove the waste and re-establish the standard of work from that point on.

Now, the word waste is where it gets a little difficult.  Waste refers to any activity that does not add value to the customer.  In other words, if it’s a task that the customer is NOT willing to pay for, then it’s a possible source of waste.  This includes things like overproduction, wasted movement, transportation of information or material, repair or rejects, inventory, over processing, and missed opportunities.

A great place to start is to hold a company meeting.  Identify a group of “subject matter experts” who can clearly define the current method for doing all major parts of the job – from the beginning of the customer stream (Marketing and Sales), to Operations, through Customer Service, to Billing or cash collections.  Have the “experts” walk through each step of the process – to identify when something needs to happen, who would interact with the task, and how long it takes to complete.  All you need is a big blank wall, and some post-its.

This is a picture of the first value mapping session I was part of.  As the founder and CEO, it was a painful experience.  But, I would say that it only made visible what everyone already knew – we had some pretty screwed up processes that were causing us to be incredibly inefficient.  When you put it all down and try to measure how much time you actually spend adding value along the way, it’s a very sobering experience.  It isn’t until you can see together that you can start to improve together.

In my next installment, I will walk you through in more detail how we documented our work and what we were interested in seeing.

Visual Management is any system, process or tool that provides real-time information and feedback about the status of the organization, departments and job functions.  Think of it as the organizational nervous system that connects employees to the critical activities needed to achieve the goals of the business.   It’s also what many refer to as KPI’s (Key Performance Indicators).  Visual Management systems can take on a number of different forms from sophisticated database applications to simple white boards mounted on a conference room wall.  Over the years, I’ve learned a tremendous amount through trial and error as to what seems to work best and what doesn’t.  Here are a few tips that might help.

Think of a visual management system as the scoreboard for your business.  At a minimum it should communicate:

• What are the goals the organization, department or job function is trying to achieve?
• What are the key measures or units of work?
• How are we performing in relation to our goals?
• What prevents us from reaching our goals?
• And, most importantly…what are we doing to contribute to reaching our goals?

It sounds a lot easier than it really is.  Here’s an example of what I would consider a better than average visual management example.  I took this photo when I was on a “Junction Tour” at the headquarters of 1800GotJunk in Vancouver, BC.  They’ve done a tremendous job of integrating a number of parts of the business into the area where they hold their daily huddles.  They’ve included information and metrics related to the long-term goals of the business, as well as operational information about the day-to-day activities by department that are critical to the success of the business.   

Now, here are a few things to consider when you are either add or modify your huddle boards within your business (see example below).

•  First, make sure your visual management board is broken down into three specific sections – “how”, “why” and “what”. The “HOW” should illustrate the performance (daily) with daily metrics that are critical to your business.  This could include things such as “number of calls”, “conversion rates”, etc.  They are the activities that matter to your financial or customer service performance.  Be sure to include the “goal” rate for performance within the graph (see example below). 
• The “WHY” should be a metric that is related to the “HOW.”  e.g., if you were tracking your turn-over, the “WHY” metric would be results from the exit interviews you conducted as to why the employee was leaving the company. 
• Finally, the “WHAT” should chart what corrective “actions” need to be taken, who is responsible, when it will be done, and what resources will be needed. 
• Use graphs, pictures and diagrams whenever possible.  There’s a reason for the saying “a picture’s worth a thousand words.” 
• Display “expected” performance levels whenever possible.
• Don’t sweat it if your board doesn’t look polished.  It needs to be adaptable to your market and industry’s changing environment. 
• Require your people interact with the data.  A simple way to do this is to NOT use computer programs to generate fancy graphs (e.g., Excel) but rather to make them draw the results on a white board.  When they interact manually with the data they will have to “think” about it – which in turn will help them see when something needs their attention.
• Include as many employees in the process whenever possible – this includes the design on your boards, deciding where to post them, and how to communicate the information.

Good luck!  And please share you ideas and examples with us.