Big v Small Lean

The contrast between big company lean and small company lean has been troubling me recently, especially as you consider that in the automotive arena Toyota has the highest levels of recalls. One way to view this is to contrast Boeing, who is purportedly using lean to build its new 787 model and Leading Edge, a 120-employee shop that fabricates hydraulic tubing.

To me, and a lot of my other distinguished colleagues, Boeing uses pseudo-lean. This is summarized by Kevin at Evolving Excellence:

Boeing has outsourced most of the 787’s manufacturing to firms in Japan, China, Italy, South Carolina and elsewhere, while the company itself is concentrating on putting the plane together at its cavernous main facility in Everett, near Seattle.

Yes, that’s something to be proud of. Your core competency becomes snapping six pieces (okay, six very large pieces) together. But then Boeing’s warped understanding of lean, especially the metric of cycle time, comes into play.

Boeing said it will take about seven weeks to assemble the first plane. By the 100th plane, the company expects to lower that to six days and, ultimately, Boeing said a new 787 will roll out of its factory every three days. By comparison, Boeing said it takes an average of 14 weeks for the 777 to move out the factory door because much of the manufacturing is done by the company.

Using that logic I could assemble a Dreamliner in about 10 minutes if everything came complete except for painting the black dot on the tip of the nose.

The Leading Edge approach is summarized as follows:

It’s a philosophy; it’s really a culture that you develop. It’s the idea that says no matter how good you are, you can always be better. And when you have that belief you’re constantly looking for ways to improve, to eliminate waste, to reduce redundancies.

Correct!! These guys understand the power of kaizen and need to move away from tools and to a philosophy of continuous improvement. As Mike says over at Got Boondoggle?

On a lean journey, we should never be satisfied, never become comfortable, and never feel secure in the status quo.

Six Sigma doesn't work?

There’s a rumour going around, and I’ve heard it from lots of people. Believe it or not, some people are claiming that Six Sigma doesn’t work, and Lean is the only approach you should take to effect continuous improvement.

Image via Wikipedia

Any unsupported process improvement initiative is destined to fail, no matter what moniker is assigned to it. Over the past few years, I have seen Six Sigma approaches drift further and further away from what General Electric Co., Motorola and Allied Signal (now Honeywell) designed them to be. If you have studied your quality history, you will know that the Six Sigma approaches employed by these companies and other forerunners worked because they included design features that were not part of the quality circle movement of the 1980s. Real Six Sigma worked for two key reasons:

1. increased support
2. increased focus

Ironically, we have reached a point in time when many people are buying Six Sigma packages that closely mirror those approaches that caused most quality circle programs to fail. If you are not familiar with this approach, here it is:

1. collect ideas from all of your people
2. provide a few days of training
3. form some teams to work on what appear to be the high-leverage projects

Quality circles failed because:

• Top-Management: Top management involvement and management have been suggested as key factors related to the success of QC programs. Top management involvement is essential in setting up the policy and guidelines and helps to promote more funding, participation, guidance, and cooperation throughout the company. QCs‘ participative problem solving and upward communication can open boundaries between management and worker that have traditionally been closed. Thus, communication channels to top-management are very important.
• Inadequate funding: Lack of financial support, or management’s unwillingness to invest a large amount of money to support the programs may also cause QCs to drop a project. The lack of recognition of circle accomplishments is also very critical.
• Middle-Management (Supporting Staff): QCs with a high level of middle-management support have worked on more projects and have a higher amount of cost savings than those with a low level of support. Resistance by staff groups and middle management and prohibitive costs are threats to the programs’ survival.
• QC Members: QC members’ motivation, commitment, cooperation, and effort in solving their problems may also influence the success or failure of the programs. Further, the lack of members’ problem-solving skills and training and the lack of knowledge of operations are threats to programs’ survival. Interestingly, About 37% of Toyotas assemblers participate in Toyota‘s global “Quality Circles” competition that pits worker against worker in a friendly competition to develop more efficient manufacturing methods. Twice a year, Toyota holds a competition to identify the best ideas. A Silver Circle award is presented for the best idea from one of every four quality circles. One of every four Silver Circles wins a Golden Circle award. The winners of the Golden Circle then face off against each other in the Global Quality Circle competition, often held in Japan.
• Low volunteer rate and the stability o.f the QC membership: may also influence QCs’ problem-solving process. Thus, turnover in an organization is an important factor related to the success and failure of these programs.
• The Nature of The Task: The nature of the project and the timing of the project seem important. First, the complexity and difficulty of the project may also have some impacts on the success of QCs. Sometimes, the project may be too complex and difficult for members to identify the solutions. As mentioned earlier, participants have limited power and are limited to the types of problems they are allowed to work on.
• Data and Time: Finally, the availability of necessary data, information, and time to solve the problems is very critical. Besides on-time delivery, Japanese supervisors display a strong management commitment to quality, yet U.S. supervisors expressed far less concerns on quality but placed a heavy emphasis on meeting production schedules. Therefore, it is plausible that management personnel in the U.S. may have a higher priority on meeting production schedules than on spending time to collect data and information for QC activities. This concern again is closely related to management commitment.

Do you know many green belts an organization of 250 people should have?

What percent of their work time should be devoted to Six Sigma projects?

According to Mikel Harry’s book, Six Sigma, the answers are:

“one per 20 employees”

and

“it depends.”

Harry states that there is no formula for how a green belt’s time should be used, but the ‘one green belt per 20 employees’ ratio is explicitly stated. In General Electric, becoming a green belt is a requirement for all exempt employees, and in most cases, you need a black belt certification to get promoted. We are regressing toward our ineffective quality past, and yet we have the nerve to blame the tools when the users use them wrong. It’s like saying a cordless drill doesn’t work because we failed to charge the battery first. We must build project-focused and continuous process improvement expectations into every employee’s job.

Many companies think lean works through reduced headcount, but they have yet to realize that short-term gains will most likely come back to haunt them as customer service slides and process failures increase. The reduced waste (fewer people and lower labor costs) looks polished on this quarter’s financial report, but what happens if we are also trimming away those skills and relationships that provide value to our customers? We are essentially watering down a powerful approach to process improvement on a day-by-day basis.

What’s the case in your organization? Are you properly supporting your Six Sigma efforts with well-trained, focused and effectively supported leaders, or are you repeating the mistakes that many of us made 20 years ago?

With each day that goes by, we are losing ground. If we don’t stop this erosion, where will we end up?

What do you think? Leave your comments below:

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Takt Time Demystified!

Takt time can be defined as the maximum time allowed to produce a product in order to meet demand. Here’s the lowdown on how you can apply it.

It is derived from the German word taktzeit which translates to clock cycle. The pace of production flow would then be set based on this takt time. Product flow is expected to fall within a pace that is less than or equal to the takt time. In a lean manufacturing environment, the pace time is set equal to the takt time. A similar but alternative definition can be found here

How is Takt Time established?

Image by qa.manager via Flickr

What is Takt Time?
The customers buying rate establishes Takt Time. It’s the rate at which the customer buys your product. It is calculated as the net available production time (the amount of time available for work to be done. This excludes break times and any expected stoppage time) divided by customer demand. It provides the heartbeat of a lean production system.

Improving Takt Time

Takt time isn’t “improved.” Cycle time is improved. Takt time is the amount of time “allowed” to complete a work sequence. Cycle time is what is “required” to complete a work sequence. We can reduce the Cycle Time and the content of the work involved in that Cycle, such as reducing or eliminating waste and non-value added steps, thereby influencing the Takt Time, or overall beat of the line. Specifically, we can do the following:

• Reduce Variation
• Reduce Idle Time
• Reduce set-up time
• Reduce or eliminate waste
• Better manage constraints

Demand Flow Technology: learnsigma.com

View SlideShare presentation or Upload your own. (tags: leanlean manufacturingtakttoyotatps)

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• Actual Takt Time is Planned Takt Time, Actually
• Taking Changeover Time into Account for Takt Time Calculation
• Embrace Change
• Waiting: A Necessary Part of Life
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Toyota Production System Quiz

From Wikipedia:

The Toyota Production System (TPS) is the philosophy which organizes manufacturing and logistics at Toyota, including the interaction with suppliers and customers. The TPS is a major part of the more generic Lean manufacturing. It was largely created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno; they drew heavily on the work of W. Edwards Deming and the writings of Henry Ford.

But how much do you really know about the Toyota Production System?

Take this quiz and add your results below … no cheating!

What are andon systems?

In ‘ancient’ Japan, Andon was a paper lantern (a handy vertically collapsible paper lampshade with an open top and a candle placed at the central section of the closed bottom). To the ancient Japanese, Andon functioned as a flashlight, a signaling device in distance, or even a commercial sign.

However, now:

Andon – is an visual (and often auditory) process cue. For example a light that signals all is well (green light), when stock is running low (or a machine is nearing time for service) (yellow light) and when a machine is down or stock is empty (red light).

An Andon system is

one of the principle elements of the Jidoka quality-control method. It gives the worker the ability to stop production when a defect is found, and immediately call for assistance. Common reasons for manual activation of the Andon are part shortage, defect created or found, tool malfunction, or a safety problem exists. Work is stopped until a solution has been found out. The alerts may be logged to a database so that they can be studied as part of a continuous-improvement program.

In fact:

Workers at the Toyota plant in Georgetown, Kentucky, pull the cord 2,000 times a week – and their care is what makes Toyota one of the most reliable, and most desired, brands in the US.In contrast, workers at Ford’s brand-new truck plant in Dearborn, Michigan, pull the cord only twice a week – the legacy of generations of mistrust between shop-floor workers and managers.

Killer Kaizen

photo credit: keatl

Bill Shankly quote:

Someone said “football is more important than life and death to you” and I said “Listen, it’s more important than that.”

Is the elimination of waste more important than life and death?

A major criticism of the Toyota Production System is that while it:

may bring good benefit for companies, the system may induce new issues too because the system does not always think about workers. In fact, Toyota has issues of Karoshi/major depression, etc.

Karoshi can be translated quite literally from Japanese as “death from overwork“.

About 355 workers fell severely ill or died from overwork in 2006, 7.6 percent up from the previous year.

Unpaid overtime is routine in factories and offices across Japan.

Consider Mr Uchino, a manager of quality control at Toyota:

Mr Uchino was constantly training workers, attending meetings and writing reports when not on the production line. Toyota treated almost all that time as voluntary and unpaid. So did the Toyota Labour Standards Inspection Office, part of the labour ministry. But the court ruled that the long hours were an integral part of his job. On December 14th the government decided not to appeal against the verdict.

The ruling is important because it may increase the pressure on companies to treat “free overtime” (work that an employee is obliged to perform but not paid for) as paid work. That would send shockwaves through corporate Japan, where long, long hours are the norm.

At Toyota, long hours are been built into factory life — in the form of long, after-hours kaizen events that are supposedly voluntary — and are considered a key to the company’s success. Participation in the sessions, though, often figured in a worker’s prospects for promotion and higher pay.

Is this really “Respect for People“, the second pillar of Toyota’s success?

Toyota announced in May that it would begin paying overtime to workers who take part in the kaizen events.

Will this reduce the amount of deaths? I don’t think so. Who wants to be a well paid corpse?

Deming stressed it was key to have an appreciation of a system. A system is a network of components which work together to try to achieve common aims. If the common aim is to cause premature death, then perhaps we need to take a long, hard objective look at the Toyota Production System.

UPDATE
Mark definately has a point (see comments section)

Sources: OECD Factbook 2007: Economic, Environmental and Social Statistics – ISBN 92-64-02946-X – (http://lysander.sourceoecd….) and WHO (http://www.who.int/mental_h…)

USA Today reported that “a suicide fad is sweeping Japan.” Last year nearly 34,000 Japanese men and women committed suicide. The country’s suicide rate is ninth highest in the world and nearly double the rate of the US. The article points to weak economic growth and a high rate of unemployment as one reason for the self-inflicted deaths. This graph shows the suicide rates and long-term unemployment rates in Japan. Among Japanese suicides, nearly 71 percent are men, more than 73 percent are over the age of 40, and more than 57 percent are jobless

The Toyota Way – Part 3

This post continues my summary of the The Toyota Way by Dr Jeff K. Liker.

Principle 3: Use the “Pull-System” to Avoid Over Production

The pull-system hinges on the idea of restocking inventory based on the day-to day demand of the customers rather than on a fixed schedule or system. This calls for a flexible system that relies on consumer demand. The Just-in-Time (JIT) system provides customers with what they want, when they want it and in the amount they want it. Material restocking based on consumption minimizes work in process and warehousing of inventory. You only stock small amounts of each product and frequently replenish based on what the customer actually takes away.

Principle 4: Level out theWorkload (heijunka)

A strict build-to-order system builds a lot of inventory, over-head cost, poorer product and service quality and hidden problems. To eliminate this problem, Toyota came up with a scheme of leveling out the production schedule. The leveling of production by volume and product mix is known as heijunka. The process does not build up products according to the actual flow of customer orders. Rather, it takes the total volume of orders in a period and levels them out. This results to having the same amount and mix made each day.

Benefits of a Leveling Schedule

1. Flexibility to make what the customer wants when they want it.
2. Reduced risk of unsold goods.
3. Balanced used of labor and goods.

Principle 5: Build a Culture of Shopping to Fix the Problem, to Get the Quality Right the First Time

Quality for the customers should be the driving force behind any company’s philosophy. Quality should be built in your company and your production processes. Building an Early Warning Device into your line or equipment prevents problems from being passed down the line. This reduces costs and is more effective than inspecting and repairing quality problems after the fact. You should also build a support system that can quickly solve problems and create counter measures. The development of a company principle of stopping or slowing down work when a problem is detected and getting the quality right enhances productivity and profitability in the long run.

Principle 6: Standardized Tasks are the Foundation for Continuous Improvement and Employee Empowerment

Standardization is the foundation for continuous improvement, innovation, growth and quality. It is impossible to enhance any process until it is standardized. Quality is likewise guaranteed through standard procedures to ensure consistency in the process and product. When implementing standardization, it is important to strike a balance between providing the employees with firm procedures and providing them the freedom to innovate and be creative. Standards should be specific enough to offer useful guidelines yet general enough to allow for some flexibility.

Principle 7: Use Visual Control So No Problems are Hidden

Five S’s for Elimination of Waste

1. Sort.
2. Straighten.
3. Shine or cleanliness.
4. Standardize or create rules.
5. Sustain.

• Keep only what is needed and dispose of what is not.
• Maintain orderliness. Remember, there is a place for everything and everything in its place.
• The cleaning process often acts as a form of inspection that can identify defects or abnormal conditions that can affect quality.
• Develop systems and procedures to maintain and monitor the first three rules stated above.
• Maintaining a stabilized workplace is an ongoing process of continuous improvement.

Principle 8: Use Only Reliable, Thoroughly Tested Technology that Serves Your People and Process

Adaptation of new technologies must support your people, process and values. It must not displace or replace them. Introduce new technology after it has been tested and proven with the involvement of a broad cross-section of your organization. Before adopting any new technology, Toyota first analyzes the impact it might have on existing processes. If it determines that the new technology adds value to the existing process, it analyzes it further to determine if it does not conflict with the company’s philosophy and operating principles. If it violates any of the principles,Toyota rejects the new technology. The introduction of new technology is done through a process of consensus, analysis and planning involving the employees and all the stakeholders in the process. This painstaking process results in the smooth implementation of the new technology without employee resistance and process disruption.

The next post in the series will cover the remainder of the fourteen points and how to apply the Toyota Way in your organization.

Zen & Art of The Toyota Way

photo credit: Dunechaser

She came trotting by with her watering pot between those two doors, going from the corridor to her office, and she said, “I hope you are teaching Quality to your students.” This in a la?de?da, singsong voice of a lady in her final year before retirement about to water her plants. That was the moment it all started. That was the seed crystal. The Narrator, p. 175, Zen and the Art of Motorcycle Maintenance

This is a post which extracts a tiny bit of the wisdom (more to follow) contained in Zen and the Art of Motorcycle Maintenance by Robert M. Pirsig and merges it with the philosophy behind The Toyota Way.

Zen and the Art of Motorcycle Maintenance
Zen and the Art of Motorcycle Maintenance was published in 1974 and uses a long motorcycle trip to frame a prolonged exploration of the world of ideas, about life and how best to live it. It references perspectives from Western and Eastern Civilizations as it explores the central question of the how to pursue technology so that human life is enriched rather than degraded.

In summary, how to come to terms with the mysteries of why we exist and how best to live.

The Toyota Way
[link]

The 14 Principles of the The Toyota Way is a management philosophy used by the Toyota corporation that includes the Toyota Production System. The main ideas are to base management decisions on a “philosophical sense of purpose” and think long term, to have a process for solving problems, to add value to the organization by developing its people, and to recognize that continuously solving root problems drives organizational learning.

Both persue how to achieve quality based on deep understanding of underlying philosophies and as such there are many parallels, if you look at them from the correct perspective. So my first tiny bit of wisdom is based around screws ….

According to Pirsig, at the cutting edge of experience is Quality. This is the mass of sensory perceptions that we take in. When we become stuck with a problem, we may be forced to re-evaluate our entire perception as our experience shifts due to a different level of understanding:

“Stuckness shouldn’t be avoided. It’s the psychic predecessor of all real understanding.”

Pirsig talks about a screw which has become sheared so that you cannot remove it when you are trying to fix your bike.

“Normally screws are so cheap and small and simple you think of them as unimportant. But now, as your Quality awareness becomes stronger, you realise that the screw actually has the same value as the whole motorcycle.”

In other words, break out of normal ways of thought and force us to come up with new ideas. We need to rethink things because the world is in a continual state of flux – Quality. We need to look deeper than merely on the surface of things and think about what they are really worth.

How do you attain these new experiences?

Go to the workplace and see for yourself to thoroughly understand the situation (genchi genbutsu), while reflecting on what you have leanred (hansei) and practicing continuous improvement (kaizen). Attentive receptivity is to be cultivated. This practice is uncomfortable at first, but with practice and with successful experiences of what this attentive receptivity brings, it becomes an accepted and welcome modality leading to useful results.

More to follow in future posts!

What's San-Gen Shugi?

This article in the Harvard Business Review looks at how staff are trained in the Toyota Production System (TPS) to make improvements in the production process. The article picks out some of the key differences between TPS and the way most American and European enterprises tackle productivity improvement. I’ll focus on two points:

• There is no substitute for direct observation.
  Many western employees try to solve problems (for example, why a machine is unreliable) by thinking about the problem and devising hypotheses that can can checked. Toyota gets their employees to recognise the importance of direct observation.
• Managers should coach, not fix.
  Each worker looks for ways to improve the process, and the manager’s role becomes one of involving the team in identifying the problems and not doing all the work himself

The TPS lends itself to Deming’s writings about Leadership who understood that traditional supervisory activities are reactive rather than proactive. Many managers to pay a great deal of attention to reports and data which tell them what happened yesterday, last week, last month, or last year. Often such reports highlight the things that have gone wrong. Deming has compared this to attempting to drive a car by looking only in the rear-view mirror. Because of this, he observed that, “A supervisor is an auditor of failure, while a leader listens and learns, studies and understands and works to improve the system.” He also noted that “One important characteristic of a leader is that he will forgive a mistake – there will be mistakes.”

The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer book elaborates on these points using the principle of Genchi Genbutsu which means “Go and see for yourself” or San Gen Shugi ‘Three Reals Philosophy’:

1. Genba: the real place – ‘the actual spot’; ‘the precise location’; ‘the place where the action is’ i.e. the shopfloor, in a manufacturing plant, or ‘the workplace’.
2. Genbutsu: the real thing – look at the real part or the real service provided (whether good or bad) and analyze it while focusing on the facts
3. Genjitsu: realistic action – speak with data for a better understanding

The graphic below provides an outline of this principle (image credit)

click the image for a large version

Is this more effective method than simply reading a report?

The Toyota Way – Part 2

The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer

Toyota developed the after World War II. While Ford and GM used mass production and economies of scale, Toyota faced very different business conditions. Toyota’s market was very small but it had to produce a variety of vehicles on the same assembly line to satisfy customers. The solution: making the operations flexible. This resulted in the birth of TPS.TPS borrowed some of its ideas from the United States.

The core idea of the Just in Time system came from the concept of the “pull-system”, which was inspired by the American supermarkets. In the pull system, individual items are replenished as each item begins to run low on the shelf.

Applied to Toyota, it means that the first step in the process is not completed until the second step uses the materials or supplies from Step 1. At Toyota, every step of the manufacturing process uses Kanban to signal to the previous step when its part needs to be replenished.

The company was also inspired by W. Edwards Deming. Aside from broadly defining customers to include internal and external clients, he also encouraged Toyota to adopt a systematic approach to problem solving, which became a cornerstone for continuous improvement (Kaizen). The point of the TPS is to minimize time spent on non-value adding activities by positioning the materials and tools as close as possible to the point of assembly.

The major types of non-value adding waste in business or production process are:

1. Overproduction.
2. Waiting or time on hand.
3. Unnecessary transport or conveyance.
4. Over processing or incorrect processing.
5. Excess inventory.
6. Unnecessary movement.
7. Defects.
8. Unused employee creativity.

The Fourteen Principles of the Toyota Way

Principle 1: Base your management decision on a long-term philosophy, even at the expense of short-term financial goals

The Toyota message is consistent: Do the right thing for the company, its employees, the customer and the society as a whole. This long-term philosophy is the guiding post of the company in its continuous quest to offer the best in quality and service to its customers, employees and stockholders.

Long-term goal should supersede short-term decision making or goals: Develop, work, grow and align the company towards a common goal that is bigger than making money.Your philosophical mission is and should be the foundation of all our other principles.

Toyota is aligned around satisfying the customer. It believes that a satisfied customer comes back and gives more business through referrals. It generates value for the customer, the society and the economy.

One of the keys to success of Toyota is that it lives by the philosophy of self reliance and a “let’s do it ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not buy a company that already made luxury cars.

Rather, it created its own luxury division – the Lexus – from scratch in order to learn and understand the essence of a luxury car.

Principle 2: Create continuous process flow to bring problems to the surface

The mass production system used by many manufacturers assures overproduction in large batches which in turn guarantees inventory being idle and taking up a lot of plant space. Toyota’s lean production system has redesigned the work process to move both materials and information faster.To optimize the flow of materials so that it would move quickly, Toyota reduced batch sizes and came up with work cells that were grouped by product rather than by process. The continuous process flow links the process and the people together so that if a problem surfaced, it can be solved right away.

1. Builds in quality.
2. Creates real flexibility.
3. Creates higher productivity.
4. Frees up floor space.
5. Improves safety.
6. Improves moral.
7. Reduces cost of inventory.

The next post in the series will cover the remainder of the fourteen points and how to apply the Toyota Way in your organization.