Monday, January 28, 2013

Is there a Lean way to measure productivity?

Hello folks, I wanted to share my lasted post from which is Michael Balle's website (author of The Lean Manager and The Gold Mine)

The question of the moment is:

Is there a Lean way to measure productivity?

As the ole’ saying goes “you can lead a horse to water……”, well you can give a person a measure but you can’t ensure it’s going to be totally value added. I think most people understand the concept of managing by the numbers or objectives it’s more common than not; if you tell me what you need and you are my boss then I will normally do what is necessary to get you that number especially if it’s tied to my performance evaluation, bonus, wage increase, or promotion (*note just because I meet numbers doesn’t always mean I deserve a promotion). I see this very often in organizations and what is amazing is people will find a way because we have been conditioned to be result driven, it’s our human nature really; the problem lies when we are asked to sift the sand to see if there is any gold there—most often there isn’t.
As always I draw from my experience and my valuable teachings from my Japanese trainers at Toyota (TMMK). I had the very fortunate opportunity to be hired before we actually ran saleable production, this timing gave me the opportunity to see how all the components (thinking) came together to determine how we measured how efficient we were in our processes while bringing the waste to the surface in order to improve and meet customer need. By doing business this way we weren’t able to mask problems so easily like many organizations do without really knowing that’s what they are doing, it’s years of conditioning “that’s how we’ve always done it!”. I often hear folks say to me, “well those processes were easy for you to do because you had a green-field situation, but we are already established (brown-field) it’s very hard to implement that infrastructure or cultural thinking” in an existing workplace. Well, I call…… I will let you be creative there. If you have time to give me ten excuses why you can’t do it (usually leadership); then to me, you can use that time more wisely and begin to look at the order to customer process and ask yourself; “how long I can sustain this current thinking we use in today’s challenging market without knowing what is hemorrhaging out our door?” It truly is scary when you do some cost translations to your key performance indicators.
Some of the numerous lessons I learned from my trainers was to understand first and foremost what does the customer need from our organization, and how does each process work to meet that. So in our case we referred to that as our “takt time”, (this was a German term actually not a Japanese term), we needed to know how fast the customer was pulling from us (this can be any service, output or product). This suggests you may have to involve other departments within the organization like sales, purchasing, engineering, and suppliers. . Was all this easy, no! Did it take discipline and accountability from our leadership, yes!
In our case we looked at it on a monthly schedule based on the past 3 month average. This gave us the information we needed to understand another key component which is machine or process capacity (cycle time), basically what are we capable of? If we aren’t capable to meet what the customer needs then should be a red flag, most organizations can’t tell you this much they just run wide open and stock inventory which looks really good on paper if that’s what you measure.
So it’s important to understand as an organization to be able to differentiate cycle time and takt time. Cycle is what it takes your process to meet the takt time (customer), they do not necessarily have to be the same based on certain factors (leveling, mold or equipment changes). In my experience working in the Plastics department we had factored in mold change time so our cycle time was actually faster than takt time to accommodate for “planned” downtime. It’s also crucial to perform production capacity studies for each process (equipment/machinery), again you must know production capability to recognize gaps to the customer need. **Please note there is a difference between total capacity; meaning I can just run the equipment 24/7 (if you are running to total capacity as the norm then common sense will tell you there will be problems meeting customer need), versus process capacity which can be a normal working day time requirement.
If you were to create an ideal state you would want to know what your customer pull is, and then purchase the specific equipment that meets that need (cycle), but always be aware that even if I meet the ideal state today, tomorrow that may change. So built in to our production system at Toyota was the ability to adjust when the customer demand changed either way, we had to build in flexibility in our processes in order to remain competitive and not pass cost onto the customer. We did this by always understanding takt, cycle, capacity and manpower for every process. Most do not have that luxury of knowing the answers to all the questions above, they may be just deciding to join the Lean journey perhaps, so then it’s time for them to grasp the current state and understand where is the waste, how can we kaizen in those areas, and what other options are possible to effectively meet the customer (manpower, equipment upgrades, or outsourcing to name a couple). If this is the journey you are going down then it’s important to have leadership on board.
Once the takt, and process capacity are understood then it’s time to develop standardized work to assist in determining the manpower necessary for production needs. Each process knowing its capability must have standard work that involves specific steps with times to complete the cycle time. After these are developed then Job Breakdown sheets are created for the key points and reasons in order to use Job Instruction training (JIT/TWI) so each person is able to fully understand expectations so they can see abnormality at a glance and recognize potential improvements as they do the process each day.
So the tool we used to help visualize the cycle time, equipment involved and standardized work was the work combination table. This was how we would know what the machine is doing and when, what the worker was doing and how much time per step, along with any walk time involved to fully see the complete cycle, this was the benchmark for future kaizen. This was done for all processes that created outputs, when you think about it, how you can do business effectively and sustain for the long-term and be flexible without understand these key components? Without them you definitely can’t measure how you are doing based on the customer’s expectation of you and be flexible to their ever-changing needs.
So what does all this mean at the end of the day? So for me as a team leader and a group leader in the organization I needed to know on an hourly basis where I was against the standard, so I had a “plan versus actual” board for each process. This visualized what I did each hour, factored in downtime we had that could have been equipment related, training related, or andon pulls etc. We also had a variable called “wait kanban”, what that meant was the Assembly shop we were providing parts to had downtime which in turn didn’t allow them to return their carts for replenishment (pull system), so instead of continuing to run and “stack” parts, we stopped. This time was not calculated as downtime, but “wait kanban”, which didn’t go against our production efficiency, it was how we did business (TPS), but knowing everything above was necessary to extrapolate all this information. So after our shift each day I was responsible for a daily report to calculate productivity for our group which contributed to a department need; which supported the plant need. This report factored in our capability, our run time, downtime, repair, scrap, delay work, wait kanban, and supplier/vendor shortages. This gave us our daily “parts per hour” efficiency rate, which we based on the expectation which gave us our productivity rate for the day. We knew every day where we fell short of the standard and what we were going to do about it the next day to try not to replicate the same problem (PDCA). This was considered grasping the problem situation or the first step of problem solving. So I often tell folks our infrastructure we had in place always allowed us to grasp the situation or give us a problem awareness at all times because we knew what was happening versus what should be happening based on Assembly pull which was determined by the customer.
Every day we managed to the customer need not a number pulled from a hat that met an objective that looks good on paper short term. If a person doesn’t understand daily expectations based on takt time, cycle time, production capabilities, and standardized work then they are just haphazardly running till the next shift comes in to take over (vicious cycle), not sustainable for long-term growth, nor can you ever understand how to improve. Although I’m describing somewhat of a manufacturing setting this thinking can be applied in any industry. I always ask folks who tell me “that works great if you make cars”, I reply by asking them if they have the 3P’s – Do you have processes? Do you have people? Do you have problems? Then this thinking can be adapted if services or outputs are being created and a customer has an expectation.
Until next time,
Tracey Richardson

Sunday, January 6, 2013

How to effectively establish Kaizen Promotion Offices (KPO) in Organizations?

Happy New Year to everyone, welcome 2013.   Its hard to believe my blog is now 4 years old, boy does time fly when you are on the road learning about Lean :).

My next blog post is shared again from hosted by author Michael Balle'.  This week's question has to do with KPO's.   Please visit Michael's website above to get the opinions of other Lean practitioners!

The question (s): 

What practical advice would you offer to companies as they establish their Kaizen Promotion Offices? At the beginning their Lean journey each company faces questions such as:
(a) What is the role of the KPO to serve the organization?
(b) How do we best leverage the KPO for leadership development?
(c) What is optimal size of the KPO organization?
(d) What is right mix of internal / external hires?
(e) Who should the KPO lead report to?
(f) How is the KPO best organized in order to sustain Lean both inside/outside of the plant? (i.e. sales, distribution, marketing, product development in addition to manufacturing)”

MY Response:

(a) What is the role of the KPO to serve the organization? When I see this question it takes me back to when I was taught the essence behind the Quality Circle Program and how they began at Toyota (back in the 1950’s) based on Taiichi Ohno’s vision of developing his people. I remember when I was in my assimilation hiring process (learning Toyota history) they discussed the fact with us (new hires) that the program wasn’t designed to necessarily save the company money (ROI) in the very beginning; it was more so to develop people in problem solving, and their ability to set up systems to see abnormality at a glance. Of course we all know ROI is important, (and many put that ahead of people development) but if people had the ability to “think”and leaders could foster that then, well- the ROI will come. I believe that is a “process versus results”discussion that the Japanese trainers taught us if you have good “thinking”results will follow, not start with a result as the priority. So back in the 50’s Toyota was lagging behind in production capabilities in comparison to American manufacturing so relying on a person’s ability to think and make improvements was absolutely a necessity for them in those days to be successful. It was the start of how “respect for people”got embedded into the culture I believe, they just didn’t have the resources to improve with equipment or other means until later. I will say that ALL of our “off-line”improvement groups/teams at TMMK (just speaking from my experience there) were “formed”from waste-reduction improvement (kaizen events) where we would actually save enough time to reduce a person in the process; this was part of our jobs. Most companies would define that as Lean (reduce head-count or the infamous “less employees are needed”). They were let go, fired, or laid-off. If this is what Lean meant would you want to think about improvements? Unfortunately this is reality for many companies that I have experience firsthand.

So at Toyota our incentive was to reduce waste, reduce people in order to form these KPO’s (ODG’s, SMK teams (smooth motion kaizen) ESI teams (Early Symptom Investigation), Quality Circle champions, Suggestion system specialists, and Ergonomic process evaluators. I could continue to discuss many forms and sub categories of KPO’s that were created from the thinking of the people in the organization (again our job, not an event or special occasion). These positions were never created and hired by an outside person; we created them ourselves, that was all part of the incentive. These positions were opened up to regular employees as a training ground for further development, promotions, or leadership training. They typically stayed in the role from 1-3-5 years then rotated outward to continue to teach to a group or team again they led. Again respect for people at its best.
I would like to take a second and ensure that everyone that may read this or is involved with KPO’s really know how to define Kaizen, I feel based on my time at Toyota and my time as a consultant over the past 15 years it can be a very misunderstood term. Many people in an organization are labeled “continuous improvement” leaders. I ask “what are you improving and how do you know”? They often answer “we make things better”; you can see where I’m going, it can be an endless loop, like Chevy Chase driving around Big Ben (hope you have seen that movie) I think before an organization decides on creating a KPO or whatever they decide to call it, it’s essential to make sure we understand the purpose of the group hence my question why are you doing it? Why is it necessary? Ohno knew, but I’m not always sure today, organizations know and foster this basic principle. A familiar saying for many that have studied TPS, have heard, “without standards you can’t have continuous improvement.” So if you have a group that is about Kaizen I sure hope one of the important lessons taught within the KPO are “standards”,if there is one common thread I see across various industries, is the lack of standardization, so without that how can we improve or measure? So KPO’s can be non-value-added if the purpose isn’t clear, which can just create area where bad habits can form.

So one of the roles for the KPO group is to set the direction for the company’s lean journey and/ or transformation and its purpose, many people can’t define Lean properly so that must be understood as well in my opinion, again why are we doing this? It’s important as others have mentioned to have champions, practitioners, or leaders who have a little more experience in problem solving, seeing abnormality and gemba walks. I caution labeling them experts (I never consider myself one, I’m learning too much daily to be an expert, it implies I know everything; as my trainers would tell me “Tracey-san you are always “leading and learning”.) So these champions should help coach, support and direct the lean activities that align with the Hoshin Kanri or strategy deployment as it cascades downward and upward. Each individual in an organization should have a line of sight to the KPI’s (Q, S, P, C, and HR). There should always be a strategic approach to understand the impact of the KPO group including the long term impact on KPI’s, so there could be a short-term aspect that can be looked at with each problem solved and what people are learning, and a long-term aspect with the company business plan (Hoshin). If I had it my way I would say the “measure”should be on people development as Ohno demonstrated decades ago, but that isn’t always an easy sell in today’s world where results are a strong hold to process. So how do we blend the two?

I think if people, especially leaders, are armed with good problem solving skills then that promotes the ability to always see abnormality and ask why when it’s seen. As Mr. Cho always said: Go See, Show Respect, and Ask Why! This thinking should be in the forefront of every KPO’s mission.

  (b) How do we best leverage the KPO for leadership development? If I had an ideal state, or what I call my “fantasy island” moment I would get the highest leadership on board in order to start the company seeing through the same lens, speaking the same language as problems go back and forth (catch-ball) through the levels. If a senior leader is a mentor then they can ensure good habits “thinking” are flowing downward and being captured coming upward. This selected leader must be committed to the lean journey and support the activity even when it seems it shouldn’t make the cut for the day so to speak. The senior person would need to be a teacher for the other leadership team and set the example even if the “numbers” aren’t met for the day. If you decide this is important, then it stays important, otherwise the danger is “add-on”, “flavor of month” feelings start to surface and the people only use it when there is time. Everyone knows how that ends.

(c) What is optimal size of the KPO organization? I think really it depends on the size of the company and the skill level of the members selected for the KPO team. There should be a couple of champions and practitioners and this could be adjusted as it evolves (and as I mentioned above are you reducing waste to have the ability to add more headcount to the KPO). The KPO needs never ending resources and support from other functional areas of the company, like production, R&D, Accounting, Payroll, Human Resources Maintenance, and Engineering for example. Again everyone needs to be on board to create this infrastructure where everyone is seeing through the same lens (Process).

(d) What is right mix of internal / external hires? This would depend greatly on the level of knowledge and current condition within the company. An assessment of knowledge in my opinion would have to be taken in order to understand the current state (skill level). There is nothing wrong with hiring external support, but the end goal is to develop those champions so they can lead and learn simultaneously so eventually the externals wouldn’t be necessary. Even at Toyota we eventually lost most of our gemba trainers after we started production, their thinking is you have to cut the cord to learn at some time, it’s a weaning process over time based on the current state. This could take 1-5 years in some cases, if the company embraces the KPO as a priority and part of the way the company does business this time could be less. What are you willing to dedicate to it?

(e) Who should the KPO lead report to? The KPO should have direct report to the most senior person in the organization. There would need to be a senior level person that supports the daily operations as it pertains to the business KPI’s for each department and well as measuring individual growth. There should be as much emphasis on this development group as there is on production outputs. Going back to Ohno’s vision if people can think and see abnormality at a glance then there are better products/outputs. The motto for the KPO should be something like “Every day, Everybody, Problem solving”. Describing the model I learned from at Toyota it started with the President’s support and that cascaded downward to the team leader on line and floor level. Everyone knew their role in Problem Solving, we worked to develop an infrastructure that became our common language or way to do business, the leader of the KPO should foster this daily as it become a norm, but a project.

(f) How is the KPO best organized in order to sustain Lean both inside/outside of the plant? (i.e. sales, distribution, marketing, product development in addition to manufacturing)” In my experience the KPO can evolve to these different areas as people grow. It can even be different teams in different functional areas with different roles and responsibilities. For example the ODG group was strictly internal to our plant, where, TSSC (Toyota Supplier Support Center), when it began, was focused on external learning (vendors/suppliers). To me the importance lies first and foremost in the internal learning and development of people at all levels to have that line of sight to the company business indicators within their daily work. People need to know and understand what they do need to have purpose and value that tie in to a greater good, otherwise they can guess on their own why it’s important and this can be the start of a morale problem or an unaligned workplace. Once the KPO has been established and measures of process improvements can be seen and replicated through a good thinking process, then begin to take it outward slowly, sustainment and repeatability is the key, if we try to teach people too quickly without the proper learning curve and the ability to mistakes without repercussions then it can quickly lead to more bad habits (results oriented thinking).

I will always be an advocate to people development no matter how you want to label it; if you invest in your people they can determine the success and long-term sustainability of your organization. Growing people can spawn leaders, leaders can develop habits, and habits can create character which leads to an organization that would be label the “place of choice”! That’s what I had the opportunity to be a part of, priceless!

Until next time,
Tracey Richardson