What is Lean Success?

“Lean success (success in anything, for that matter) is defined by the customer. If the (program) is yielding what they originally wanted, it will be deemed a success. If it is not, it will be deemed a failure. Nothing profound about it, but true. And this is where misconceptions arise.

“Looking at lean as simply a means of cutting costs is VERY limiting. It means that you're really not looking to grow, or to change for that growth. This defines 2 distinct paths for lean: One for growth, and one for cost cutting.

“If your company is growing, lean is about freeing more capacity within the same resource structure. THIS IS NOT SAVINGS, even though many enterprising managers manage to 'dollarize' everything, for 'clarities' sake. (I love the term 'dollarize', which I've heard several high level execs use. We always look smart when we create new terms for concepts that already exist, don't we?)

“IF YOUR COMPANY IS GROWING, you need to remove waste, fast. You need capacity. You need to take on the new business now, and be at the low end of the learning curve as you do. You need everyone able to make decisions without having to get permission (certain quality and safety considerations excepted). You need a flexible workforce, able to take on any task. You need to better utilize your current asset base, make it put out twice as much product. This means involving everyone in the change process, growing your people as you grow your business. KPI's (key performance indicators): Cross-training, OE, 5S, freed floorspace, outsourcing measures, progress toward zero-defects, customer service metrics, etc... Matching these metrics to your growth is critical.

“IF YOU'RE NOT GROWING (you’re contracting), you need to cut costs, fast. It's all about money, that's how we'll measure success. You'll necessarily use a very limited subset of lean, principally a subset of lean tools. No concepts needed, no big change initiative. This is a top-down implementation. Yes, there will be layoffs. Yes, we will get rid of non-performing assets (they're a drain on the books, right?). We'll be doing things that the workforce can't possibly understand, so we won't need to really involve them. KPI's: It all about savings dollars, everything will be measured (or converted) to this standard.

“I've worked in both situations, and I've seen success in both. However, lean doesn't 'survive' for long in the 'cost-cutting' scenario. Once the crisis has been averted, the need for the specific tools goes away. And since we've defined success in terms of savings dollars, we really don't need 'lean' anymore. It simply fades away. (I'd argue that this is specifically when these companies should expand their lean programs, but since the layoffs and top-down implementation have turned-off most of the workforce, it's really not going to happen.)

“So to reiterate, it's really all about how you define success. I define the conditions for lean success in this manner:

1) For what reason are we implementing lean? (Growth, or Costs?) This will define the path that we travel - a cultural path or a tool centered path.

2) Is senior management behind the reason for implementation? If not, don't go there.

3) Can management commit the resources needed (People, Money, Time)? There will be costs, it will take time to get results.

4) Do you have access to experts who can get you started? This means either the C word (consultants - can you believe I'm even saying that?), or hiring a top person in the field. This person MUST REPORT TO YOUR GM OR CEO. If he reports to only one function you'll miss the proverbial boat on MOST OF THE CHANGE NEEDED.

5) Can you let the 'experts' guide you, or will you force them down a path of sub-optimization? Face it, you don't know what you don't know. If you think you can design a lean program (for either growth or costs), you're wrong. Define the important metrics, keep them very high level. If you force your team to focus on efficiency, they will, and it will NEVER translate to your needs.

6) Is senior management ready to be involved in the change? Sure, change is easy, when you don't actually have to change yourself. Getting lean means changing everything about your business, don't fool yourself by thinking that you can successfully watch the change happen. You'll be in it up to your neck, expect it, and get used to it.”

Source: Lean Digest #1986 by Bill Kluck , June 24, 2008

MUDA walk for a Month is Coming Back

If you are interested in driving out waste (Muda) and improving your operations this may be just the ticket.

The challenge – Do a Muda walk in some part of your operations (jobs site, office, fabrication shop, materials warehouse, etc.) for one hour every workday for a month. If you can’t do a walk every day then you decide what days you will do.

The target - Implement at least one improvement each day. More is better.

How it works – Each week I will email a Muda Walk theme for you to apply while doing your Muda walk during that week. You will look for opportunities to drive out waste related to that theme. I ask that you keep a list of improvements implemented and share those with me at the end of the month.

Your investment – About an hour a day to do what managers should do every day – drive continuous improvement and document your successes. The emails assignments are free. The time is yours to invest. After a month, hopefully it will be a habit that will stick.

To participate in this pilot Muda Walk for a Month Opportunity - sign up by emailing to dennis@YourQSS.com . The program will start the week of September 29 to Oct. 2 and go through October. If you do a walk every day you would have 25 improvements by the end of month.

Are you serious about improving your company and trying something new? Please let me know before September 26th

The Last Planner System *

Project Productivity: Gains Are Lost and Losses Accumulate
By Gregory Howell, P.E., & John Draper, P.E.

“There is a law regarding variability in production management that is valid for all production systems in which subsequent tasks are dependent upon preceding ones. This law states that increasing the variability in workflow (arrivals and task cycle times) always degrades the performance of a production system. That is to say, system performance is reduced by the combined effect of dependence and variation. This rule is ignored in current approaches to project management; understanding its implications in projects and creating predictable workflow is the way to start improving project performance.

“Today, the focus of our measures and attention is productivity, which is commonly thought of as labor utilization. Pressure to increase local productivity reduces project performance. Here is why. Think of going into a bank to be served by a teller. You get instant service if a teller is idle. You get great service when there is idle capacity. Of course, with idle tellers, their productivity, in terms of customers served per shift, will be low. By contrast the teller will be very productive if there is always a line at the window. High teller utilization usually means long lines for customers because they arrive at random times and the time required to serve each customer varies. So from a customer’s perspective, high teller productivity reduces system performance.

“But what if the arrival time of the customer and the processing time by the teller were more predictable? For example, what if we knew that a customer would arrive every 5 minutes and that every transaction would take 5 minutes? The performance of the banking system as experienced by both the teller and the customer would improve because the time required for each customer to be served would drop and the productivity of the teller would increase (another customer would arrive just as the transaction was being completed). By contrast, the performance of the banking system is reduced by the combined effect of variation and dependence. The impact, from the customer’s perspective, is worse when resources, tellers, carpenters or cranes are fully utilized.

“So what does this phenomenon have to do with projects? In projects we push for high utilization in each activity. From a subcontractor’s perspective, this sounds great because their labor utilization will be high. So they organize their work to maximize their productivity rather than to release work to the next crew in batches sized and sequenced to maximize total project performance – or to meet the level of quality required. This unpredictable release of work causes a “knock on” effect. That is to say that if the work is released early, the downstream trade is already busy doing something else, so nothing is gained in terms of time. But if the work is late, then the downstream worker stands idle (or worse, goes to another job) and the project is delayed. The gains are lost and the losses accumulate.

“Lean is about reducing waste and adding value. The waste of mis-coordination and of unpredictable flow in projects is not an explicit concern of traditional project management. Labor utilization, productivity in each task, is the primary concern. The reality is that pushing to increase local utilization almost always makes workflow less predictable. By contrast, improving predictability of workflow both improves productivity and reduces project duration. Ask yourself, what does productivity mean on your job? Does it mean high labor utilization in each activity or total system performance? Maximizing project performance requires shifting attention from local productivity to workflow predictability. Measure that and invest in to improve it. You will see local performance and project performance improve.

Source: Construction Newsletter, Institute of Industrial Engineers, July 2008

* Last Planner System is a trademark of the Lean Construction Institute.

Before and After

In future issues of this newsletter I plan to show pictures of work areas, shops, gang boxes, service vehicles, etc. before and after the 5S’s. If you have pictures you would like to share, please send them to me.

Learning Opportunities

You may be interested in attending one of these training seminars:
Oct 2, 2008 – Lean Works in Construction, Seattle, WA – Sponsor: SMACNA - Western Washington Chapter – contact Elizabeth Jones at 206 285-4144. Must be a SMACNA member to attend.
Oct. 16, 2008- Designing and Achieving World-Class Performance in Construction – Phoenix, AZ – Sponsor: PIPE & 469 JAC, contact Cathy

Other Lean Construction Learning Opportunities:
September 25th: The Southern California Chapter - San Diego will hold an organizational meeting on.
October 28-31: LCI Annual Congress - Boulder Colorado

A Quick Thought

We let the flow manage the processes, and not let management manage the flow.
- Taiichi Ohno

For more information about Lean applications to construction and especially the 5S’s contact Dennis Sowards at his office at 480-835-1185 or his cell at 602-740-7271 or at his web site: www.YourQSS.com