Tuesday, 05 February 2013 03:07

How Successful Are American Organizations in Deploying Lean?

Written by  Larry Rubrich
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The September 30, 2011 edition of Manufacturing and Technology News magazine presented an article entitled, Lean and Six Sigma Are Not Leading To Breakthroughs In Corporate Performance. This article (the result of a survey of 100 business executives conducted by Alix Partners, a business consulting firm) highlighted some problems with Lean and Six Sigma implementations, including:

n   70% of respondents reported a less than 5% improvement in manufacturing costs as a result of Lean.

n   60% of respondents said their previous Lean improvements were not sustainable.

Only 17% of respondents reported seeking long-term culture change in their organization.

Alix Partners made observations about the survey that are summarized here:

Most companies are getting a poor return on their investment in Lean and Six Sigma.

Companies are far too focused on implementing Lean tools and processes rather than on basic execution.

Organizations need to dramatically rethink their Lean strategies by focusing on cash and finding the biggest opportunity to improve, and then deciding which Lean tool(s) will help them achieve that result.

Company Leadership Teams must take responsibility for the Lean implementation, rather than trying to push this responsibility down to the Lean facilitator. 

This data supported a report completed by Industry Week magazine in 2007 that reported the following Lean results from American business:

lean_initiatives_progress

As noted in the figure above, 74% of American businesses that indicated they were using Lean as their business improvement activity, reported "little" or "no progress" with their Lean implementations. Toyota says this number is 70%.

For the "little" or "no progress" organizations, Lean is viewed as an appendage or an add-on; something that is done in addition to our normal busy schedules, not as the operating system by which we run the organization and achieve our business goals. This lack of progress leaves organizations saying, "We're different, Lean doesn't work for us," thereby placing the lack of results on Lean itself rather than the organization's Lean implementation plan.

To be successful with Lean, we must view and acknowledge Lean as our "business operating system" by which we will run the entire organization and achieve the desired business results. This business operating system includes the establishment of a Lean Culture.

Lean is not just a set of Lean tools used on the organization--for example, 5S or Kaizen Events. Achieving the "desired results" means being focused on the three key metrics by which all "for profit" companies are measured: profit, cash flow, and revenue growth. Organizations must establish linkage between the desired business results and Lean activities using a technique called Policy Deployment. Policy Deployment also establishes the framework of a Lean Culture.

In Policy Deployment, the Lean tools are only deployed into the organization when we understand how using 5S, Kanbans, or other Lean tools will help eliminate the wasteful activities that are preventing us from achieving the desired business results.

The idea of adopting Lean as a business operating system in U.S. organizations has been very difficult to accomplish because it is rarely understood as an absolute requirement to a successful implementation. This has resulted in an extremely low level of Lean success as measured by either the ability to achieve "World Class" (globally competitive) status, or significant improvement, for an organization's Lean activities. 

For more by Larry, see his blog.  

Last modified on Monday, 16 September 2013 20:34

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