Step Up to Lean: Why Lean Implementations Fail

Over the last 20 years, many articles, books, and case studies have been written about Lean Manufacturing implementations.  In those reading materials, we are exposed to amazing results with the implementation of Lean Manufacturing.  However, we also read that after two to three years of implementation that 70% to 80% of companies are struggling to maintain the improvements made in the first two years of implementation and are making limited if any continued progress in their Lean journey.  After three years, many companies have abandoned Lean implementation or moved on to Six Sigma implementation in the belief that Six Sigma is the way to sustain lasting improvements.  This begs the question:  If Lean Manufacturing offers so many cost benefits and quality gains, why are so many companies struggling to implement Lean?

First, let's discuss the steps a successful organization takes to implement Lean.  Figure 1 is a description of Lean implementation in terms of stair steps.  A company implementing Lean will naturally progress up the stairs as it implements Lean Manufacturing.  A company is not required to complete a step prior to moving on to another step.  In fact, a company may operate on multiple steps at any one time.  The objective is that a step cannot be skipped and moving up the steps without achieving process stability will increase the failure at implementing Lean tools at a higher level.  A summary of the stairway is:

Stair 1 5S - 5S and standardized work are the foundations of Lean implementation.  5S is the start point for workplace organization (a place for everything and everything in its place) and a visual representation of the disciplines that will be required for Lean thinking.  Anyone that has attempted to implement quick changeover without 5S disciplines quickly realizes the importance of 5S.

Stair 2 Standardized work - Standardized work is the second foundational element to Lean.  Standardized work is the documentation of each process by the operator.  Standardized work assists in employee training and is a foundational requirement to implementing any quality system.

Stair 3 - Visual controls - The ability to manage by looking and seeing the status of the operation.  Visual control is tracking process variation and performance through visual cues and measurables rather than tracking people.  The operations performance can be viewed by the flow of material, posted measurable data, Andon indicators, TPM, etc.

Stair 4 - Kanban - Kanban/Pull systems use visual controls and standardized work to manage material flow visually based on customer demand. Kanban/Pull systems can take many forms such as cards, totes or electronic signals.  The common element is that the Kanban trigger is based on customer demand and not a forecast.

Stair 5 - Flexible associates and equipment - Having flexible equipment (quick changeover, line diversification) and flexible employees that are cross trained in multiple areas is a key driver in Lean cost structures and process agility.  Operators and equipment are flexible to run multiple products with a quick changeover.  Employees are formed into working groups (teams) and non-production time is allowed for team activities and problem solving.

Stair 6 - Supplier development - Supplier development and partnership is a must for a successful Lean enterprise.  Supplier delivery and quality capability is crucial to successful Lean processes.  Many Kanban systems have been compromised due to a supplier’s quality or delivery performance.  Supplier relationships built on trust and treated as partnerships will reduce cost as a supplier will readily commit to small lot packaging, frequent deliveries, and quality improvements.  Partnerships can be established through single sourcing and first-bid agreements as a supplier reaches predetermined quality and delivery levels.

As an organization implements Lean, a transformation begins in the culture of the organization.  Decision-making is driven down the organization empowering employees to make change happen. Since processes are managed rather than people, each individual has visibility to the process measureables for his/her area and are capable of making correct decisions.

Why Lean Fails

The common errors made by the executive level have been well documented.  These errors can be summarized into several categories:

1. Cost savings not a strategy – All too often, upper management views Lean as a cost saving opportunity rather than a disciplined manufacturing strategy for long term competitiveness. As a result, management loses focus after a few months and moves to another initiative to reduce costs.
2. Commitment – Company executives see Lean tools in action, perhaps through tours or presentations and decide to bring Lean to their organization without fully understanding the commitment required to implement Lean. These executives fail to dedicate enough resources for a successful launch and often fall into the trap of “do as I say not as I do” mentality.
3. Lack of training – Since many companies do not view Lean as a corporate strategy, training is limited to only a few individuals. Sufficient time is not given to properly train employees on the principles and practices of Lean and tolerance is not given to allow employees to make mistakes to truly learn the process. This is apparent when it takes three to five years to develop a Lean culture within an organization.

Although many companies have no chance at implementing Lean because of executive misunderstanding or focus.  Other companies have executives that do not exhibit one of the problems listed above.  These executives are committed to the Lean strategy yet the organization still struggles to implement the necessary changes for sustained success.

To better understand this, we must realize that Lean implementation is as much about cultural change as it is about process change.  If you follow the works of Dr. Deming, management is responsible for 85% of process quality and the worker is 15% responsible.  The more entrenched a company is in its process and subsequently its culture, the more difficult change will be and the management of the organization is responsible for 85% of the change, process and culture.

In that view, let’s review the stair steps again and review the transformation the organization goes through, process and cultural, to implement Lean and review the common mistakes that managers make in Lean implementation. Noting that companies that cannot sustain success at the lower levels cannot move further up the stairs and will not successfully implement any advanced Lean tools such as TPM and Kanban.

Stairs one and two – 5S and standardized work.  Employees and first level supervisors are trained in 5S practices and standardized work.  Operators may work in group Kaizen activity or individually to make quality and productivity improvements by implementing 5S.  Time is allowed for operators to document the process for standardized work.  The standardized work sheets are posted at the work station and updated routinely as improvements are made and are used as a training tool for new/rotating employees.

Common errors made at stair steps one and two:

1. Training is classroom only - Training is not solidified by using on–the-job implementation. Not only does the employee not truly understand 5S and standardized work, but the company loses out on the quality and productivity gains the process provided by training the employee.
2. Standardized work is documented by a Manufacturing Engineer or a Quality Engineer - As a result, the document is most likely not accurate to the operator’s true task and the operator will not be committed to a document he/she did not write.
3. Not using 5S and standardized work - Floor supervisors and managers need to support the 5S and standardized work processes by walking the process and verifying that material and tools are in the proper locations. Supervisors should work employee stations and verify that standardized work is accurate and up-to-date.  5S and standardized work is the foundation required to implement visual controls later in the process.  Failure to put discipline in the process will inhibit the implementation of visual controls.

Stair three – Visual controls. Visual control is the ability to view the operation’s performance by walking the processes.  Obstructions of unnecessary equipment and racking have been eliminated and data is posted near the operation that details performance measurables for the area such as, TPM schedules, productivity, downtime and improvements.  Supervisors and managers routinely walk the operation and question data and any deviations.  Andon warning systems have been implemented to alert equipment downtime, quality concerns and material flow disruptions within the process.  Support groups such as maintenance, materials and quality are trained to respond quickly to process deviations.

Common errors made at stair step three:

1. Posting of measurables - The establishment of visual measurable tracking at the work area is a must for visual management.  Each process area should have a local posting of how that process is performing in terms of employee safety, quality measures, cost measures, delivery performance and employee morale.  Many organizations tend to ‘hide’ this information from the employees or employees already know this data.
2.  Managing from the office - Managers fail to remove themselves from their offices and walk the processes and talk to operators to clearly understand how the operation is running.  Too often, organizations rely on ERP or other database programs for shop floor tracking data and report generation view processes from a computer screen.  A manager that makes decisions from this data is not gathering the necessary information on how the floor is truly operating.  Often, the data from these programs is inherently inaccurate due to data entry errors, timing of data entry and intentional data manipulation to hide floor problems.
3. Not invented here syndrome – Supervisors and managers with years and sometimes decades of experience at the floor level are the most difficult individuals to train in visual management.  These supervisors/managers are deeply entrenched in their ways and may be unwilling to view the operation in any way other than how they’ve run it in the past.  These supervisors/managers are not only difficult to change but can limit team building by not listening to operator’s improvement ideas due to their myopic view of the operation.

Stair four – Kanban. Kanban/Pull systems eliminate the need for system forecasting and synchronized customer demand to operational requirements.  Work orders and production scheduling has been removed and visual Kanban cards/totes have been installed to trigger production and material flow.  The operator uses the Kanban to determine manufacturing priority and not a master schedule. Kanban systems are implemented linking customer requirements of finished goods to manufacturing requirements.  Manufacturing requirements are linked to component need and delivery from marketplace storage.  Component requirements trigger supplier delivery taking into account order size and logistics timing.

Common errors made at stair step four:

1. Kanban reduces inventory levels – Many managers are under a misconception that Kanban reduces inventory.  Inventory is a function of established processes and will change only when the process changes.  With the implementation of quick changeover, small lot and frequent replenishment inventory can be reduced.  Kanban is a signal for material flow and not a method for quick inventory reduction.
2. Implementing too soon - To implement Kanban, a company must have stable processes for quick changeover, quality programs and a small lot strategy.  This requires changes in purchasing processes to have suppliers quote and deliver in small containers that are designed to fit in ergonomically designed work stations.
3. Kanban is a problem solving tool – Since Kanban is a signal, it will alert when problems arise.  Too often, companies abandon the Kanban system because they cannot get the system to work.  When in reality, the Kanban process is working flawlessly because it is alerting to a problem in changeover time, scrap, supplier delivery or quality concerns.  Kanban, unlike ERP based scheduling tools, gives immediate and visual feedback to the process.  Many Kanban implementation failures are a result of not problem solving the root cause and blaming the Kanban system.

Stair five – Flexible associates and equipment. When an organization achieves stair five employees are formed into teams and cross-trained to run multiple, if not all, stations in the team.  Fixtures and tooling has been designed for quick changeover allowing the team to adjust product and cycle time based upon changing customer requirements.  During periods of low customer demand, the team can adjust production and rotate team members to continuous improvement activities.  The work group is given non-production time each week for team building meetings to review process measurable data, suggestions and continuous improvement activities.

Common errors made at stair step five:

1. Command and control supervision - Supervision that only values employee’s hands and not their minds will prevent a team from working effectively.  As the team forms, the role of the supervisor changes from that of a policeman to that of a coach.  The supervisor’s role becomes a facilitator to problem solving and an agent to get resources for the team.  Traditional supervisors that ‘grew-up’ in a command and control culture cannot accept direction/requests from his/her work team.  As a result, the supervisor prevents the team concept from forming.
2. Outdated compensation methods - The change to Lean practices requires that employees know many different skills.  Traditional companies with tier pay systems based on a single skill will need to adjust to pay-for-skill or base pay on knowledge rather than one particular skill or longevity.  Compensation programs will need to be updated for suggestion systems.
3. No focus on continuous improvement activities/team building time - Failure to allow the team planned downtime for meetings and continuous improvement will not allow the team to form and results in the organization not obtaining the benefits of the Lean training given to employees.
4. Outdated accounting standards - Traditional accounting systems measure labor efficiency based on units produced for each labor hour.  If the process is not producing product it is considered inefficient.  This practice results in unnecessary inventory in the name of efficiency and does not support Lean principles of Just-in-Time and team based continuous improvement.

Stair six – Supplier development. As a company implements the step of supplier development, the flow of material from suppliers is frequent and in small lots, preferably in returnable containers.  Suppliers are working as partners and are involved in pre-product launch activities, cost/quality improvements, build schedules and delivery/quality issues.  Suppliers receive quality and delivery performance feedback frequently.

Common errors made at stair step six:

1. Engineering does not trust the supply base – The engineering group does not trust the supply base with competitive information or underestimates the suppliers’ technical capability.  Although a supplier cannot know all the technical nuances of a customer’s products, a supplier does have the technical knowledge of their own products and a technical problem can be easily solved by a supplier who has encountered a similar problem with another customer.  Technical information can be secured through confidentiality agreements.  Many times engineering pride masks true competitive advantages and in reality the technical feature the engineer wants to protect is already known.
2. Purchasing practices of bid and award – Purchasing practices of how a product is awarded must change from the traditional three bids and business awarded on the lowest price.  Purchasing will need to award business based on total cost.  Supplier programs such as rating systems, auditing systems on capability and quality need to be developed.  The use of blanket purchase orders will need to be used rather than discrete purchase orders to support Kanban.  Logistic programs need to be developed to support small lot and frequent delivery.