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Business in Crisis? Now’s the Time to Rely on Lean’s Basics

Business in Crisis? Now’s the Time to Rely on Lean’s Basics

When times get tough, people are inclined to seek out new solutions instead of digging deeper into the tried-and-true methods they already have. This is why one of the best things that leaders can do in a crisis is get back to the basic tenets of Lean.

Instead of thinking, “These Lean concepts don’t apply to my business,” shift your mindset to want to be an active, hands-on participant in your company’s Lean transformation. Even if you sit in a corner office, you can still be a part of your business’ transition to a deeper understanding of the fundamentals of Lean. These basics include Heijunka level scheduling, standard work, Kaizen, Just in Time (JIT), Jidoka, and the SQDC hierarchy. If you aren’t using these basics, you aren’t actually practicing Lean business.

Heijunka Level Scheduling

It’s difficult to manage a process when volume severely fluctuates on a day-to-day basis. Heijunka combats this by specifying the amount of inventory that must be produced in a given time period.

Because of its function, many assume that Heijunka only applies to a manufacturing operation; however, it’s applicable to an administrative process as well. For example, an insurance company that processes claims will be more efficient and easier to manage if it has a “production” schedule for processing claims.

For Heijunka to be effective, all functions of the organization must collaborate. This is typically done through a sales and operations planning process (S&OP) resulting from critical input from sales, marketing, finances, engineering, and human resources. Most companies do not optimize using Heijunka because they insist on managing their business from a siloed functional perspective, not an enterprise perspective, but this will lead to failure. In the Lean world, an organization must work to optimize the entire enterprise.

Standard Work

Standard work is a tool that defines the interaction between people and their environment when processing a repetitive product or service. For consistency of the operation, it specifies the motion of the operator and the sequence of action.

By detailing the “best” method or process to execute a job, standard work makes managing processes (scheduling, resource allocation) easier. It also highlights what’s normal and abnormal procedure, which can help prevent backsliding and provides a standard for improvement within both administrative and manufacturing processes.

Takt Time

Takt is a German word meaning beat or rhythm, but in business, it means the rate at which customers are placing orders on a particular operation. This rate is computed by taking the available time during a production shift (expressed in seconds) and dividing it by the customer demand for items produced by that particular shift. For example, if there were 27,000 seconds available in a shift with a daily demand of 270 units, the takt time would equate to 100 seconds.

What does this mean? It means that if you were to stand at the end of a production line, one good part should fall off the line every 100 seconds. Not 90 seconds and not 110 seconds, but 100 seconds because that is the rate at which you will produce a sufficient number of items to meet demand without creating excessive inventory.

Takt time is a powerful tool for any repetitive process, whether it’s in manufacturing or administration. Running a process without takt time is analogous to an orchestra playing without a conductor.

Standard Work Sequence

Taiichi Ohno, the father of Lean, once stated, “There cannot be improvement without a standard.” Achieving said improvement is not impossible as standard work is a tool to facilitate continuous improvement based on, as the name states, a standard. Standard work sequence also defines the series of operations performed in a one-piece flow environment.

For example, an operator might carry out this sequence in a manufacturing environment: unload part from machine; load part into machine; cycle start machine; gauge part (quality check); walk to assembly bench; assemble part; test part; pack part into container; walk back to first machine.

Or, in an administrative process it may work a little like this: analyze insurance claim; check policy for eligibility; review adjuster’s report; approve claim; enter claim into computer system; process payment; notify insured of claim status; file relevant claim paperwork.

As with all kinds of standard work, once an established process and sequence is set in place, it is easy to see deviations to be corrected and the sequence can be better tailored to fit the stated takt time.

Kaizen

Kaizen is Japanese for continuous improvement as the word part “Kai” means change and the word part “Zen” means for the better. Based on the philosophy that what we do today should be better than yesterday—and what we do tomorrow should be better than today—kaizen means never resting or accepting the status quo. Another way to think of this concept is that kaizen is a healthy dissatisfaction with the status quo.

The key to creating a kaizen culture is to briefly celebrate your successes, not become complacent, and always be taking the next step on the never-ending journey to perfection. Is there ever a time where enough improvement is enough? Hopefully, your initial response was “no”; however, one must assess where to place continuous improvement efforts relative to strategic initiatives. Because there will never be complete satisfaction with every aspect of your business, you need to be conscious of how much effort and funds you are putting in to attain “perfection” in every aspect of your business. It would be a much better use of your time and resources to focus on the frontrunning and essential functions of your business first.

Just in Time

Just in time (JIT) is a philosophy and strategy meant to increase efficiency and decrease waste by receiving or producing goods only as they are needed, when they are needed, and in the quantity that they are needed.

With this method, though, there are higher stakes. For JIT systems to be effective, it’s vital that companies produce products at near-perfect quality. Otherwise, defects can disrupt the production process or the orderly flow and availability of products.

Jidoka

Back in the early 1900s at the Toyoda Automatic Loom Works, the concept of Jidoka was born when a loom stopped due to breakage of thread. Jidoka is an automated process that’s sufficiently “aware” of itself so that it will detect process malfunctions or product defects, stop itself, and alert the operator. If Jidoka is not utilized, a manufacturing process will continue to produce defective products until detected by an operator, which can occur too late resulting in the manufacture of a costly number of defective products.

The SQDC Hierarchy

Another Lean fundamental to default to when looking to improve your business’ service to customers is the SQDC hierarchy. SQDC stands for Safety, Quality, on-time Delivery, and Cost.

For example, let’s say you’re debating whether or not to airship a product at a high cost to a customer in order to acquire the benefit of on-time delivery. Because on-time delivery ranks higher than cost in the SQDC model, you know it makes sense to spend the extra money to airship. The SQDC model will help your business prioritize business functions and, as a result, help you blow your competition out of the water.

You may be uncomfortable with going back to these basics at first because they aren’t easy to master and they can sometimes seem counter to traditional business practices; however, if you stay the course, these standards will help you recover from a crisis—and get further faster.


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by Mark C. DeLuzio // Mark DeLuzio—known as a pioneer of Lean and the principal architect of the Danaher Business System (DBS)—serves as a trusted advisor to senior leaders in global organizations whose financial and operational metrics have flatlined. Leveraging his unmatched and inventive experience, DeLuzio helps them think differently about how to optimize their approach systemwide. His new book is Flatlined: Why Lean Transformations Fail and What to Do About It. Learn more at markdeluzio.com and leanhorizons.com.

Opinions expressed by contributors are their own.