Is the journey to Lean manufacturing really worth the cost of admission? That’s the provocative question asked by the business process consultants, AlixPartners, in a new survey of manufacturing executives.
Considering how much time, organizational effort and cost manufacturers have invested in Lean, the results of the survey surprised me. The issue is not whether Lean has failed – more than 90% of the executives surveyed said their efforts were somewhat or very effective. The question is whether Lean has delivered on expectations. Almost 60% of the executives said they were realizing “less than half of their expected savings.” What’s more, among those enterprises that had projected 5% savings, less than a third had managed to reach that goal.
Why is there such a gap between expectations and reality?
One answer may be “inaccurate opportunity analysis,” in consultant jargon. But I think the survey points to something deeper. The fact is that some Lean projects are more successful than others. Why is this? What makes for a successful Lean initiative? Having worked with many manufacturing enterprises, I believe Lean delivers on value when three criteria are met:
- When the approach is complete
- When results are measurable
- When continuous process improvement is enforceable
I’m going to drill down into these three points over my next few blogs.
Let’s start with the first requirement: Lean implementations must be complete. What I mean is that manufacturers must have organizational and technological platforms that span the full spectrum of operations, across all locations, or else inefficiencies will always crop up. For example, say you’re implementing a pull strategy with synchronized production, warehouse and suppliers. For that to work right, you need an operations platform with a footprint at least that wide, or else how will you synchronize all the moving parts? In fact, it should cover other dimensions impacting production, such as quality, compliance and maintenance. Any gap in the system inevitably results in inefficiencies.
But it’s even more complicated than that because in the real world things go wrong. Your planning systems can schedule a perfectly efficient day at the factory, but then there’s an equipment breakdown, a missed delivery, or a last-minute change in a customer order. In the real world of manufacturing, that kind of occurrence is the rule more than the exception. So, a Lean manufacturing system has to be complete, in the sense that it can handle unpredictability with optimum efficiency, on a daily basis.
There’s yet another dimension to be considered in a “complete” approach, and that’s the global aspect. This may be the most important dimension of all. Lean initiatives that are implemented on a plant-by-plant basis will never be as effective as those implemented on a common global platform of processes and technology. When all plants are using the same planning and execution system, best practices can be more readily discovered and shared across the enterprise.
In this way, a global platform becomes a powerful Lean multiplier, capable of leveraging every savings across 10, 20 or more plants worldwide. I’d be willing to bet that 100% of executives would consider that a worthwhile investment!
In my next post, I’ll look at the role of how to best measure Lean success.
Jordan can be found on Google+