In my experience, the owner/leader/CEO must be the company’s overall lean zealot in order to be successful. I have never seen a robust lean implementation that occurred on a bottoms-up basis.

Even with this absolute commitment, there is much work to be done. First of all, you have to understand that lean is strategic, a better way to run the company—one that creates unfair competitive advantage. Next you have to understand that you are trying to remove the waste from your own operations so that you can deliver more value to your customers than your competitors.

Well, that’s all very nice but it sounds a bit like high level gobble-dee-gook. It may sound ok and make you feel warm and fuzzy; but what do you need to do to actually make it happen? Where should you focus? The answer here, like most things in lean, is simple. In order to go beyond your traditional batch state you need to focus on implementing the lean fundamentals:

WORK TO TAKT TIME

ONE PIECE FLOW

STANDARD WORK

PULL SYSTEM

If you drive these fundamentals in a rigorous way every day, in every part of your business, you have a very high chance of being successful. For example, if the CEO asked his management team every day, “Is everything running to takt time?”, or, “Is everything in a one piece flow?”, or “Do we have standard work in place everywhere and is it being adhered to?”, and “Is everything working to the pull of the customer?” I think you could be very successful. Of course, to begin with, the answers to all these questions will be...no. It will take you years before your team can say yes to each of the four lean fundamentals. Even so, asking every day keeps the focus on the things that are important in getting you where you are trying to go.

But how do I actually get there? In my opinion there are several foundational areas that you must focus on to make the lean fundamentals work. In my experience these foundational areas are often overlooked and as a result the lean turnaround is slow to develop or doesn’t happen at all. To me, three of them stand out as being worthy of further discussion.

SETUP REDUCTION

The most important of these, and probably the most overlooked, in my opinion, is setup reduction. After all, how can you work to takt time, have one piece flow or respond to the pull of the customer if you have setup times in the 2-4 hour range—or longer? The long setups themselves will dictate batching almost everything. For example, if you work on a single shift, and have 3-hour setups, then changing over 3 times per week means you lose a whole day of production every week. It’s just simple math. If this is your reality, then the boys in the finance department will come up with economic lot sizes for you such that you may need to make 3-4 months worth of inventory every time you do a setup to maximize its efficiency.

Obviously, if you don’t fix this you cannot become lean. But there will be great resistance and it will come with 20-30 well thought out “reasons” (i.e. excuses) as to why setups can’t be reduced any further. Your operators and shop floor management will defend the current state. Over and over, I have seen companies start down the lean path and try and do it without a very aggressive push to reduce setup times. Instead they just put kanban cards on their big batches and say, “Yup, we’re lean.” But this is just accepting the waste that exists and limiting your capacity and ability to respond to the pull of the customer.

Even if it is understood that reducing setup time is critical for lean understanding, what is possible and making it happen are not likely to be one of your core competences. If you ask an engineer in a traditional company to reduce set up time by 50%, for example, she is likely to tell you a) it is impossible or b) she will go to the catalogs and buy some very expensive setup reduction automation. But as the chart below illustrates, at Wiremold we were able to average about a 90% reduction in setup time after a one week kaizen on a broad array of equipment.

WIREMOLD ONE-WEEK SETUP RESULTS

Rolling Mill 720m to 34m -95% 150 Ton Press 90m to 5m -94% PM Punch Press 52m to 5m -90% Hole Cut Mill 64m to 5m -92% 5” Extruder 180m to 19m -89% Injection Molder 120m to 15m -88%

And we didn’t stop there. The Extruder, for example, got down to 3 minutes, the injection molder got down to 2 minutes, a large rolling mill went from 14 hours to 6 minutes, a large coil fed punch press went from 3 hours and 10 minutes to 1 minute and on and on. In one of my private equity companies where I was Chairman we took a 750-ton injection molding machine from 5 hours to 5 minutes. I could cite other examples but I think you get the point. And of course, unlike the catalog engineer, you can’t spend a lot of money in a one-week kaizen to get these results. The key point of all this of course is if you don’t focus your attention on reducing all your setups then becoming lean is almost impossible.

FOCUS ON THE 5S’s

The next foundational pillar for lean, in my opinion, is the whole area of 5S. Lean requires a great deal of discipline and the ability to keep going back over and over to remove the next layer of waste. As a result, if a company is not good at the basic housekeeping of 5S then its chances of becoming a lean enterprise are very limited. At Wiremold we did 21 acquisitions over the course of about 9 years, mostly using the funds we freed up from reducing inventory. Our standard work for an acquisition was to start doing kaizen as soon after the financial closing as possible. Once we were underway we continued an aggressive kaizen schedule except in cases where the 5S was very bad. In those cases we had the new company focus, with our help, on nothing but 5S for the next six months before we would do another kaizen.

Not only is the discipline of 5S important but 5S is extremely important for several other things you need for lean. Safety is at the top of this list: an organized, “everything in its place”, uncluttered work space is a much safer place to work. Organization also helps in creating one piece flow where everything needed (and nothing extra) is within easy reach. Pull systems also require organization for things like super markets of parts (small ones hopefully) and ease in replenishment.

VISUAL CONTROL

Last on my list of foundational keys is visual control. In the typical traditional batch factory, information is kept on computers in an office, but on the shop floor, in most cases there is no easy way to tell if you are on schedule or not. Things are made in batches in functional departments that are often far away from each other. They are trying to make a forecast—not respond to the pull of the customer. The focus is on “make the number” be it for the day week or more commonly the month. There is a big reliance on having lots of inventory so no one is particularly concerned about how we are doing this hour or day.

When you switch to lean and try to work to takt time, i.e. the rate of customer demand, knowing where you are hour by hour throughout the day becomes very critical. You no longer have time to “make it up later” so to speak. The big inventory buffers are no longer there so there is tremendous pressure to get it right the first time. If you start to get off track you need to take action right away. To do this you need the hour by hour visual control in place in every operation.

Visual control is also the basis of what we call daily management, or said another way, corrective action or countermeasures. Everyone needs to be involved in removing the waste, and the visual management helps everyone to see the current status at all times. The team can then come up with quick countermeasures to get back on track. In addition, visual control is a subtle but great motivator for any team. People are naturally competitive. They come to work to do a good job and will come together as a team to hit the takt time the customer requires if they can see it throughout the day. I’ve seen some great examples of this over the years.

SUMMARY

I’ve only talked about three things that are what I call foundational items for lean. I’m sure that that I will get suggestions for several others to add to the list but these to me are the most important. As you start down the lean path make sure that you put major emphasis on getting all these in place. Be a zealot on the foundational items. If you don't, you won't get very far with your Lean conversion. None of these are financial measures that traditional companies tend to focus on. They are indeed far more significant than that. They will touch every employee in some way and help them understand how they can contribute to removing waste. As a result they are key to your future financial results.