Personal Kaizen

I am recently read a book which was recommended by a good friend of mine called "The Monk who Sold his Ferrari", a book written by self help guru Robin S Sharma; for those who are unfamiliar with this little gem it is a book on personal self development, which aims to help its readers lead a fuller, more productive life.

It is well worth a read for those who have in interest in personal development; it is only about 200 pages long but is very hard to put down.

Some of you may be wandering what has this got to do with Lean, and I can assure you all that there is a very relevant connection; the main theme of the story is how a very successful and materialistic American Lawyer sells all of his possessions in search of deeper meaning for his life following a major health scare. He finds himself seeking ancient wisdom from sages living deep in the Himalayan Mountains.

Interestingly these Sages tell the traveller that in order to add purpose to his life he needs to practice 'daily Kaizen'. By identifying a personal long term goal (which could be translated to mapping a future state in lean lingua franca) and then working diligently towards continuous improvement efforts to achieving this goals the book states that individuals will not only be more effective in their personal goals, but lead happier and healthier lives.

We know that Kaizen is a powerful tool in business, so take time now to envisage what could achieve if you applied this ancient wisdom to your life? Feel free to contribute any personal examples you wish to share…….

The many, the few and the select…

All too often we get excited by the idea of organisational change, optimising entire value streams or employing a new Poke Yoke (error proofing) concept that will ensure future products or services will be defect free, and rightly so after all if lean tools weren't so powerful, why would we want to use them in the first place?

Sometimes it is hard for us to make the switch from the grand to the minute; observing, enjoying and appreciating the smallest kaizen improvement, often focussing on the larger issues and neglecting the smaller.

I recently read an article by Ron Pereira on Laundry Kaizen, where he had implemented a system which allowed him to store dirty washing in separate compartments of the laundry basket, effectively separating the items before the wash, preventing users from putting coloured items in a mixed wash (Poke Yoke).

In addition when the compartment was full it acted as a 'Kanban' signal to put on another load; finally this simple system also reduced set up time as all pre-wash sorting was virtually eliminated (eliminating waste).

This very simple system may not get many of you exited but for some people, a routine task such as this can be laborious and using if using basic lean principles the process is reduced and if this provides the user more free time to spend with his or her family then surely it should be embraced.

Many of us learn about learn principles, a few of us teach these and a select few 'live' this principles throughout every aspect their lives.

How could you 'Lean' your life? Please email me with ideas – the best ones will be published in future blogs…

The Back Burner and the Crematorium

Kaizen initiatives have proven their worth for any company who claims to be operating a Lean system whether in the service or manufacturing sector; however what happens to all of the suggestions that are produced?

Most organisations will produce some form or effort vs. impact analysis (you may do this under another name) which may include the use of Pareto charts; often those deemed to be 'business critical' or the improvement ideas with the highest impact for the lowest effort are selected with many of the alternative ideas being put on the 'back burner' for future review

My experience tells be than the 'back burner' of often the resting place for many great kaizen improvement initiatives (the crematorium). Realistically how often do we revisit some of the improvement initiatives we have saved for 'another time'?

Now I would never advocate deploying all of the kaizen improvement initiative generated as in the real world there is neither the time or the resource, however many of the ideas generated could provide very a very useful confidence building exercise for those newly inducted to lean.

In addition, accepting the ideas of certain members of staff can have a powerful motivational effect on the work force which should not be underestimated.

So why not develop a 'Kaizen Pool' of ideas for future implementation, allowing front row workers to directly manage their implementation? Empowering staff to deploy these non business critical projects now could help develop the 'black belts' or 'lean sensei' of the future within your organisation.

 

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Simple Office Kanban

This blog unexpectedly explores the motivational effect of hand towels; I was recently part of a kaizen brainstorming exercise where the focus of the group was trying to improve staff morale.

So how are hand towels linked to motivation? Well I don't believe there is a direct correlation between the two, however to lean on the work of Herzberg's theory of motivation it was clear that members of staff viewed any shortage as a frustration, especially in areas which were deemed to be 'getting the basics right' and couldn't understand how an organisation with 250 employees could not provide something as simple as this (a hygiene factor in Herzberg's terminology).

Following root cause analysis, it turned out that the reason there had been some shortages was not due to supply problems or unrealistic budgetary constraints but a number of redundancies in the maintenance team; this resulted in the remaining members of staff feeling over worked and lead them to prioritise their duties based on 'who shouted the loudest' which coincidentally in this organisation was always management.

This resulted in basic supplies being ordered infrequently and in larger batches that required as there 'simply wasn't sufficient time' to check current requirements.

Working through the analysis of this 'issue' further a member of staff came up with a simple solution using Kanban. By simply colour coding the hand towel holder (see below image) it was very easy for any member of staff to identify when a new order was required and could email the office manager.

(Proposed Kanban Idea)

If organisations are to truly embrace a Lean culture then why shouldn't we encourage the use of its principles in every aspect of the company, from the process to the premises? Particularly if this results in time savings, increased efficiency and a boost to staff morale.

Extreme Poke Yoke

It always amazes me how far organisation of all sizes will take the concept of Poke-Yoke (error proofing) within their business; I recently purchased a dual VGA Graphics card for my work computer (for those of you who are not that technically minded this is a device which will allow me to use up to three monitors at once on the same machine). The reasons why I took the time to buy this is the subject matter of a separate blog, however I can assure you that the reasons are rooted in lean principles (at least in my head anyway).

In the end, I purchased an item from China via an eBay trader. The item arrived within 5 days rather than the 14 day delivery time advertised and was in perfect condition when it arrived. Upon opening the packaging I found a note as follows:

"Please remember to leave us positive feedback. Remember for every bit of positive feedback we receive, we will donate $1 to Unicef"

This is, in fact a very inventive demonstration of how this firm was able to 'error-proof' the feedback aspect of the transaction.

Recently eBay has prevented sellers leaving buyers bad feedback in response to buyers leaving a negative comment, this ensures the feedback is a fairer reflection of the actual transaction, not simply 'tit for tat' positive feedback essentially taking the ability to influence customers feedback out of the retailers hands. Or does it?

The true sense of poke-Yoke is preventing defects, often incorrectly assumed to only apply to errors, as negative feedback could be considered a defect this is clearly Poke-Yoke at its most inventive, offering a charitable donation in response for a few clicks.

Whether the final donations are made is a different matter entirely and outside the scope of this blog, but it does force you to think about ways in which you can prevent defects on every aspect of the transaction.

Feel free to let me know of any other examples like this that you may have come across.

Batching, Heijunka or WIP?

I was recently involved in a project which involved optimising the value streams of a mortgage administration company. This company was of particular interest for a number of reasons; firstly due to confusion as to who was their 'true' customer, due to the nature of the organisation which carried out back office administration on behalf of mortgage lenders, for financial intermediaries on behalf of their clients.

To complicate this issue further the Financial Services Authority, who regulate the mortgage sector in the UK launched their TCF initiative (Treating Customers Fairly) two years ago which places responsibility on the regulated firm to ensure that all customers receive fair treatment through the entire product lifecycle, in this instance the regulator is referring to the end user (applicant/consumer); however this firm received 100% of its business from financial intermediaries and therefore they were considered the customer.

I argued that the clue was in the very nature of the organisation; to conduct outsourced administration for lenders and as such put the idea forwards that they are in fact the customer (from a lean perspective) and that there are in some instances several customer groups all with different value added requirements at various parts of the process.

The second reason why I found this particular organisation interesting was the way that new applications were processed. Upon receipt of an application form and supporting documentation (received in the vast majority of cases through the postal system), the cases would be piled up and keyed in batches, with the applications being processed the following day.

This batch process had been used as it was viewed as being more efficient; an administrator could be given a pile of cases to key throughout the day resulting in that member of staff achieving what was viewed as close to 100% efficiency. The fact that it meant that each new application had to wait in a 'batch' for up to a day was not viewed by the company as waste, primarily in my view as this waste was not measured or reported.

While talking through the lean concepts with employees, it was clear there were conflicting views from different interested parties; while the management viewed these batches as WIP (work in process) even though they had not yet 'entered the system' at this stage; staff regarded the system as being efficient as they were all very busy throughout the day while the introducing financial intermediaries viewed this batching process as wasteful and time consuming.

I would like to add a slightly different viewpoint; once value streams had been optimised, this process could essentially perform a similar function to the Heijunka box to control the rate that the work entered the system, as long as the administrators used the opportunity to identify and allocate different properties to each case to allow management (or ideally staff in a self regulated system) to prioritise and plan the workload for that day.

For example if large value loans were classed as one group, and perhaps smaller value loans allocated to another, the team could work on the cases which would bring about the highest value for both themselves and their customer (the lender); working on the lower value loans once they had cleared the first group.

The lesson here is that on the lean journey, nothing is ever black and white and different user groups will often have conflicting (and often deeply seated) views on a process as seen in the above example.

So, batching, WIP or Heijunka? You decide…..

Train to Gain?

Today's blog is going to focus on the issue of training within a lean organisation; from experience I find that companies tend to fall into two distinct groups when it comes to training:

1. Sniper
   
2. Shotgun
   

'Sniper' firms have a lean focus, usually as a result of the owner or Director(s) adopting a top down lean approach on behalf of the organisation, as such they concentrate 100% of their training efforts in educating its staff on lean tools, trying to 'batch process' as many staff as possible into one of their training courses (green belt/ black belt/ practitioner/ sensei certification).

In contrast 'Shotgun' firms often have not yet adopted a organisation-wide lean approach or if they have it is at grass roots level and has not yet had the full 'buy in' and acceptance from the management of the company. This approach tends to train members of staff on a wide range of disciplines from customer service, to complaints handling, marketing, management or specialist courses (i.e. accountancy or other specialist skills); these types of firms rarely have any dedicated resource to training in lean principles by the very nature of the organisation.

So which is the right approach? The answer (as I am sure many of you have guessed) is that there is no such thing as the right approach; this would depend entirely on the organisational culture and the industry context, however I will say while many lean consultants would err towards what I have termed the sniper approach there are a number of benefits for the alternative.

By training up members of staff in areas other than lean, employees can feel engaged in the organisation, in addition the company can adapt the training requirements to the needs of the individual and the company which provides a wider skills base than offering lean training in isolation. In addition this can greatly influence kaizen activities as those involved will be able to introduce ideas to the kaizen committee that would not have afforded themselves in a 'lean only' organisation; these ideas will be of particular importance where the member of staff has received specialist training for a 'specialist' product for example, if you were producing accounting software, it would make sense if you included members of staff who were qualified or trained in some other way in accountancy principles. Do not confuse this with obtaining true VOC (Voice of Customer) data.

Lean principles are not threatened in any way by the introduction of other management techniques or knowledge of other disciplines, as such it can be healthy for organisations to tailor their training programmes to go beyond the 'vanilla' lean training.

'Respect for people' is a core part of the Lean philosophy, and how much more respectful can you get than investing time and resource into your employees to develop them in a way that not only meets business objectives, but allows individuals to flourish and realise their true potential?

With a workforce like that, can you begin to imagine what miracles could take place in your organisation?

One Sandwich Short….

…of a picnic? A phrase which will be familiar to most (apologies to our American cousins reading this), I'm not sure if this title describes the subject matter of today's blog or if it perhaps more suited to me.

For the last two weeks I have been on the Cambridge Diet, which for those of you who are unfamiliar with this involves having approximately 600 Calories per day in the form of 4 milkshakes….. that's right, no solid food!

As part of my health plan I have also decided to walk to work and have invested in a pedometer so I can gage exactly how many steps I take during the course of a day with the aim to ensure that I exceed a minimum of 10,000 steps.

I managed to find the device I was looking for with all of the necessary features in particular I was after a discreet device that was not brightly coloured (pictured below).

After wearing it for a number of days I discovered one fatal flaw….. the reset button (used to 'zero' the device) is located at the top of the item, which when attached to the user's belt keeps on resetting whenever the users sits down!

After much frustration at this I have put this down to a design flaw; one which could have been prevent had the manufacturer applied Poke Yoke (error proofing) concepts in the design of this item. It is such a shame that this one flaw has essentially enabled this item useless.

The challenge here is that as a customer I did not put usability high on my list of requirements, assuming that such a simple device would be very simple to use.

So how can manufacturers rely on VOC customer data to begin the Poke Yoke process if customers don't realise what they want?

There are various solutions, and I would suggest in this instance prototyping and using the device personally before beginning the manufacturing process, alternatively the use of focus groups prior to launch and then again after a defined period preferably having issued this group the device to test before gathering further VOC data.

Insurance Companies in the UK have experienced a similar phenomenon where the features which are important to customers upon purchasing an insurance item are typically ranked as follows:

1. Cost
   
2. Cover
   
3. Service
   

However, when the customers' needs make an insurance claim their priorities have shifted dramatically, in most cases looking for a quick resolution to their problem (service) as follows:

1. Service
   
2. Cover
   
3. Cost*
   

Only by ensuring that all of the users requirements are met during the lifespan of the product is the only way to ensure that the customer received the value they deserve; in particular this is where Kaizen improvement events are invaluable for Lean enterprises.

Maybe you have a few similar experiences you would like to share, please let me know…

p.s. for those of you who are interested I have lost 10lbs.

*Source Legal and General

Who is your Customer?

I was recently reading a business article about how a retailer managed to increase productivity solely by training its staff on customer service, particularly the concept of the 'internal customer', putting mandatory service standards in place for the department to meet its service targets (which by the way were very different to its financial targets).

They basically process involved the process owners (or workers as the article described) listing all of the internal departments they interacted with such as purchasing, sale & marketing etc, then using a flip chart and a marker they listed all of the attributes they would look for if they were in the shoes of their internal customer.

So, here we have a business looking to make process improvements using VOC (Voice of Customer) data to streamline their business, could this be described as Lean? In a word, no.

There are several clues in the text as to why this is certainly not a lean approach, firstly they have involved a number of different departments, and have used basic empathy to identity the other departments requirements (guesswork), in addition they have not looked at any cross functional process (or the value stream as a whole), rather the interaction between each company department.

In addition they have curiously defined the customer as 'anyone they interact with', surely as disciples of the Lean tradition, many of us are reeling at the thought of this; I am often asked how should a business determine who the customer is and in writing this I am reminded of the parable of the Good Samaritan found in the Gospel of Luke, chapter 10, verses 25–37:

"…he asked Jesus, "And who is my neighbour?" [after explaining the parable of the Good Samaritan Jesus asked the man;]

"Which of these three do you think was a neighbour to the man who fell into the hands of robbers?" The expert in the law replied, "The one who had mercy on him." Jesus told him, "Go and do likewise."

I would argue, that your customer is whoever pays for the goods or service.

This could include a wholesaler, as retailer and a consumer in a manufacturing example. Equally this could apply to a financial institution, an intermediary and the end customer and in instances where the value stream from origin to end user is more complicated then VOC data may be required from each of the customer groups.

So is it wrong to think of other business functions as internal customers? Not necessarily, but the concept of a customer tends to be perceived as a one way relationship; lean methodologies usually require a partnership approach if they are to realise any tangible, lasting benefits.

By all accounts this approach worked very well for the firm and seemed to have a positive motivational effect on the workers, which in turn has improved productivity, however the approach chosen is not lean as this does not serve the true customer.

The lesson here is to not underestimate the importance of your people, this is also an intrinsic principle of lean, Toyota themselves claim to achieve outstanding results, from ordinary people, operating perfect processes. In addition you need to make sure you are always aware of who your customer's really are….

Change for the better?

I came across an interesting post from People Management (the member magazine of the Chartered Institute of Personnel Development) which stated that to success in business, it is not the biggest of the best in class that success but those who are able to successfully (and in some cases continually) adapt to change:

"In January 2008, there were 875 million internet shoppers worldwide; in 1993 there were none. Success is no longer a matter of being the fastest or the fittest, but rather is about being the most adaptable."

While I understand where the author of this article is coming from, I think that the above supposition is missing one very vital element in the equation;

'the ability to adapt to the changing needs of customers to continually deliver customer value'

Now, if we examine this a little closer, we are saying that the ability of a business to adapt in still fundamental in today's constantly changing business environment, however being able to adapt in itself is not sufficient if the business is not delivering the value that the end customer desires.

To give you an example, supermarkets in the UK such as Tesco and Sainsbury's have both managed to successfully develop and deploy online shopping, allowing customers to 'pull' their orders in the exact quantities required at a time that suits them, while the ability to order groceries in this way is important to hundreds of thousands of UK consumers, you could not assume that this would apply to all online food deliveries, i.e. fast food; consumers do not want to order a Big Mac™ for Saturday morning between 8.00 – 10.00 am, as such MacDonald's has not simply followed suit. it has however developed a web presence which allows users to find out more about their offering including nutritional information on their products which allows customers to 'pull' information according to their requirements.

So the lesson to learn here is that companies who are able to adapt quickly will not be assured success unless in doing so, they identify (or even forecast) the changing (and future) needs of their customers and in doing so optimise ways of delivering this value.

Flying in the face of the Credit Crunch

I'm going to begin this blog with another quote from one of the magazines I regularly follow, Mortgage Strategy, who recently published an article about the Newcastle Building Society (UK):

"Newcastle Building Society which has witnessed substantial growth over the last year, increased staff numbers across its branch network and main offices to 1,300 from 1,100 this time last year, with many of the new staff being ex Northern Rock employees."

The most impressive factor here is that the NBC has managed to achieve 'substantial growth' while many of its competitors are rationalising and downsizing.

Are these results due to the successful implementation of Lean? Sadly, no; but it does ring alarm bells in my mind, during what has been described as the worst liquidity crisis of the last 30 years that the Newcastle Building Society are looking to expand rather than to optimise.

If this is part of a short term plan to cope with increased productivity as a result of a sharp business increase possibly due to a number of their direct competitors going out of business, then no one could blame them: however I can't help but ask, will the NBC use this opportunity to review its processes, improve quality and reduce lead time of its range of products allowing it to adapt quickly in these changing times, or will they simply add to their bottom line, essentially carrying more weight and not evolving as an organisation. In times like these only the lean survive, BIG is not necessarily beautiful.

Let's hope that just because the NBC has managed to escape the negative impact of the 'credit crunch' that they haven't ignored the hard felt lessons learned by the wider banking industry.

Will this be the turning point for the NBC, taking advantage of less competition and relatively cheap labour due to a oversupply of 'financial services casualties'; only time will tell….

 

When will they ever Lean?

It always amazes me how large, well established companies have managed to remain completely oblivious to the unparalleled success experience by business across the globe who have successfully employed Lean principles.

Below is an extract from an article released today by Mortgage Strategy; following Nationwide, the UKs largest Building Society, announcing the closure of 5 of its processing centres:

A spokeswoman for Nationwide said: "In order to improve service, we are looking to streamline our mortgage processing centres. Intermediaries can expect to receive the same level of service as before."

Matthew Wyles, group executive director of non-retail at Nationwide, added it was an established fact that larger processing centres are more efficient and more capable of delivering a consistently high level of service. He added: "Small units are more susceptible to peaks and troughs in activity.

I don't know about you, but this raises a few questions in my mind. Firstly I would like to know if they first consulted their customers to understand what they felt was important to them (VOC- Voice of Customer Data)? Did they go onto the streets and speak to their members? Did they conduct research with the mortgage intermediary market? Do their customers feel they will be served better by closing processing centres?

My pre-supposition is that this was not based on VOC feedback, rather on traditional P&L accounting principles and VOS - Voice of Stakeholders (as Nationwide are a Building Society they are 'owned' by their members rather than shareholders).

Secondly, Nationwide are looking to 'streamline' their processing centres, which could be translated as 'optimising the value stream' in Lean terminology; however there improvement efforts appear to be based on the "established fact that":

"… larger processing centres are more efficient and more capable of delivering a consistently high level of service"

When was this fact established? Who established this? Why has this break though in efficiency not yet been shared with the rest of the Lean World?

When you use the voice of stakeholders as the bases for improvement you end up doing exactly that, improving things in the eyes of your stakeholders, and not your customers; what follows is a decline in customer loyalty, drop in profitability and ultimately the need for further closures in an attempt to reduce your fixed costs in order to satisfy stakeholders. It's a shame that so many efforts to 'streamline' services result in jobs losses, worsening standards of service and in some cases the end product is what I would call 'corporate anorexia'.

It seems that this if public relation's spin on the truth that it appears that Nationwide, despite their size are as susceptible to the effect of the 'credit crunch' as anyone else.