A way to think about Lean by Jeff Liker

The Toyota Way to Lean Leadership

The following materials are in Jeff Liker's online course, and the book Developing Lean Leaders at All Levels: A Practical Guide .

 So the philosophy is really a broad picture of what will it take to make our company great for the long term so that it will outlive us and continue to be great. Then we have an idea of satisfying customers and now we need a way to do that and we need a delivery mechanism. The delivery mechanism is a whole series of processes in your organization, whatever organization you have, whatever your customers want. In Healthcare there is many, many different processes that directly affect the customer for example. So being operated on that's a very value added activity. Having a blood test taken and then quickly getting the results of that blood test will add value. Those are different processes that have a direct impact on the patient, in addition to that there are many supporting processes, there are people who have to prepare the operating room for the surgeon. There are many processes all of them can be improved and they can be improved by reducing lead time, they can be improved by reducing variation and making more predictable product that can be improved by better understanding what customers wants and better providing that. So there is a process and there are some tools in the toolkit of Lean that will help you to improve that process of better deliveries value to the customers.

These processes, unfortunately to make our lives difficult, cut across what we normally think of as different departments. So in a vertical organization life is pretty good, I'm the boss, I know what I want from you, I'm the purchasing boss, you're a purchasing agent, and I want one thing; lower cost components, of course, that are high quality and delivered on time, that's a given. So I want my suppliers to perform but I want them to do it at a low cost. I could then measure that very easily and I can judge you as a subordinate based on whether you're delivering that. You as a subordinate know exactly how you're measured and what you need to do is within your control. You need to get a lowered piece part price, you know how to do that, you negotiate hard with suppliers and you know that you can play some games about how you categorize parts and there's various ways to make the numbers look good even though, in fact, you haven't reduced cost. 

So supervisors are managing people to the specific functional target within that chimney and they feel in control because they're measuring a few simple things they control. The people know the game that they need to play to make the numbers look good. That is actually a type of culture. It's a culture of making the numbers of rising in the hierarchy and it becomes a purchasing culture or a sales culture. The customer frankly just doesn't care; the customer could care less what kind of games you're playing with the suppliers. The customer cares about the product you deliver to them, the cost, the quality, the innovation and the design of the product, how well they are treated when they have a problem, so they care about the service organization, they care about what impacts them. What impacts them is not only happening in one department and often what impacts them depends upon collaboration across those departments, so for example, if Purchasing is trying to get the lowest price possible for each piece and Engineering is trying to solve a specific customer problem which requires an exotic part that only small numbers of companies in the world can make well. They're going to be in conflict with Purchasing because Purchasing wants the low cost producer and Engineering wants the high quality producer that capable of making this special part. So you start to find horizontally is conflict across the value stream that the customer actually cares about. 

 The horizontal focus therefore become processes that cut across with a purpose in mind and the purpose is to satisfy customers, it's overall quality, cost and delivery as well as internally safety and morale. So you have a bigger set of variables to try to manage to and you have to work with other people and suddenly lives not so fun and easy. You're going to have to think, thinking isn't fun, it's hard work you have to talk to other people and cooperate with them that could be a real pain and really the only way you can do that horizontally and actually get better has an organization, this idea of Continuous Improvement is if you're solving problems because problems always come up. They come up inside the chimney, inside of Purchasing but they come up big time across the company. 

 So now you want these same people who have for years figured out how beat the system and lie and cheat, to suddenly become honest and tell you what their problems are.  This is a big cultural change. So now people's ingenuity you want to be channeled, the same ingenuity that allow them to make the numbers look good even though the process terrible, that ingenuity is going to be used to make the process a great process. The supervisors instead of just controlling people through numbers are actually going to work with people to solve problems. You can see that this is a dramatic, you're basically turning the organization outside and dramatically changing the way people think, what people do and the way they relate to each other and the way they think about their role in the company. Not a trivial thing, the tools like value stream mapping of used properly can really help a group of people understand the current condition, how badly they're working together across organizations, where the waste is and what they have to do to work more effectively to satisfy customers.

Here's a way of thinking about Lean,

we start out by asking what is the process and we take in some things and we put out some things, so there's inputs and outputs. Now in a traditional process the inputs is in the form a bundle of inputs, a batch, that is inventory. Again that could be information inventory, we got a big inbox on my email or I'm getting all these reports from Engineering or all these test results from the laboratory, or it could be a small amount of inventory, but usually it's pretty big. Then we keep on producing based on our own logic, what we have available to us, what our priorities are and then we push of stuff, information, product, service and it waits for somebody else to pick it up and use it. So it's inventory in and inventory out of the process. 

So we can build on that and what really happens in company is that there's of processes and their all kind of independently working based on their metrics, based on what they do, Purchasing is purchasing, the Stamping Department is making steel parts a certain shape, the Paint Department is painting them, the Accounting Department is generating reports. So you have all these disconnected processes and they're all working from inventory and are all building to inventory. But one thing we know about inventory, we learn that from Taiichi Ohno the founder of the Toyota Production System, is that inventory hides problems. As long as I'm busy working and doing stuff and I'm not directly connected to my customer, my immediate customer, I can be happy and dumb and ignorant. I don't have to know that in fact, I'm not providing information in a good form and they're struggling to figure out what I was really trying to say and where in this report is really what they need and they're all doing that, I could be ignorant of it and think I'm doing a great job and I'm busy. I'm fighting fires. I'm working and I'm a good person because I'm doing a lot of good work. So the inventory and the disconnection between these process actually hides the problems, allows people to stay within their silo.

So the bigger that buffer, whether it's a time buffer or a physical buffer or a buffer of a lot of different reports or a lot of different analysis results, that gives you some breathing room to solve the problems, to be delayed. It literally when you get to one-piece flow you are generating exactly what the next process needs, what the next person needs. You're getting exactly what you need and when anybody stops everything stops and it's immediately visible and suddenly everybody's looking at you, because you stopped the process. So in that case that's when the problems are really visible. Now the problem could be small, medium, large that's what we mean by that. It could be that there's basic problem in how we schedule the whole operation. It could mean that the parts aren't oriented right and I pick them up wrong and I put them in the opposite direction and therefore cause a quality problem. So there's a lot of problems and then you have to prioritize those problems.

Part of prioritizing is not simply we work on the big problems and we ignore the little problems, it's also an assignment process that we assign priority but we also assign who works on. The little problems can go to the work group, the bigger problems might have to go to Senior Management and to specialty organizations like Planning and Scheduling. So you're sorting and you're assigning and then people have to take on the responsibility to then go through the problem solving process. 

 So next step after we have problems and they've been surfaced and we have some prioritization and we show Hoshin Kanri there as what we'll talk about later, that's a method for prioritizing, it's my goals for the year, it's the annual plan that helps me decide what I should focus on, what's more important. Now we're dropping them into these plan, do, check, act, the little coins are plan, do, check, act circles and then we have this bucket of problems that are low priority but we're going to put off to the side, so we're not solving all the problems. Now we’ve got to cycle through plan, do, check, act. Then the next step after that is that we have to, in the process of doing plan, do, check, act, we are doing two things, one is we're improving the processes themselves to make them more Lean, more consistent, higher quality, on time and we're at same time developing people and people are doing the problem solving and as we mentioned if there's visual management like board showing there and people seeing the board and seeing where they're red and where they're green, where they're yellow, then it clear where there are problems and that can help and the right people with the right leader can then start to use the slow thinking good type of problem solving process, potentially solve the problems. So then what's going to happen is that fewer problems are going to bubble up because we solved the problems. Then what we're going to do is stress the system by actually reducing the inventory, making the processes even more connected and now you've got a day instead of a week to deliver this. Tomorrow you're going to have a half day and then you're going to have an hour and as you compress the process the steps become more tightly linked and the problems even smaller problems will come up really fast. So really what you often see is that, we talk about low hanging fruit, the low hanging fruit are the big problems that just jump out at you and as you solve those big problems you get into smaller and smaller problems, for example. Standardized work is at a very detailed level; it's dealing with very small problems whereas over in scheduling is dealing with a very big problem. But you eventually need to get down to those little problems to really get the almost perfect quality that many companies want. 

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