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April 2015 www.leanmj.com DO WE NEED LEAN? $65 – £45 – €50 Organisations and interviews featured in this edition include: Hayward Tyler, Diakonhjemmet Hospital, Plexus Corp, Nicholson Consultancy, Bill Bellows, David Ben-Tovim and Torbjørn Netland. IN THIS ISSUE: Do we have to fail? Does a start-up need lean from the very beginning? Industry 4.0: where does it leave lean? Exploring the new technology and where it leaves lean. Don’t tell them it’s lean! How an unnamed technique helped revolutionise a hospital. Redesigning healthcare processes from Google What can lean healthcare learn from the one of the world’s most successful companies? Exploring lean’s role as tech takes over Issue 3 Volume 5
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Jul 21, 2016

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Page 1: LMJ April 2015

A p r i l 2 0 15 w w w . l e a n m j . c o m

DO WE NEED LEAN?

$65

– £4

5 –

€50

Organisations and interviews featured in this edition include: Hayward Tyler, Diakonhjemmet Hospital, Plexus Corp, Nicholson Consultancy, Bill Bellows, David Ben-Tovim and Torbjørn Netland.

IN THIS ISSUE:Do we have to fail?Does a start-up need lean from the very beginning?

Industry 4.0: where does it leave lean?Exploring the new technology and where it leaves lean.

Don’t tell them it’s lean!How an unnamed technique helped revolutionise a hospital.

Redesigning healthcare processes from GoogleWhat can lean healthcare learn from the one of the world’s most successful companies?

Exploring lean’s role as tech takes over

I s sue 3 Volume 5

Page 2: LMJ April 2015

2

Dear reader,

Lean doesn’t often get much of the limelight, but here at LMJ we’re determined it have its moment to shine. That’s why we’re launching our inaugural LMJ Lean Top 25.

The Lean Top 25 is designed to celebrate the lean movers and shakers who have helped to further the cause of lean and continuous improvement with their passion and dedication. Nominations have been open during March and February and members of the editorial board were invited to advise on who they thought were the best candidates.

There were several criteria: candidates must be a lean practioner involved in an organisation where they were implementing lean, must be working in Europe and could not be an academic or a consultant.

The three reasons they could have been nominated were if they came under one or more of following categories: Involvement and waste reduction: someone who is passionate about lean and has created or managed a lean implementation or continuous improvement change that saw a significant rise in profit margins or increase in production.

Championing: a person publicising lean and helping its reach grow. Someone who is driving more knowledge of lean and creating awareness of continuous improvement.

Innovation: a lean practioner whose ideas and enthusiasm have led them on a new path of lean, whether it be a minor tweak to the existing way of implementation or a revolutionary ideas that has been a game changer.

The Top 25 will be announced at the LMJAC in Amsterdam in July and will be covered in the LMJ with explanations of why they were chosen. We hope you’ll enjoy reading about those in lean who have taken it to another level and encourage everyone get in touch with their suggestions and ideas.

Back to our usual musings: this month’s issue takes on the theme of whether lean has had its day. Andy Hyde, presents and article on how a successful lean implementation was introduced without using the word.

Other article include a fantastic case study from Hayward Tyler’s Martin Clocherty on the company’s growth strategy and how lean helped them achieve it and Dave Maddison from Plexus Ltd, who discusses how lean helped the firm. Andy Nicholson, meanwhile, comes to LMJ with ideas on whether a start-up needs to be lean? Is it better to embrace it from the word go or wait until the business begins to hit hard times before it decides to start a lean journey.

As well as this we have board members David Ben-Tovim and Torbjørn Netland discussing ideas of technology and whether lean has a place in these modern worlds. David’s article is what healthcare can learn from Google, especially in incorporating lean in to public hospitals. While, Torbjørn focuses on Industry 4.0 and if it leaves and room for lean.

We also have all out other usual features, Bill Bellows second part of his tour de force on a brief history of quality, and the events and social media pages.

Andrew Putwain, Commissioning Editor.

E D I T O r ’ S L E T T E r

E D I T O r I A LCommissioning editor Andrew [email protected]

Managing editor Victoria [email protected]

Editorial directorCallum [email protected]

D E S I G NArt editorMartin [email protected] Cole [email protected]

In order to receive your copy of the Lean Management Journal kindly email [email protected] or telephone 0207 401 6033. Neither the Lean Management Journal nor Hennik Group can accept responsibilty for omissions or errors.

Terms and ConditionsPlease note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

Page 3: LMJ April 2015

CONTENTS

APrIL 2015

CO

NT

EN

TS

04 Lean News

05 Introducing the editors

06 IntroJacob Austad presents this month’s introduction.

P r I N C I P L E S & P u r P O S E7 Where do we go from here? A look at where lean stands in electronics manufacturingDavid Maddison, continuous improvement director at Plexus, a global firm tailoring solutions to integrate product design and manufacturing, speaks about their continuous improvement efforts.

10 Do we have to fail?Andrew Nicholson, managing director of Nicholson Consultancy, shares sure-fire tips on how start-ups needn’t face economic uncertainty if they embrace lean from the get go.

12 Redesigning healthcare processes from GoogleLMJ board member David Ben-Tovim presents this paper on what can be learned from the business practices of Google to the world of lean and healthcare. Even though the tech giant’s policies of running a streamlined model with only room for profit making endeavours is surely out of step with public healthcare?

14 Don’t tell them it’s lean and you’ll get away with it.The Diakonhjemmet Hospital in Norway’s underwent a lean transformation without putting a name to the operation. Andy Hyde, from the Department of eHealth and Technology, tells us how.

S P E C I A L F E A T u r E S 1 8 Is lean its own worst enemy?LMJ explores where lean is failing in public healthcare.

2 2 Industry 4.0: where does it leave lean?Academic and LMJ’s own Torbjørn Netland teaches us about the present arguments on where the digital revolution can incorporate lean and how they can feed off each other.

2 4 C A S E S T u D y Hayward Tyler: Pumping it upMartin Clocherty, manufacturing systems director, explains how Hayward Tyler, uses programmes and technology to innovate and create new growth opportunities.

2 6 L E S S O N S F r O M D E M I N G A brief history of quality, part twoBill Bellows shares part two of Deming’s ideas on quality in his new column.

2 9 L E A N O N L I N E We bring you all the latest lean news and discussion from the world of social media.

3 0 E V E N T SFind out about the latest lean events from all over the world.

Elizabeth House, Block 2, Part 5th Floor, 39 York Road, London, SE1 7NQT +44 (0)207 401 6033 F 0844 854 1010 www.hennikgroup.com.

Lean management journal: ISSN 2040-493X. Copyright © Hennik Group 2015. 3www.leanmj.com | April 2015

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LMJ

If you have any news that you think would interest and benefit the lean community please let us know.

Send submissions to the commissioning editor Andrew Putwain: [email protected]

rICHArD FATHErS APPOINTED SPECIALIST MAINTENANCE CONSuLTANT

Richard Fathers joins MCP having worked within the UK food industry for over 17 years, with Tinsley Foods, where he covered a variety of roles including chief engineer and general manager.

The Solihull based consulting firm has been in operation since 1976 and now has several training centres around the UK as well as global partners in the USA, Portugal, Spain, India, Thailand, South Africa, Germany, Austria, Singapore and UAE.

Fathers’ role followed a segue into operations in engineering and manufacturing for five years, including business services manager responsible for environmental/lean management team.

Most recently, Fathers has worked as chief engineer with Greencore Foods, Spalding.

EEF LAuNCHES LEAN ACADEMy

EEF has established a new Lean Academy programme to give SMEs the same access to transformational techniques as their larger peers.

EEF says the new programme will be built around a full-scale, configurable and transportable modular assembly line that can be re-configured daily, and thereby challenge a company’s employees as they work through a 12-day programme.

Steve Chicken (pictured), manufacturing growth director at EEF, said: “this overcomes a key criticism of previous attempts to provide Lean Academy training to SMEs, which is practical exercises were limited to desk-top scale using Lego or three-pin plugs.”

The new Academy can be run at an individual company’s premises or at EEF’s technical training centre in Aston.

Dr Chicken said: “This is vital step forward in giving smaller manufacturers the same access to game-changing techniques to boost efficiency and growth as their larger peers.”

For LMJ’s review of the new service go to: http://bit.ly/1JlqgxR

STuDy SHOWS BENEFITS OF LEAN

A new study from an inter-university team of Melbourne researchers investigated the application of LSS in a large hospital to see if it could reduce the time to assess and stabilise patients in the emergency department. The team studied if LSS assisted in increasing the flow of patients through the hospital, from their admission, transit through various units to their discharge into the community without increasing the workload of staff.

The researchers found balancing such conflicting flows was important to ensure the smooth running of an ED, to limit the amount of time patients are waiting for a bed and to reduce work and stress levels.

Management expert Professor Greg Bamber from the Monash University Business School said LSS was developed to improve productivity and efficiency of automobile and manufacturing industries.

“In recent years hospitals have been trying to adapt LSS processes to streamline processes and improve costs.

“There have been earlier claims about work intensification experienced by employees in lean manufacturing. Therefore, we studied the outcomes after transferring LSS concepts into a hospital context, to streamline processes and improve costs there.”

The project found introducing LLS in hospitals was more challenging than in manufacturing, but it can help to improve patient flow from the emergency department to hospital beds.

Implementation also allowed the hospital studied to open more beds as well as install software for monitoring bed availability. At the ward level opening more rehabilitation beds, which improved the discharge process, enhanced patient flow.

Professor Pauline Stanton from RMIT University cautioned that to be successful with innovations such as LSS, hospitals needed to have sufficient resources excellent implementation processes.

Page 5: LMJ April 2015

Our experienced editorial board members contribute to the journal providing comment against articles and guiding the coverage of subject matter.

EDITOrS

More information on our editorial board, their experience, and views on lean is available on the LMJ website: www.leanmj.com

I N T r O D u C I N G y O u r

Paul Hardiman industry Forum, united Kingdom

René AAgAARdTelenor, denmark

RenÉ AeRnoudts Lean Management Instituut, the netherlands

Jacob austad Leanteam, denmark

Bill Bellows President, in2:inThinking Network

DaviD Ben-Tovim Flinders medical Centre, australia

John Bicheno University of Buckingham, United Kingdom

Gwendolyn GalsworthVisual thinking Inc., Usa

Brenton Harder Commonwealth Bank of australia, australia

Alice leeBeth israel Deaconess Medical center, USA

Sarah LethbridgeCardiff business School, United Kingdom

Jeffrey K. LiKer University of Michigan, USA

joseph parisoperational excellence society

Zoe RadnoR Loughborough University, United Kingdom

nick rich Swansea University, United kingdom

Ebly SanchEzVolvo Group, Sweden

Peter Walshlean enterprise australia

Peter Watkins Gkn, United kingdom

wendy wilsonwarwick Manufacturing Group, University of warwick, United Kingdom

Torbjørn neTlandnorwegian University of Science and Technology (nTnU), norway

Steve YorkStoneedinburgh napier University, United kingdom

5www.leanmj.com | April 2015

Page 6: LMJ April 2015

Looking to the future

I N T r O D u C T I O NW r I T T E N B y J A C O B A u S T A D

6

current business models might not work in the future, because to stay in business in a new and better tomorrow we need to change and adapt. As people change, the world and business environments also have to change and it will happen in a new kind of symbioses with unclear boarders. New generations will use current technology in new ways and develop new technologies creating more capacity and flexibility to fulfil customer needs.

I completely agree with Torbjørn Netland we assumedly will see less physical lean tools (or any other tools for that matter) and still will need to further explore and use the principles. Once, knowledge was considered to be power – today, knowledge sharing is power and whenever someone post a new question or paint the picture of a new strategy we just get more information to consider and bring into our part of the world.

Personally, I hope that with Industry 4.0 we finally will be closer to ending the constant discussions on how to apply lean tools and instead focus on understanding what problems to solve and to solve them with an end-to-end focus and to the benefit of all stakeholders.

Let’s agree to share more ideas, to focus more on the total supply chain and continue to build on and remember the ideas that lean was built on.

Let the future begin with painting the intelligent factory – whatever it is.

Since the dawn of days, humans have strived to answer three fundamental questions; from

Where do we come from? Why are we here? and Where are we going? This edition of LMJ does not claim do have any of the answers, but in a world of constant change we should try to take advantage of the underlying human curiosity when we look into the possible future with Industry 4.0

If we want to be part of the creation of a better tomorrow we should start by acknowledging the journey already done and thereby know that the past plus 100 years has been quite a rollercoaster in terms of speed, new inventions and (re-)use of knowledge. The big break-through’s came from people, organisations and countries that had to do something to change their current state and/or wanted to explore possibilities.

We all know about the industrial revolutions from mass-production to individual customisation and one-piece-flow taking old ideas into a new perspective and further. It was perfectly framed by Robert Kennedy stating:

There are those who look at things the way they are, and ask why… I dream of things that never were, and ask why not?

In this edition of the LMJ we get the opportunity to look into the future and dream new things. We are reminded our

Page 7: LMJ April 2015

P r I N C I P L E S

& P u r P O S E

David Maddison, continuous improvement director at

Plexus Corp, a global firm tailoring solutions

to integrate product design and manufacturing speaks

about the continuous improvement efforts.

Both lean and six sigma are terms associated with manufacturing in all its forms for a number of

years. Whilst Henry Ford began to design his assembly lines in 1910s on flow production principles, it is recognised lean as we know it today started with the development of the Toyota production system (TPS) in the 1940s.

In the face of continual customer pressure for cost reduction, performance improvement and to maintain competitive advantage, it has become a necessity for electronics manufacturers to drive continuous improvement in their business performance.

Electronics companies who have successfully integrated lean six sigma (LSS) into their organisations have learned developing a LSS culture is not just about the tools and techniques. It is more importantly about involving everyone in their business to help drive the change.

Undoubtedly the benefits can be attributed to the effective use of LSS methodology, principles and tools. However, sustainability can only be achieved by creating a culture of employee engagement where people at every level

Where do we go from here?

7www.leanmj.com | April 2015

r E A D A B O u T :

The global company’s agile development approach

Culture of focusing on eliminating waste and creating efficiencies

A look at where lean stands in electronics

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8

company towards lean six sigma adoption. Organisational culture is influenced by the dominant leader/leadership style, national/local culture, business size/demographics, existing business practices and type of products or services.

Convincing the dominant leader or leaders is an essential step in gaining executive sponsorship for cultural change but, to be successful, all of the other cultural influences need to be addressed. The introduction of cultural awareness programmes for executives, change leaders and managers is used by some companies to create understanding and competence in this area.

Another area of debate is the confusion as to whether lean or six sigma is the better way forward. In reality the two are complementary. Lean is focused on identifying value in the eyes of the customer (what they are prepared to pay for) and removal of waste (what they are not willing to pay for). Whereas six sigma takes a structured approach to reducing

variation in processes to ensure products are manufactured without defects.

As business models and technology become more complex and time to market expectations are reduced, a company wishing to maintain a competitive

advantage needs to embrace the application of both lean and six sigma principles. This should be introduced throughout the entire organisation and through the product life cycle from design through to obsolescence.

Within the electronics manufacturing arena improvement focus areas will

of the organisation embrace and believe in the change.

This not only involves employees participating in kaizen activity. It is also about job satisfaction, job variety, job relevance, understanding of business vision and strategy, personal development, reward and recognition, but most importantly, listening and acting upon the voice of the employee. This approach takes a significant amount of time and, to be successful, requires an understanding of change psychology and the human reaction to change. However, it is the key to driving sustainable change, though it can require time and effort with little immediate return.

Many manufacturing companies have tried to replicate the Toyota lean principles without considering the psychological impact of issues, such as implementing new working methods, will have on their employees. This has led to a failure to sustain LSS. To prevent this it is critical for the executives and leaders who are driving the change in operating philosophy towards LSS to understand about the human reaction to change. This reaction directly impacts the effective management of how these changes are introduced and will ultimately define whether implementation is successful.

Surprisingly, every year industry spends millions of dollars educating people how to use LSS tools and techniques, but there is less emphasis placed upon equipping change leaders or agents to deal with the human side of change. It is people who will make the change happen. Therefore, educating the change leaders it will provide immense benefit to the user.

Understanding and effective management of the influences driving organisational culture is another critical success factor that needs to be addressed in the overall context of moving a

understanding and effective management of the influences

driving organisational culture is another critical success factor that

needs to be addressed in the overall context of moving a company

towards lean six sigma adoption

W H E r E D O W E G O F r O M H E r E ? D A V I D M A D D I S O N

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P r I N C I P L E S

& P u r P O S E

Supply chain

management is increasingly being focused upon and is a key area with a significant

impact on the value stream

ultimately differ, depending upon the dynamics of the business. For example, reducing the cycle time of a product by one second in a low mix high volume environment will produce a significant benefit. Conversely, in a high mix low volume environment the same approach will produce minimal benefit and the focus will be more around driving optimisation of equipment changeovers.

The question is how far does each company take it and what does the future of LSS hold for the electronics industry?

Over the last 30 years, the manufacturing industry globally has increasingly driven to be more effective and reduce operating costs. Consequently, lean six sigma improvements within the manufacturing area itself do not typically present as big an opportunity as those found in the rest of the value stream. Increasingly the emphasis in mature LSS manufacturing operations has been around achieving zero defects (especially in the aerospace, defence and medical sectors) and creating products that can be manufactured on processes engineered to run an optimal capability level and produce little, if no, variation.

Consequently this has switched the emphasis for designers to focus on design for LSS and create defect free products; equipment suppliers to develop processes that can operate at six sigma quality levels and suppliers to provide components and materials that fall within six sigma quality levels.

Despite this focus there is still a lot of room for improvement. Electronics manufacturers who still employ receiving inspection and testing of purchased product as a means of protecting customers from receiving poor quality need to review their whole supplier development strategy from a LSS perspective. The emphasis in this area has to be to drive improvement back into the supply base and engineer in the quality of supplied product and consequently reduce the need to inspect and test.

Supply chain management is increasingly being focused upon and is a key area

with a significant impact on the value stream. LSS development of the supply chain can lead to significant benefits in many areas; e.g. improved delivery performance, inventory reduction, inventory holding space reduction, reduction of working capital, cash cycle improvement and lower operating margins.

C O N C L u S I O NWaste and variation are everywhere. They exist in every process and every interaction between humans, systems and functions. They create performance issues, soak up cost and affect customer satisfaction, health and safety and potentially job security.

Adoption of lean six sigma principles goes a long way towards identifying and removing waste and variation; but to be sustainable, we need to ensure we create an environment where continuous improvement is a part of the organisational culture. Only then will LSS be successful within electronics manufacturing.

On a final note; after over 70 years of lean at Toyota, the company still believes it has a long way to way to go to remove waste entirely from its value streams. So there is a lot of room for further improvement within electronics manufacturing.

9www.leanmj.com | April 2015

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Andrew Nicholson, managing director of Nicholson Consultancy Ltd, presents arguments on when best to introduce lean. Does a company need it from day one?

Do we all have to fail before we can succeed?

We might think the simple answer is to learn from other people’s mistakes, but current thinking is lean is situational – we can transfer the skills, but we need to tailor our approach for each organisation and each unique set of circumstances.

The question of where lean fits into a business strategy mirrors various conversations I’ve had recently with friends and colleagues who are business owners and entrepreneurs.

We’ve all made many mistakes over the years and most of us would like to think we wouldn’t repeat them. But how do you get it right until you’ve had the experience of trying it and getting it wrong? The challenge is to create a business that is right first time – and having done that to

Do the absolute minimum you need to do with a new product or process to see if it works

The value of going lean is easy to quantify: in forensically examining a firm experiencing

problems, lean experts can identify what is going wrong and suggest solutions for the workforce to put in place.

But what if it is a new company, that doesn’t yet need a solution? At a recent summit from the Lean Enterprise Academy, Jim Womack summed it up: “Is it possible for an organisation to start up lean from day one, or must an organisation grow until it becomes inefficient, and only then learn from its mistakes?”

This challenge helps us re-examine the lean principles we use every day and realise their value as independent tactics, transferrable to a number of situations.

D O W E H A V E T O F A I L ? A N D r E W N I C H O L S O N

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P r I N C I P L E S

& P u r P O S E

keep it on track so it never needs major work. Of course, there will always be improvements to be made because the manufacturing landscape changes so often, but an appreciation of lean strategies can be a solid foundation to build on.

This is an interesting approach many practitioners and their potential clients miss out on. Let’s get the message across that lean is not only a repair option, it can also be one of the first things on the list when a new business is being planned.

We don’t have all the answers and maybe we can’t get everything perfectly right from day one, but surely there’s more than enough experience and accumulated knowledge out there now to at least aim for more right than wrong, most of the time.

This is what we should be aiming for. Because the short answer is yes- it is possible to start lean and stay lean. Here’s how:

It is important to keep it simple and stay organised. This can be achieved by adopting lean 5S principles, which is a system to reduce waste and optimise productivity through maintaining an orderly workplace and using visual cues.

This includes making sure anyone can find anything quickly and easily. Keep things simple and visual – can people easily see at a glance what’s OK and what isn’t?

Focus on the following main three business areas: Sales: getting the work in and engaging with

the customer; Operations: getting the work done and delivering; Finance: managing the cash, funding the growth.

Employees should be made aware of how they fit into the company structure and what their contribution needs to be to make the business run smoothly, effectively and efficiently.

To achieve this: Write down each role and give it a name or

a description; Write down the main purpose of the role and exactly

how its provides value to the customer; Outline what a good job looks like - the best way, tricks

of the trade, and pitfalls to avoid.

Draw up a grid with the roles along one side and people’s names along the other. For each job show with an R who is responsible, with a D who deputises, and with an A who assists so employees know at a glance what their duties are.

Regular communication is key. Each week talk about what’s going well, what’s not going well and what ideas you have to make things better.

By consensus, pick one improvement idea that is easiest to implement, has the highest impact and is affordable. Agree who will make it happen, and when, and get on with it.

Hire slowly, fire quickly. Be clear about values, expectations, do’s and don’ts. With new staff, have a one-to-one review for 15 minutes each day, then one hour per week, then one hour per month.

Make a conscious decision to retain or part company at the end of the first day, the first week, the first month. If it isn’t working in the first month, it probably never will. Let people take risks, make mistakes and fail, but expect them to learn and not to repeat their mistakes.

Do the absolute minimum required to add value for the customer – everything else is waste. Keep it simple, keep it electronic, and automate it.

Store data in one place, share it and organise it so anyone can easily find what they need.

Seriously consider scalable, cloud-based pay-as-you- go systems. Use non-proprietary open systems where you can.

Similarly, do the absolute minimum you need to do with a new product or process to see if it works. This is what Silicon Valley entrepreneur Eric Ries calls the minimum viable prototype.

Experiment quickly, fail early, learn as you go and keep on learning. The key to lean is the improvement cycle PDCA. In a start-up the most important thing is to get along the learning curve as quickly as you can.

Therefore, you need to cycle through these stages as quickly as you can. You’ll need some sort of plan to start with, but also be prepared to be flexible. This is because reality is likely to be different from your original plan, so you have to learn as you go.

Have a tight control on costs by keeping fixed overheads to a minimum, outsourcing non-core tasks, paying as you go and avoiding long-term tie-ins.

Continually question the reasoning behind any action plan. Always ask yourself if something adds value for our customer, does it make us more profitable, and does it make things easier for us?

Manage the cash every day, without fail. This can be done by using a simple spreadsheet.

The lean process is all about keeping it simple, focusing on what matters, learning what works and having the courage to ditch what doesn’t.

11www.leanmj.com | April 2015

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David Ben-Tovim puts on his healthcare hat and explores how hospitals can learn from the waste-cutting wisdom of Google.

redesigning healthcare processes from Google

Toyota makes cars. Google makes connections. Toyota takes a set of raw materials and transforms them into a product people buy. Google takes the information stored in the internet and makes it

accessible to you and me.

Google, Facebook, and many other internet giants are intangible marketplace providers. They provide the cyberspace market where customers for bits and bytes link with providers of those bits and bytes. The customers do not expect to pay directly to access the bits and bytes, and once accessed, may or may not pursue the service or goods the bits and bytes represent. Considerable ingenuity is required to monetise the market, or platform, as it is commonly described. Google does it by piggy-backing advertisements onto those transactions. Anyone with access to the internet is either a bits and bytes fabricator, or a customer, or both. So anyone with something to sell is a potential Google advertiser. This is why it is so wealthy. Many other would be platform providers work on creating the platform first, and monetising it later. Which is why investing in internet start-ups is a risky business.

For over a decade, we’ve used lean thinking to redesign the way healthcare organisations deliver care. Many lean concepts are useful to us, but lean has it’s restrictions.

How Google Works is written by Eric Schmidt and Jonathan Rosenberg, the professional managers hired by the founders of Google to manage the company as it expanded.

r E A D A B O u T :

The ideas transferable from private corporations to public healthcare

How Google Works by Eric Schmidt and Jonathan Rosenberg

The knowledge every individual brings to an environment and bowing to the experts

L E A N H E A L T H C A r E D A V I D B E N - T O V I M

Page 13: LMJ April 2015

pure knowledge work issues, so both as a redesigner and an occasional patient, I, and the managers who work with her, have to trust she and her colleagues adequately police the quality of their own knowledge work.

As a redesigner, my challenge is how to get the cardiologist, and all the other

knowledge workers, to accept whilst I don’t want to interfere with her clinical decision making, I would like her to start her ward rounds on time, and do the quick work of confirming discharge decisions first, rather than leaving them until last. I want to redesign and improve how tasks get done, but the tasks are still her’s to identify and design.

Healthcare workers are used to a degree of independence. Knowledge work cannot be formulaic. When I am sick, I want someone who treats me, not the average patient. I learnt I could not get these independent souls to do things by telling them “upstairs are worried about your turnover. The boss has told me to come and sort things out”. Healthcare workers are notoriously effective at passive resistance. If they do not want to do something, somehow, it just does not get done. I can see their point, having myself been subject to attempts by inexperienced project officers to impose poorly thought through solutions dreamt up by ambitious senior executive trying to gain favour by managing up.

It took us some time to work out how to differentiate gaining the permission of knowledge workers for their work to be part of a programme of redesign, from getting a programme of work authorised by the management team. Authorisation and permission are both important, but require quite different tactics.

P r I N C I P L E S

& P u r P O S E

Whilst Google occasionally ventures into the world of things, essentially it is a pure knowledge-work organisation. Its basic resource is the knowledge its founders, and their employees, have of applied mathematics and computer programming. For elegance and sheer density of ideas per page, How Google Works does not compare with Taiichi Ohno’s Toyota production system; beyond large scale production. But How Google Works is all about the management of a company of knowledge workers, a subject in my experience, lean does not do enough to address.

The Australian healthcare classification system groups all the individual diagnoses a large public hospital expects to deal with into around 1000 different individual, resource related, diagnostic related groups. A public hospital of any size has to be able to recognise and deal with most of the 1000 clinical groups, alone, or in combination, and modified by a host of person-specific factors. It also has to be able to respond twenty-four hours a day, seven days a week, 52 weeks a year.

Yes, there are a range of conditions that present frequently. But public hospitals cannot just say they have to keep a whole lot of stuff to manage small-volume problems. That is not very cost-efficient. Let’s just stop doing the complicated or the unusual and stick with the high volume work. That may be possible if you are a for-profit business; not in public healthcare.

How does the public healthcare system do it? By employing a large number of trained doctors, nurses, scientists-and, within limits, giving them the autonomy they need to practice their knowledge based trades. It is this autonomous, knowledge based work that is the stuff of healthcare.

I am not a fan of management or business writers. One exception is Peter Drucker, who had great ideas. Back in the 1970s, Drucker was already talking about knowledge work and the knowledge worker. He said for the knowledge worker, the crucial question is ‘What is the task?’ For the process worker, the question is ‘How the work should be done’. Both groups can be creative, but the knowledge of the knowledge worker is what that worker uses to define the task. The customer, the patient, presents with a problem. It is up to the healthcare worker to reconceptualise that problem as a healthcare problem, decide what that problem is, and design and execute an appropriate plan of action. For the process worker, the task, the design, is given; the challenge is finding the best way to make the design work.

Drucker added a further distinction: between pure knowledge work, and hands-on work. He used the example of a surgeon, who does the pure knowledge work of examining, assessing, choosing and explaining, and the hands-on work of cutting and caring. Most healthcare work involves a combination of pure knowledge and more structured doing. There may be one best way to do doing work, but the one best way for knowledge work is only visible in retrospect. For

Drucker, when the balance tilts towards hands-on doing, the worker is a technologist rather than a pure knowledge worker.

I am not sure about the ultimate validity of the distinction but I recognise as a healthcare redesigner, most of my work is at the junction of the pure

knowledge and the technical. I have to leave the pure knowledge stuff to the knowledge worker. I am a psychiatrist by background, and even though I am a qualified medical practitioner, I have to leave the heart stuff to the cardiologist. Only she understands her

Let’s just stop doing the complicated or the unusual and stick

with the high volume work. That may be possible if you are a for-profit business; not in public healthcare

Healthcare workers are notoriously effective at passive resistance. If they do not want to do something, somehow, it just does not get done

13www.leanmj.com | April 2015

Page 14: LMJ April 2015

Don’t tell them it’s lean and you’ll get

away with it

14

Andy Hyde works for the Department of eHealth and Technology, South East Regional Health Authority, Oslo, Norway. At the time the case study was undertaken he was director of quality and performance management.

This article describes how the improvement process was implemented and by relating it to lean philosophy and methods attempts to conclude as to why the improvement is continuing.

B A C k G r O u N DDiakonhjemmet Hospital is a privately owned non-profit hospital fully funded by public funds and, for all intents and purpose, part of the public health system in Norway. It is located in Oslo, and serves a population of approximately 120,000 people. It has services for A&E, internal medicine, surgery, rheumatology and child, adult and elderly psychiatry. Medical services include anesthesiology, medical biology, psychopharmacology, clinical activity and radiology. The only large areas not covered are children and maternity.

In 2006 the hospital’s quality statistics were middle of the road, not bad, but not good and definitely not best. The

r E A D A B O u T :

Diakonhjemmet Hospital in Norway’s not-lean lean transformation

Showing how lean ideas are used as an improvement philosophy without mentioning lean

Improvement processes following a planned and structured method without anyone realising

I N T r O D u C T I O NThe improvement process was initiated in 2006 and the measurement of the changes were made in 2011 and 2012.

The background for this article is not only the improvement process but the fact that the improvements have continued despite a change of hospital director and the improvement system’s architect and builder, the author, leaving the hospital.

In many improvement processes, the rate of improvement either stagnates or reverses when central actors such as the sponsor or architect leave.

So what has happened differently at Diakonhjemmet Hospital?

D O N ’ T T E L L T H E M I T ’ S L E A N A N D y H y D E

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P r I N C I P L E S

& P u r P O S E

national statistics office (SSB) showed the cost per bed day for Diakonhjemmet Hospital was 16% over the regional average making us one of the most costly hospitals in the country. We explained away this by pointing out how special and different we were but behind the scenes we weren’t happy.

D E V E L O P I N G A N D I M P L E M E N T I N G L E A N P r I N C I P L E S A N D P H I L O S O P H yMaybe because of the author’s lack of formal training in lean or maybe as a result of a deeper understanding yet to be identified, there was no big project plan, no major quality improvement milestones, no great announcement. There was no burning platform, no crisis to be addressed, just a general feeling we should be better than we are.

The one basic principle the implementation built on was ownership of the improvements had to be with the people doing the work. Facts, not just data provided by some external data analysis team, should drive the improvement. The author was initially employed at the hospital to develop a business intelligence (BI) system to measure and report performance. By 2006 the system was developed and in use; christened DIA-LIS, Diakonhjemmet’s leadership information system.

DIA-LIS was built to show performance using statistical process control (SPC) and was used first to identify issues and bottlenecks in the process of creating and sending the patient’s clinical summary document to the patient’s GP. The law demanded 80% of the summaries be sent within seven days of discharge. In 2006 we managed under 50% as an average across all departments.

DIA-LIS quickly showed there were large differences between different departments and within departments between different functions. The figures were shown to the employee groups involved in the process and to cut a long story short, nobody accepted responsibility for the results and basically blamed each other. The figures were broken down by process step to identify throughput times for each activity that

was measurable and thereby indirectly showing with which employee group the bottleneck was. Once this was identified and after the usual rounds of denial, shock, depression and then acceptance, these groups took ownership and redesigned their processes. No value stream mapping, no flow charts on the wall, just continual elimination of waste.

The result was a gradual increase from under 50% in January 2007 to over 80% by October of 2008 after each department and/or section had undergone the same approach. The figure stayed over 80% without further intervention other than monthly reporting of the status per department through the standard DIA-LIS reporting system.

This same method was used on two new highly politicised indicators, waiting times and defaulted treatment guarantees. In Norway, when you are referred to a hospital for treatment, if you are amongst those given a high priority because of the nature of your illness or condition, you receive a date within which the doctor, on behalf of the hospital, guarantees treatment will be commenced. If the patient does not receive treatment within the date this is a breach of the guarantee and a violation of the patient’s rights covered by laws and bylaws.

Again, the pattern was the same. Each department had different results and each specialty within a department also differed. Department managers and heads of the specialties were shown their figures and denied the figures were correct. After discussing the figures with the health secretaries whom had a major role in the process, new ways to present the figures were developed and gradually ownership was taken by those involved.

Looking back and comparing the praxis with the theory there were several elements of lean philosophy being applied. Ownership of the improvements was given to those involved. The author, despite having the authority through a senior position in the hospital management,

15www.leanmj.com | April 2015

but not having a clinical background, never told anyone what to do to improve. Visualisation of the results both for each department and function, but also for management and between departments and functions gave transparency to the improvement process. It is not fair to say there was competition but nobody wants to be last. The basics of process and flow were being understood whilst looking for both bottlenecks and waste. And not least the PDCA circle was introduced to plan a change, try the improvement, measure it and document the new way of doing things.

D E V E L O P I N G L E A N M A N A G E M E N TThe rest of the management team at this time were not involved and were largely unaware of the changes taking place and the process being used. However, by 2010 the targets in almost all areas were achieved or levels greatly improved and it was being noticed.

The next step was to use a phrase the author doesn’t really like: we set a big hairy audacious goal (BHAG). Let’s make this into a new hospital management system. The author explained the philosophy to the rest of

the management team through PDCA, processes, DIA-LIS and ownership of the improvements. The total planning process from the yearly political goals and demands document setting out the political expectations for the year for each hospital, to the internal planning process, monthly internal reporting and back to quarterly and yearly external reporting would be managed in the same was as clinical summary, waiting times and treatment guarantee defaults. Each of the goals and expectations would be broken down by ownership in the management

There was no burning platform, no crisis to be addressed, just a general feeling we should be better than we are

Page 16: LMJ April 2015

Plan Do Check

Act

16

activities. Each department in addition has a set of want to do activities. The problem was more resources were often used on the want to do activities meaning strategic and must do activities were not always completed.

To make matters worse, the silo structure of the hospital meant many of the want activities were also not completed because of dependencies to other departments or functions who had not been part of the planning. Often by the end of the year, it was not clear who the customer was in the first place, except the department itself.

The value based management system introduced the requirement that all local activities must have a customer, they must be planned with all involved departments and they should in some way be aligned with the hospitals overall strategy. Almost immediately, the yearly action plans were focused, holistic and realistic saving resources used for value adding activity.

C O N T I N u I N G I M P r O V E M E N T A G A I N S T T H E O D D SThe hospital director who was the main sponsor for the improvements (who had a copy of Senge’s The Fifth Discipline in his office bookcase) left his position in

and clinical departments. Improvement plans would be made and implemented by the departments themselves

Measurement statistics were developed in DIA-LIS and a reporting structure was created based on the ISO 9001 concept of management reviews. One important aspect of the whole system is the hospital values were placed firmly in the centre.

One major element of the lean approach to the management system was to think longer term and more holistic than previously. Hospitals have a long-term strategy and receive a set of yearly goals and deliverables outlined in the yearly plan documents from the regional health authority. Both of these are must do

Lean is all the rage in healthcare and according to books, conference presentations and articles in journals, it works

2012 and in 2013, the author accepted a position in the regional health authority. The new director was an internal candidate and therefore was already familiar with the management system. What’s more, he also supported its continued use and development.

To add to the changes that could influence the results. In 2014, the regional health authority instigated changes to the distribution of patients between the hospitals in Oslo in 2014 to reduce queues resulting in a patient increase of 35% for Diakonhjemmet.

What would happen? Would the improvements be sustained or as in so many other improvement processes, flatten or even return to their pre- change states?

To the author’s delight and surprise the management system is further developed and the results are not only sustained but continuously improving.

The system of management, value based performance management as depicted in figure one has been truly embedded in the culture, standards and processes of the hospital and has been rechristened. As of 2015 it is now called value based improvement management.

Core values respect, quality, service of justice are the foundation of the holistic quality managment system at Diakonhjemmet Hospital. The colours of the different toolsets and results documentation are associated with the different parts of the PDCA circle.

Laws and regulations Regional health

authority Strategy Cooperation

agreements Budget Workers tariff

agreements

Action plans Project management Risk management

Care pathways Electronic quality

managment Administrative

managment Processes,

procedures and standards

Reporting Analysis Result managment HSEQ

Management review Continuous

improvement

V A L u E - B A S E D I M P r O V E M E N T M A N A G M E N TRespect

QualityServiceJustice

Demands Plan Do Check Act

Figure one: Value based performance managment model

D O N ’ T T E L L T H E M I T ’ S L E A N A N D y H y D E

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P r I N C I P L E S

& P u r P O S E

We have never

mentioned the word lean. We

have never held a kaizen workshop, at least not by

name

In a recent management white paper distributed to all the hospital managers it says:

We use the PDCA circle as the underpinning model for value based performance management, or more correctly, value based improvement management. The model describes how all services and results are continually improved and how managers at all levels have responsibility to make this happen through their style of leadership.

r E S u L T SThe national health directorate publishes monthly, quarterly and yearly quality statistics for all the hospitals in Norway. Diakonhjemmet Hospital was around average in 2006 and near the top in 2011,-it is now, in 2014, number one in Norway in many of the categories.

The national statistics include waiting times, treatment guarantee defaults, evaluation of referral duration defaults, corridor patients, patient satisfaction, readmissions, hospital infections, sending of clinical summary documents and postponed surgery.

The results for the patient satisfaction survey are, in a lean context, maybe the most satisfying. In the survey from 2005, Diakonhjemmet Hospital was placed number 32 out of 60 hospitals. In 2011 after five years of improvement, placed seventh and when excluding tertiary specialist hospitals, fourth. Only two hospitals achieved a significant increase in over half of the measured categories and Diakonhjemmet Hospital was one of these.

The final acknowledgement of the improvement process and one all quality and lean exponents firmly believe is the hospital has now a cost per bed day index of 1.00. An improvement of 16% in cost efficiency.

C O N C L u S I O N SLean is all the rage in healthcare and according to books, conference presentations and articles in journals, it works. However, many of the improvements are in operations and

logistics and have focused on the use of tools such as value stream mapping, 5S, A3 problem solving. Examples of improvements in processes in A&E and operation room efficiency abound.

This article has shown by applying lean through its basic philosophies such as respect for people and systematically improving quality using PDCA then building these into the management system of the hospital, continual improvement becomes a way of working and not just a buzz word or project that ends with no lasting result.

We have never mentioned the word lean. We have never held a kaizen workshop, at least not by name. The hospital’s management or its employees, would never ask if it is lean and if asked would undoubtedly deny it. They have found a system of continual improvement that works for them, based on a lean philosophy, and they have chosen to call it value based improvement management. Is it lean? The author would answer, yes; the hospital is better today than it was yesterday.

Quality indicator Ranking (out of 23 hospital trusts) 2nd tertial 2014*

Waiting times until start treatment

1

Treatment guarantee defaults 1

Evaluation of referral duration defaults

1

Corridor patients 1

Readmissions of elderly patients 11

Hospital infections 6

Sending of clinical summary documents

1

Postponed surgery 6

Patient satisfactionNurses InformationDoctors Next of kinOrganisingStandardDischargeCross tier cooperationPatient safetyWaiting

1111521343

17www.leanmj.com | April 2015

Further reading: Modig N. and Åhlström P., This is Lean: Resolving the Efficiency Paradox

Page 18: LMJ April 2015

18

Is lean its own worst enemy?

LMJ goes digging around the strained world of hospitals,

in this time of tightened budgets and press outrage, why is the seemingly easy

answer of lean in our public healthcare systems receiving

such a level of vitriol?

S P E C I A L F E A T u r E P u B L I C H E A L T H C A r E

The ongoing saga in the Canadian province of Saskatchewan has been bubbling away for nearly a year. The province decided to take on credit-crunch budget cuts with a lean programme in its public hospitals. The idea of having to spend money to make money-or in this case save money, was clearly lost. The government has been accused of crony-ism and a lack of transparency in its awarding the lucrative contract to Seattle-based John Black and associates.

And when you see the financial figures involved it is hard not to see the points of the naysayers. Public funds-those lauded taxpayers dollars which are in such short demand- have been spent on paying the high salaries of consultants to bid for contracts they were almost sure of already getting and such tasks as flying Japanese senseis to visit and teach.

While a proper trained lean teacher is always best, the lack of forethought and

If you are a regular peruser of LMJ’s news page, or spend some time on news sites, you’ll have

noticed a recurring trend: that of opposition to implementation of lean programmes in public hospitals.

We’ve covered it with reaction to San Francisco hospitals going lean, with lean being brought in to the NHS, with Canadian hospitals, and a rare positive story of lean in rural Indian hospitals.

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S P E C I A L

F E A T u r E

We expect the civil service to be a laborious home of red tape, but we

want our hospitals to be able to cope with anything

awareness in this situation of a private firm and government body not understanding when working in the public sector, budgets are tight and mindsets have to change to a frugal outlook, is truly alarming. It shows, at best, a perverse closed mindedness to the concerns of those unfamiliar with lean and an inability or non-desire to educate, and, at worst, a corruption of the ideas of efficiency and a self-serving attitude.

We spend a lot of time at the LMJ trying to educate people about the theories behind lean.

Where newspaper writers see a way of cost cutting (read: job losses) and a quick salacious headline about budgets in the healthcare sector, we know it’s really about encouraging efficiency.

But we here in Britain have undergone five years of austerity, with our beloved National Health Service (NHS) at the forefront of these cuts and freezes.

The New Year saw record queues and waiting times as - a key clue to any lean analysts out there - millions went to their A&E rather than GP out of frustration at unhelpful opening hours and long waits that just don’t sit with our lifestyles. Especially not the millennials, who have been raised on the internet and Amazon next-day delivery. The healthcare system was in crisis, the tabloids yelled. Third world healthcare, others yelled.

So where do we go from this? The situation stands with a healthcare system being used as a prop in a hotly contested election, in the midst of never-ending financial uncertainty, and record numbers of patient admissions.

The cause? The NHS hasn’t modernised as quickly as it needs to and hasn’t been given the proper tools to. Staff are overworked and haven’t the time for training let alone huddles.

When LMJ travelled to Florida for the AME conference in November 2014 it was

lucky enough to tour the world famous Mayo Clinic with a group of other lean enthusiasts. Amongst this group were several nurses from Ontario, Canada who worked in a large public hospital.

These nurses, passionate about their work, were relatively new to lean and were hoping for inspiration as we toured. As they went round the facility their eyes widened at the state of the hospital; the lack of patients having to wait in corridors for a free room, bureaucracy that was designed to be helpful rather than a

hindrance and management systems that actually worked.

It wasn’t just the shiny floors and order they weren’t used to; they whispered in amazement amongst themselves and looked sheepish as the positive, motivated and highly organised staff of the Mayo Clinic accurately took their appreciation as congratulation

If their anecdotal musings on the state of healthcare is to believed, then clearly we need an overhaul. And what better overhaul than making the system more efficient? David Ben-Tovim says in his article this month healthcare workers are notoriously difficult to engage in new programmes; they are the masters of passive resistance. And it’s understandable: the job they do is far too important to society to attend seminars and management workshops unless it has a proper and proven outcome.

Does this resistance come back to the arguments Nathan Wilson expounded upon in his recent article (“The language

The New year saw record queues and waiting times as - a key clue to any lean analysts out there - millions went to their A&E rather than GP out of frustration at unhelpful opening hours and long waits that just don’t sit with our lifestyles

19www.leanmj.com | April 2015

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20

of lean”, LMJ January/February 2015) where he spoke of his colleagues indifference, and at time hostility, when he brought back lean? That institution, like a hospital, was a public sector –the UK’s Ministry of Justice- with similar staff cultures and gripes: lower pay than the private sector, lack of incentives, a poorly managed system burdened in paperwork and the dreaded bureaucracy- and the staff responded in poor measure to his attempts to implement lean.

They hated the jargon, they were needlessly confused by Japanese terms; they wanted clear-cut solutions in English- minor trials of their work-day fixed. No grandiose promises of cultural change, just a working environment which wasn’t as stressful. The cultural change would occur on its own if these problems were fixed and the daily grind in the office became easier.

But with the hospitals it’s a little different: we expect the civil service to be a laborious home of red tape, but we want our hospitals to be able to cope with anything. We put our doctors and nurses on a pedestal and treat them terribly when they fail. The outrage at the implementation of lean, whether it’s the San Francisco General Hospital in California or the NHS in England.

So where is lean going wrong? It’s not treating the public sector perceptively enough. It’s not adapting itself to the sensitivities of the situation. And it is most definitely not playing the game with the media. You cannot expect people who want to be angry about a subject to be calmed when you throw Japanese terms at them that just sound pretentious and out of step. If you want lean to work in the healthcare –notably public healthcare, not the endless money of private healthcare- you have to speak to your audience.

A nurse on a low income who has been doing her job for twenty years, does not want yet another management drive. We need to learn to sell lean. The efficiencies it brings-lean will make your life easier; lean will be a way of making those short-staffed shifts easier to cope with. Pinna and Belpanno’s article (“Using 5S in a paediatric hospitals”, LMJ March 2015)

came illustrated with before and after images of a nurse’s toolkit and equipment shelves. Helpfully leaned. The effect was instant-the nurses were spending half as much time looking for things as they were before. The syringes, medications and other paraphernalia were where they were supposed to be and the hospital was a better run organisation for it. Patients benefited.

This is what we need lean in healthcare to show. Not million dollar contracts awarded to consultants, not lean experts using Japanese phrases in media interviews to hostile journalists (as one particularly cringe-inducing consultant did in the coverage of the San Francisco Hospital debacle) which had her framed in the interview as out of step and elitist.

It’s as we have spoken before of in LMJ, lean needs to learn to sell itself. Its cloistered days of manufacturing are over. If it hopes to grow and be seen as worthwhile to society at large it needs to adapt and learn from what the customer wants. They do not want buzzwords and complicated terminology. They do not want a culture based on efficiency, which seems to have a surfeit of consultants.

The NHS’s own institute for innovation and development’s lean page defines lean as “an improvement approach to improve flow and eliminate waste that was developed by Toyota. Lean is basically about getting the right things to the right place, at the right time, in the right quantities, while minimising waste and being flexible and open to change.” There it is. Simple. And yet misunderstood.

With our ageing populations and other social demographics, healthcare will become more and more important. The baby boomers will be sure to prove cantankerous in old age and a force to be reckoned with-we need efficiency and lean in our healthcare. We just need to do it cleverer. And retake the controls of the story away from the press and back in to those who know the way to make it the obvious solution.

We would love to hear what you think. Agree? Outraged? Get in contact with [email protected] to share your thoughts.

It’s as we have spoken before of in LMJ, lean

needs to learn to sell itself. Its cloistered

days of manufacturing

are over

S P E C I A L F E A T u r E P u B L I C H E A L T H C A r E

Page 21: LMJ April 2015

We want to hear from you!As the Lean Management Journal progresses on its own continuous improvement journey, we understand how important it is for us to listen to the voice of our readers.

So we have set up our own suggestions box and would like you to tell us what topics we should cover in the journal and at our events in the next few months. What are the questions you want answered? What are the issues you are facing that you would like to read about? We believe in pull and will always welcome your suggestions and feedback. We will try our best to address every request by providing helpful, thought-provoking case studies, interviews and features.

Don’t forget that our Letters and comment section is open to anybody in the lean community who wants to share an opinion or an experience with their peers.

Your feedback is important to us as we strive to improve our publication, services, and overall reader experience.

If you have any suggestions for topics you would like the LMJ to feature in the coming months, please send an email to the editor, Andrew Putwain, who can be reached at [email protected] or +44 (0)20 7401 6033.

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22

Industry 4.0: Where does it leave lean?

LMJ editorial board member Dr. Torbjørn Netland from the Norwegian university of Science and Technology presents his arguments on where the digital revolution can incorporate lean and how they can feed off each other.

S P E C I A L F E A T u r E I N D u S T r y 4 . 0

Germany—the European manufacturing powerhouse—has set a new course for its

future high-tech industry. Under the strategy Industry 4.0, Germany is in transition to the fourth industrial revolution. Cloud computing, internet of things, real-time sense-and-response technologies, cloud-based services, big data analytics, robotics, artificial intelligence, 3D printing and so on are foreseen to revolutionise how we make things and deliver services today. Indeed, our factories and businesses are changing. But where does this leave lean? Will developments in technology leave lean irrelevant? Is lean a hype that is soon to end?

T H E F O u r I N D u S T r I A L r E V O L u T I O N SIndustry 4.0 is the current high-tech manufacturing strategy of the German government. If Germany thinks it is the right direction for its future

r E A D A B O u T :

Industry 4.0

Strategies to incorporate lean into the internet of things

competitiveness, we should all probably listen. Industry 4.0 was first presented as a concept in 2011, and has been researched, debated and further defined since then. Industry 4.0 is based on tight integration of modern information technology in the manufacturing and supply chain operations (called cyber-physical production systems). The objective is to create the intelligent factory during the two next decades.

Industry 4.0 refers to the fourth industrial revolution. The first industrial revolution started in Great Britain and took place around 1760-1840. It involved the establishment of factories using mechanical machines and steam or water power to move from craft production to industrial manufacturing in the textile industry. A century later, around 1870-1930, the second industrial revolution took advantage of electrical power and moving assembly lines to introduce the era of mass production. The third industrial revolution started

Page 23: LMJ April 2015

S P E C I A L

F E A T u r E

Industry 4.0 is the current

high-tech manufacturing

strategy of the German government. If Germany

thinks it is the right direction for its future

competitiveness, we should all

probably listen

around 1970, and use information technology and operations research to transform how we plan, control and automate the production. We got numerically controlled machines (CNC), material resource planning software (MRP, later ERP), computer aided engineering, -design and -manufacturing software (CAE/CAD/CAM), and automated material handling conveyors and robots. It is within this paradigm of industrial production lean was born—partly in parallel-, partly in competition- and partly in cooperation with the digitalisation of the workplace. Today, manufacturing combines the philosophy of lean production with automation and IT technology.

We’re now in the beginning of the fourth industrial revolution. This introduces the internet of things in manufacturing; the digital and physical worlds merge. One central idea is to move from a centralised to a desentralised production model where materials and machines communicate with each other in real-time without the need of a fixed production plan. The shop-floor of smart factories will be embedded within the global networks of supply and demand through the cloud. It will be self-diagnosing, self-optimising and self-configuring. The result is intelligent value-creating supply chain networks that autonomously and automatically respond to changes in end-demand. Clearly, Industry 4.0—when realised— will revolutionise the current business models of how we design, manufacture and deliver products and services. Is the era of lean manufacturing soon to end?

L E A N I N I N D u S T r y 4 . 0Lean will not fade with Industry 4.0. Quite the opposite, lean principles are likely to become more important. The fourth industrial revolution can enable the true lean enterprise. Industry 4.0 permits a much richer understanding of the customer demand and allows the immediate sharing of the demand data throughout complex supply chains and networks. Smart factories can produce faster with less waste. Industry 4.0 enables a much quicker one-piece flow of customised products. It has the potential to radically reduce inventories throughout the supply chain.

On the other side, with radical changes in the environment come changes in lean as a practice. Assumedly, there will be less physical kanban cards, less andon cords, less whiteboards and similar technical lean solutions in future factories. But that is not a pity; Toyota has never looked at these tools and practices as objectives in their selves, they are just technical solutions to minimise wasteful processes. One of the most promising advances in technology is the possibility to share—and act on—real-time information in a coordinated end-to-end supply chain. This enables a radically improved form of instant just-in-time pull production.

In short, Industry 4.0 technologies may be exactly what we need in order to create lean supply chains and networks. Lean is about doing more with less—today and in the future.

F u r T H E r r E A D I N G :

www.plattform-i40.de

First mechanical loom 1784

1: Industrial RevolutionFollows introduction of water and steam powered mechanical manufacturing facilities

First production line, Cincinnati slaughterhouses 1870

2: Industrial RevolutionFollows introduction of electrically-powered mass production based on the division of labour

First programmable logic controller (PLC) Modicon 084 1969

3: Industrial RevolutionUses electronics and IT to achieve further automation of manufacturing

4: Industrial RevolutionBased on Cyber-Physical systems

End of 18th century Start of 20th century Start of 1970’s Today

Time

Com

plex

ity

The four industrial revolutions (Source: www.plattform-i40.de)

23www.leanmj.com | April 2015

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24

PuMPING IT uP

WITNESS simulation platform played an important part in developing the

growth plans for mission-critical motors and pumps company,

Hayward Tyler. Martin Clocherty, manufacturing systems director,

explains the company’s undertakings.

C A S E S T u D y H A y W A r D T y L E r

A B O u T H A y W A r D T y L E rHayward Tyler is one of the world’s leading suppliers of mission critical electric motors and pumps. With a heritage spanning almost 200 years, the UK-based manufacturer operates in a number of sectors including oil and gas, renewables, fossil, nuclear, industrial and chemical.

Covering both original equipment manufacturing and aftermarket support Hayward Tyler has global revenues of over £45 million with its headquarters and main manufacturing operation in Luton with other facilities in the U.S., Scotland, India and China.

G r O W T H P L A N S O V E r T H E N E x T 5 - 1 0 y E A r SIn order to capitalise on growth across a number of its markets, Hayward Tyler recognised it needed to undertake a business transformation project focused on maximising efficiency, aligning capacity to demand as closely as possible, and boosting profitability.

Having already achieved a substantial growth in the turnover of its Luton operations – from £18m in 2011 to £26m in the financial year to 31 March 2014, the next stage was to create a plan designed to achieve two key objectives: doubling the size of its Luton facility and increasing the number of units produced, whilst ensuring the facility remained fit for purpose.

Hayward Tyler had previously used Excel as its primary tool for planning. However when the management team looked at the extent of change required to meet accelerating demand across its markets, they felt it was impossible to deliver an accurate, trusted plan using such methods.

“The growth in our key markets means market share is there for the taking. We’ve already got great products – we simply have to get ourselves into the best position to take advantage of increasing demand,” comments Martin.

“We needed the foresight to be able to fully understand things like what will the business look like in 5-10 years, What will the opportunity look like then?, and how will it evolve over that period?.

Most importantly we needed to understand the timing of key asset investments. We had to factor in so many complex variables such as new equipment, people, sub-assembly processes, cranes, forklifts and back office processes, that even the most experienced brain would have been completely overwhelmed,” he continues.

H I T T I N G T H E G r O u N D r u N N I N GA number of executives at Hayward Tyler had used modelling in the past and the company decided to look at how process simulation could

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be used to create a virtual, dynamic factory. Having evaluated a number of solutions, the management team selected WITNESS from Lanner based on its ability to execute detailed schedule based planning in a rapidly deployable and user friendly environment, completely out of the box.

“We are dynamic as a company and needed a solution which we could adopt quickly and hit the ground running. When we saw the level of insight which WITNESS could provide, we immediately bought it, installed it and had a meaningful model from which to create our master plan within a few months,” Martin says.

T H E V I r T u A L F A C T O r y Using WITNESS, Hayward Tyler created a virtual factory which presented a highly visible picture of Hayward Tyler’s manufacturing operations as they evolve over the next 5-10 years. Highlighting exactly what would be required to meet demand and maximise profitability, the model factored in numerous influencers of plant capacity and performance, including factory layout, equipment requirements, shift patterns and peaks and troughs in demand. The model also factored in key milestones and product mixes and identified exactly what processes and resources would be needed at any such milestone in order to keep pace with predicted demand.

“Thanks to WITNESS we have our 2022 model which tells us everything we need to do to achieve our plans in the most efficient way possible. The model is effectively a virtual factory which shows us how the business will look in 2022 and any point between now and then. It’s exciting to clearly see where the ongoing investment in our facilities will take us. The model tells us when spare capacity will run out, when we need to upgrade machines, or when a shift pattern change is needed.” Martin explains.

This insight means Hayward Tyler has a robust, accurate plan which allows them to pre-empt forecast changes in the business, ensuring productivity

C A S E

S T u D y

WITNESS is hugely powerful in

that it can run a year’s simulation in a second, facilitating a detailed

picture of exactly what business processes and resources we need to deliver against future demand. In my 20

years of working with software this is the first

time a solution has genuinely delivered on its out of the box

promises and equipped us with insight to

transform our business and boost profitability

exponentially

Martin Clocherty

remains high and costs are minimised. It also means they have a credible plan to present to stakeholders - both internally and externally.

“WITNESS has quickly become an invaluable tool in communication with our stakeholders. It has helped us to demonstrate the robustness of our plan and the diligence of our approach to our key banking partner, providing transparency, demonstrating the competency of the team and instilling confidence,” he continues.

“In parallel, it has been presented to our in-house manufacturing workforce and sub-contractors and has significantly helped us to engage, motivate and secure buy-in from such internal stakeholders, which will contribute to ensuring a successful transition to our new methods of operation.”

I N S I G H T A N D I N T E G r I T yAs Hayward Tyler embarks upon its growth strategy, it will use WITNESS to underpin its planning, updating the virtual factory with changes as they occur.

“The model is dynamic so we will continue to update and populate the model with more detail and market changes as we become aware of them. We are currently undertaking initial works at the factory based on the outputs of the model with main construction to start in 2015,” Martin comments.

“Testament to its success is our CEO has mandated simulation must be used as the foundation for planning across our other facilities, so we looking to extend the reach of WITNESS across the organisation - starting with our U.S. based operation.”

“In 20 years of using software across a number of different roles, nothing has impressed me as much. To gain the level of insight provided by WITNESS, and the productivity improvements which we will derive as a result, is testament to the integrity of the software and commitment and professionalism of the team at Lanner. That we were able to achieve this within a few months of engagement is hugely impressive.”

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Lessons from Deming: a brief history of quality- part two

In the second instalment of Bill Bellows lessons on quality we read about the industrial revolution, Charlie Chaplin and Ford Motors.

S P E C I A L F E A T u r E L E S S O N S F r O M D E M M I N G

for implementing this revolutionary conversion from craftsmanship to mass production fell to the aforementioned Honoré Blanc. This advance in engineering and manufacturing practice within le système Gribeauval shifted authority for quality from guilds and master craftsman and placed it into every interchangeable part produced and integrated along an assembly line. Business owners were attracted by both the higher volume of assembly line operations and the lower wages paid for tasks not requiring the expertise of a master craftsman. Missing from the financial equations was the impact of shifting the spotlight of quality from the final product of a craftsman and infusing it, instead, into each interchangeable part.

Mass production with interchangeable parts was first demonstrated in 1803 at Portsmouth Block Works in Hampshire; timing coinciding with the height of the

another guild critic for their ability to maintain social classes-which conflicted with the classless society which embodies Marxism.

Faced with growing condemnation and the dawn of the British-led industrial revolution, guilds declined in number and in stature. They remain alive today. Historians credit the universities of Bologna, Paris, and Oxford as having originated from guilds of students and masters in the 1200s, with qualitas of education as their contribution to society.

A few years after James Watt perfected his steam engine, Lieutenant General Jean-Baptiste Vaquette de Gribeauval sponsored standardised weapons through a royal order. He is the earliest known advocate for the practice of interchangeability of gun parts, aside from reports of similar advances in China in the time frame of Cicero’s orations. The myriad of management details

While guilds held a strong control over quality and commerce through the middle ages, they

began to decline in importance in the 18th and 19th centuries, given to their perceived disregard for free trade and technological innovation. Amongst their outspoken critics were philosophers Jean-Jacques Rousseau and Adam Smith, who saw them as constraining market forces over prices, wages, and profits. Add revolutionary socialist Karl Marx as

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S P E C I A L

F E A T u r E

Missing from the financial equations was the impact of shifting the spotlight of quality from the final product of a craftsman and infusing it,

instead, into each interchangeable part

Napoleonic War and the strong demand for pulley locks on sailing ships for the British Navy. By 1808, a team led by Marc Brunel had achieved an annual production rate of 130,000 blocks. To appreciate the context of this accomplishment, Richard Beamish, an assistant to Brunel’s son, Isambard Kingdom Brunel (who built bridges and tunnels across the U.K.), commented on this feat; “ten men, by the aid of this machinery, can accomplish with uniformity, celerity and ease, what formerly required the uncertain labour of one hundred and ten.”

The first American to be exposed to the potential transformative economics of interchangeable parts was Thomas Jefferson, the U.S. Ambassador to France 1785- 1789. After they met, Jefferson invited Blanc to move to the U.S. and share his mass production solution with American companies. He embraced a vision of how this emerging manufacturing system would benefit Americans, as it had the British and French. Rather than leave France, Blanc declined the relocation offer. The American system of manufacturing followed shortly thereafter when Jefferson’s dream was shared with Eli Whitney, from Connecticut, leading to the first-ever contract with the U.S. Congress for a product (rifles) assembled with interchangeable parts.

In a radical departure from craftsmanship, in which the

master forms all of a product’s parts and also aggregates them for assembly operations, the practice of interchangeable parts begins with disaggregation of the component parts of a product. Fabrication follows, often using a series of machine tools (from lathes to milling machines to shapers) to form parts which ideally conform to a series of specification limits(represented by a minimum value and a maximum value, also known as tolerances). Prior to assembly, each part is examined by a quality inspector according to its respective specification limits and graded as either a “good part” or a “bad part.” Using the absolute logic of category thinking, all “good parts” are not only good, they are equally good, without variation. Should the specification limits for a hole diameter be a minimum value of 5.000 units (inches, cm, etc) and a maximum of 6.000 units, parts measuring 5.001 and 5.999 would both be rated as “good” and one measuring 6.001 would be rated as “bad,” a defect. Good parts are directed to assembly operations and bad parts are scraped, reworked, or, perhaps, measured again.

In a twist on the answer to the second question, notice how the use of tolerances to define the quality categories of good parts and bad parts has changed the predominant answer of 5.999 and 6.001. Had the dimensions been 5.0001, 5.9999, and 6.0001, the distance between the second and third numbers would be

even smaller, yet the first two numbers would represent “good parts.” In this brief history of quality, herein lies the legend of “the good” parts and “the bad” parts, judged in isolation from each other, rather than judged by how well they integrate, as a craftsman would discern. As an aside, I have heard often-repeated tales of parts slightly outside the specification limits (such as 6.001 is slightly above 6.000) being inspected again, perhaps on second shift, perhaps by a different inspector, awaiting the conclusion that a second, third, if not fourth, result would lead to a value within the specification limits. How likely would it be for a part measuring 5.999 to be inspected again when the specification limits are 5.000 and 6.000?

One hundred years after Whitney’s debut with rifles in Connecticut and Brunel’s debut with blocks in Portsmouth, the Ford Motor Company Ransom Olds’ use of assembly lines for the mass production of interchangeable parts through the use of conveyor belts to create a moving assembly line. In a blitz, moving assembly lines spread the world over, for those companies left behind feared they would perish.

I N 2 : I N T H I N k I N G N E T W O r k 2 0 1 5 F O r u M

June 10-14, 2015 – Los Angeles, California

The 14th annual forum is themed Break the Mold: Inspire, Aspire, Achieve. The event was formed in 2001 by a group of students of W. Edwards Deming and related theorists, including Russell Ackoff, Edward de Bono, Tom Johnson, Peter Senge, and Genichi Taguchi.

The aim of the 5-day forum is to continue to elevate the consciousness of individual and collective thinking. Join in order to learn, connect and improve how you work, learn and think together.

Registration fee: $400, with $50 discount for registering on or before April 29.

More info at www.in2in.org

27www.leanmj.com | April 2015

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S P E C I A L F E A T u r E L E S S O N S F r O M D E M M I N G

Leave it to actor Charlie Chaplin to satirise moving assembly lines in his 1936 film, Modern Times, for their conceivable adverse impact on factory workers. On close examination, moving assembly lines were built on an 18th century quality foundation of “good parts” and “bad parts” and also guided by Frederick Winslow Taylor’s scientific management practices. Credit Taylor with advancing the practice of division of labour, which continues in the 21st century to separate workers, rather than unite them, using a theory of management that closely resembled the theory of interchangeable parts.

Credit Deming with introducing the Japanese economy to a theory of management that challenged the divisionism of Taylorism as well as the divisionism of managing parts and not the interactions between the parts.

Deming’s impact on Japan began before his first visits in 1947 and 1950, when Japanese business leaders learned of his role in introducing statistical process control techniques to the U.S. war industry during WWII. His series of summer lectures in 1950 followed an invitation from the Supreme Allied Commander of post-war Japan, General Douglas MacArthur, to share his quality management expertise with statisticians, engineers and senior managers. He was honest in stating his systemic solutions were not “quick fixes” and “it will not happen at once,” but also suggested results could be achieved within a few years.

Thirty years later, Larry Sullivan, a senior Ford manager, travelled to Japan to lead an internal effort to study automobile suppliers and the gain explanations for their results. Together, they had captured nearly 30% of the US market share in automobile sales, beginning with zero in 1950 and growing to 3% in 1970. A summary of his findings were published in an article for the American Society for Quality (Variability Reduction: A New Approach to Quality):

In March 1982, I was part of a group that visited Japan and studied quality systems at a variety of automotive

suppliers. The most important thing we learned was quality in those companies means something different from what it means in the U.S. - it is in fact a totally different discipline.

Over the years, Japanese managers, engineers, and workers have been successful in reducing manufacturing costs by adopting more enlightened quality thinking and by applying more technical quality methods. In other words, quality in itself has not been the primary motivation in Japan; profit is the main objective and quality (methods) is merely a means to improve profit.

Since 1980, U.S. automotive companies and their suppliers have made dramatic improvements in quality...In order to continue this improvement, we must move out of the traditional realm and adopt more enlightened quality thinking...Although statistical methods are uniform throughout the world, they are applied very differently in the East and West...Of foremost importance is the new definition of ‘manufacturing’ quality as minimum variation from target.

As Sullivan and his peers toured Japan and Deming mentored Ford’s senior managers and trained thousands of their employees, Motorola introduced six sigma quality as its own quality management strategy. On the reason for selecting six sigma, Motorola offered this explanation:

At Motorola, we actually have a measure for quality which we call six sigma, and this literally affects everybody and everything we do, every minute, of everyday. Six sigma is basically a target based on zero defects per million manufactured parts. At present we are hitting 99.9996%, which is so close to perfection we are now using a parts-per-billion measure for defects.

The concept of zero defects as the achievement of perfection is evidence of the endurance of Blanc’s 18th century efforts to transform manufacturing from craftsmanship to a system of interchangeable parts. Six sigma quality has added new life to the zero defects movement launched by Philip Crosby during his employment by International Telephone and Telegraph (ITT), where he retired as the vice president of quality.

Much earlier in his career, he worked as a quality professional in the defence industry. While employed there, he witnessed the known shipment of non-conforming, (defective) hardware to the customer (the U.S. government), albeit at an acceptable level of defects. Crosby set a higher goal for himself, the delivery of zero defects, or 100% “good parts.” In doing so, he initiated what was to become known as the zero defects philosophy. In 1979 Crosby released a book on quality management, quality is free. In it, Crosby theorised there are absolutes of quality management, including quality is defined as conformance to requirements, not as goodness nor elegance and the performance standard must be zero defects, not “that’s close enough.”

While terms like zero defects and defect-free quality are now obvious indications of managing quality through a lens of interchangeable parts, less obvious terms associated with this quality model are yield (the percentage of parts which are “good”), scrap (expenses for the disposal of “bad” parts), rework (expenses for the repair of “bad” parts), non-conformances (parts which are “bad”), process capability indices (various ratios which are based on specification limits), and the cost of quality as well as the price of non-conformance (expenses associated with “bad” parts).

Mass production with interchangeable parts was first demonstrated in 1803 at Portsmouth Block Works in Hampshire

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Russell Watkins @leansempai Did enjoyable guest lecture on lean today at @NBS_NTU with Masters students with Marshmallow game for kaizen cycles

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O N L I N E

L E A N O N L I N E A P r I L 2 0 1 5

rOuNDING uP THE MONTH’S DIGITAL COMMuNICATIONS ON LEAN

LEAN NLINE

LMJ’s social media pages are a great place to go for lots of networking opportunities and information on all things lean from around the web.

Find industry experts and exciting discussions on our LinkedIn page, and follow @LeanMJournal and @AndrewPutwain for news on upcoming events and ways to get involved with the LMJ.

A great selection of knowledge, events and pithy remarks came across the LMJ’s Twitter. Here’s our selection of what we thought was the best:

EEF Insights @EEF_Insights Why investing in your own #lean growth strategy has never been more important ow.ly/INj22 #ukmfg #manufacturing

ReAgent Chemicals @ReAgent_UK 6 Essential #lean #manufacturing podcasts @TheManufacturer @LeanMJournal buff.ly/1tlSxY7

Brent Brewington @BrentBrewington “Standardization does not stop creativity; it just helps everyone benefit from it” -H. James Harrington #QualityQuote #LeanManagement

Barbara Martinez @babs_77 #LeanManagement has revived the theory of Darwin: Be flexible, adapt and survive.

Mark Graban @MarkGraban If an organization really thinks that “#Lean is just a tool to pull from the toolbox when needed” then you’ve already lost, I think.

29www.leanmj.com | April 2015

But our favourite is definitely Stafford-based MD of Lean FSL Associates who sees possibilities for encouraging efficiency at every aspect of his life:

Graham Canning @lean_fsl #overprocessing at the coffee shop. Too much #signage! #confusing #muda

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There is currently an expanding pool of events available for the development of the lean community. They offer both general and sector specific opportunities to renew your enthusiasm and gain new perspectives through communicating with lean contemporaries.

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LEAN THINkING & PrACTICE - 2015 AuSTrALASIAN SuMMIT May 5-8, 2015, Melbourne, AustraliaLean Enterprise Australia will be doing things differently in 2015; hosting the Lean Thinking and Practice Summit over 4 days with a flexible program designed to meet the needs of all lean leaders and practitioners across all sectors.

For more information visit: http://bit.ly/1BgOGEw

13TH INTErNATIONAL LEAN MANAGEMENT CONFErENCE June 16, 2015 – June 18, 2015, Wroclaw, PolandThe Lean Institute Polska presents this year’s International Lean Management Conference.

This year will have more than 400 participants and some of the world’s best lean practitioners and experts, inspiring case studies, workshops and factory visits.

Speakers include John Shook, Chris Vogel, Mike Orzen, Samuel Obara and José Ferro.

For more information please visit: http://bit.ly/1JlCWoy

FACTOry PHySICS19-20 May 2015, Bicester, UKThis is a 2 day practical workshop delivered by experts; Dr Mark Spearman and Ed Pound of Factory Physics Inc, from Texas. Places are limited on this course due to format.

This course is suitable for Manufacturing and supply chain operations executives Planning and production control managers Anyone interested in advancing to a new level of lean

Factory Physics represents a major breakthrough opportunity for lean organisations and their managers. You will not find this material in conventional books on lean.

For more information please visit: http://bit.ly/1EnDohy

AME/CME CANADIAN LEAN CONFErENCE 2015June 1- 4, Winnipeg, Manitoba, CanadaThe Association for Manufacturing Excellence (AME) is the premier organisation for education and networking in the manufacturing profession. Members come together to explore lean thinking, enterprise improvement methods, exchange best practices and network. AME has partnered with Canadian Manufacturers & Exporters (CME), Canada’s leading trade and industry association, to deliver a world-class national lean conference

Conference attendees will experience six highly acclaimed lean experts and motivational keynote speakers, they can choose from 36 best practice practitioner presentations organised around four value streams.

There will also be over 18 tours to see hands-on application of lean techniques in action and 15 highly interactive workshops.

For more information please visit: http://bit.ly/1AIdGmS

INTErNATIONAL LEAN SuMMIT June 10- 11, 2015, Budapest, HungaryLean Enterprise Institute Hungary presents its International Lean Summit for the fourth time since its foundation.

This year Dave Brunt and Tilo Schwartz will be the keynote speaker at the event.

On the day before the summit there will be two parallel pre-summit workshops running: Introduction to Lean Leadership and Toyota Kata.

For more information please visit: http://bit.ly/1CzpqHm

Photo courtesy of Sebastiaan ter Burg on flickr

DATE FOr yOur DIAry: LMJAC 2015The Lean Management Journal Annual Conference is rapidly approaching. Contact [email protected] for more information on the essential lean event of 2015.

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IN THIS ISSUE:

Do we have to fail?

Does a start-up need lean from the very beginning?

Industry 4.0: where does it leave lean?

Exploring the new technology and where it leaves lean.

Don’t tell them it’s lean!

How an unnamed technique helped revolutionise

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Redesigning healthcare processes from Google

What can lean healthcare learn from the one of the

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