LMJ Dec 14/Jan 15

Issue 10 Volume 4 | Dec/Jan 2014/15 | www.leanmj.com

GREENS, SHOOTS AND STAYS

$65

– £4

5 –

€50

Organisations and interviews featured in this edition include: Adnams, Dessault Systémes, SA Partners, Ramboll Gas and Oil, SMMT Industry Forum, Joseph Paris, Lincoln Forbes, Joseph Paris, Bill Bellows and Jean Cunningham.

IN THIS ISSUE:Lean and green: Lincoln Forbes, adjunct professor at Florida International University, analyses lean’s role in creating sustainably constructed buildings and how we can make the construction industry more environmentally friendly.

Lean accounting: Consultant Jean Cunningham explores the best way for a business to undertake leaning its books, and how the ideas can benefit an organisation.

Managing businesses for the future; a sustainable approach: Andy Wood, CEO of Adnams, and Keivan Zokaei, of S A Partners investigate sustainability in lean business practices. Is the idea a pipedream or a practical

and pragmatic approach to production in the 21st century?

Continuously improving management: Tuan Nguyen, senior manager of DELMIA Global Enterprise Manufacturing Intelligence at Dassault Systèmes, talks about how manufacturers can take a more lean approach to management.

This issue looks at the beginnings of lean’s adoption of sustainable and green-friendly policies.

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Dear reader,The ideas of lean working with those ideas of sustainability should be an easy one to understand: cutting waste and figuring out ways to use less; respecting people and treating the world’s resources in a sensible and reasoned manner. It seems like a match made in standardised heaven.

And yet, lean in the world of modern, green-friendly construction, manufacturing and technology has not taken off with the speed that it should have. The two ideas are compatible in so many ways, but often come as an afterthought. In this month’s issue we explore the relationship between these methodologies and how they could continue to build in the future.

Embracing this idea is Lincoln Forbes, adjunct professor at Florida International University, who in this month’s sector focus discusses lean’s place in the world sustainable construction. Can lean ideas help one of the world’s most carbon producing industries to become more environmentally friendly?

In principles and purpose, Jean Cunningham returns with more ideas for using lean to improve a company’s books; this time focusing on the accounts, showing us how lean can expedite processes and engage all levels of the company to figure out how to run a tight ship.

And Dessault Systémes Tuan Nguyen explores management systems in a modern global world. What is the best way for company to deliver a standardised but progressive system that responds to change, but isn’t so rigid that it stifles it in the first place?

SMMT Industry forum’s Malcolm Jones, who is also the co-author of several lean books, brings his knowledge to LMJ with a piece on Little’s law and VSM. And MCP Consultant Roy Davis returns to LMJ to explore the similarities and differences between OAC and TPM.

LMJ board member, Joseph Paris, returns with a cautionary tale on the ascension of Mt stupid; companies cutting their continuous improvement programmes and how to avoid this short term-ism and the damaging effect it has.

Katrine Graae Lauritzen, from Danish oil company Ramboll Oil and Gas, presents this month’s case study on how the firm has undergone a ten-year long lean transformation and its seven rules for doing so successfully.

This month’s special feature sees Adnams CEO Andy Wood and lean expert Keivan Zokaei explore the ideas of sustainability in business and how this can mesh with lean.

Bill Bellows returns with his column on Lessons from Demings; this month taking on the ideas of lean, karma and puddings, and how one can learn from being patient in the adoption of lean.

As well as all this, we have your usual LMJ regulars: our events page brings you coverage of the lean happenings around the world, while we also have all the latest news and the roundup of our twitter and LinkedIn pages where you can read about all the interesting discussions.

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 SayOne Media 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.

CONTENTS

DEC/JAN 2014-15

CO

NT

EN

TS

04 Lean News

05 Introducing the editors

06 IntroJeffrey Liker explores sustainability in lean and the ways the continuous improvement community can do more.

P R I N C I P L E S & P U R P O S E

07 Continuously improving managementTuan Nguyen, senior manager of DELMIA Global Enterprise Manufacturing Intelligence at Dassault Systèmes, talks about how manufacturers can take a more lean approach to management.

10 Value stream mapping and Little’s lawMalcolm Jones, of SMMT, has been involved in lean manufacturing research and development for over 20 years and is co-author of Learning from World Class Manufacturers. In this article he explores Mike Rother’s idea of value stream mapping and what we can learn.

14 The ABCs of OAC and TPMMCP Consultant Roy Davis returns to LMJ to explore the similarities and differences between OAC and TPM.

18 Lean accountingConsultant Jean Cunningham explores the best way for a business to undertake leaning its books, and how the ideas can benefit an organisation.

21 Mt StupidLMJ’s Joseph Paris returns to discuss the curse of short term ideas and pulling the plug on lean before it can develop.

2 6 C A S E S T U D YRamboll Gas and Oil: getting clever quickerKatrine Graae Laurtizen, a consultant at Ramboll Gas and Oil, discusses the organisation’s lean implementation and the golden rules for keeping momentum going in a large company.

3 0 L E A N O N L I N E We bring you all the latest news and discussion from our LinkedIn and Twitter pages.

3 1 S P E C I A L F E A T U R E Managing businesses for the future; a sustainable approachAndy Wood, CEO of Adnams, and Keivan Zokaei, of S A Partners, investigate sustainability in lean business practices. Is the idea a pipedream or a practical and pragmatic approach to production in the 21st century?

3 5 S E C T O R F O C U S : S U S T A I N A B L E C O N S T R U C T I O N Lean and greenLincoln Forbes, adjunct professor at Florida International University, analyses lean’s role in creating sustainably constructed buildings and how we can make the construction industry more environmentally friendly.

4 0 L E S S O N S F R O M D E M I N GThis month Bill Bellows discusses pudding, The Beatles and Deming’s ideas on production systems.

4 2 E V E N T SFind out about the latest lean events coming your way.

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

Lean management journal: ISSN 2040-493X. Copyright © SayOne Media 2014. 3www.leanmj.com | December / January 2014-15

4

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]

THEDACARE ANNOUNCES NEW TOURS

The ThedaCare Center for Healthcare Value has introduced a new analytics-focused site visit to the array of lean healthcare education programmes it offers.

The centre invites healthcare leaders to get a behind-the-scenes look at ThedaCare’s clinical business intelligence (CBI) programme through the “Linking strategy, performance improvement and analytics at ThedaCare” site visit.

The new site visit builds on and complements the existing CEO site visits by demonstrating how ThedaCare has made its daily work data-driven and evidence-based at every level.

“While our traditional site visits focus on lean leadership at a high visionary level, ‘linking strategy, performance improvement and analytics’ teaches participants how to operationalise that learning by tying their lean efforts to strategy using metrics and analytics,” said Julie Bartels, executive vice president of national health information at the centre. “It’s difficult to sustain meaningful clinical change without the supporting information flow and performance metrics that clinical business intelligence provides. These new visits demonstrate the transformational relationship between performance improvement and analytics.”

During the day-and-a-half site visit, attendees will be introduced to the ThedaCare CBI program, witnessing how information and performance analytics flow to the front line to support strategy deployment, improve decision making and accelerate continuous improvement. By purposefully aligning CBI initiatives with performance improvement priorities.

TANZANIA OPENS UP TO LEAN

Kaizen could be one of the major solutions to emancipate the east African nation’s business firms from the low competitiveness trap.

The permanent secretary of the, Prime Minister’s Office, Dr Florens Turuka, said to journalists in the capital in October, after opening the kaizen seminar for the Chief Executive Officers (CEOs) Round Table.

Dr Turuka, who represented the Prime Minster, described kaizen as “a management technique that aims at improving company operations bit by bit on a continuous basis by involving all employees”.

The government turned to kaizen, on the basis that Tanzania needs to promote manufacturing enterprises through kaizen and by doing so could join other countries where it’s added productivity, such as Singapore, Brazil and Tunisia

He added it was important for both the public and private sectors to understand and apply the philosophy in all business firms. And especially the manufacturing sector.

The chief representative of Japan International Cooperation Agency (JICA) Tanzania office, Mr Yasunori Onishi, added that the kaizen project in Tanzania started in April 2013 and has successfully trained trainers through class room trainings and the 32 pilot companies.

INDIA’S LARGEST AUTO COMPANY TAKES ON LEAN

Escorts Auto Products Limited has been India’s leading manufacturer of auto products for over four decades, and recently began a lean transformation.

Prioritising on operational focus to improve business performance, Escorts Auto Products Limited implemented a group wide voluntary redundancy scheme (VRS), meant to restructure Escorts Auto Products. VRS at Escorts was taken up by 350 employees, and was aimed at enabling greater efficiencies and productivity.

Escorts’ VRS plan took 30 days, and costed about Rs 300,000,000 (£3.056m) and will have a payback of two years. The one time impact will reflect in Escorts’ Q2 results. Ishan Mehta, executive vice president of human resources, says the VRS offer was a group wide strategic initiative to make Escorts leaner and smarter, with more focus on productivity and improve organisational efficiencies.

Dipankar Ghosh, CEO, says the company initiated ambitious programmes with lean management; with consolidation of manufacturing facilities being prioritised to create more profitable production methods.

Alongside, Escorts has engaged with chosen prospective partners for the technology infusion to get a slice of the pie from larger opportunities available in the automotive sector. They are confident these initiatives will enable EAP to target a higher market share through high end products to domestic and international markets.

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 | December / January 2014-15

I N T R O D U C T I O NW R I T T E N B Y J E F F R E Y L I K E R

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What is the relationship between lean and sustainability? Lean is defined as the elimination of

waste; anything unnecessary or noxious to the environment. But more recent thinking suggests a broader definition of lean. The Toyota Way aspires to continuous improvement and respect for people. Respect for people starts with contributing to society and that includes having a positive impact on the environment. How do you accomplish that: through continuous improvement. Sustainability then becomes the constant struggle to have no negative impacts on the planet and the health of its life forms.

Toyota has set goals for being environmentally friendly, such as zero land fill use and 100% water reuse. They have used the culture of respect for people and continuous improvement to drive these efforts. At the Georgetown plant, every department began to track how much was thrown away which led to recycling efforts, including reusable plastic containers for auto parts and materials, elimination of conventional rubbish bins in favour of colour-coded recycle bins and using food scraps for compost, which is then used in a greenhouse to grow vegetables and donated to a food bank.

Secondly, Toyota was one of the first to push into environmentally friendly vehicles. It started in the early 1990s when business was booming, and chairman Eiji Toyoda challenged the company to think beyond the boom and work on new technology for the 21st century. Global 21 was a think tank program that concluded they would need environmentally friendly transport with high fuel economy.

This led to the relatively crude first generation Prius in 1997. Critics said the vehicle was heavily subsidised by Toyota and it could not possibly pay back the billions of dollars in R&D investment. GM said it was only a stop-gap solution and they would leap frog hybrids and go to an all-electric car. But Toyota understood continuous improvement. Get a

practical first model into production and then learn.

They learned about battery technology through their joint venture with Panasonic. They learned about making electric motors to power vehicles. They learned about computer systems to govern the use of different power sources. Now Toyota is preparing for its fourth generation Prius. They did as much as possible internally to learn.

It took about 10 years to sell one million Prius’-by 2014, Toyota was approaching the point of selling one million each month. They have invested heavily in fuel cell technology. Their long-term journey of continuous improvement and learning provides core technology know-how needed for whatever direction environmentally friendly vehicles go.

What can we learn from this? Long-term thinking is essential to becoming a lean learning organisation. We need to have people develop a way of thinking and process for continuous improvement. Toyota has invested in a culture of respect for people and continuous improvement, which in 2014-15 put it in a position to be the most valuable automotive brand, sell the most vehicles in the world, make the most profit in the history of the automotive industry and be the most environmentally friendly auto company.

There are no special lean methods for sustainability. It is our old friend, the scientific method of PDCA, in a culture of continuous improvement and respect for people.

It took about 10 years to sell one million Prius’-by 2014, Toyota was approaching the point of selling one

million each month

P R I N C I P L E S

& P U R P O S E

Tuan Nguyen, senior manager of DELMIA Global Enterprise Manufacturing Intelligence at Dassault Systèmes, talks about how manufacturers can take a more lean approach to management.

Continuously improving management

Manufacturing enterprises have invested heavily in lean practices for many years, wringing the

inefficiencies out of every operation in the production process. Supply chains have been tightened, inventories reduced or virtually eliminated with just-in-time processing, and production operations at every stage streamlined and optimised.


R E A D A B O U T :

Where managers can go wrong with applying new techniques

How to apply lean to an organisation locally, nationally and globally

The benefits of a management intelligence system

8

C O N T I N U O U S L Y I M P R O V I N G M A N A G E M E N T T U A N N G U Y E N

in the enterprise who needs it, in a form appropriate for their role.

The plant manager may spot a problem quickly, based on local data. But what if it’s a regional problem that is only apparent when looking at aggregated data? Then it will take longer, perhaps a good deal longer. There are companies that are happy if they get aggregated global manufacturing reports on a weekly basis. But a lot can happen in a week. Faulty products can ship. Quality can get bogged down with testing. Warehouses can accumulate parts waiting for a management decision.

A N E W U S E C A S E F O R E N T E R P R I S E M A N U F A C T U R I N G I N T E L L I G E N C EThis is why some enterprises are now implementing a new generation of manufacturing intelligence systems that provide global management reporting and analysis in close to real-time. This approach requires more than a graphical front-end that simply dresses up disparate or incomplete data. It requires real-time information gathering from all the plant floors, the ability to clean and aggregate the data from multiple sources, and the means to deliver that data up the corporate chain as it happens— all the way to the corner office if needed.

Such a system is not trivial to implement, and IT may grumble about yet another information project that will stretch its already thin resources. But there are solutions on the market that are relatively easy to deploy, and the investment is small compared to the efforts already expended on global lean initiatives.

Besides, without a manufacturing intelligence system, lean organisations are only lean when nothing unexpected happens. And, as every manufacturing enterprise knows, that is almost never the case. One unexpected event can undo months of savings and efficiencies.

For enterprises that are serious about continuous improvement, it would seem that manufacturing intelligence for managers is a necessary step.

But there is one area in the lean revolution that is often not considered—not because it doesn’t matter, but because it has been so difficult to deliver a solution. That neglected area? The management decision-making process.

Consider a global manufacturer that has practiced continuous improvement for a decade. Products roll off the assembly line with precision. The quality team is on top of production worldwide, so yields are consistently high. Warehouses operate at top efficiency. And then one day, a supplier problem develops. A key component, let’s say, begins trending out of spec.

What does the company do? That depends on the managers who have responsibility. How quickly can they identify the problem? What actions do they take? How soon can they correct the problem, and how accurately?

A P P LY I N G A L E A N A P P R O A C H T O M A N A G E M E N TThese actions depend on information getting to that decision-maker in a timely way. And this is where lean systems can fall down. Global manufacturers have complex supply chains and multiple plants that often capture data in different ways and report in different formats. That data has to be gathered and analysed, and then delivered to each person

Global manufacturers have complex supply chains and multiple plants that

often capture data in

different ways and report in different formats

Some enterprises are now

implementing a new

generation of manufacturing

intelligence systems that

provide global management reporting and

analysis in close to real-

time

P R I N C I P L E S

& P U R P O S E

C O N T I N U O U S LY I M P R O V I N G M A N A G E M E N T P E R F O R M A N C E Visibility into real-time manufacturing intelligence can let management improve and enhance lean programmes. This improvement can be accomplished with access to real-time production information, ideally aggregated from across the enterprise. Better, faster access to information allows management to act with greater efficiency, which contributes to improved lean performance.

But what if we took the idea even further? What if manufacturers could continuously improve the management process itself, in the same way that they continuously improve a production process?

After all, they are both processes. When something happens in the enterprise that requires judgment and decisions, such as a quality crisis or a market shift, a management process is initiated. Management receives information (or doesn’t), investigates the situation (or not), and takes action (or fails to). Furthermore, there are meaningful metrics involved, such as time to discovery, time to resolution, outcome of resolution, and profit/loss impact.

L O O K I N G A T M A N A G E M E N T A S A P R O C E S SIf management decisions affect lean performance, and if there are metrics that can be tracked, compared, and improved upon, then in theory, couldn’t it be used this information to continuously improve the actual management processes? The answer is yes.

When a manufactured part begins to trend out of performance, managers know this because they are tracking all such parts being produced globally. If one part from one plant is out of spec, they’ll take action. Perhaps they will find the plant is not following best practices, so they take steps to correct the problem and deploy the proper processes.

The same approach can apply to management decision-making. If an enterprise tracked how managers performed in these situations, we could wager there would be significant differences discovered. Some management teams would accomplish more with fewer resources. Some would resolve problems faster. Some would deploy new processes more effectively than others. These differences could be tracked by an information system—let’s call it a management intelligence system.

M A N A G E M E N T I N T E L L I G E N C E S Y S T E MSuppose, for example, that a particular lean production initiative was being deployed globally. If we had a management intelligence system, we could track and compare how different regions deployed the

initiative at the management level. We might find that one region was far ahead of the others in certain key metrics. For instance, we might find that the successful management team accomplished more with fewer resources, but had more regular inter-departmental meetings to facilitate problem-solving.

We could then identify and deploy these management best practices around the enterprise, just as we deploy best production practices.

I S T H I S C O N C E P T P O S S I B L E , O R J U S T F A N T A S Y ?In theory, this type of system could be created using the manufacturing intelligence technologies available today. It would simply require the creation of a new set of metrics—time spent, resources used, departments contacted, etc. This data could be captured by the same system that managers use to investigate production issues, through their computers and mobile devices.

The data is probably there; it’s simply a matter of figuring out how to access and use it.

We’re not proposing a type of big brother automate the management process. That would be small minded and doomed to failure. Management, by definition, involves human judgment and will never be as cut-and-dried as a production process. But certain elements of management could be measured and improved. What about mean time to resolution? And if used judiciously and fairly, a management intelligence system could yield significant information about how management is performing, and more importantly, where it could be improved.

In other words: lean management based on continuous improvement.

Note: this article originally appeared as a blog on The Manufacturer website. http://www.themanufacturer.com/articles/a-lean-approach-to-management/


If management

decisions affect lean

performance, and if there are

metrics that can be tracked,

compared, and improved

upon, then in theory, couldn’t

we use this information to continuously

improve the actual

management processes?

10

Malcolm Jones, of SMMT, has been involved in lean manufacturing research and development for over 20 years and is co-author of Learning from World Class Manufacturers. In this article he explores Mike Rother’s idea of value stream mapping and what we can learn.

Value stream mapping and Little’s law

Value stream mapping is ubiquitous in current lean implementation, despite not

being part of the original Toyota production system as developed by Taiichi Ohno and colleagues. Instead the strategy was invented by Mike Rother, a US researcher who studied Toyota and particularly the practices of their supply chain development engineers. Rother noted that these engineers drew maps of two types of flow, material flow and information flow and also distinguished between value adding process time and non-value adding time in production. His rather elegant solution to integrate and explain these concepts is what is now known as a value stream map, as described in his book Learning to See.

In order to calculate the value adding percentage and leadtime on his value stream map, Rother used Little’s law of queues. Little’s law was originally developed in retail banking to calculate the length of queues and the number of

R E A D A B O U T :

Exploring the ideas of Little’s law and VSM

The application of Mike Rother’s Learning to See to the ideas

What manufacturing has learnt from the principles involved

P R I N C I P L E S

& P U R P O S E

Little’s law states that leadtime is equal to work in process divided by the end of line rate – the rate at which the queue diminishes

counters needed to be opened to keep the customer waiting time at an acceptable level. One particular early application to manufacturing of Little’s law, in a consistent way, was in what Ford Motors called the dock to dock calculation, DTD (receiving dock to shipping dock). Before the application of DTD we would simply use an average empirical leadtime to generate a value adding percentage. The DTD calculation is a method to convert inventory to time, and specifically to leadtime. This can then be compared to the value adding processing time for an item to generate a value adding percentage. As a lean calculation it is very

instructive as it focuses on leadtime and the relationship between inventory and leadtime, both key lean concepts.

This is where Little’s law of queues comes in. Little’s law states that leadtime is equal to work in process divided by the end of line rate – the rate at which the queue diminishes. The end of line rate is averaged over time, so that if we ship 5,000 assemblies per month; that is 250 per day (assuming 20 production days). If we have 4,000 pieces of inventory in our production system, then the leadtime is 4,000/250 = 16 days. This definition of leadtime is based on an assumption of

FIFO and basically says that if new raw material is introduced and queues behind all the other material in process, then it will take 16 days to appear in finished goods inventory – again, regardless of any processing time. If all our current WIP is black and a customer orders a white one, then the white material will have to queue for 16 days behind all the black ones until it can leave the line, unless expedited.

Ford used this calculation to define the dock to dock time for a particular control part, such as an engine block. The procedure is to count all the engine


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V A L U E S T R E A M M A P P I N G A N D L I T T L E ’ S L A W M A L C O L M J O N E S

Learning to See is an appropriate title for Rother’s book and he has done the lean community a great

service in developing the value stream mapping tool

these on the stepped timeline at the bottom of the map. Again this is useful in illustrating that inventory is a source of extended leadtimes, but the calculation itself is invalid as the leadtime for each pile of inventory cannot be derived in this way as it is a stock and flow calculation, like the time taken to empty a bath at a given rate, not an additive calculation at each stage of the process.

This has led people to introduce an alternative calculation as illustrated in the example below, taken from commonly available lean training material. Realising that one single end of line rate cannot be allocated to different inventories, it has become practice in some circles to calculate the leadtime for each inventory pile based on the processing time of the subsequent process. In this example, the 430 items before mixing are converted into 4300 minutes of leadtime as the mixing process has a cycle time of ten minutes.

A similar calculation is performed at each stage (there is an arithmetic or typographical error before the finishing stage, but no matter) and these are then added to give a total leadtime of 31,677 minutes. The shipping calculation is based on 35 units shipped every day and converted using 1440 minutes in a day, so one unit is shipped every 41 minutes. The problem is that this leadtime is meaningless. The total time generated is simply the sum of the times it will take to process the current inventory to the next stage in the process i.e. to move the piles of inventory one stage to the right – it is not a total elapsed time or leadtime through the process. This can be seen because the times are running in parallel – the inventory at each process is being depleted simultaneously, not in sequence.

If we use Little’s law as recommended by Rother, then the calculation is simply the total inventory divided by the end of line rate, in this case 35 units shipped per day. This gives 2,130 units divided by 35 = 61 days. If this is converted into minutes we get either 61 x 1440 = 87,840 or 61 x 460 = 28,060. The former is based on a 24 hour day, the latter on the 460 minute shift time available. It is preferable to use the latter if calculating a value adding percentage, as this relates to the 460 minutes of opportunity to add value each

blocks in the factory, in whatever configuration they appear, and then use the rate at which engines leave the plant to calculate the length of the queue of engine block inventory in the factory. If, as in the example above, we have 4,000 engine blocks and the end of line rate is 250 per day we have a 16 day leadtime. Comparing this to the processing time for an engine, say eight hours, for example, we can then derive a value adding percentage of 8/(16*16 hours) = 3.125%. This assumes two eight hour shifts per day, i.e. a day is equal to 16 hours of opportunity to add value.

This is a perfectly reasonable calculation and shows us the amount of waste in the production system based on the amount of inventory, but problems arise when this total leadtime is divided up on the timeline of a value stream map. The leadtime is totally independent of the cycle times or process times, it is solely derived from Little’s law. The confusion arises because in his mapping process Rother identifies piles of inventory and then uses Little’s law and a single end of line rate to convert these piles of inventory into time, listing

P R I N C I P L E S

& P U R P O S E

day, so we are comparing actual value adding with opportunity to add value. The latter calculation is in the same ballpark as the 31,677 minutes given in the example as the total leadtime, but this has been calculated using a 24 hour working day for the shipping process, which is dubious in itself, so this is more by luck than judgement, and is still out by a factor of about 13%.

It should be emphasised that the error is not Rother’s. Rother uses the DTD calculation in a perfectly reasonable way, except he causes confusion by allocating leadtime to individual inventory piles on the VSM, which is a theoretical construct, and then draws a timeline which unwitting readers assume to be additive.

If we are to generate a valid value adding percentage, the only proper calculation is to apply Little’s law using the available value adding time – the available time used in an overall equipment effectiveness (OEE) calculation – comparing this to the actual value adding processing time. In the example above this would give 35 minutes divided by 28,060 minutes, 0.13%.

What then, is the solution to this confusion? The easiest solution is to be very explicit about the application of Little’s Law in deriving the VSM leadtime and not divide it up on a timeline. The map will still indicate the location and quantity of inventories and provide focus for inventory and hence leadtime reduction, but will stop introducing potential for error. Similarly we can add the processing value adding times (which are additive) without the need for a timeline on the map. The leadtime and value adding percentage can still be indicated on the map as they are now, and current and future states can be compared. All we have lost by ditching the stepped timeline is a source of confusion and some dubious mathematics.

Learning to See is an appropriate title for Rother’s book and he has done the lean community a great service in developing the value stream mapping tool. Unfortunately the artificial and unnecessary stepped timeline he introduced on the bottom of the map obscures our sight and the meaning and value of the technique. Our value stream maps would be better off without it.


Little’s Law was originally developed in retail banking to

calculate the length of queues and the number of counters needed to be opened to keep the customer waiting time

at an acceptable level

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14

MCP Consultant Roy Davis returns to LMJ to explore the similarities and differences between OAC and TPM.

The original premise of the article was meant to be: TPM or OAC which is best? But we could

suggest that it is not as easy as that, and instead this article will look at the similarities and differences between TPM and OAC and the reasons why an organisation might decide upon one or other, or perhaps both, as part of their asset management or maintenance strategy.

It is now a little over 25 years since total productive maintenance (TPM) made its debut in the UK and this article takes the opportunity to look back at the original roots of TPM and to contrast and compare it with the relatively recent phenomenon of operator asset care (OAC).

T H E O R I G I N A L F I V E P I L L A R S O F T P MIt is important to remind ourselves of the basic principles and philosophy of TPM which is as relevant now as it was 25 years ago and is encapsulated by the original five pillars of TPM that could be interpreted from Seiichi Nakajima’s original texts and are illustrated in figure one on the next page:

The original five pillars were described as follows:

Elimination of the six big losses to improve equipment effectiveness

An autonomous maintenance programme

A scheduled maintenance programme for the maintenance department

Increase the skills of operations and maintenance personnel

An initial equipment management programme

The original book suggested a minimum three year programme for TPM implementation.

It should be noted in figure one that the main roots of OAC lie within the original autonomous maintenance pillar of TPM.

S I M I L A R I T I E S A N D D I F F E R E N C E SSo what is the difference between TPM and OAC? Also, what are the similarities between a TPM programme and an OAC programme?

R E A D A B O U T :

The five pillars of TPM

Total productive management and operator asset care: more in common than you would think?

How to instigate these ideas

The ABCs of OAC and TPM

P R I N C I P L E S

& P U R P O S E

So what is the difference between TPM

and OAC? Also, what are the similarities

between a TPM

programme and an OAC

programme?

The diagram in figure two provides an overview:

Over the years, the basic philosophy and all encompassing principles of TPM have been lost somewhat and many organisations and individuals, although being familiar with the acronym TPM, have varying interpretations. One of the most common held beliefs is that TPM is just the manifestation of autonomous maintenance activities or alternatively TPM is purely the involvement of production operators in maintenance activities.

Many disagree with this interpretation and have tried to educate the group or individual concerning the differences and similarities between their incorrect assumptions and the true meaning of TPM.

T P M P R O G R A M M E SA TPM programme is basically a company-wide change programme which will encompass many aspects of manufacturing, quality, safety and support functions as well as asset management and maintenance, all underpinned by continuous improvement and the engagement and development of personnel at all levels within the organisation.

TPM programmes often require a major organisational re-alignment in order to support the leaner and more effective operating methods that emerge from the

programme and they require a significant commitment from the senior leadership team to the change, which will span a number years.

TPM can require a substantial investment in the training and development of personnel at all levels and in changes to the physical assets within the company.

When implementing TPM it is very important that the programme is not allowed to become too top down and alienate shop floor personnel. Companies who pursue the goals of TPM will typically follow guidelines and steps which provide a structured approach to implementing the main pillars and the underpinning enablers.

Many will seek to achieve recognition of their efforts and progress through awards typically provided by the Japan Institute for Plant Maintenance (JIPM) or one of their accredited partners.

Although relatively few companies have whole heartedly embraced TPM, there have been some positive influences as a result of UK industry’s exposure to TPM over the years through, for example:

Overall equipment effectiveness (OEE) is now used an important key performance indicator (KPI) by many manufacturing businesses

The use of OEE (whether it is calculated correctly or not) has provided more focus on the major losses encountered within manufacturing areas

Small group activity involving production operators and maintenance personnel has increased and although they are not always referred to as autonomous TPM teams, in many cases, it is exactly what they are.

There is much more emphasis on workplace organisation and cleanliness in many companies who run 5S or can do activities and carry out regular shop floor based audits and improvement activities.

The recording and analysis of downtime information (usually as a part of the OEE measurements) has helped companies to identify the contribution to operational performance that good maintenance practice can make.

Some OAC programmes do encapsulate many of the good principles of


Figure one – the original five pillars of TPM

OEE

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ts a

nd Im

prov

emen

ts

Plan

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Mai

nten

ance

/Sys

tem

s

Aut

onom

ous

Mai

nten

ance

Earl

y Eq

uipe

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Trai

ning

and

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T H E A B C S O F O A C A N D T P M R O Y D A V I S

from the bottom up by the team with technical advice from the maintenance department.

Autonomous maintenance requires a very strong partnership between operations and engineering to be developed and a great deal of trust is required, particularly from the management team, as the local team becomes more and more autonomous.

Of course, the autonomy has to be underpinned with a substantial programme of training and development of personnel along with development of managers necessary to change their approach and provide support to the teams.

O P E R A T O R A S S E T C A R EThe principles underpinning autonomous maintenance are exactly the same for operator asset care, including:

Asset care responsibilities shared between production operations and maintenance.

The engagement of operations’ personnel and management with the care and maintenance of their machinery and equipment assets.

Production operators provided with training and development so that they can play an active part in the on-going

autonomous maintenance, especially when they are not just seen as a means of moving technician jobs to operators but also as a means of engaging production operators in continuous improvement activities and developing ownership of their facilities

TPM is a familiar acronym these days, most people working within manufacturing have heard of TPM, although, as mentioned, I would question whether many really understand its core philosophy and principles.

A U T O N O M O U S M A I N T E N A N C EAs discussed, the autonomous maintenance pillar has always been one of the main pillars of a TPM programme. It can be argued that it is probably the most important pillar of TPM as it not only engages and involves both production and maintenance personnel in the whole process, but also considerably improves the effectiveness and performance of manufacturing facilities.

As the name implies, autonomous maintenance encourages and develops autonomy i.e. self regulation or self rule regarding the care, condition, performance and continuous improvement of the machinery, equipment and other facilities within the local team’s area.

In order for autonomous maintenance to work it has to be a truly bottom up approach and has to win the hearts and minds of factory floor personnel both from production operations and maintenance. The team accepts ownership of all of the facilities and processes within its operating environment and is gradually given more responsibility and authority regarding the teams’ facilities and work place. The autonomous maintenance tasks undertaken locally will usually have been developed

When implementing TPM it is very important that the programme is not allowed to become too top down and alienate shop

floor personnel

T P M P R O G R A M M E

Company wide change programme

Affecting all aspects of company manufacturing and support operations

Leading to major organisational re-alignment

Large investments in training, factory floor resources and support staff

Can become a high level, top down programme

Team and site steps, achievements and awards

A U T O N O M O U S M A I N T E N A N C E

Essential part of a TPM programme

Factory floor based teams

Operators and maintenance share asset care and kaizen activities

Responsibility for the maintenance and assets within the team’s area

Becoming more autonomous with minimal supervision

O P E R A T O R A S S E T C A R E

Essential part of asset management/MBP programme

Shared responsibility for asset condition, reliability and performance

Skills developed to enable operators to undertake maintenance and process improvement tasks

Team and individual activities to maintain and continuously improve assets and processes

Support and regulatory framework

Figure two – an overview of the differences between TPM and OAC

P R I N C I P L E S

& P U R P O S E

maintenance and improvement of machinery and equipment within their area.

Team and individual involvement in the continuous improvement of the condition and performance of operating facilities within their area, developing true ownership.

It is essential to implement these principles and gain bottom up support if the goals of world class asset management and maintenance are to be achieved.

The main difference between autonomous maintenance and operator asset care is in the approach taken and the degree of autonomy pursued.

An OAC programme can be implemented as part of a maintenance best practice or reliability excellence type programme and does not have to be linked directly to a TPM programme.

The training and development of production and maintenance personnel is key to the success of OAC programmes which will provide a structured, regulated and managed approach with much less autonomy of the local shop floor based teams than with autonomous maintenance and much more management support and leadership.

It is likely that maintenance plans pertaining to the machinery and equipment within an OAC area will have been developed as a result of engineering analysis by the maintenance department. The operator based activities will then have been extracted from the plans, work instructions compiled and trained out to production operators by maintenance technicians.

The subsequent implementation of the OAC tasks will be issued planned and scheduled using the computerised maintenance management system (CMMS), and managed and monitored by line managers with specific reports and key performance indicators (KPI’s) being used to monitor compliance.

W H Y O A C A N D N O T T P M ?It’s recommended to any manufacturing organisation, whatever improvement programme they are embarked upon, should at least encompass the original five pillars of TPM in some form or other. It is true to say the pillars that are related to OEE and PM systems have, comparatively, been the least difficult to implement and that is why many manufacturing businesses have embraced elements of these pillars. The other pillars relate to people issues including involvement, motivation, changing behaviour and overall culture change and as such, are more difficult and take longer to implement.

That is why TPM programmes take many years to bring about change and so it should not be surprising that these have not been either attempted, or if attempted,

sustained in many companies as unfortunately many, senior and middle managers do not have the will, the long term vision or the determination to make TPM or a similar programme succeed (or may be put off by the perceived enormity of the task).

In this case it is necessary to be realistic and to gradually implement some of the core pillars in one form or other, and OAC is certainly an effective way of developing the engagement and involvement of operations, with asset care and making them part of the drive towards the achievement of world class asset management and maintenance performance.

S U M M A R YReturning to the opening paragraph of this article, of which is best: TPM or OAC?, the principles and good practice approaches are shared and in essence OAC is a subset of TPM which is very much related to autonomous maintenance. The decision about what is best for any organisation must be based upon: the present situation, company strategy, senior management attitudes and perceptions, resource availability and many other considerations.

In some cases it is appropriate and desirable to embark upon an all embracing TPM programme, but in many cases this will not be practical and therefore an OAC approach that is gradually implemented as a work stream within a world class asset management and maintenance programme will be much more likely to succeed. Hopefully, in this scenario, it will be possible to evolve into a more holistic TPM model.


It’s recommended

to any manufacturing organisation,

whatever improvement programme

they are embarked

upon, should at least

encompass the original five

pillars of TPM in some form or other

F U R T H E R R E A D I N G :

Introduction to TPM, Total Productive Maintenance- Seiichi Nakajima.

Productivity Improvements Through TPM, Roy Davis.

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Consultant Jean Cunningham explores the benefits of applying lean principles to a company’s finance.

Lean accounting

2 Greatly reduce the number of transactions. As one piece of flow is implemented, collecting transactional information on each order or item is impractical and only wastes time by the operators.

3 Focuses on customer demand to drive production rather than equipment and labour capacity. Standard cost accounting is based on internal capacity and will always encourage excess and cash consuming production.

4 Align metrics with the lean behaviours desired by increasing the number of metrics that focus on the process itself, and not only the outcome.

5 Provide the correct information for decision making. Standard cost accounting merges together variable costs with fixed costs, as well as direct costs with shared costs. Lean accounting makes access to needed information much easier.

collecting money and paying taxes. By applying lean concepts, accounting can eliminate waste and create capacity enabling accounting personnel to provide higher value analytical and consulting support.

W H A T I S A C C O U N T I N G F O R L E A N ? Accounting for lean enables –and in some ways, ensures—that financial reporting, decision-making information, and metrics are aligned with your lean strategy, and, thereby, provide the highest value and most needed information throughout the lean company. Typically, a lean company will want to eliminate the standard cost accounting modules and align the financial reporting with the value streams or product lines.

W H A T I S T H E B E N E F I T O F A P P LY I N G A C C O U N T I N G O F L E A N ?

1 Create information that is simpler to understand. This is very important in the lean culture focused on employee empowerment and involvement.

If your company is applying lean on the shop floor, there are many compelling reasons to apply lean

accounting. Lean techniques applied to company product related processes (1) dramatically reduces waste, (2) completely change how work is done, and (3) demands real data—including financial data— be communicated in an understandable and timely fashion.

As these changes proliferate in product areas, traditional financial data and reports become more ineffective and the need to apply lean principles and tools in your accounting and other back office functions grows precipitously. A lean accounting function can adjust to these new requirements and even become a valuable partner in establishing a lean enterprise.

Lean accounting is comprised of two separate parts; lean for accounting and accounting for lean.

W H A T I S L E A N F O R A C C O U N T I N G ?Lean for accounting is the application of lean principles to accounting operations such as paying bills, closing the books,

P R I N C I P L E S

& P U R P O S E

Accounting for lean not only

eliminates low value, wasteful processes and data, but turns

accounting into an

essential component for decision making

The benefits of the five points are not subtle. Each has high value impact on both accounting and the company at large. The mind shift in accounting to being a partner with other functions is very positive for individuals and greatly raises the value of the accounting function in the eyes of those outside of accounting. Using revised terminology enables accounting to communicate effectively across the company from the CEO to the machine operator in a meaningful way. The new focus on customer demand and decision making requirements makes reports essential and in demand.

Collectively, accounting for lean not only eliminates low value, wasteful processes and data, but turns accounting into an essential component for decision making within operations, R&D, and upper management.

W H A T I S T H E V A L U E O F T I M E ? Is time money? Or, is time what you make with it? The following is a story about using time wisely.

A publicly-listed company decided they wanted to engage their accounting department in the lean journey. They setup a kaizen event. For their initial kaizen, the accounting team selected the close process with a goal to reduce the time it took to close the books. The close was over 10 days at the time. The kaizen was facilitated and the team made some immediate improvements, but also created a vision of a five day close and developed a detail plan that would take 12 months to execute.

It has now been 12 months and they did in fact meet their goal on schedule. Secondly, they did not miss any of the deliverables.

W H A T D I D F I V E L E S S D A Y S M E A N T O T H E C O M P A N Y ? First, the team used to spend many nights grinding it out to achieve a 10+ day close. Now, the work life balance is in alignment for the entire team and they are able to close the books in five days. Morale is up in the department.

So work/life balance, capacity for higher value work - sounds good. In the third

quarter, the company, for the first time in years, beat their main competitor by releasing earnings first to the market. This was very critical because the company was then able to set the message for the industry. Their message was one of increasing market share and increasing order size.

Days later, the competitor’s earnings announcement message was that it was “a tough economy”. If the company had not issued first, their stock performance would have been tainted by the other company’s news. But instead they were able to set the mark.

C O L L E C T I O N M O N E Y Nothing makes the whole business cycle work like getting the money for the products and services you provided. Yet, many companies that have made huge strides in the manufacturing area, have not used the lean tools so effective at the shop floor, to shorten the collection time of money.

At a kaizen event, the perfect days’ sales outstanding (DSO: A measure of the average number of days that a company takes to collect revenue after a sale has been made. It is a measure of process optimisation for collections from a lean perspective) was calculated for each of the company’s four product lines. One of the product lines had a huge gap between the actual and the perfect. So, the kaizen team dug deeper in this area and found the root cause. A decision that had been made in earlier times and been put in place in the hopes of speeding up collections was being interpreted in a way that tied the hands of the collectors. When brought to light, it was determined that it could be changed immediately. This change affected the processing time of 30% of this Fortune 200 manufacturing company’s receivables. That will get a lot of cash in the door faster to pay bills, make the payroll, and borrow less from the bank.

D O Y O U B U D G E T V A R I A N C E S ? If you still use a standard cost system, do you budget for variances? In cost accounting courses at business schools, this would be a ridiculous question because the standard cost system was supposed to show the real cost of our products. If production varied from this amount, students learn that they should investigate why that would happen. Then if the variance was unfavourable, the students could expect an improvement plan. And if the variance was favourable, they could raise the bar and change the standard rates to this new level of improved method.

T H E R E A L W O R L D Sadly in the real world, it is much more common to hear of companies that budget for variances. In fact, it might be as high as 50% of the companies do this. Why?

1 Setting standards every year is too much work. It can take weeks to figure out the new rates. In


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companies with lots of continuous improvement and reorganisation of the physical work, it is even more difficult to adjust rates from year to year.

2 People are used to the traditional relationships and get confused when the standards are reset. How can standard costs go from favourable variances at the end of the year, to no variances or negative variances at the beginning of the next year, just because the standards are reset? What does it mean? How can anyone manage-and most managers do not have accounting background-with this sudden and bewildering new information?

3 The standards are used for pricing and no one wants to affect customer prices. Perhaps a company has been really successful with their lean efforts and really doesn’t want to drop the prices of their products. So, what happens? In the end, all the systems use the standards plus some adder factor to set the prices.

4 Managers know their company is producing far under capacity, and they don’t want the standards to go up so high to absorb all the existing fixed costs.

Given the potential confusion and irrational workarounds, a better question might be, why have a standard cost system at all? For some companies, this question is heresy. They say they need their standard cost system (1) to understand their product cost, (2) to help with product pricing, and (3) to evaluate production performance. And yet, they budget variances. A true oxymoron.

W H A T I S T H E A L T E R N A T I V E ? It’s what’s called plain English financial statements. They retain material cost at a bill of material level, but separate the remainder of costs between: 1. True variable cost versus near term fixed costs (which

means labour is fixed for most companies) 2. Direct cost incurred specifically for a product or

value stream 3. Costs that are shared across the product or value stream

All labour and overhead is treated as a period cost expressed in simple to understand language. Inventory valuation is seen as an accounting adjustment and separated from operational numbers.

T H E R E A L I T Y O F L E A N F I N A N C I A L S T A T E M E N T S If a CEO was wondering how to handle a significant downturn in demand.

Firstly, no financial statement can provide the complete and final answer to this question. While one of the most important purposes of a business is to provide a financial return, the financial statement serves the purpose of providing some of the outcome feedback for decisions. It

provides data for what has been; not for what is to be. What is more important for decision-making (before-the-fact thinking) is to have the information that is actually needed to assist in the evaluation stage when establishing and considering options. This is where lean financial/management statements are crucial. The lean statement provides the information needed and it reflects real world costs unlike standard cost-based statements.

One of the characteristics of the statement is it separates (1) the costs driven by volume from (2) the costs that are variable only in the medium or fixed term. This is important for making decisions regarding elastic demand and how to address it.

Standard cost systems, on the other hand, assume all manufacturing costs are fully variable. As a result of this underlying assumption, when forecasting the impact of additional sales, the profit impact is underestimated. And, when forecasting the impact of lost sales, the reduction to profit is underestimated.

For instance, if the gross margin percentage (gross margin includes both variable and fixed costs) equals 25%, that implies for every dollar of lost/gained sales, there is $0.25 of profit impact. However, if the variable margin percentage (variable margin is based only on variable costs) equals 50%, a typical relationship, then the impact of lost/gained sales is $0.50 per $1.00 of lost/gain sales. And, of course, not every product has the same relationships.

In a lean financial statement, the difference between variable margin and gross margin is clear. Additionally, the GAAP specific accounting transactions for inventory valuation are separated from actual cost elements. This provides very direct and obvious clarity for decision-making.

Harvard Business Review published an article that indicated 50% of CEO decisions are made on intuition. Maybe with lean providing hard and accurate information, the use of intuition as the primary tool can be reduced adding confidence and reliability to the decision-making process, and in all probability, bottom line profits going forward.

Collectively, accounting for lean not only

eliminates low value, wasteful processes and data, but turns

accounting into an

essential component for decision

making within operations, R&D, and

upper management

P R I N C I P L E S

& P U R P O S E

LMJ editorial board member Joseph Paris returns to discuss the ideas of short short term-ism in the business world over continuous improvement.

Lessons from Mt. Stupid

A month later the much learn’d and passionate individual had been released. The company had killed the entire operational excellence program to cut costs.

Believe it or not, this happens more than you might imagine; operational excellence programmes being cut or killed to save costs, continuous improvement programs ceasing to be continuous, lean and six-sigma programmes being starved of oxygen – the incredible idea of corporate leadership on the improvement teams to accomplish grand goals with little or no support, and the more incredible acceptance of the demands under such conditions by the improvement team leadership.

The misalignment of expectations of programme-objectives


R E A D A B O U T :

The idea of Mt Stupid: spending more money and wasting time on a programme you won’t stick with.

The short term-ism that plagues boardroom decision making.

Managers not realising continuous improvement needs to be continuous.

The premier example of Mt. Stupid: the director of operational excellence in

Europe for a publicly-traded company was speaking at a conference – which is not so unusual, as most of the speakers and attendees were in operational excellence (or continuous improvement) leadership roles. He was a bright and passionate individual. He was fully engaged in the programme and hoped to continue on it for his time at the company.

22

Incompetent people will pursue a path born out of

ignorance with great confidence until it is

glaringly apparent that the path is wrong

of honour; proof, if you will, that the experience was in fact perilous, they had overcome, and they have the t-shirt to prove it.

These people don’t come back home and talk about all the successful runs they had. They will talk of the wipe-outs and near misses. Smiling all the time.

I F Y O U S q U I N T R E A L H A R D , Y O U C A N S E E S U C C E S S F R O M T H E P E A K O F M T S T U P I D :Inspired by the case of McArthur Wheeler – who rubbed lemon juice on his face before he robbed banks in the misguided belief that the cameras would not be able to record him during the robbery – David Dunning and Justin Kruger of the psychology department at Cornell University, observed a pattern of behaviour where an ignorance of real requirements led to overestimation of capabilities – often in the extreme.

There had been references to such misguided belief going back to antiquity;

“Real knowledge is to know the extent of one’s ignorance.” – Confucius

“Ignorance more frequently begets confidence than does knowledge.” – Charles Darwin

“One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision.” – Bertrand Russell

In 1999, Dunning and Kruger released a study –known as the Dunning-Kruger effect – that proposed, for a given challenge, incompetent people will pursue a path born out of ignorance with great confidence until it is glaringly apparent that the path is wrong – with the resultant realisation setting their confidence into a deep devaluation before the process of rebuilding can occur.

Setting off on the journey: embarking on a new venture is a very exciting time. Everyone builds themselves up to face the challenge. But are those selecting the individuals to complete the task selecting the right people?

versus ability-to-deliver responsibility isn’t just to be blamed on corporate leadership, though. It’s possible to place responsibility for the pending doom on the leadership of the improvement teams for not understanding what is being asked of them, and what they truly need to accomplish the task. In essence, they are setting themselves up for failure – being held accountable and responsible, but without authority – before they even start.

Y O U W A N T M E T O F I G H T A D E S P E R A T E B A T T L E A G A I N S T I N C R E D I B L E O D D S – W H E R E D O I S I G N U P ?There is a reason that young people join the armed services, bungee-jump, and participate in extreme sports much more often than older folks; they don’t know any better, it looks sexy, and participation feeds the ego. If a few others join, a crowd mentality forms, and a frenzy often follows. These people are referred to as adrenaline junkies – they love the rush of excitement and challenge of facing the peril.

Oftentimes, they will engage in the activity long before they have the capability for success. In fact, getting slightly injured is looked upon as a badge

P R I N C I P L E S

& P U R P O S E

The selection process is the most critical step when formulating the members of the team – especially those initial members who will form the core, the leadership, of the team. During the interview, the interviewer will want to select the individual whose credentials and experience satisfy the prima facie requirements – but will gravitate towards selecting the most confident and enthusiastic person they can find. They will listen with great interest to the person who has a general understanding of the challenge - and who possesses a can do attitude - over the person who is more cerebral, contemplative and modest to risk taking. The risk takers are uniquely aware of their own inability, over the more capable person, who is consciously consignant of the reality of the challenge and more reserved.

Climbing Mt. Stupid: And so our ambitious – though unlearn’d and unprepared – adventurer begins his ill-conceived journey up the slope of Mt. Stupid. Subtle warnings that he might not be on sound footing go largely ignored. Instead, he:

overestimates his own level of skill because he doesn’t know any better;

fails to recognise genuine skill in others because he doesn’t realise his own shortcomings;

fails to recognise the extremity of his inadequacy because he can’t measure what he doesn’t know.

Reaching the peak of Mt. Stupid: More often than not, and directly related to his level of confidence and the size of his ego, our adventurer’s realisation that he lacks the skills or knowledge become apparent when the decisions he has made, or course he is on, is incontrovertibly incorrect – he has reached the peak of Mt Stupid. Here, he finally is faced with, and must acknowledge, his own lack of skill and capability.

Falling from the peak: Depending upon how high our adventurer has climbed and the magnitude that he allowed his misguided confidence and ego to drive him beyond the reasonable, the fall from the peak can be a gentle stroll down a hill, or falling off a cliff. It is at this point that the misalignment of the expectations to the results is glaringly

apparent with the operational excellence programme, and those involved, become de minimis or outright terminated. But this failure, though predestined, is not of nefarious intent.

A contemporary example of a board of directors selecting arrogance over competence – and the subsequent fall from Mt. Stupid – is the story of retailer JC Penney, and Ron Johnson. JC Penney had been struggling for several years with the condition of its business becoming increasingly tenuous. It was time for a change in leadership at the top.

In November 2011, the board of directors decided to hire Ron Johnson as CEO. Johnson had been senior vice president of retail operations of Apple, during which time Apple’s retail operation grew from nothing to being an envy of the retail industry – with profits that never seemed to stop growing.

When the hiring of Johnson was announced, JC Penney’s stock rose almost 25%. But Johnson ignorance of the industry was only surpassed by his arrogance. The first signal should have been Johnson’s insistence of commuting to work, from California to Texas, on a private jet.

Although the leadership of JC Penney was loath to admit a mistake had been made, it soon became glaringly apparent that Johnson and his strategies – instead of being on the path to salvation – were actually accelerating JC Penney on the path to destruction. Often described as one of the most aggressively unsuccessful tenures in retail history, Johnson’s rebranding and revitalisation efforts were ambitious, but could not be supported by cash-flows. In addition, Johnson’s plans served to push away the customers loyal to JC Penney in pursuit of an undefined expanded customer base.

Ultimately, JC Penney terminated Johnson in April of 2013.

Valley of Despair: Eventually, our adventurer completes his fall and finds himself at the bottom. He has lost all confidence in himself and his beliefs. At this point, he has to make a decision; does


It’s possible to place responsibility for the pending doom on the leadership of the improvement teams

for not understanding what is being asked of

them

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L E S S O N S F R O M M T . S T U P I D J O S E P H P A R I S

he re-assess his circumstances and begin to take corrective action? Or does he give up? And what about the company? Does it assess its experiences and re-engineer and redeploy the operational excellence programme? Or does it eliminate it to reduce costs?

Probably the best example of this is the story of Steve Jobs and the company he co-founded with Steve Wozniak, Apple Computers. Soon after Apple Computers went public, the board of

Slope of enlightenment: Let’s assume that our adventurer does not give-up his career as a change-agent – but instead he decides to reflect on his experience, and discover the Tao (the way).

In this phase, he performs a self-assessment of his beliefs and capabilities. He compares them with what is needed for him to achieve his goals. And he goes about acquiring the capability (either personally or by proxy).

Plateau of sustainability: In this final phase, real sustainability is achieved. There is no fanfare. There is no panic or talk of a burning platform. There is just cerebral and methodical forward movement in a continuous and deliberate manner.

The humble servant leader: But there is something magical that also happens to our adventurer. His experience has taught him that he does not know nearly as much as he thought he did and – striped of hype and hubris – his confidence has been set to be more aligned with reality.

Over time, even as he learns more and more, he realises his knowledge in absolute terms is less and less. He has become humble and wise.

And now, a true mentor, he can be a positive and indelible force within the world.

The Hegelian dialectic: By this evidence, the Dunning-Kruger effect is, in fact, a variant application of the Hegelian dialectic; a form and method for argument and reasoning. Named after Georg Wilhelm Friedrich Hegel, a German philosopher who is credited with the theory’s formation and development.

The Hegelian dialectic is usually described in three phases; a thesis, a new paradigm – usually a transformational

challenge to the status-quo, an antithesis, which contradicts or negates the thesis, and the reconciliation of the two being resolved by

means of a synthesis.

directors became uncomfortable with its leader being rather inexperienced in business – especially a publicly-traded company looking to transition from an entrepreneurial start-up to a mature enterprise. The result was that Steve Jobs was unceremoniously discharged from the company he helped to create. But Steve Jobs did not wallow. First, he took his fortune and started NeXT Incorporated With the help of Ross Perot, NeXT Incorporated was eventually sold to Apple. Afterwards, Steve Jobs bought

The Graphics Group from LucasFilm (which he renamed Pixar), helped to make the company a huge success, and parlayed his investment into his being the largest private investor of the Walt Disney Corporation (7%) and a seat on the Disney board of directors.

In 2000, with Apple Computer facing a life-and-death struggle, the board of directors of Apple Computer asked Steve Jobs to rejoin the company – eventually becoming president and CEO.

P R I N C I P L E S

& P U R P O S E

We see this pattern repeat itself throughout history. A most glaring example in contemporary times came with the introduction of the internet.

Thesis: In the later 1990s the internet was the next undiscovered country – a technical wild west where everything and anything was possible and without boundaries without limitation.

Soon, the hype turned into a frenzy as start-up after start-up promised great fortunes in the new economy of dot-coms.

It did not matter that these fledgling companies were losing money by the barrelful. In their new economy, cash didn’t matter – what mattered was eyeballs to the website. And the CEO’s of these new-economy companies, when challenged, would scoff arrogantly at the ignorant who didn’t understand. Investment money kept pouring into these companies chasing revenue and profitability numbers that had no basis in reality.

The mantra of this thesis became, if you are not an internet company, you are a dinosaur business and about to become extinct. The euphoria drove the stock-prices of the dot-coms to unrealistic and unsustainable levels – a bubble had formed.

Antithesis: Suddenly and spectacularly, the dot-com bubble exploded in 2001. Billions of dollars, if not trillions, were lost in a very short time by investors across the spectrum – from the institutional investor to the investment novice. The once mighty CEO’s of these companies, who at one time demonstrated such hubris in their new economy with little patience for those who did not understand, were exposed for the arrogance in their ignorance.

Afterwards, the investor backlash against all businesses and business models that relied on the internet were anathema. The opinion on business changed from if you are not an internet business, you are soon to be extinct to, if you are an internet business, you are not a real business.

Synthesis: But, over time, more pragmatic eyes looked beyond the hype of the internet and focused on the realistic potential and power that did exist. The market matured, and so did the business models, giving us

innovative companies like Google and social media companies. And although users are important, they are secondary to earnings before interest, taxes, depreciation and mmortisations (EBITDA) and free cash-flow generated from operations.

S O W H A T C A N W E L E A R N F R O M T H I S ? H O W C A N W E A P P LY I T T O O U R O P E R A T I O N A L E x C E L L E N C E P R O G R A M M E S ?

1 If this is your first attempt at operational excellence (or continuous improvement, lean, six-sigma), make every attempt to set pragmatic goals. Hire the cerebral and the deliberate over the emotionally super-charged. Listen to them and give them the support they need. Realise that everyone’s expectations will probably not be met.

2 If you have climbed and fallen from Mt. Stupid, or are about to; take a moment to reflect on the journey. What was good? What was not so good? How can we build on the successes? How can we ensure the failures do not recur? After all, the only alternatives to moving forward are to stand still or go backwards.

3 Get going again. Move forward with your new-found expertise and wisdom.

4 Achieve a sustainable program in both pace and impact.

In all things, in all initiatives, in all great aspirations, one should: evaluate critically, consider cerebrally, prepare calmly, and act deliberately.



Psychology Today: When Ignorance Begets Confidence: The Classic Dunning-Kruger.

PsyBlog: The Dunning-Kruger Effect: Why The Incompetent Don’t Know They’re Incompetent.

Pacific Standard Magazine: Why People Have So Much Trouble Recognizing Their Own Incompetence.

ARS-Technica: Revisiting why incompetents think they’re awesome.

The selection process is the most critical

step when formulating

the members of the team – especially those initial members who will form the core, the

leadership, of the team

26

Katrine Graae Lauritzen of Ramboll Oil & Gas a Danish engineering firm, explores how the company has embraced lean and enacted its seven golden rules to a successful lean transformation.

S P E C I A L F E A T U R E R A M B O L L O I L & G A S

different materials are led through a number of processes which in the end result in a finished product or component, that can be sold to end-users or other manufacturers.

In knowledge-based organisations, no physical products are produced, and no flow of materials happens. Rather these types of companies produce answers to questions, they sell knowledge. This does not mean that knowledge-based organisations cannot learn from lean, and it most certainly does not mean that they cannot benefit from the lean philosophy.

In an effort to become stronger and leaner, Ramboll Oil & Gas, an oil and gas engineering design consultancy within the Ramboll Group, has adopted the main principles from lean, and translated them to fit the company’s production of knowledge and knowhow. What Ramboll wanted to achieve with this transition was to find a structured way to become clever faster and learn all about the potential pitfalls in a project as early in the process as possible, in order to be able to prevent and avoid delays and misunderstandings.

“Let’s start by making one thing clear: lean is not rocket science, lean is common sense laid out in a

structured way.” The words belong to Anders Rødgaard Knudsen, corporate director of Ramboll Oil & Gas, and responsible for implementing lean in the organisation. He continues: “The lean principles are however an excellent way to enable organisations to be more efficient, and regardless which type of projects the company bases its business on, lean as a method makes a lot of sense.”

Typically, lean has been adopted in manufacturing companies, where

Getting clever quickly R E A D A B O U T :

How the company brought lean in

Their 10 year journey and the views of senior lean figures in the organisation

The art of coaching lean

S P E C I A L

F E A T U R E

Ramboll started going lean 10 years

ago, the company

was growing rapidly, and the

management saw the

potential in adopting the lean

philosophy

H I G H R I S K A N D E x T R E M E C O M P L E x I T Y - L E A N I N T H E O I L A N D G A S I N D U S T R Y

The world of oil and gas is very complex and many projects are extremely large. This means that there is great risk involved, both in terms of economic risk and in terms of risk of personnel and environmental danger. Further to this, a lot of people are involved in designing an offshore facility, and where many people are involved at the same time, the risk of human error arises.

Engineers live a life with constant interdependent deadlines. Because of the nature and size of the projects they deliver, complete control over interfaces is paramount.

When Ramboll started going lean 10 years ago, the company was growing rapidly, and to ensure that the quality of work remained at the same high level, the management saw the potential in adopting the lean philosophy. Projects were getting bigger and involved more and more people and the need for finding a solution that could help break down each project into smaller bits and make the entire process of the highly complex projects transparent was becoming imminent. By starting to work lean, the company would make sure that all team members understood how their part contributed to the project in its entirety.

To start the process, the company looked at the traditional lean principles and converted them into seven golden rules, which can be applied to any project, big or small, internal or external:

1. Understand what really happensThe purpose is to uncover the truth by being actively present where opinions are voiced. This means going out into the organisation to talk to employees and meet with clients to understand their points of view and their needs.

2. Learn before you decideIn the beginning of a project, understanding is limited. Therefore, front loading is used as a tool to increase the level of knowledge as early as possible. Clients are invited to take part in the front loading session, which gives them a sense of ownership of the process, creates transparency and strengthens the relationship with the clients.

3. Share knowledgeIn order to continuously share knowledge of all parts of the project, the engineers convene around a visual planning board to actively go over all deliverables and ensure that no deadlines are missed due to lack of planning. The team’s understanding of all members’ deliverables and the resulting interdependencies is vital to make sure that nothing is missed.

4. Development can go on foreverMany things that are done in projects can continue forever, if a specific deadline is not set. Therefore, all activities are time boxed, and all planning is based on milestones. This increases the ownership of tasks and ensures progress.

5. Do one thing at a time – fastTo increase efficiency, the engineers focus on doing one thing at a time. This results in the engineers spending less time finding the best solutions. As an added bonus, it also results in more content employees, by allowing them to focus on and finalise one task at a time.

6. Establish a heartbeat that everybody knowsLike a human being, a company should have a heartbeat that is known to everyone in the organisation. It could be a planning meeting Monday morning and a department meeting Friday morning. The result of a shared organisational rhythm is everybody knows when decisions are taken and understand the decision making process better.

7. Speak the language of the user and learnThis rule focuses on learning and innovation. Creating a solution that meets and exceeds the client’s expectations is only possible when continuously focusing on listening to and understanding the needs of the client. Discussing the solution with the client on a regular basis in order to be able to adjust along the way is key.

Overriding the seven golden rules is the PDCA circle, which ensures that the project is transparent and all project team members know the processes and understand the interdependencies in the project. It is important that all involved have an understanding of the benefits that come from actively adhering to all the golden rules. The whole of the lean approach is greater than the sum of its parts.

Knudsen explains: “The visual plan in itself is nothing. What adds the value is the process around the visual planning, where all deliverables and deadlines are structured and the team members openly discuss progress.”


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S P E C I A L F E A T U R E R A M B O L L O I L & G A S

B E T T E R P R O J E C T S – D E L I V E R E D O N T I M EAfter implementing the seven golden rules of lean in Ramboll, the company has experienced that project management has become more structured and the projects have become more transparent. To align work processes, the Ramboll Group with its 11,000 employees, has developed a common project management model, which is used in all its business units and includes elements and tools which are based on lean.

By involving the clients in some of the processes (e.g. front loading), and continuously matching expectations with the clients, the company has gained a much deeper understanding of each client and developed a more intimate relationship with them.

As a result of the increased project transparency, the employees in Ramboll have a higher job satisfaction, because of the greater understanding of the correlation between the individual parts of a project.

Compared to the time before the company started adopting its own version of the lean principles, more projects are delivered on time. On top of that, the clients are more involved in the development of the solution, and this means the clients are more satisfied with the result and have

Compared to the time before the company

started adopting its own version of the lean principles,

more projects are delivered on time

a better understanding of the entire process from idea through development to final delivery.

A N E V E R - E N D I N G S T O R YThe very nature of lean is to focus on continuous improvements and as such, the story never ends. It is simply not possible to tick off “implementation of lean” as done, and then forget all about it. Lean has to be an integral part of a company’s processes and the employees’ mind-set, and therefore, Knudsen stresses Ramboll is still in the process: “As a learning organisation, we can always become better, and we continue to put effort into perfecting our approach to lean. We’ve come a long way with regards to structure and transparency, but we’re not done yet.”

T A K I N G L E A N F U R T H E RMany industries work with lean as a tool for continuous improvement whether it is about a better flow in the value stream, cost-efficiency or a more aligned policy deployment linking key performance indicators to different leadership levels. But lean as a concept also continues to develop and improve.

Tobias Dam Hede, managing consultant, Ramboll Management Consulting, a business unit within the Ramboll Group, explains that lean itself has come to a turning point: “We have found lean needs to enter the next level of maturity by the help of an old and well known methodology: coaching.”

Lean coaching is not new to lean experts, but through its management consulting practice, the company has experienced that clients who have known and used lean for decades are not familiar with the coupling of these two concepts.

S P E C I A L

F E A T U R E

It is therefore relevant to point out three areas where lean coaching could benefit lean organisations:

1 Lean coaching is an effective tool to help collaboration across functional boundaries: lean specialists are often organised in a supply chain of support or in a kind of staff function. This means their benefit to the organisation is often challenged with the problem of cross references in a matrix organisation, where competing organisational logics of performance prevent the line manager and the lean agent from working on the same page or within the same sense of urgency. The lean agent typically has an informal authority from top management, but the line or plant manager is unwilling to cooperate. Ramboll discovered ownership of the lean project in the line increased dramatically with the help of coaching by the lean specialists.

2 Lean coaching transforms the logic of perfection into a practice of continuous learning: in most lean organisations Ramboll has worked with, there is a strong drive to look for problems and waste as opportunities for improvement. This is in the very nature of lean. The problem is that it requires a relatively mature organisation to learn from problems and flaws without being defensive and confrontational. The result is a mediocre performance instead of excellence. Lean coaching is the perfect method to cultivate continuous improvement without producing anxiety to fail.

3 Lean coaching is time efficient: lean organisations know different kinds of performance appraisals are

part of a culture of high performance. In one of the leading lean industries in Denmark, Ramboll has measured the time consumption of team leaders who should engage in different interview and dialogue settings with employees. The time amounted to between 30-40% of the total time – not including meetings and visual management reviews. With the help of lean coaching, the team leaders learnt to move away from an exhausting amount of performance interviews and gain the right momentum of interaction with their employees. Lean coaching makes a greater impact on performance with less time and resources spent.

L E A R N I N G T O C O A C H L E A NAs is the case with lean in general there is a mind-set to adopt and there is a series of techniques to learn. The first takes much longer than the latter. Based on the PDCA cycle approach to problem solving, the lean coaching method is defined by eight steps in addition to the PDCA steps:

Hede says: “Lean coaching is an important pillar. It is the architecture of learning. We have now trained hundreds of managers and lean specialists in lean coaching, and our experience is that the managers and the organisations alike gain a lot of value from adopting the new approach”.

L E A N A N D L E A R N I N GLean, and the different approaches and takes on lean are in general value-adding for any company. Whether it is a product producing company or a knowledge-based organisation, lean can help structure the way the employees work together and ensure that processes are transparent.

The companies, the employees and the clients all benefit from the adoption of lean.

There is, however, never a time when lean adoption is done – continuous perfection and improvement lies in the very nature of the lean concept, and as such, lean organisations will and must continue to learn.


There is never a time when

lean adoption is done –

continuous perfection and improvement lies in the very nature of the lean concept

Design Steps

Coaching inquiry

1. What’s the current state of the challenge relative to the target condition?

2. What does the challenge look like, if you break it down to smaller pieces?

3. What part of the challenge makes most sense to look at first?

4. What would a realistic and desirable goal that could be the first step towards an improvement be?

5. What have you learnt from previous situations like this?

6. What have you not seen that could be relevant to consider?

7. Is it still the right solution that should be your first step?

8. What prevents you from taking it?

Do 9. Implement the solution

Check 10. Check the impact

Act 11. Adjust, standardise, and spread

L E A N O N L I N E

This month, Bertrand Oliver, the managing director at LeanPerf lean consultants posted on LMJ’s LinkedIn about 8D, the problem solving technique with eight disciplines.

ROUNDING UP THE MONTH’S DIGITAL COMMUNICATIONS ON LEAN

Solving customer quality problems is sometimes a complex task which requires powerful tools such as 8D. Let’s have a look at 8D content and the key factors for a successful 8D:

1 . 8 D C O N T E N TD1: Select the work group: Identify customer contact, 8D pilot and the team who will address the problem using 8D methodology.

D2: Describe the problem: Understand the problem using the appropriate data for analysis with defective samples to hand, with the help of 5W2H and “IS/IS not”.

D3: Protect the customer: Analyse the non-detection causes prevent any further complaint by the same customer for the same defect by implementing a quality firewall within 24 hours; and analyse the causes which allowed us to transmit the defect to the customer.

D4: Analyse the root causes of occurrence: Identify all potential causes using a 6M Ishikawa diagram, validate some of them and eliminate the rest. Run a 5Why analysis on the validated causes to find root causes of occurrence.

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D5: Implement corrective actions: Prevent the root causes from re-appearing Solve the root causes by implementing corrective solutions.

D6: Check action effectiveness: Ensure, with measurements, metrics, data sheets and so on, that the problem does not occur anymore.

D7: Implement preventive actions: Modify the process and procedures in order to keep a similar problem from recurring for similar or future customers or products.

D8: Close the 8D: The manager checks that teams have rigorously followed the methodology and developed a logical thinking. Write a final report on the basis of the latest observations from the shopfloor (results, 8D effectiveness, lessons learned, etc.); congratulate the 8D team.

2 . E I G H T K E Y F A C T O R S F O R A S U C C E S S F U L 8 DD1: The problem solving team must include a group of operators concerned by the defect that occurred or that was not detected, as well as the supervisor/shift leader of the area.

D2: Describe the problem from the customer’s point of view and do not only settle for a technical description from the manufacturer’s point of view. Defective parts must absolutely be available for the work group.

D3: During the customer containment, do not restrict the actions to be taken to purely technical ones; also take actions on

labour and organisation. Do not hesitate to keep the customer informed on a regular basis. The point is to turn a quality problem into an opportunity in order to reinforce the bonds of trust. We should learn from our inability to detect the defect.

D4: Do not forget that the objective of D4 is to validate possible causes. To do so, analyses should mainly be carried out on the shopfloor. Methodology tools such as 6M and 5Why are only useful to direct investigation on the shopfloor. Cause validation is the outcome of a rigorous analysis and a logical thinking, not of assumptions.

D5: Be aware that some actions which have been taken on might be out of scope. The facilitator should remain vigilant to ensure that the planned actions will indeed eliminate the validated causes.

D6: Check by going on the shopfloor that corrective actions have been carried out and that the defect reduction is visible and sustainable.

D7: Preventive actions should include cause treatment related to the company processes and organisation (i.e. systemic causes). Not finding any systemic cause is a sign that analyses have not been carried out in enough detail.

D8: At 8D closure, managers should draw lessons learned about the organisation that they are responsible for. Key points are to make sure the methodology and logical thinking have been strictly adhered to and congratulate the team.

Managing businesses for the future; a sustainable approach

Andy Wood, CEO of Adnams, and Keivan Zokaei, from SA Partners investigate sustainability in lean business practices. Is the idea a pipedream or a practical and pragmatic approach to production in the 21st century?

S P E C I A L

F E A T U R E

A G O V E R N A N C E S H I F TAccording to Jonathan Porritt, founder of the Forum for the Future, “A governance shift is occurring in the field of sustainability, with governments stepping back and businesses stepping forward to lead the change”. The whole idea that democratically elected governments will care for the non-proximate and non-contemporary humans, just as much as their existing constituents,


R E A D A B O U T :

Adnams brewers plans for lean and green growth

Exploring the role of the sustainability movement in the manufacturing industry

Embracing new technology and a progressive spirit

32

S P E C I A L F E A T U R E M A N A G I N G B U S I N E S S E S F O R T H E F U T U R E

seems to have failed. Today, the notion of sustainable development and its integration into the core of governments’ policy making is but conceptual social science. Look at the utter failure that was the Rio+20 Summit. In June 2012, at Rio+20, the leaders of 190 countries grouped together to celebrate “The Future We Want”. Instead, what they committed to, at best, could be described as the lowest common denominator consensus that hardly delivers any scalable benefits. In the United Kingdom in 2010, the Sustainable Development Commission, the country’s main sustainability watchdog, was axed as part of the coalition government’s spending cuts. And, in the United States, in 2012, neither candidates thought climate change worthy of mention during Presidential campaigns.

However, there is another side to this story with more and more private sector companies stepping up to the plate to make their businesses more sustainable. Whilst the government’s lack of decisive action is worrying, one is encouraged by the number of leading-edge organisations that put sustainability at the heart of what they do. Going green has become a key economic driver for forward-looking firms such as Toyota, Walmart, DuPont, Volvo, Sainsbury’s, Tesco, Unilever, Marks &

Spencer, General Electric (GE) and Adnams – all of whom have invested heavily in greening their products and processes over the past few years.

Adnams, an English brewery with a turnover of around £60m, invested in an energy-efficient brew stream in 2006, shortly after commissioning an eco-friendly distribution centre a few miles inland from the brewery, thereby removing frequent and heavy brewery traffic from the historic small town of Southwold. Adnams’ Distribution Centre was built with lime-hemp walls, glulam beams, and one of the largest sedum green roofs in the UK. This building is insulated so there is no need to heat or cool the warehouse, removing substantial energy costs from the business of around £100,000pa and potential savings and revenues of around £185,000 will be generated from its commercial anaerobic digestion (AD) facilities in conjunction with BioGroup. The AD plant takes food waste created from brewing and retailing, and from its pubs and hotels and turns it into biogas for injection into the national grid.

Despite almost doubling beer production volumes, the business has actually managed to reduce its carbon emissions, sequestering in excess of 500 tonnes

Lean construction is assumed to include both

the design and construction phases of a project

S P E C I A L

F E A T U R E


of CO2 by using crops in the design and construction of its Distribution Centre.

Another following this example is Unilever. It plans to double its revenue over the next 10 years while halving the environmental impact of its products. General Electric also aims to reduce the energy intensity of its operations by 50% by 2015 and have invested heavily in the Eco-magination project. Tesco has announced that it will reduce emissions from stores and distribution centres by half by 2020, and that it will become an altogether zero-carbon business by 2050. WalMart’s zero waste initiative claims that more than 80% of waste generated in its US operations has been diverted from landfill, while the company continues to work towards its goal of zero waste. Moreover, in 2010, Walmart announced that it will cut total carbon emissions by 20 million metric tons by 2015.

In the UK, Sainsbury’s announced the 20x20 sustainability plan as a cornerstone of their business strategy. In April 2013, it had beaten a self-imposed target to reduce water consumption by 50%, which means so far they are on track against this plan. Toyota, in its fifth environmental action Plan, announced that it will improve the average fuel efficiency of its vehicles by 25% in all regions by 2015, compared to that of 2005. In production, Toyota has already reduced emissions per vehicle by 37% between 2001 and 2012. Similarly, Du Pont committed itself to a 65% reduction in greenhouse gas emissions over a ten-year period, up to 2010. In 2007, Du Pont saved $2.2 billion through energy efficiency – in the same year its total declared profit was not much more that $2 billion.

The question therefore is: Why should companies show such level of commitment to sustainable development? The answer lies in a simple yet powerful realisation that environmental and economic footprints are aligned. When we prevent physical waste, increase energy efficiency or improve resource productivity, we save money, improve profitability and enhance competitiveness. In fact, there are often huge opportunities, which we can call quick wins thanks to decades of neglect. In other words, the environmental

wastes are a great proxy for identifying the economic savings. Lean thinkers will know that the same is true about the lean wastes whereupon variation, over-burden, over-production and inventory are often used as the key proxy for economic improvements.

A P A R A L E L S T O R Y F R O M q U A L I T Y M A N A G E M E N TToday, the greening industry movement stands where the quality movement stood around 40 years ago. During the past 40 years, industries realised that better quality can be – and often is – cheaper to make. Today, the quality movement is variably referred to as TQM, six sigma, lean sigma, or just lean thinking. The story of the quality movement first begins in the late 1940s and 1950s when quality gurus such as Deming and Juran went to Japan to help rebuild the country’s war-torn economy. They initiated what was a true industrial revolution and later became known as the Total quality movement, exerting a huge influence on hundreds of companies, amongst them Toyota, which itself became legendary for lean management. But it was not until 1970s that Philip Crosby popularised the total quality movement in the western world with his infinitely accessible style of writing and by finding a terminology that mere mortals could relate to. In his 1979 best-seller, Quality Is Free, he famously claimed that “quality is not a gift, but it is free”.

Up until that time, the conventional wisdom was that each level of quality has its own price and in order to get to the highest levels of quality it would exponentially cost more – also known as the law of diminishing returns. Nonetheless, Crosby, along with other quality gurus, defied the conventional wisdom of the time, pointing out that poor quality causes hidden costs such as the need for inspection, rework, scrap, delivery delays to the customer and potential costs during product use, which typically dwarf the costs of systems and training required to foster zero defects.

By the same token, we argue that it is much cheaper to make processes and products environmentally friendly.

The primary barrier to the introduction of

sustainable construction is the widely held

belief that sustainable construction is more

expensive and involves a higher risk

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S P E C I A L F E A T U R E M A N A G I N G B U S I N E S S E S F O R T H E F U T U R E

(CBI) that recognised Adnams for the way it develops and progresses female careers. The person who collected this award on behalf of the company was Karen Hester. Since then, Karen has become the first executive director on the Adnams board. Through skill, Karen has been able to progress from part-time office cleaner to the boardroom during the tenure of her career at Adnams.

P R I N C I P L E SEvery business focused on lean and green management will have its own set of values around which strategic thinking can revolve. The principles of lean and green leadership at Adnams can be summarised as value-based decision making, challenge, tenacity and staff engagement. Making the right decisions based on a core set of business values will lead to a more efficient, morally sensitive, holistic approach to business, rejecting short-term reactionary behaviours in favour of long-term, sustainable planning.

We strive for continuous improvement through the identification of new technologies, self-auditing and self-awareness and by being truly aware of the impact we have for all stakeholders in the business. For the environmental and economic benefits of all, we urge other businesses to do the same.

Lowering our impact on the environment, rather counter-intuitively, means lowering costs. The reasons are the same ones that underpinned the quality movement of the 1960s and 70s. When making poor quality products (or services) we waste time, energy and resources. By not making mistakes in the first place, it is much cheaper, while also guaranteeing better customer satisfaction. Sustainable business means not wasting resources and energy, which in turn means cheaper and better products.

Adnams, for example, has adopted close working relationships with local farmers and suppliers, ensuring that the raw materials that go into making its beers and spirits are locally-sourced and of the highest quality (in other words, sourced from producers and suppliers that also share its set of business and social values leading to an increase in quality). All the way through the production process, emphasis is on maximising returns from the raw materials, re-using waste heat and water, and using innovative techniques to ensure an engaging and attractive end product for customers.

C R E A T I N G A L E A N A N D G R E E N B U S I N E S S S Y S T E MYou cannot implement lean: you have to create it. The same is true for lean and green. In order to create a lean and green business system, there needs to be orchestration across all levels of managing an organisation, from strategy deployment, process management, supply chain management and leadership and people engagement. Adnams engenders widespread dedication and commitment to a core set of values with sustainability at the heart, at all levels throughout its business operations.

L E A D E R S H I P A N D P E O P L E E N G A G E M E N TLeadership and people engagement is the key building block of creating any lean and green business system. Across the company, team members should lend their support willingly, buying into senior management’s commitment to the vision of building a more sustainable company for the long term. A strong set of social and environmental values, combined with technological excellence and a track-record of innovation, will not only enable substantial improvements in terms of environmental performance, but also have the ability to generate real business benefits, principally in the form of cost savings, people engagement and brand development. In terms of people engagement, Adnams received an 88% response rate to its last staff opinion survey. Of this, some 92% of respondents said they were either proud or very proud to work for the company. An equal 92% rated sustainability as the company’s most important value.

In 2012, Adnams won the First Woman Award, a national competition run by the Confederation of British Industry


Advisor to the Prince of Wales. From the foreword to Creating a Lean and Green Business System, Jonathan Porritt.

Quality is Free, Philip Crosby.

Environment is free; but it’s not a gift, MIT-Sloan management Review, 2013: Hunter Lovins, Keivan Zokaei, Andy Wood, Peter Hines.

Sustainability projects and lean

projects have both clearly

demonstrated their

contributions to a better future state

for the environment

Lincoln Forbes, Ph.D., P.E., LEED AP, is an adjunct professor at Florida International University, principal consultant at Harding Associates Inc. and an expert in the field of bringing the worlds of lean and sustainability together in the realm of the construction industry.

S E C T O R

F O C U S


An insidious threat lurks quietly in the shadows – our environmental sustainability in relation to the built environment. Built facilities account for 40%

(three billion tonnes annually) of raw materials use globally. In the US, buildings account for 65.2% of total electricity consumption, more than 36% of total primary energy use, and 12% of potable water. They generate 136m tonnes of construction and demolition waste and 30% of total greenhouse gas emissions. Fossil fuels continue to be depleted at a relatively rapid rate; in turn, greenhouse gases are degrading the ozone layer faster

R E A D A B O U T :

The benefits of lean construction

It’s worthwhile contribution to lowering greenhouse emissions

The helpful and cost-effective ways it reduces waste

Sustainability and lean construction

S E C T O R F O C U S C O N S T R U C T I O N

the United Kingdom, Netherlands, Spain, Germany, Norway, and Sweden. The DGNB certification system can be applied internationally. There are several other initiatives such as energy star, green globes, and Florida green building coalition. Although these initiatives have significant differences between them, they all seek to promote high levels of environmental performance in buildings and communities.

In this article, LEED will be used as a proxy for sustainability initiatives for built facilities.

The LEED system was developed in 1995 as a voluntary, consensus-based national standard for developing high-performance, sustainable green buildings. The certification programme awards points and ratings, for satisfying green building criteria. Its major categories include: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality and innovation in design. The overall goals for sustainability include:

Maximising resource reuse Utilising renewable energy sources Creating a healthy working environment Building facilities of long-term value And protecting and/or restoring the

natural environment.

I S T H E R E A C O N N E C T I O N B E T W E E N S U S T A I N A B I L I T Y A N D L E A N C O N S T R U C T I O N ?A brief overview of lean construction will help to clarify this question. Lean construction is assumed to include both the design and construction phases of a project. Greg Howell and Glenn Ballard, co-founders of the Lean Construction Institute (LCI), view lean construction as a new way to manage construction. In their view, the objective, principles and techniques of lean construction taken together, form the basis for a new project delivery process. The Construction Industry Institute (CII) describes lean construction as “the continuous process of eliminating waste, meeting or exceeding all customer requirements, focusing on the entire value stream, and pursuing perfection in the

execution of a constructed project”. Waste represents activities or resources that consume time and/or cost, but add no value.

Lean construction is a collaborative approach to

project delivery, in which stakeholders, including the project team and the owner, seek to optimise

the overall project, minimising waste in all forms and maximising value. It contrasts

Lean construction is assumed to include both

the design and construction phases of a project


36

than climate change experts think can maintain the planet on a sustainable path.

The UN established the Brundtland Commission in 1983 to encourage countries to pursue sustainable development. In 1987 it released a report defining sustainable development as the development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Professor Charles Kibert, a researcher at the University of Florida, further defined sustainable development in 1994, as “the creation and responsible management of a healthy built environmental based on resources [that are] efficient and ecological”. Clearly, any efforts to improve sustainability on a global scale can be significantly leveraged through initiatives in the construction industry.

H O W A R E S U S T A I N A B I L I T Y S T A N D A R D S A D D R E S S E D ?Several sustainability initiatives have been implemented since the 1990s, and the most prominent ones are leadership in energy and environmental design (LEED) established by the U.S. Green Building Council (USGBC), the building research establishment environmental assessment method for buildings (BREEAM) and the DGNB certification system in Germany. BREEAM is used to assess buildings and large scale developments in many countries around the world, including

strikingly with traditional construction practices in which project team members seek what is called local optimisation to maximise their individual progress and their profits. This often happens to the unintended detriment of other team members and the project as a whole. Target value design (TVD) focuses designers on meeting and exceeding owners’ project requirements at prices below the market rate, while providing high quality and constructability.

Lean construction is based on a highly structured process derived from the Toyota Production system (TPS). The seven main wastes identified in the TPS are targeted for reduction in the construction environment, both in the design and construction phases of a project. Examples are:

Idle time: people waiting for work, or work waiting for people, sometimes caused by poor co-ordination

Excessive transporting/conveyance: caused by poor site layouts

Processing waste: waste in the work, and materials

Inventory waste: having unnecessary stock on hand

Wasted motion: due to poor practices Defective work: resulting in rework Over-producing: often seen as a virtue,

but it may obstruct the next discipline Other wastes: very typical in

construction is the underutilisation of people’s minds and initiative.

The lean construction philosophy views a project as a promise delivered by people working in a network of commitments. Smooth work flow is dependent on having the parties to construction make promises to carry out assignments, and keep their promises; waste is reduced, productivity is increased, and projects can be completed more rapidly. Foremen are empowered to plan the detailed work activities for each week with their counterparts from different trades or disciplines.

An integrated form of agreement is very effective in having people from different disciplines and companies work together for the benefit of the project - as well as themselves. It promotes problem resolution through collaboration between the various disciplines. Mediation is

substituted for litigation. Training of staff at various levels is a non-negotiable requirement. Project teams have to adopt lean processes such as the last planner system that requires ongoing collaboration with other disciplines, measurement, analysis, and action. Performance metrics are applied weekly - not just at the end of a project, so work activities are kept on track and the possibility of errors and surprises is reduced. As a result, many lean projects have experienced more than 10% savings in the schedule and/or overall cost – in some cases, simultaneously.

Green construction is a natural extension of the lean philosophy of eliminating waste – it reduces the waste of energy, water, and materials. While lean construction minimises waste, ensuring that the resources used in the building process enhance the value chain for a completed facility, green building design promotes environmentally beneficial long-term operation. Not only is a lean building assembled using fewer resources – human, financial, energy, - and to some extent material, a green building has a lower environmental impact in its construction as well as in its ongoing operation. Green practices may even reduce initial construction costs. The recycling of construction material reduces the amount of physical waste generated in a project, and the amount of pollution associated with the process is reduced as well. Sorting construction waste on a site qualifies for LEED credits. It also reduces disposal costs as some of that material can be reused.

Comparing the benefits of sustainable projects and lean projects

Two studies, by the New Buildings Institute (NBI) and the CoStar Group respectively, have verified that certified buildings outperform their conventional counterparts across a wide variety of metrics, including energy savings, occupancy rates, sale price and rental rates.

The NBI study indicates that new LEED certified buildings, on average, perform 25-30% better than non-LEED certified buildings in terms of energy use. Gold and platinum certified buildings have average energy savings approaching

S E C T O R

F O C U S


The primary barrier to the introduction of

sustainable construction is the widely held

belief that sustainable construction is more

expensive and involves a higher risk

mandate to implement major capital improvements to their failing health facilities’ infrastructure. Working with very tight budgets, they embraced lean project delivery as a leap of faith; and had positive results that greatly exceeded their expectations. A study of 22 lean projects valued over $10m each and completed since 2005 revealed:

No projects over budget or schedule No sacrifice of scope or quality A final cost 5.8% under budget, and

approximately 15% under market, on average

Sutter subsequently initiated 135 active projects worth $4.4 billion. Through the lean process, these projects had savings estimated at $125 million under budget. An example of Sutter’s successful projects is the Camino Medical Group Office Building in which costs were reduced by $9 million, and the schedule was shortened by six months. Labour productivity was increased by 15 – 30% and rework was reduced to less than 0.2% versus the five-ten per cent range of many traditional projects.

A hospital system in Florida recently built an 80-bed hospital wing plus


38

Sustainability projects and lean

projects have both clearly

demonstrated their

contributions to a better future state

for the environment

50%. New LEED certified buildings have commanded rent premiums of $11.24 (2008 dollars) per square foot over their non-LEED peers and have had 3.8% higher occupancy. Rental rates for energy star - rated buildings represent a $2.38 per square foot premium over comparable non-energy star buildings and have 3.6% higher occupancy. Both energy star and LEED-certified buildings have commanded higher market prices per square foot. The US General Services Administration (GSA) conducted a post occupancy survey of twelve sustainably designed buildings including seven that were LEED certified. They reviewed environmental performance, financial metrics, and occupant satisfaction. Their key findings were that, compared to national averages, these facilities experienced 26% less energy use, 13% lower maintenance cost, 27% higher occupant satisfaction, and 33% fewer CO

2 emissions.

With regard to lean projects, there have been several notable examples of successful project delivery.

The Sutter Health Care system in California embarked on a lean journey in the early 2000s following a state

kitchen facilities. This 100,000 square foot addition was constructed with integrated lean project delivery (ILPD), using an integrated form of agreement. A very tight schedule and budget called for innovative approaches; lacking prior lean experience, the project team hired a lean facilitator for training and implementation support. Project outcomes with the lean process were highly successful. The schedule was reduced from 14 months to 12 months. At the same time, cost savings were approximately $3m on an estimated reference price of $34m. RFIs were addressed promptly and did not affect the schedule. Safety performance was very high: over 200,000 man hours without a recordable accident.

W H Y A R E N ’ T T H E R E M O R E S U S T A I N A B L E P R O J E C T S ?The primary barrier to the introduction of sustainable construction is the widely held belief that sustainable construction is more expensive and involves a higher risk. The higher costs are attributable to new technologies, specialised materials, and additional design. In many projects, cost projections emphasise initial costs, with less attention to life-cycle costs. Some facility owners are not motivated to generate lower operating costs for building occupants or tenants. The LEED process involves paying fees for certification as well as hiring a commissioning professional to verify that specific processes have been followed. A number of owners have adopted sustainability initiatives, but have stopped short of seeking certification. A recent survey of contractors identified “higher initial cost” (90%) and “difficulty/cost of certification” (57%) as primary obstacles to sustainable building, even though 81% thought it was “the right thing to do”. In the same survey, 88% of respondents reported the additional cost of LEED certification as less than two per cent of overall project costs.

A wider understanding of sustainability and life-cycle costing, as well as a lowering of initial cost will greatly affect the acceptance of sustainable building. Nevertheless, recent studies suggest that designers have begun to incorporate green practices in standard designs. Some contractors have begun to institute paperless jobsites and to practice waste diversion.

Michigan State University’s new dining hall is an example of a successful lean and LEED GOLD project, driven by a knowledgeable owner. MSU’s Dr. Tariq Abdelhamid, a proponent of both lean and sustainability, helped to guide the project. The Vista at Shaw Hall was a renovation project completed in January 2013 at a cost of $13.2m, and was the first lean/IPD project at a US public university.

Because of the challenging scope as a renovation with asbestos abatement, MSU selected lean/IPD with an integrated form of agreement (IFOA), with contingencies for hidden existing conditions, and construction risk. Building information modelling was used for clash detection, and the contractors were active participants

in the design phase. Project outcomes were outstanding: the seating (made of recycled materials) was almost doubled from 455 to 720. The project was completed three weeks early, at a price 15% lower than comparable projects, and the contract administration cost was 28% less. In addition, 84% of the construction waste was diverted from landfills; 11% was recycled – flooring, concrete, metals; and 21% of construction materials were obtained within 500 miles. Abdelhamid credits lean design and construction with “achieving green features at reasonable and competitive first costs to the owner”.

T H E W A Y F O R W A R DSustainability projects and lean projects have both clearly demonstrated their contributions to a better future state for the environment. Lean projects have routinely saved five to 10% of initial costs, and even more when compared with standard market costs. High stakeholder satisfaction has been observed as a hallmark of lean construction, worker safety has been far greater than in traditional projects. There have not been reports of litigation in the hundreds of lean projects to date. Sustainable projects generally use 30% less energy and 30% less water, resulting in lower operating costs indefinitely. Energy star rated facilities emit 35% less carbon. During construction, many projects have used recycled wood and metal, diverting tonnes of waste from landfills. The many intangible benefits include better air quality, higher occupant satisfaction and productivity.

The question of a premium for sustainable projects is still debated but has been measured in the range of one to five per cent, significantly less than typical lean construction savings. Lean and sustainability represent a smart business practice and social responsibility at the same time.

S E C T O R

F O C U S



“The Contractor’s Self Perceived in Sustainable Construction: Survey Results.” Proc. Twenty first Annual Conference of The International Group for Lean Construction, Holloway, S. and Parrish, K.

“The Economic Theory of Production Contractor’s Self Perceived in Sustainable Construction: Survey Results.” Proc. Twenty first Annual Conference of The International Group for Lean Construction (IGLC-21), Koskela and Tommelein.

Modern construction: Lean Project Delivery and Integrated Practices, Forbes, L. H., and Ahmed, S. M.

40

This month LMJ board member Bill Bellows writes about pudding, The Beatles and Deming’s ideas on production systems.

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

the conventional linear view of the beginning of any value stream (such as product design), leading to an end point (release to the customer), Deming included a return loop to provide feedback to the entire design-to-release process, opening imaginative minds to the interdependency of these efforts.

In the spirit of applying the feedback loop in his own interactions with people, Deming employed this very model in his classroom, when he used the students’ answers to his questions, to let him know how he was doing and, thereby, how to improve his lectures. He understood interdependence;

The first step is transformation of the individual. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people W. Edwards Deming

In 1970, John Lennon was inspired by late night conversations to compose a song about the timeless theory of the circle of life; what comes

around goes around. Ten days later, Instant Karma! was released, offering Lennon’s sentiments on circular causality through a joyful chorus of “Well we all shine on.”

Twenty years earlier, Deming was in Japan, invited by the Japanese Union of Scientists and Engineers to share his ideas on management with business leaders and wide cross sections of their organisations. In one event, he recalled hosting a group of executives representing as much as 80% of the corporate wealth of Japan. He used the opportunity to introduce his own karmic thoughts on the potential of interactions between people, with applicability to any organisation. His circular model-production viewed as a system-features a feedback loop to link the activities of a production-based organisation, from design to manufacturing, with materials from suppliers, to assembly and release to the customer.

Change the context to a service industry, education or healthcare system, and replace the labels to their respective function to project this circular model onto any organisation, with the premise that interdependent activities-otherwise known as teamwork, are a phenomenon in all organisations. In departure from

Lessons from Demming

S P E C I A L

F E A T U R E

There are many simple illustrations

to present the stark contrast between the prevailing

linear models of

organisations and the

circular model proposed by Deming.

their ability to learn depended on his ability to present. In his references to the prevailing style of management, Deming was mindful of the impact of the linear model in creating behaviours within organisations that could be also characterised as observer-status. Under such a system, players on the sideline of a football match would not be appear to be influencing the outcome of the game, in spite of their contributions during practice sessions. In the nature of instant karma, they would never be spectators, even if viewing from home.

In 1980, Deming was featured in a television documentary (If Japan Can, Why Can’t We?) focusing on the contrast between the gloom facing the US economy and the remarkable success of the Japanese economy. He advised US companies competing with their Japanese counterparts that his solutions should not be construed as quick fixes, “It will not happen at once, there is no instant pudding!”, as encouragement, he posed that results could be achieved within a few years, sharing examples from Japan. Toyota would become one of the most celebrated examples, when his ideas on quality management were integrated into an existing system of quantity management.

Lacking the interdependence of a circular model, linear models reveal the direction of flow of activities, with intermittent handoffs from independent completed tasks, from one observer to another. There are many simple illustrations to present the stark contrast between the prevailing linear models of organisations and the circular model proposed by Deming.

One of the simplest examples came from watching a three year old direct how to divide a 2.4m length of wood into a series of smaller pieces. He drew one line across the top face of the wood to direct where to use the saw. Upon each cut, he drew one line for the next cut, repeating until the original 2.4m length was reduced to several dozen shorter lengths.

This experience prompted the idea of sharing the one line solution using the question, “At home, when cutting a piece of wood to a given length, how many lines would you draw across the top face before

making the cut?” People were puzzled by this seemingly distant inquiry. One line, they answered.

We demonstrate the answer by sharing an image of the top face of a long piece of wood, followed by the single line to indicate where to cut it. Next, we add two additional lines to the image, one slightly to the left of the original line, the other slightly to the right. We then ask if anyone has ever used two lines, such as these new lines, instead of the original single line, to indicate where to cut the wood, with further clarification of cutting anywhere in between these two lines. What usually follows are signs of disbelief in such an imprecise practice. Yet, this disbelief dissolves after suggesting that the practice of two lines, anywhere in between, is a traditional practice of both defining and meeting requirements when operating in a workplace under the prevailing style of management.

When asked why he used one line to direct his cutting at home and two lines at work, one man offered the following explanation, “because at home, I cut wood, and at work, I cut metal.” Without serious scrutiny, this answer seems plausible. Then we probe further: “Who designed the project at home? Who cut the pieces at home? Who assembled the pieces at home? Who used the resulting product at home?” In each case, using circular causality, they answered that it was themselves who did so. Yet, when the questions were posed in the context of work, the (linear causality) answers shifted to the designer, machinist, assembly mechanic, and the customer.

Examples like this are fundamental to shattering the illusion of separation of work in a progression of activities and shifting awareness to envision value streams comprised of circular, interdependent efforts, not linear, independent tasks. To quote Deming, “The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside.” The aim is to present readers with an outside view, with appreciation that instant karma is not instant pudding, yet our journeys begin with a willing shift in mindfulness to perceive new possibilities for teamwork.


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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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FACTORY PHYSICS SEMINAR10 & 11 December 2014, Chesterton, Bicester, UK.This two day seminar, delivered by experts Dr Mark Spearman and Ed Pound of Factory Physics Inc., is suitable to managers new to factory physics, but also to those delegates who attended the first seminar in November 2014.

Activities and highlights include: Simulation game: introduces the challenge of real world scheduling and

how factory physics principles can be applied. Case study: based on Learning to See value stream mapping book, but

revealing hidden opportunities and pitfalls Essential tactical thinking and analysis: revealing opportunities that

await with an appreciation of: Inventory optimisation (investment vs fill rate) The throughput curve (non linear relationship) between throughput

& WIP The operation and advantages of CONWIP in complex environments Operations strategy: including balancing the three types of buffer,

appreciating variations & strategic choices that are not often recognised. Pitfalls and wrong-thinking of MRP and ERP Financial statements and FP approach to accounting and measures

For more information:www.buckingham.ac.uk/business/professional-executive/short-courses

LEAN TRANSFORMATION SUMMIT 2015March 4-5 2015, New Orleans, USAEach year we bring outstanding examples of lean in a variety of industries at different points in their lean journeys from manufacturing, to healthcare, to services. They share their successes, their failures, and how lean has made things better.

In addition, we also give the lean community a chance to learn and share through offering compelling learning sessions, based upon struggles we see every day. In fact many companies use our annual summit as part of their training regime.

All of the presentations also focus on “What can you do Monday?” The purpose of

our summit is to give you the knowledge to take back to your organisation and experiment; it’s how you can take something you’ve heard and turn it into something you’ve learned.

Highlights and keynote speakers include:

Margarette Purvis, of the Food Bank of New York City, returns.

Zack Rosenberg of New Orleans’s St. Bernard Project, who helped rebuild the city of after Hurricane Katrina.

For more information please visit: www.lean.org/Events/2015_lean_transformation_summit.cfm

LEAN & SIx S IGMA WORLD CONFERENCEMarch 11-12 2015 Houston, Texas, USAJoin the community of practitioners, experts, gurus, leaders, and executives from manufacturing, service, healthcare, transactional, government and others.

The lean and six sigma world conference gathers only the best and brightest speakers from lean and six sigma for two days of top-notch keynotes, presentations, workshops, networking, and idea-sharing. We are currently accepting proposals from leading practitioners from a diverse range of industries to share innovative ideas, best practices and case studies on lean, six sigma and related methodologies. We are especially interested in practical information, proven strategies, best practices and lessons learned. The conference aims to encompass all areas related to lean and six sigma for all industry sectors.

Some of the topics that will be covered in the technical program:

Strategic design for organisational excellence

Organisational assessments for high priority results

Lean and six sigma tools for sustainability

Methods of measurement and control using lean and six sigma

Integrating lean and six sigma into daily process activity

Examples of qualitative and quantitative tools for problem determination and resolution

Sharing lean and six sigma approaches across the global value chain

Analytical approaches for gathering effective data for planning and improvement

For more information please visit:www.leanandsixsigma.org

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Issue 10 Volume 4 | Dec/Jan 2014/15 | www.leanmj.com

GREENS, SHOOTS AND STAYS

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– £4

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Organisations and interviews featured in this

edition include: Adnams, Dessault Systémes, SA Partners,

Ramboll Gas and Oil, SMMT Industry Forum, Joseph

Paris, Lincoln Forbes, Joseph Paris, Bill Bellows and Jean

Cunningham.

IN THIS ISSUE:

Lean and green: Lincoln Forbes, adjunct professor at

Florida International University, analyses lean’s role in

creating sustainably built buildings and how we can make

the construction industry more environmentally friendly.

Lean accounting: Consultant Jean Cunningham explores

the best way for a business to undertake leaning its books,

and how the ideas can benefit an organisation.

Managing businesses for the future; a sustainable

approach: Andy Wood, CEO of Adnams, and Keivan

Zokaei, partner at S A Partners investigate sustainability

in lean business practices. Is the idea a pipedream or

a practical and pragmatic approach to production in the

21st century?

Continuously improving management: Tuan Nguyen,

senior manager of DELMIA Global Enterprise

Manufacturing Intelligence at Dassault Systèmes, talks

about how manufacturers can take a more lean approach

to management.

This issue looks at the beginnings

of lean’s adoption of sustainable

and green-friendly policies.

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LMJ Dec 14/Jan 15

Documents

lean approach

lean books

ideas of lean working

lean accounting

lean business practices

ideas of sustainability

greenfriendly construction

joseph paris