Busting the myth: Lean piles on the overhead

Companies often hesitate to implement a lean manufacturing program because they don’t want to take on the bureaucracy that such programs usually entail. Yet lean doesn’t have to add burdensome overhead. It often does because lean manufacturing and six sigma are typically implemented as enterprise-wide programs, with a multi-year implementation roadmap that requires dedicated resources and other overhead. But an alternative approach to manufacturing improvements can eliminate most of the potential costs. That alternative is a tightly targeted program takes aim at specific processes, lines, or workflows and is implemented by teams that hold each member accountable for results.

Effective leaders of manufacturing organizations keep the following imperatives in mind when launching a lean program:

1. Keep it local

A localized approach to lean focuses on specific opportunities selected for their potential to generate a significant financial payback over a short time frame. Rather than develop a detailed roadmap that describes how to fix everything over an extended time frame, the localized approach generates multiple waves of projects and institutionalizes a handful of key management practices. Training is provided to specific teams only when and as they need it. Such focused actions eliminate the need for broad-based program management and dedicated trainers.

Consider the recent case of a company that had ordered all its plants to start tracking overall equipment effectiveness (OEE), beginning with one minor piece of equipment at each location. Plant personnel duly reported the data to corporate, which compiled the information but corporate did not leverage it to generate cost and productivity improvements. The OEE reporting devolved into one more bit of bureaucracy that had no impact on plant operations.

The company then redirected its OEE drive to two pilot site, tracked the effectiveness of critical equipment and used the data to identify and plug specific cost and efficiency leakages selected for their financial impact and speed to payoff. Plant personnel involved in the pilot programs then cross-trained their colleagues elsewhere on the floor, which spread the new, efficiency-focused practices across the organization and built momentum for additional improvement measures. 

2. Responsibilities and accountabilities

The long-term success of a lean program hinges on changing mindsets and behaviors. One powerful lever for change is to task individuals and teams with improving a single process and hold them accountable for results. Those teams and individuals need the appropriate training and tools, as well as the expertise of a black belt or lean coordinator. But leadership of the project and accountability for it remain with plant personnel and management.  

That more localized approach does eventually reach every corner of the enterprise. But it does so in a phased, gradual manner, with visible successes that build momentum along the way—all while quickly delivering material cost savings. This approach typically involves one or more shop floor teams in projects that directly improve their jobs while teaching them to analyze—not just see—and to correct. Lean manufacturing simply becomes a part of the job and not an additional programmatic burden.

The company mentioned earlier organized shop-floor teams led by local process engineers empowered to drive change without becoming entangled in bureaucracy. With ownership and accountability for results in place, the teams began to collect data that fed into relevant KPIs. Meetings were reformatted to address specific KPIs, with those in attendance accountable for analyzing any shortfalls; identifying and executing the actions required to correct them; and documenting the actions and results. To enforce accountability, the company linked its performance management systems to the improvement program and focused them on adding measurable value.

3. Visibility

Fundamental management processes and systems were a critical driver of the company’s lean initiative. The management processes started with shop-floor controls and performance monitoring of key hourly and daily production data that shop floor workers captured and posted to dashboards. The data was the raw material of the reviews that replaced the company’s customary plant meetings. Rather than covering all the numbers regardless of their impact on manufacturing processes, the reviews identified exceptions, good or bad, then analyzed and addressed them. With the new approach, the meetings became a crucial lever for cascading an action-oriented lean mindset throughout the organization and underpinned the organization’s cultural and operational transformation.

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Ultimately, the success of a lean implementation depends on people and how they’re used. A company that defines success by metrics like the extent of a program’s implementation and its status will put its people to work measuring things like percentage of staff trained and percentage of site covered by 5S. The culture that grows from those activities will be focused on checking the box rather than achieving specific results. Conversely, a program that asks its people to measure production and financial impacts will ultimately yield a culture focused on analyzing performance, identifying and resolving shortfalls, and—instead of ticking a box—achieving material financial improvement.