Chapter 2
What Is Lean?
Lean is a customer-focused approach that concentrates on providing value by eliminating waste and increasing quality. It is customer-focused, meaning that a person or organization receives output, such as a product or service, from one or more processes. It provides value by satisfying a customer’s requirements. One way to do that is to eliminate waste by removing obstacles that impede the continuous flow of one or more processes delivering output to a customer. In turn, Lean increases quality by reducing defects in the output delivered to the customer.
Therefore, adopting Lean means making the customer the center of attention by capturing a person or organization’s specifications, or requirements, and satisfying them using value-added processes, operations, procedures, tools, and techniques deemed worthwhile by the customer. For example, any process or operation that does not satisfy the customer may be considered non-value-added and, consequently, be eliminated. Hence, value-added means those processes, operations, procedures, tools, and techniques that are what the customer is willing to pay for, whereas non-value-added ones do not contribute to what the customer wants. Naturally, it is the latter, non-value-added items, which should be eliminated, that are the fundamental reason for adopting Lean.
2.1 Key Lean Concepts
Lean is predicated on several key concepts, shown in Figure 2.1.
Focus on the customer. Under Lean described above, the customer is king. All effort is focused on ensuring that the person or organization meets the requirements of the customer, nothing more and nothing less. The customer becomes the reason for existence of the person or organization. Failure to focus on the customer is, from a Lean perspective, a prescription for failure.
Eliminate waste. Anything that interrupts satisfying customer requirements needs to be removed. Waste not only interferes with satisfying customer requirements; it also adds to operating costs hindering the performance of a person or organization. The concept of waste is referred to as muda of which there are two types.
Distinguish between value-added and non-value-added. Processes, operations, procedures, tools, and techniques contributing toward satisfying the requirements of the customer are considered value-added; those not contributing are non-value-added. The non-value-added ones are waste and, therefore, should be eliminated.
Emphasize pull over push. In the not-too-distant past, the emphasis was push rather than pull, meaning that demand was predicated upon past or anticipated requirements of the customer. Pull is the rule today, whereby fulfilling customer requirements is predicated on meeting existing demand. By giving preference to pull, waste such as excessive inventory or overproduction can be more easily eliminated. Of course, pull requires continuous process flow to meet the demand; waste obstructs, interrupts, and sometimes stops, continuous flow.
Stress standardization. Uniqueness is fine, however, when delivering a product or service standardization is critical. Standardization, from a Lean perspective, applies to processes, operations, procedures, tools, and techniques so that continuous flow can occur; setup times are reduced; and cycle time improves. Through standardization, consistency can occur. Lack of standardization often results in waste, which can interrupt the continuous flow to meet customer demand.
Leverage technology. Although not the center of attention for Lean, technology is seen as an enabler for processes, operations, procedures, tools, and techniques. Under Lean, technology supports executing processes, operations, procedures, tools, and techniques and not the other way around which, unfortunately, is often the case. Technology serves as a means to remove obstacles such as delays in the form of bottlenecks. Technology is also seen as helping people to perform responsibilities when satisfying customer needs, not replacing employees, which again is often the case seen by people in finance.
Stress interdependence and integration. Continuous flow of one or more processes requires that each element within it provide the necessary output to serve as input to the other elements depending upon it, in other words, interdependence. All the elements must also work together as smoothly as possible, in other words, integration. Through interdependence and integration a continuous flow can occur with little or no waste. That, in turn, helps in large part to satisfy customer requirements. The best way to appreciate the concepts of interdependence and integration is to look at the organization as a complex system consisting of objects, or components, that depend upon one another and work together to operate effectively and efficiently. An organization adopting Lean is such a system; anything that interrupts efficiency and effectiveness is waste.
Seek more information, less data. Since the rise of information technology the world has become awash with data, not information. Data are facts that have no intrinsic value; information is data converted into having intrinsic value. The effort in producing and possessing too much data is waste. It is waste because people have to spend time trying to analyze and interpret it. This action can interrupt continuous flow and divert valuable resources that could have focused on satisfying customer requirements. From a Lean perspective, information is king, not data. With information, important decisions can be made more easily and quickly, and waste identified and eliminated.
Seek continuous flow. Lean requires continuous flow based upon the demand of the customer. Ideally, all processes, operations, procedures, tools, and techniques enable continuous flow to meet the requirements of the customer. In reality, of course, no process is perfect and waste that arises interferes with continuous flow. Processes, operations, procedures, tools, and techniques are adapted to differing levels of degree that do not add value. That is often the case for older larger organizations. To ensure that continuous flow occurs and sustains itself, Lean requires the removal of such waste.
Less is more. Redundancy and planned obsolescence are two examples of the opposite of this concept during the days of the push-through system. In the early days, building large stockpiles of parts, for example, was seen as a natural way of doing business to offset shortfalls as well as unanticipated problems with products. Today, the pull-through system is the preferred way of doing business. Through pull, redundancy and stockpiling are done at a minimum or nonexistent level. Pull demand necessitates a continuous flow of a system that provides a product or service that meets customer requirements as they arise. Naturally, more facilities and stockpiling, for example, not only add to costs but also require concentrating on activities that fail to add value.
Modularize. Standardization enables the ability to modularize, meaning to mix and match components of a manual and automated system that supports a value stream. Breaking a system into modules provides greater flexibility in meeting customer requirements by manipulating components or subsets in ways that can reduce waste. For example, certain functionality of a software application may be modified more easily by reducing the impact of a significant change in the configuration. Or, replacing equipment in a work cell can occur more easily if based upon a common standard, thereby reducing setup times. The less a component is based upon a common standard, the more time and labor are required to make a change, adding to setup times that affect cycle time and, ultimately, add to waste.
Seek simplicity and flexibility. Lean seeks simplicity in design by embracing standards and modularization. Complexity leads to waste according to the philosophy of Lean, and it is not hard to understand. Through complexity, adaptation to changing requirements or fixing problems in a value stream can take excessive time and effort to understand. This time and effort to unravel and understand a situation interferes with making timely delivery to the customer by extending cycle time and it does not satisfy pull by the customer. Through standardization and modularization, simplicity becomes possible. Flexibility also becomes possible because it enables participants in a value stream to rearrange the parts, so to speak, to determine the cause of a problem but, just as important, to come up with a solution more quickly and with less effort.
Pursue quality at the source. Under Lean, quality is critical to satisfy the customer. The best way to deliver quality to the customer is to address it at the source, for example, such as during design and development. Traditional ways of dealing with quality, such as through inspections, are not part of Lean. Inspection just before delivering a product or service to a customer is wasteful. It requires overhead in terms of labor and storage of parts, adding to costs that are passed on to the customer. It can also mean slowing down cycle time by clogging the value stream. Not addressing quality at its source can lead to returns and legal complications that not only indicate a degree of dissatisfaction on the part of the customer, but can also hurt the financial bottom line.
Adhere to a holistic perspective. Lean requires a big picture perspective, which is having the ability to look beyond a person’s, or organization’s, purview. Participants in a value stream see how all the components work together and what impact their responsibilities have on it, as well as upon themselves. By adhering to such a perspective, participants begin to appreciate the importance of their roles and those of others in contributing to customer satisfaction. For example, the failure of a function to perform in a value stream can affect when a product or service is delivered to a customer. Interdependence and integration, mentioned earlier, are significant contributors to the success of a value stream and integral to a successful public or private organization.
Visualize. Graphics have a significant role in Lean in many ways. They are used to capture and improve process flows. They are used to stop production when a problem arises. They are used to reflect progress regarding key performance indicators. They are used to communicate information to various levels of an organization. This visualization is less on displaying data and more on information so decisions and actions can be taken quickly and effectively to ensure the continuous flow of the value streams based upon demand pull, not push. Stoplight charts and scorecards are just two examples of using visualization in Lean.
Link strategy and operations. In many organizations, particularly large ones, strategy sometimes seems disconnected from operations. It seems to create a layer-cake effect whereby the top layer is not aligned with the bottom layer. Under Lean, considerable effort is made to ensure that this situation does not occur. By having everyone up and down the chain of command get into the Lean mind set, and by placing primacy on focusing on satisfying the needs of the customer, both the strategic and operational layers of a company perform as one. Both strategic and operational layers start to adhere to a holistic perspective and seek to reduce waste in daily performance and when delivering a product or service to a customer. Visualization plays a key role in tracking and reporting progress as it relates to tying strategy and operations and encouraging employees at all levels to walk the talk and visit where the action occurs.
Engender trust and confidence. Lean emphasizes trust in the people who do the work by capitalizing on their talents and expertise. That means allowing people to take ownership and come up with ideas to improve process performance in a value stream. Applying this concept, of course, requires management to trust and place confidence in people to do what is right in terms of satisfying the customer through process improvement. It also means management making a commitment not to lay off people as a result of making contributions toward satisfying a customer; to do otherwise will destroy employees’ trust and confidence in management. Trust and confidence need to flow up and down the chain of command for Lean to remain a sustaining activity within an organization.
Change the organizational culture. Lean just doesn’t happen once executive leadership promulgates it as the new philosophy behind the way of doing business. The groundwork has to be set for Lean to become a reality; that is, more than a flavor of the month program. Lean requires setting the context for it to become a sustaining reality. It is imperative, therefore, that the culture of the organization change; rarely does the culture make it conducive for Lean to have an easy foothold in an organization: trusting subordinates and granting them to take ownership of, not only their immediate responsibilities, but also the operations of the entire enterprise. From an improvement perspective, training people in the concepts and tools of Lean and allowing them the time to engage in improving processes are just some cultural changes that must occur. It largely means that executives and senior management must change from a take-charge, controlling style to one of being supportive and sharing information and even responsibilities with people lower in the organizational hierarchy. In theory that seems innocuous; however, in reality it is harder than what many people think, especially in traditional corporate environments.
Seek perfection through continuous improvement. Lean relies heavily on the concept of continuous improvement. The idea is to seek perfection in everything that is done in the work environment. This pursuit of perfection does not occur in a revolutionary manner but incrementally progresses via an iterative cycle. This pursuit of perfection occurs at all levels of an organization and everything that a person does. The Japanese term, kaizen, represents the pursuit of perfection in everything that people do. The focus is actually applying the pursuit of perfection rather than simply talking about it. The PDCA (for plan, do, check, act) cycle, also known as the Deming wheel, is the path to achieve perfection. This wheel repeats itself, rolling its way to a destination, perfection.
Educate people. To implement Lean successfully, people must have the necessary understanding and knowledge about the subject. That means management must invest in education and training, of not only the rank and file but also of themselves. Lean requires a total commitment in providing value to the customer and to do so requires just about everyone to have the necessary knowledge and understanding of Lean concepts, tools, and techniques. People do not change overnight and sometimes require considerable effort to unlearn, as much as learn, about Lean. Over time, people can acquire additional understanding and knowledge through more training and experience as they tackle individual and group projects involving Lean.
Communicate up, down, and laterally. Lean is about people providing people with value. The best way to communicate is more than just pontificating to people about Lean; it requires communication throughout an organization, to and from the machine operator in the corner of a shop floor to the president of the company. This communication goes beyond simply talking to each other about Lean and making proposals for implementation albeit that is also important. It is foremost about listening to others to understand, from a customer perspective, what is of value. It is also about listening to peers to capitalize on their expertise to come up with recommendations for improvement. Communication should be ongoing to further the pursuit of perfection in everything.
Walk the talk. People, from management to the rank and file employee, must live the Lean philosophy. They must perceive, think, and act accordingly. They must become true believers by showing a willingness to learn about Lean, change old habits, and embrace the new ones in their environment. They must also be willing to go where the action is, which includes everyone in the chain of command. That means going out to the customer’s environment and learning and observing everything of relevance, and then using that knowledge, changing relevant processes and procedures that will augment value to the customer. By walking the talk, people will also start to make the necessary mind shift to a Lean perspective.
2.2 Benefits
Embracing Lean offers many benefits, shown in Figure 2.2.
Understanding customer values. The focus is on the customer, whether an internal or external one. This benefit is really the premier benefit of Lean. By satisfying the customer, all other benefits are realized, too. To realize this benefit requires knowing the needs, wants, and other customer requirements and orienting all processes, procedures, techniques, and so on toward satisfying them. To maximize the payback of this benefit requires considerable effort on the part of the company that delivers the product or service to learn about the customer. It requires people compiling and collecting data and information, interviewing people, conducting extensive reviews of internal and external reports about the customer, and going to the customer’s major site locations to observe and learn. Whatever the means, the important point is to know the customer’s requirements and then to work to satisfy those deemed important by the customer.
Improving cycle time. The time required to build and deliver a product or service should be in concert with the demand of the customer. The idea is to operate in tandem with the needs of the customer when the customer needs a product or service. Too long or too short a cycle time can frustrate the producer and the customer. It can cause, for instance, a buildup of inventory or a delay in delivering products or services to a customer, both adding waste. Improving the cycle time is a direct benefit of Lean because it improves flow by eliminating waste.
Enhancing shareholder value. Throughout the 1990s, special emphasis was given to delivering shareholders a return on their investment. One key metric was enhancing shareholder value, which was essentially calculated using strategic considerations to provide a solid return to shareholders. Lean is a tool that contributes to shareholder value by reducing waste, such as excessive inventories or delays in delivering a product or service to a customer. Applying Lean concepts, tools, and techniques to a process becomes more efficient and effective, allowing for larger cash flows.
Providing greater flexibility. At first, it may be difficult to envision how Lean can increase flexibility because redundancy sometimes allows for flexibility in response to circumstances. More often than not, however, flexibility is inhibited due to redundancy entrapped in a complex network of supporting processes and resources. Too much redundancy can be as stultifying as too little when responding to an event. Having too much inventory, too many approvals, or a complex process flow are examples that make it difficult to make necessary changes to respond to a customer’s dynamic requirements. One particular example is when a simple change in the requirements requested by a customer becomes too costly to a service provider or delays delivery by responding to the change. Lean stresses simplicity through standardization and modularization to allow for rearranging, adding, or deleting components with as little disruption as possible in response to changing conditions.
Providing better quality and reliability. This benefit is realized because Lean involves using a wide range of quality management tools and techniques that focus on reducing waste. Tools such as Pareto and statistical process control charts are just some of the many tools and techniques that can be used to reduce waste and eradicate poor quality as a major focus. Emphasis shifts from building in quality at the source and less on inspecting and keeping inventories for just-in-case scenarios. With quality, of course, comes reliability because the products and services meet customer requirements.
Reducing capital expenditures. Because Lean focuses on reducing wastes in all forms to deliver value to the customer, it makes sense that one of the areas for doing so is in capital expenditures. These expenditures are, for the most part, high-dollar items such as facilities, heavy equipment, and large item storage, to name just a few. Such items require substantial overhead to maintain, house, and keep them in workable order; that translates into costs. Lean works on reducing overhead in an effort to provide value to the customer, which includes a competitive price. It achieves that by adopting a just-in-time delivery of resources, reducing storage space, and decreasing unit costs.
Reducing organizational hierarchies. In many large private and public entities, empire building is common practice. Translated, that means adding more people and greater levels of hierarchy, especially in the executive and management ranks. Naturally, this type of growth has many negative side effects. Communication becomes more difficult; management gets out of touch with what is occurring in the lower-level ranks; negative conflict often erupts as members of executive management compete for greater growth in power and control; and processes become so intertwined that making change is next to impossible because it upsets the power and control of certain people or organizations. In the end, it all translates in a bloated overhead due to salaries, facilities with larger offices and cubicles, and power grabs, all adding to waste. Lean stresses the importance of reducing hierarchies to ensure continuous flow occurs and does not lead to excessive costs affecting the operational efficiency of the company or organization.
Focusing on core competencies. Every organization, private or public, has a set of core competencies, for example, skill sets and expertise, that it performs well. These are strengths. Organizations should concentrate on these strengths as much as possible and enable other organizations to perform the functions or responsibilities that they do better. Outsourcing and just-in-time delivery of goods and services are examples whereby other companies perform work that the recipient organization does not do too well. By focusing on core competencies, an organization can reduce waste and concentrate more on providing value to the customer.
Balancing the qualitative with the quantitative. Many times, value is associated with cost or some other financial metric. Under Lean, cost is but one major consideration to provide value to the customer. Albeit important, cost is often emphasized at the “expense” of the qualitative. Quality, employee morale, and customer relations are just a few examples of qualitative considerations that can add value to a customer and, if not addressed, can add to waste and have a negative impact on quantitative performance. The need for balance between the two is often overlooked and, yet, they have a symbiotic relationship; performance failure in one can affect the other negatively.
Leveraging technology. Technology should serve as an enabler of one or more processes, not the other way around. In many environments, processes are more oriented toward meeting the internal needs of equipment or software applications; the focus shifts to internal requirements rather than those that the customer wants to address. So much effort is made to satisfy the requirements of the machine or application that overhead costs increase and so does cycle time, hence, production does not match customer demand. Ideally, technology should enhance process performance to reduce any waste and allow for continuous flow to provide a product or service to a customer.
Utilizing resources more efficiently and effectively. Bloated overhead due to excessive resources, such as increasing layers of management, is waste. It does not add value to the customer. It simply increases costs and can interfere with accomplishing goals and objectives concerning customer requirements. Under Lean, the emphasis is on reducing inventories of labor and nonlabor resources. Such reductions in inventories lower production costs but also allow focusing efforts on meeting customer requirements. They improve efficiency and effectiveness with minimal resources by eliminating many examples of waste such as overproduction, dealing with contingencies, or delivering a defective product or service to the customer.
Lessening fear. If Lean is employed as a means for improvement and not to remove people from the workforce, then fear should dissipate. Ideally, and the word here is ideally, no one should lose his or her employment for applying Lean in the work environment. Management should be engendering trust and confidence in employees and granting them the autonomy to take ownership in the work they perform, the processes they support, and support for the entire organization. Employees participating in Lean should not be forced to view it as performing their execution under the pretext of removing waste. Unfortunately, too many times Lean initiatives are conducted resulting in or occurring concurrently with layoffs. Despite management’s insistence that Lean and layoffs are unconnected, the perception of a relationship persists. Consequently, trust and confidence decline and Lean becomes a four-letter word.
Overcoming a silo mentality. Lean requires everyone, not just executives, to look at the big picture regarding a company. This perspective is possible because the focus is on customer satisfaction and assurance that a process flows continuously and with minimal waste. Everyone takes ownership in all that happens in an organization, not just what occurs within her functional area of responsibility. In large organizations such a perspective becomes quite difficult, especially if one is deep in the bowels of an organization. Nevertheless, all individuals should know how they contribute toward customer satisfaction by identifying opportunities for waste reduction and improving process flow.
Teaming at greater levels. Although Lean can occur individually or as a group, many improvements occur when people form teams consisting of people from all levels of an organization and from different functional disciplines. Everyone applies the same knowledge, tools, and techniques to improve one or more processes. Each team member provides knowledge and expertise while at the same time looking at the bigger picture as it relates to customer satisfaction. Good communication and team dynamics are critical to a successful Lean project as improvements are identified and implemented within a value stream.
Reducing overhead costs. If waste is removed from a value stream, naturally a reduction of overhead costs should occur accordingly. These reductions can then be transferred to savings for the organization and the customer. These savings can come from many areas, such as storage and transportation. Any reductions in overhead costs should not mean laying people off; doing so will only jeopardize ongoing and future Lean projects.
Engendering an environment conducive to creativity. In some organizations, lip service is paid toward creativity. “Think outside the box” is bandied about when, in reality, doing so may be career limiting. If executive and senior management truly embrace Lean, however, then creativity will become more frequent and pay big dividends by identifying new ways to reduce waste in the value stream, thereby delivering value to the customer. Although not everyone is a creative genius, executive and senior management can provide the necessary support for people to apply creative techniques at the individual and team levels. Additionally, it must allow employees to question the current way of doing business and welcome suggestions for improvement.
Continuously making and tracking improvements. Applying Lean requires identifying and making improvements in an effort to achieve perfection, whether on an individual area of responsibility basis or across a value stream. The idea is that identifying and implementing change also require following up on whether it is effective as intended or pursuing a modified or different course of action. Followup and assessment are continuous until perfection has been, or is close to being, achieved, approaching perfection when waste is removed or reduced and the customer’s requirements satisfied.
Transferring and sharing knowledge. With greater trust and confidence, people up and down the chain of command can begin to feel comfortable dealing with topics that address Lean. This feeling of comfort includes a willingness to bring up issues, share insights, and recommend solutions without fear of reprisal. The focus is on satisfying the customer and eliminating waste. People begin to relinquish data and information as well as allow backup of responsibilities, knowing that they will not lose their positions or jobs. Of course, no guarantee of employment exists just about anywhere but to be applied effectively, Lean requires people feeling confident that they can share without negative consequences.
Adapting to changing circumstances. This benefit is very important in today’s dynamic business environment. As globalization and market forces expand so does the need for flexibility in responding to changes in the market. If an organization finds itself bloated from waste, it will find itself constrained in its ability to marshal its processes and resources to remain competitive. Lean encourages using standardization, simplicity, modularization, effective resource utilization, modern information technology, and solid communications, to name a few, internally and externally. All are enablers for an organization to adapt to changing circumstances if waste is minimal, perhaps nonexistent.
2.3 Challenges
Despite all the benefits of Lean, trying to make it a reality in an organization can be extremely challenging, as shown in Figure 2.3.
Bureaucracy. Bureaucracy sometimes seems to be a synonym for waste and it can often seem to be the biggest impediment to Lean. This situation especially occurs when first considering Lean. Just the idea of applying Lean can result in people going through myriad approvals and meetings just to recommend looking at the topic. Numerous people will want to get involved in the preliminary discussion and some people may express concern that it might disrupt the current process too much and raise expectations too high. In the end, of course, it is the fear of losing something, such as position or power, which makes bureaucracy so challenging to Lean. After all, in a sense Lean is the antithesis of bureaucracy.
Silos. This challenge is very closely related to bureaucracy. However, it more reflects traditional organizational structure that exists in some organizations. Commonly referred to as stovepipes, each silo represents a discipline, such as information systems or marketing. These stovepipes tend to see a process through their own discipline and protect their power and position vis-à-vis other silos. This structure tends to delay projects and other decisions because each silo contributes its knowledge, expertise, approval, and the like independently of the other silos.
Specialization. From a Lean perspective, specialization can prove a challenge similar to that of a silo. People with very specific knowledge or expertise can delay process improvement activities. The tendency to see a process from their narrow discipline and to use jargon, unless translated, can cause communication problems. Hence, a designer may view designing as more important than engineers in manufacturing or vice versa. Specialization adds to the challenge by adding complexity in understanding the perspective of each discipline and determining what is and is not important.
Fear. Depending on the state of the economy or an organization, a topic of Lean is often followed by another topic: layoff. Just the word Lean has a connotation of less and that means people will eventually be let go to realize the savings. Unfortunately, Lean receives a bad reputation for this perception. Sometimes, this perception is not too unwarranted, though. Lean sometimes reduces so much waste within a process that people can lose their jobs if no other opportunities exist within their organization. It is this connection to job loss that engenders resistance to Lean although, in fact, they are not related.
Lack of management support. Within every organization, some people will say they embrace Lean and talk it but when it comes to actually doing it, their support is limited or hot air when setting priorities and budgets. In reality, under this circumstance, Lean never had support. Employees who participate in Lean projects know that this support is simply perfunctory and, while working on a Lean project, do so only in a perfunctory manner. This lack of management support is also expressed in other ways, too, besides financial. Political or in-kind support may be tepid or nonexistent from a project sponsor or the topic of Lean is not addressed at significant meetings.
Past failures. Whether for Lean or any other project or initiative, past failure may have likely occurred. These failures will serve as justifications to not perform Lean by claiming it is another boondoggle or flavor of the month. The naysayers will all come out and say that Lean has all the characteristics of a past failure and that good money should be spent elsewhere. Sometimes the correlations have little in common. The assumption is that the past will repeat itself, which has as much relevance and reliability as the assumption that the past will not repeat itself. Each Lean project, like most projects, is unique and the best approach is to learn from the past Leans, successful and unsuccessful ones, and capitalize on the lessons learned.
Inflexible mental models. The mind can become a mental prison, making it very difficult to find an escape. In many organizations, these mental models prevail. They view the environment with a certain lens and interpret everything through it. These models are reinforced through tradition, financial incentives, managerial styles, specialization, and much more. Shattering or questioning these models is tantamount to some people as being iconoclastic. Lean, of course, requires shifting a mindset to come up with innovative ways to remove waste in the value stream and to satisfy the customer.
Management styles. Lean requires an open management style because it requires considerable bravery to ask simple questions such as,“Why?” Some management styles, similar to James McGregor’s Theory X approach to management, will likely view such an attitude as equivalent to insurrection or noncompliance when in reality questioning and challenging are core values of Lean. Lean requires warriors, not soldiers. The difference is that warriors focus on the end result and constantly ask themselves and others why things are done a certain way and ask how things can be done better; soldiers simply follow orders by complying with commands. Both are needed, but warriors of Lean embrace the challenge of making Lean a reality.
Flavor of the month. The corporate world is awash with initiatives and programs that declare change is coming for the better. Money, time, and effort are dumped into these initiatives and programs and sold to everyone as lasting ones. Of course, people jump on the bandwagon, take all sorts of training, and attend conferences, for example, only to find a few years later that the people who embraced the change either left or shifted their priorities. Then everyone scurries to join the next flavor of the month, more out of survival for themselves rather than of the organization. Lean is often seen, in some organizations, as another flavor of the month; more often than not, people attend Lean workshops only to find that recommendations for change never get implemented.
Outdated technology. Lean requires looking at technology as an enabler, not an inhibitor of the value stream. Sometimes the technology becomes the focus of attention and everyone works to satisfy its requirements to function. This situation is intensified when legacy systems, that is, old applications, are employed, for example. In many cases, these systems have become so ingrained in the existing process and the investment in maintaining them has become prohibitive; yet, vested interests fight to keep them operating. Change seems almost impossible unless people with a vested interest see a personal gain, rather than a loss, due to system replacement.
Lack of available information. Despite the presence of computing technology, often the information, even the data, to conduct a Lean initiative or project, is unavailable, does not exist, or people do not want to share it. The former is often lost in a mess of incompatible computing systems or hardcopies stored in a cabinet or back room; the latter is often because of fear in the workplace where the release of information is seen as diluting position or power within an organization. Lean depends on the release of reliable data and information and, without both, a special effort must be made to generate them. Sometimes people see generating data and information about their role in a process or procedure as threatening, such as reflecting poor performance in specific areas of responsibility.
Rapidly changing market conditions. Lean requires at least some time to study the existing value stream. In a dynamic environment, taking the time to capture, for example, the As-Is value stream may render the output irrelevant. That is why it is important to scope a Lean project in a manner that provides sufficient payback while at the same time not taking too long to complete. For large companies, such as a global manufacturing enterprise, making this kind of decision can be quite difficult because of the complexity of the value stream. If the To-Be recommendations are acceptable, too, it can be quite difficult for the same reasons with the added challenge of getting organizations and people to want to change.
Lack of Lean expertise. For a successful Lean project, program, or initiative, people need the necessary knowledge to make meaningful improvements in a value stream. More often than not, however, the necessary knowledge acquisition and transfer come after the fact, that is, once the Lean project, program, or initiative takes place. Naturally, that knowledge comes too late and benefits only subsequent Lean endeavors. Lean is essentially a philosophical approach toward quality, requiring a reorientation from the daily operational mindset that focuses on delivering the product or service without regard to the customer per se. Lean requires putting the customer first with operations squarely focusing on customer satisfaction. Lean expertise, therefore, requires considerable unlearning and relearning.
Traditional accounting practices. Accounting in most corporate environments is based upon generally accepted accounting principles, or GAAP. These principles are intended to provide investors, not necessarily the customer, with reasonable assurance that the company will operate for a considerable time period. GAAP largely requires taking a very functional perspective, that is, a stovepipe perspective of revenue and expenses, thereby long term. This accounting perspective can clash with Lean, which focuses on the value stream, which is often cross-functional and is very project, program, or initiative oriented, thereby short term. The conflict between the two perspectives can hinder Lean when it comes to allocating costs. In some places, an alternative accounting approach is adopted, called activity based costing, or ABC, which allocates costs to specific deliverables produced for a project, program, or initiative.
Sacrosanct processes. In some companies, there is only one acceptable way of business for a value stream. It has been that way for decades and nothing, short of financial devastation, is going to allow making changes to it. The reasons are quite obvious. Vested interests will protect a process else they could face demise in stature within the organization. A process may also be proven so taking a chance by altering or replacing the current way of doing business by entering into the unknown could result in realized risks. Powerful vested interests in the status quo may have a specific reverence for the past. Lean requires questioning on the part of everyone in an organization with emphasis on customer satisfaction. Such questioning is dangerous in an environment replete with sacrosanct processes.
2.4 Lean and Project Management
Lean is an approach that, when adopted, provides many benefits. Yet, to realize these benefits requires overcoming many challenges. It is important, therefore, that Lean be applied efficiently and effectively if for no other reason than it requires investing considerable time, money, and effort as well as causing a temporary disruption in providing products and services to the customer. There is only one tool that can help Lean succeed: project management. Without project management, a company will likely not realize the benefits of Lean or overcome the challenges confronting its application.