Building a lean enterprise (page 1 of 3)

Owing to large-scale successes, the drive for continuous improvement through Lean Six Sigma is moving from the shop floor to improve all aspects of business, from product lifecycle management, supply chain management, manufacturing and service and support to back-office administrative such as human resources and financial functions - creating a "Lean Enterprise."

The Lean Enterprise has come of age, in large part through the maturity of Web and information technologies that enable company executives - by way of real-time business analytics - to analyze business operations such as cycle times, quality and customer service and leverage Six Sigma tools to reduce variability and sustain continuous improvements across all functions of the business.

While ultimately a stimulus for growth and competitive advantage, the Lean Enterprise journey is not painless. For most companies, it requires radically changing daily operations, manufacturing practices and work culture. Like the Chinese proverb about the longest journey beginning with a single step, Lean is best achieved in stages.

The first and arguably most difficult phase is the switchover from the old push manufacturing model to a pull based flow manufacturing. The second phase is embracing Operational Kaizen: a commitment to continuous improvement.

The third and last phase takes Lean Six Sigma principles to a logical conclusion - extending the information value chain to customers, partners and suppliers. This final stage of the Lean evolution is where most industry experts believe the greatest benefits lie.

This article provides a "Lean Roadmap," focusing on three sequential phases in building a Lean Enterprise, and the technologies that enable and "fast track" a company's transformation.
The evolution into a Lean Enterprise will take a company 18 to 24 months on average to progress from migrating to flow manufacturing to extending the information value chain to partners and suppliers. While the majority of companies today still are in Phase I and II, the early adopters are now entering Phase III.

Change on this scale takes leadership, vision and, in some cases, friendly coercion. When going Lean, upper management support and sponsorship is critical. Managers and line operators, seeped in the old ways and culture, will not accept the new model without scrutiny and pressure from the top. Lean must be a corporate priority.

The first step in making a case for Lean is to articulate the need for improvement. This due-diligence phase requires mapping existing manufacturing procedures and processes for the entire product line to identify pockets of waste and inefficiency.

Lean pioneer Taiichi Ohno defined the "seven wastes" most common to production, including: overproduction, delays between processing steps, unnecessary transportation of products/parts due to poor planning, over-processing of parts, over-stocked inventories, needless movement by employees in performing tasks and the production of defective parts.

The challenge of Phase I the rebuilding of a company's manufacturing operations around a radically different set of principles. The traditional model is based on forecasted market need, for example anticipating manufacturing volume and warehousing inventories of finished product.

Built around departmental, task-specific silos (i.e., painting in one area, welding in another), the model is rife with waste and inefficiencies: product moves, en masse, through a series of discrete steps, and each station does not release any completed product until the entire batch is done.