DISCLAIMER: This article is not intended to fat shame you. It’s intended to fat shame your factory.
So it’s time for your dreaded annual check-up. You already know your doctor is going to say you need to lose at least 25 pounds or face dyer consequence in the near distant future. You psychologically prepare yourself as you enter the doctor’s office. The nurse comes in and asks the usual questions: Have you been smoking? Have you been exercising regularly? Have you been practicing healthy eating habits? Are you sleeping well? You answer in a way that sounds like maybe there has been some progress but you know that not much as changed from the last visit. As expected, the doctor says you’re overweight and need to make some serious lifestyle changes – exercise more, eat right, sleep better, etc. You leave the doctor’s office thinking…this time…it’s for real! – promising yourself that you will change…but will you?
The moment you get home, nothing around you has changed. All of the stresses, behavioral cues, and environmental conditions that led to the lifestyle you’ve become accustomed to are still there. After a while, you start to feel the despair setting in and wonder if there’s any way to break this unhealthy cycle and make sustainable improvement given everything that’s happening around you.
In the story above, all of the same conditions exist in a manufacturing environment. A factory “eats” raw material, utilities, labor, time, energy, etc in order to make sales and serve the customer. You can look at the sale of the product as “exercise”. Getting good sleep is synonymous with getting the right amount of maintenance. Finally, things like smoking is similar to misusing company assets and indulging in unproductive behaviors. If you look at the factory this way, you can see how running a good business is very much like managing a healthy body.
The Causes of a Fat Factory
In the simplest terms, fatness is the accumulation of excess resources. In the body, it’s called fat; in a factory, it’s called inventory. If the body consumes more energy that it’s prepared to use, it grows fatter until it reaches equilibrium, where the effort to execute daily activity matches the energy consumed. If a factory consumes more material that it’s ready to sell, it builds inventory. As in the story above, the first thing a “doctor” might do in a factory’s annual check-up is measure how many days of inventory the plant maintains, including raw, in-process, and finished goods. This gives you a quick snapshot of the factory’s or supply chain’s health. Ultimately, the factory or supply chain reaches its equilibrium when it runs out of space for inventory or becomes so unreliable that its forced to improve, at least enough to survive. The Leanest factories are going to be pulling materials and all other resources as needed – satisfying customer demand while maintaining little to no inventory.
Sometimes higher inventory levels can be driven by seasonality as well. Even so, some of the behaviors and environmental conditions needed to maintain a business model that pre-builds for busy sales season can contribute to an unhealthy culture. First of all, it is a forecast-driven business model. We all know that a forecast is inherently inaccurate because it’s trying to predict the future, which no human or computer can do very well as of the time of this writing. Secondly, during pre-build, or slow season, people tend to lose the discipline needed for high performance. The pressure to keep the customer satisfied is removed from the equation since the factory is not serving a customer per say – but instead, it is serving a forecast. Forecasts usually don’t challenge you to get better – but to try to stay as good as you’ve been over the past year or so. It’s like a parent that enables their kid to eat as much junk food as they want, as long as they’re getting decent grades and not getting fatter. Furthermore, the real customer, you know the one that actually pays money, may decide they don’t want what you spent all year producing; then you’re in real trouble. To avoid this, the factory or supply chain needs to develop the operational agility to get closer to an on-demand production model. This means being able to scale up or down production capability based on actual demand instead of a forecast.
The Advantages of Lean-ness
For a Lean person, it doesn’t require as much brute force to accelerate, decelerate, and change directions. This is just straight up physics. The same is true for a Lean Manufacturing company. A Lean company has a distinct competitive advantage because it is able to move with the market, changing speed and direction with a lot less effort. This positions the company to take advantages of emerging opportunities to grow sales and improve customer service at a much lower cost than the company that is not Lean. Also the cost of production is generally much lower because Leaner companies don’t require as much input to produce the same or greater output. Think of the professional athlete that can easily adjust his / her game depending on the competition or effortlessly sprint from one end of the field to the other. Compare that to the supply chain that carries so much inventory that it renders itself incapable of change.
From a people development standpoint, working in an Lean factory is just like growing up in a well organized and productive home. Their chances for personal success and quality of life are dramatically increased by working in an environment that deeply espouses values of good health, productivity, and Continuous Improvement.
Becoming a More Healthy Factory
Step 1: Define Value – This needs to be done in collaboration with the customer as they ultimately define the value that your company seeks to provide
Step 2: Map the Value Stream – The key here is to identify all value-adding steps needed to satisfy Step 1; also identify all other steps currently being done to assess opportunities for improvement. You also want to gauge days of inventory and process lead time at this phase as well
Step 3: Establish Flow – Create a stream of product from the earth to the customer, minimizing batches, and adding value at each step in the process; ideally, you can create a one-piece flow as batching of any form is essentially inventory
Step 4: Pull – Establish demand signals from the customer so that work is completed as a reaction to actual customer need (not a reaction to a forecast)
Step 5: Perfection – Continue to reduce waste, or non-value-added activity, from manufacturing and supply chain processes
This approach focuses on the broader phases of becoming a healthier company. In the course of executing this method, you’ll be confronted with all of the cultural and environmental elements that drove the company to an unhealthy state to begin with. These factors are unique to each business but have the potential to derail any effort to create a culture of continuous improvement. In fact, you can organically drive a Lean transformation by systematically building problem-solving capability and ensuring that the right behaviors are consistently rewarded. You’d be surprised to find out that given the right conditions, your people will step up to the plate to deliver excellent results for the business.
All companies begin as start-ups, which tend to be naturally more Lean out of necessity for survival. As they grow, develop bad habits, and become more resistant to change, they become “fat”. In the story above, the main character needed to lose 25 lbs [again, not fat shaming here – just making a point]. An unhealthy factory might be maintaining 20 or 50 or even 100 days of inventory at the facility. Some even set up offsite warehouses to store all the access material and not have to look at it everyday. Just like with a healthy person, a Lean factory is the result of everyday healthy behaviors and choices. You cannot achieve a sustainable culture of Continuous Improvement without focusing on developing the skill and will of the people to improve.