What is Lean and How to Implement It?

Transcript of the interview with Bill Neeve, President of Cycle Time Management, recorded in July 2017.

Igor: Hello, this is Igor Chigrin, a Business Funding Expert from Fair Grant Writing, an Ontario-based grant writing company, dedicated to helping businesses grow and solve their most pressing challenges by unlocking the access to the government funding.

Today, we’ll discuss how to avoid issues and achieve operational excellence and significantly reduce the cost through the adoption of a lean-thinking approach. Lean thinking helps businesses reduce waste, time and resources required to make the products or perform the services and there are Canadian government grants that pay for lean consulting and lean training to implement lean thinking.

So, today, I am excited to have Bill Neeve, the President of Cycle Time Management on this call. Bill has over 35 years of experience in lean consulting, training and implementation and why don’t you, Bill, tell our listeners a couple of words about yourself and your company?

Bill: Thanks very much, Igor. First of all, it is a pleasure to be here with you today and to share information that I have gained over the last 35 years with your audience, and hopefully, they can walk away with some tips today that might help them in their business.

You asked me about my business; just a quick overview. Cycle Time Management is the name of the company, and it was started in 1986, a long time ago. We were one of the early birds to attempt to understand what Toyota was doing in their manufacturing operations. We ended up observing what they’ve done, and it’s been an evolution, of course, and working in lean enterprise education and facilitation. We are not consultants; we’re educators.

We’ve helped companies, many of them, implement lean operating practices over the last 35 years, so we feel we’ve got a pretty good position and understanding of what it takes to implement and change from traditional manufacturing to use lean techniques.

Igor: That’s great. So then, Bill, why don’t we start with a definition. How can you define lean? What is lean?

Bill: Well, lean… Many companies, consulting and training since the ‘80s, have tried to interpret what lean is; Toyota being the father of lean and developed it. So, lean is in the eyes of different education groups and consulting groups, can be different things and the same with companies that try and implement it. The problem is there is no Lean Standard that exists as there is with quality (ISO Standard)

It’s made up of many subsections like Total Productive Maintenance, Quick Change, Containerization, Pull System, Error Proofing, Five S, Machine Layout and Level Scheduling and many more elements. So, it can be quite overwhelming to an organization that’s first looking at it and trying to figure out how to implement it in their company, but what it comes down to, it’s all about the process. It’s about taking your traditional manufacturing operation and trying to streamline the environment, and that’s the factory floor and the office; the whole company.

We’ve always looked at lean being a holistic company opportunity and not doing/trying to implement lean in increments.

Igor: You mentioned Toyota invented lean. Is that how lean started in the first place? How did it start? What’s the story behind lean?

Bill: Well, the story behind lean goes back before Toyota, or back in the 1920s with Henry Ford. Henry Ford came up with new and exciting production methodology. The Japanese looked at that and created their own. It’s taken years and years for them to evolve into all the elements that I mentioned earlier, and there are more elements.

So, it’s an ongoing evolution of understanding the process, and one of the big variables is people: understanding people and how they relate and how you integrate them into the system. We’ll talk about that a little bit later, I believe.

Igor: What is the main approach to lean? We’ve heard of different names such as lean thinking, Six Sigma. What are those and how do you differentiate those?

Bill: Because there is no, what we would call a lean standard in the world, as I mentioned earlier, it’s up to each company that’s out there training and educating people on lean to interpret the Toyota Production System. So, some of them get it right, and some of them don’t. So, there are many approaches, but we have always looked at a company going from traditional methodology to lean, looking at the whole enterprise. We did this when we started in 1986, and it was only the last, I’d say, ten years, since about 2007, that people started to look beyond the factory floor.

Most consulting groups, if they come in to try and help you with improvements, they look at the organization how it’s structured (vertically) not how the processes run from end to end (horizontally), and we started in 1986 with the Horizontal approach which was relatively new at the time. The only other company I know that was looking at the company for improvement horizontally, the way the business runs, was Motorola at the time.

Igor: Okay, so, let’s focus on Toyota approach (Toyota production system approach). So, what are the key principles of Toyota production system?

Bill: Well, it boils down to probably 4 or 5 different areas. One is trying to determine what value is in your process. I keep saying it’s all about process, so 1 of 2 things are happening when your people are operating in the office or the factory. They’re either working on non-essential activities that shouldn’t be there, or they’re working on essential. Today, they call that value-added and non-value-added.

The value is one thing that they must look at very hard. Another thing is value streams. What do you need to do? There are some core value streams in your business like new product introduction, what we call the Make Ship loop, which is everything from order entry cross-functional until the product goes out the door, and there’s the supply chain loop in the business.

Understanding what the high-level value streams are and then breaking the company down into core value streams and then sub-value streams that connect into those and by doing that, you start to understand the flow, whether it’s good, bad, or where the bottlenecks are, and the whole issue of scheduling.

We talk about pull scheduling when we’re talking about lean. Traditional manufacturers tend to push goods through the organization, and we help companies change to pull things through the factory, as opposed to pushing them. So, that’s an important element.

Igor: You also mentioned about the waste reduction and that it is one of the important elements of the Toyota production system. Can you define the waste and give us the examples of what the waste actually is?

Bill: When we talk about waste and lean, you mentioned earlier about different subjects that are on the market and people getting confused, like Six Sigma, for example. People are confused what is that for? My belief is it’s to take variability out of a process.

Lean is all about waste. So, we’re talking waste of overproduction, waste of transportation, waste when a piece of equipment is sitting idle, or people are sitting idle, waste of motion – that means taking ten steps when you only need to take one if your operation were laid out differently, over-processing, too much inventory, defects. All of those are various types of waste that are found in what we’ll call traditional organizations as opposed to somebody attempting to implement lean.

Igor: How does one identify whether the operation produces waste? What are those basic tools that our listeners can implement to identify whether there is a waste or not?

Bill: The main one that you would use is the value stream. Looking at your systems horizontally and going through and doing what we call as-is mapping with the value streams and trying to identify things that you shouldn’t be doing that are a waste of time, waste of effort, that have crept into the business over time.

It’s not too often that we go back and say, “Let’s take a refreshing look at what we’re doing today.” We put a lot of things in over the years to keep us out of trouble (little patches, let’s say) and very seldom does a company go back and look at the whole company and use value streams. It’s interesting what you find out when you do that.

So, the mapping is what we call a current state and measuring the value stream, taking a snapshot of the various value streams, looking at inventory levels, looking at processes for bottlenecks, looking at cycle time. Changeover times, if you’re in a company that has presses, for example. The changeover is pretty important.

I still go into factories today that have a 20-ton press, and it takes 8 hours to do a changeover of a die. And you go into a company that is doing lean and has spent time reducing changeover time which gives them flexibility, and they can do it in 10 minutes – the same press, identical. So, there is quite a difference because you do changeover and you allow yourself the flexibility to shorten your runs and move more effectively.

The first-pass yield is another thing; putting products through and meeting quality standards; reliability; having maintenance. I go into companies that have machinery down, breaking all the time, they don’t have preventative maintenance, they don’t have predictable maintenance. So, looking at things such as that and there’s much more. I could go on all afternoon.

Igor: Once the waste is identified, which actions should one take to eliminate or reduce it?

Bill: I mentioned the as-is map that tells you what you think you’re doing – are you actually doing it? Once you’ve identified the non-value-added activities, you want to create a future state which is a streamlined version perhaps where you’re knocking out processes and non-value-added things and creating what you want the company to look like in the future in terms of the flow and how it operates.

Also, you want to form appropriate teams for project selection and look at resources available and project management techniques on how to handle them.

Igor: Speaking of the resources, you mentioned that lean reduces time and resources required to complete the task. Can you illustrate how this process works?

Bill: If we take a section of a shop for example, as you reduce processes – this could be pieces of the process. An example, going from a 60’ foot assembly line down to a 10’ feet, the 60’ foot required eight people to operate, there could be a reduction in labour – that’s not the point of lean to reduce labour – it’s to make the job easier for employees.

So, what you’re trying to do is a natural outcome. You’re going to reduce resources of all types. It can be equipment resources. You can have people working on more than 1 activity. It’s all about productivity and improvement. That doesn’t mean you get rid of the people that you went through and helped you get to where you are. But I’ve always told people, “If you can get your operation effectively up and running, you can increase your revenues because you’ve got more capacity, more flexibility in your shop to take on more business.” Instead of laying people off, I’ve seen many companies end up twice the size.

For example, I’ve got a client that went through a 3-year process and went from $7 million in revenue to $50 million, and the reason is that they cut the cycle time of delivery and gained more opportunity in the marketplace; faster, better quality.

Igor: We know that lean works in belts. There are different belts, different colours like white, green, yellow, black, master black. So, can you comment on how this works?

Bill: We all know about judo with different belts that was created actually in Japan and then came across the sea and around the world. In 1999, at Motorola, a gentleman named Michael Harry, who was part of the development of Six Sigma at Motorola, opened his own business and decided to use a belt system. He had a white belt, yellow belt, green belt, black belt and master black belt and what they represent are different levels that a student would go through in a company to gain higher levels of learning and capability.

Each belt takes you up a notch in terms of your understanding of whatever the subject is. Some companies have it with Six Sigma, and you get a certification saying that you’ve passed a white belt or yellow or green and some training companies such as ours, have certification in the belt system which runs similarly.

So, the belt is really a level.  I believe strongly everybody in the company should be at a green belt level. Then, they’re educated, and they’re ready to go on projects and participate in a meaningful way to implement lean.

Black belts: it’s usually a small number, but they’re responsible for selecting projects and understanding and monitoring and working with teams and leading teams.

A master black belt is like a mini-trainer from the outside. When we go in, we try and transfer our knowledge to a master black belt, and he takes over when we leave.

Igor: So, that the company doesn’t depend on the trainer for the whole time.

Bill: Yes. You don’t want to have that kind of dependence.

Igor: Okay now, let’s assume that our listeners decided to implement lean. What are the most common issues when implementing lean?

Bill: Well, there can be a number of issues. Starting at the top, I know we talk about senior management needing to support the program. In my experience, it’s way more than that. To do a successful implementation and transfer of operating methods, we need a senior management that can teach lean and quality. They need to lead, and the way they lead is by using some of the new tools that are out there that Toyota uses, like Hoshin Planning; taking your strategy and integrating it with your Hoshin Planning and Deployment.

By doing that, and doing it properly, the senior management now has a role to drive what needs to be changed in the business and how to pass that down level by level and communicate and have a total company communication system embedded in the company.

Now, you ask about things that are concerns. The people side is your biggest variability. Obviously, you want people to participate, but if you don’t have leadership at the top, the people will do whatever they want.

I think inherently people want to improve their business; they’re nervous. If you have a management team and you go in a company, and they’ve never worked with a team concept. People are going to be afraid to participate in anything new, and people always think, “Well, this is another case when the President got off an airplane, read a book and it’s the project of the month.” and you’ve got to get past all of that.

One of the ways you can get past that is with a good level of education. For my life, I don’t understand how a President can come back, get off a plane, tell somebody we want to do lean and not give the people on the job the tools or the knowledge.

Remember, they might have been working there 20 years traditionally, using the traditional methodology and they don’t know the difference between a streamlined process and what they’re currently doing. So, you end up digging the same hole deeper and expecting better results without the proper training.

There are some things that creep into it. Communication can be a problem if you’re not set up properly. Not managing the projects that are going to improve the business. Not allowing the resources to participate. There are many things that because you’re talking about the whole company changing and you really got to be structured for the change to make it happen.

Igor: How does lean education or lean training actually looks like?

Bill: There are companies that spend probably 10% of their revenue, like Hewlett Packard, on the training of all sorts, not just lean, but there are other companies that don’t have budgets. You talk to them; they don’t even have a budget for training. You can’t expect people to change without opening their minds and getting new information in there.

So, lean education really plays a part, and I think I described that back in the belt system. It’s a major part of the evolution of implementing lean in your company.

Igor: Okay, going back a little bit to the employee side and employee training, how to address the employee resistance to training and how to motivate the employees to apply lean thinking after the training is completed?

Bill: I think one of the things you’ve got to do is create competition – and you can softly do this – a competitive environment. I’ve seen teams put together and once they’re educated on how to be a team. They can get pretty competitive, especially if the ideas on the improvement come from them, they can get excited about it, and you can motivate the employees through their own participation if you know how to stickhandle through that.

Igor: We’ve looked at many examples in the manufacturing environment, but is lean only for manufacturing sector or does it work, for example, for service companies or technology companies?

Bill: That’s a good question. In the beginning, when I started the company, it was hard enough to get manufacturers interested because there was the, “It won’t work here in America, or in Canada” and that sort of thing.

We’ve learned over the years that the principles of lean, being process oriented, work in any industry, any office, any type of business. We’ve worked in healthcare. Why? Because you’re looking at the process. You’re looking at how a patient goes through the building.

We work in wineries, trying to improve the efficiencies throughout the organization. We’ve worked in the food industry. We’ve worked in like “Service Master, if You Have a Disaster,” making the company more responsive to the flood and getting the trucks out there quicker.

Insurance companies. In Canada, they’re not as far ahead as in the States. In the States, they have used lean techniques – there are plenty case studies and examples – but we’re on the verge of the insurance companies opening up in a big way to the whole lean experience.

Igor: Thank you, Bill, very much. It was a great and very informative interview.

That was Bill Neeve, from Cycle Time Management, interviewed by Igor Chigrin, a business funding expert with Fair Grant Writing.