Profits: Not A 4-Letter Word -You Can Only Learn Lean By Doing. - BodyShop Business

Profits: Not A 4-Letter Word -You Can Only Learn Lean By Doing.

Speed Is the Key

When attempting to create a continuous flow between all the steps in your process, the areas where work doesn’t flow at the pace the customer is pulling will become obvious, forcing you to correct them immediately.

by John Sweigart

It has always been — and continues to be — difficult explaining what “lean” is to those who have never experienced it. One thing is for sure: You can read, study and seminar yourself silly and never know anything more than the lingo.

Lean must be experienced before it’s truly understood. In fact, associates inside Toyota spend more than three years living in the world’s best lean environments before they’re ready to start leading lean efforts.

You can only learn lean by doing.

So why should you start doing it? What’s lean really all about?

Simply put, the objective of lean is to continually eliminate waste. The strategy for eliminating the waste is to create and improve continuous flow. How does continuous flow eliminate waste?

Continuous flow simply elevates the problems in your business so that they must be corrected immediately, corrected at the root cause. And once some waste is eliminated, the process will flow faster.

Recap of What We’ve Learned So Far
In our last few articles, we helped set the stage for a lean transformation by sharing these basic fundamentals.

  1. The customer’s voice must be clearly heard and be the driving force behind how you structure your business. In other words, the objective is to change the strategic process (the business model) so the customer is better served. Delivering to customers only those things they’re willing to pay for allows you to spend more time earning their money.

    Step one is to identify your customers and carefully think through what they want from you. I would suggest that you begin by sitting down with your team and carefully thinking this through. Write down your summary on a chart and hang it where everyone can see it. Who are your customers? What do they want from you (obviously a repaired vehicle, but the rest of the stuff takes some time to clearly see). This is the critical first step. This information will become the litmus test for both analyzing your business today, as well as designing your new business model.

  2. Learn to see the waste in your business. Use the definitions Toyota has developed to better understand waste. Some waste is easy to see: excess movement of your people and product, reworking, etc. But other waste isn’t so easy to spot: overproduction, inventory, extra or over-processing, and waiting. Go back and look at last month’s article on defining and identifying waste for more details. The importance of understanding waste is to be able see it and eliminate it. In removing the waste from your business, you spend more time working on delivering the value.

  3. Understand where the value is in your business. The value is what remains once the waste is removed. This is what’s important to your customers and what they’re willing to pay you for.

Creating Continuous Flow
Now you can begin thinking about creating this continuous flow. We now know what we need to flow — the “value-added” activities. The customer defined them for us, and we can see that the other activities we perform are waste. So what are the rules of flow?

  1. The value-added activities must be performed in the proper sequence. When people take you on a tour of their business, they usually describe it in terms of functional areas. This is where we greet customers, where we store parts, where we pull frames, where we paint … They’ll also generally discuss the performance of each area as you walk through. “This is our new booth that cures paint in 10 minutes, or our techs here can produce X hours per week.” Rarely do they describe the business in terms of how it flows. It just goes to show you that the long-dominant measure of performance has been individual efficiencies.

    So take the tour for yourself, but this time, think in terms of flow. What does the product experience on its way through the business? If you were to strap yourself to the product and go for the ride, what’s the first thing that would happen, the second, the third?

    It sounds like common sense (and it is), but how often do we perform work in the right sequence? Our focus is far too often on performing whatever work is possible to perform at the time. For example, “We don’t have the parts, but go ahead and do whatever you can for now.” If you were in the business of making peanut butter and jelly sandwiches, would you spread the peanut butter and then go buy the jelly?

    So, considering all the value-added activities, what’s the proper sequence? In the earlier auto body example, shouldn’t the focus be on getting the parts? Today, most people just create constant “work-arounds.” When building your new process, the proper sequence will force you to address the correct issues at the correct time.

  2. The value-added activities must be performed properly. Why can some of your technicians or estimators produce more work than others? How often have you heard someone say, “If I only had three more of him”? Is it because this person has some special ability or tools, or is it because he’s developed a better way of working? So what is it that this person does that allows him to produce more work correctly? Is it the way he performs the work? It’s likely because he’s developed a standard operating process (SOP) for the tasks.

    These “current best practices” should become the new standard for your process. This should be your starting point. SOPs are the foundation of a lean business. The work to perform each activity in your new process must be properly designed and documented — so it’s clear to everyone:

    • when to do the work;

    • what work must be done at this time;

    • how, specifically, to do it (this isn’t possible with everything we do. For example, I can’t tell you exactly how to change every window regulator, but I can tell you how all plastic repairs should be performed);

    • how to know if it’s correct;

    • where it goes when complete.

    The creation, documentation and consistent execution of SOPs are critical to your success. Because of they’re importance:

    • everyone must be trained in them.

    • they must be displayed in the work area so everyone understands them.

    • they must be audited to identify variances. Variances indicate that someone has created a “work-around.” Sometimes it’s caused by poor training, but usually a work-around indicates something’s wrong with the design of the SOP and it must be corrected.

    • the posted SOPs will need to be referred to by newcomers to the work area – because people will be required to help out in areas of the process that are constrained. (In a continual improvement environment, these procedures may change. You won’t be able to train everyone on every change, every time. People must rely on the posted standard to identify changes.)

      If SOPs are followed by everyone, then when problems occur, there’s no finger pointing. The people are no longer the problem; the design of the standard work is.

      There are many important aspects of SOPs, and entire books have been written on just this topic. Too often, standard work is slighted or overlooked altogether in lean businesses. Think of it as the programming of your new collision repair machine. The sum of these SOPs will become the operating manual for your entire business.

  3. The activities must be “right-sized” so that they’re interdependent. If you’re going to flow work from step to step until complete, then each step must be set up so that when one operation needs work, the prior step in the sequence can instantly deliver it.

    The easiest way to do this would be to put a huge pile of completed work inventory between the steps. But as we said earlier, inventory is waste, and this inventory would have to wait to be processed, which is also waste. So that’s not the right answer, at least not if you’re worried about making money or delivering speed to the customer.

    Think of flow in your business as a small stream through a field. Upstream, you’ll find the customer asking for our services. Downstream, you’ll find the finished product and the cash. Along that stream, you’ll find different widths and depths, as well as pebbles, rocks and boulders. If you were to drop a leaf upstream, how would you reconfigure it so that every leaf could flow easily and uninterrupted to the end? The simple way would be to just pour a lot more water down it — a flood. But that’s inventory. So we’re talking about reconfiguring with a lower water level.

    Now think about the body shop. How do you “right-size” the activities so the downstream operations get their work just in time and the upstream operations complete that work simultaneously? For example, if it takes one man 120 minutes to perform medium-sized body repair but the process downstream calls for a car every 60 minutes, how could you configure that operation to meet the need? One simple way would be to staff that area with two men working on one car, right?

    Here’s another one: It takes two days to get all the parts for repairs. Your process calls for five cars per day. How many cars would you need to have waiting for parts? The “right size” would be 10 cars (two times five) waiting for parts. If the downstream process calls for five cars per day to be dismantled and supplemented, what is the right size for scheduling cars to be dropped?
    So why do you bring in 15 cars on Monday?

    For a process to flow, there must be an interdependency between the steps. Each step becomes a customer of the prior or upstream operation, and is also a vendor for the next step or downstream operation. The truth is that this relationship exists in your business today, but you just can’t see it — and it probably doesn’t work very well.

    There are tools available to help you more accurately build an interdependent flow in your process, and we’ll discuss these later.

  4. The work must flow to the customer’s pull. This is a pull production system. In this interdependent process, the customer is at the end, pulling the rope. This system doesn’t work by pushing work through from the front. Pushing work from the front, at a rate greater than that which the customer desires, only creates overproduction (waste). The overproduced work creates inventory, raising your costs (eating the profits).

Remember the first things we discussed were who is the customer, what does he want and why is it important to pay attention to that? So it stands to reason that the customer should dictate the pace at which we operate. This pull at the last step of the process sets the pace for every upstream operation. This is the objective — meet customer demand, both the external customer at the end (the owner) and each subsequent internal customer in the sequence.

Now think about this. If there’s no pull set at the end of your process, then how fast would the entire process move? As fast as the slowest component! The truth is that today, for everyone, you only move at the pace of your slowest component. The difference is that you don’t know where that is. You may have an idea, but you’re never truly certain. What do you do to compensate for this slowest component? You build extra inventory to keep the other folks working. And this inventory eats up your profits through higher costs and slows down the process.

No Pain, No Gain
So here’s how it all ties together. The objective is to eliminate waste. Waste creates excess cost, excess time, higher stress levels and lower customer satisfaction. The strategy is to create continuous flow. Attempting to create continuous flow between all the steps in your process, at a pace determined by the customer, raises the problems (the reason you can’t flow) to the surface immediately so they must be fixed now!

And here’s where it all falls apart for many. It seems what you have now done is put yourself directly in harm’s way. Most people will say that if you build this, your entire process will shut down when the first problem surfaces. That’s the entire point! The trouble is that human instinct steers people clear of danger, which is why lean philosophies are so counterintuitive.

It’s not easy to start the lean initiative knowing what will happen. But lean is about solving problems at the root cause. It’s about surfacing problems, intentionally, so you must deal with them. It’s about making your problems obvious and painful so that you’ll resolve them quickly and find a way to never let the problems happen again.

Now here’s the good news. You have these problems anyway! You’ve just decided to push them aside. Nobody likes to dwell on the problems, let alone make them the center of your business. But let’s face it, if you don’t solve them, things will only get worse.

My point isn’t to discourage you from going there. It’s to help you understand what it’s really about.

More good news: Things get better quickly. The big, painful issues are generally the ones you already know about but haven’t dealt with. You also have the ability to adjust your pain level by adjusting the inventory. Just know you’ll pay for it with lost profits. Remember, inventory is the lubricant that keeps a bad machine running.

Speed Is Key
The key is speed. The faster you can make your process flow, the better the outcome for all parties. Here’s how:
Speed – If the process flows faster, waste has been eliminated. Less waste = less cost = more profit.

Speed – If the product flows faster, the work would have had to have been completed with fewer mistakes on the first try = higher quality.

Speed – If the process flows faster, all work moves through the process quicker = faster cycle time.

Speed – More profit from less waste, opportunity to compete on price = lower price to the customer.

In a perfect lean environment, work would flow in a single piece from step to step without ever stopping. Rarely is this ever achieved, but it’s the attempt to do this that’s important. You see, without trying to do the seemingly impossible, you have no chance of ever creating any real breakthroughs.

Again, speed is the key. Focus on making the same amount of resources go faster. Toyota never stops improving; once a process starts delivering the desired result, they’ll go in and break it, intentionally creating more problems so even more waste can be removed.

Again, counter to intuition, spend time building a process you know won’t work. It’s the “won’t work” part that holds the key to improvement. You must learn to see problems as opportunities. A system of connected flow will prioritize your problems so they may be fixed, one at a time. They’ll show up as the hindrance to speed, the place in your process where work doesn’t flow at the pace at which the customer is pulling. The wonderful part is that when you fix the problem in this place (i.e. resolve the issue causing the slower speed), your entire operation improves.

Because every step is connected, fixing the weakest area makes the whole thing stronger.

Today, most managers run around expediting vehicles through the process, holding production meetings to determine where vehicles are and what needs to be addressed. It’s a process of loading in a bunch of cars early in the week, sorting them through each day and doing whatever needs to be done so they might leave by Friday (which almost never happens). It’s a world of constant chaos with little or no opportunity to work on improving the business.

Now think about a world where problems are exposed in real time and both the responsibility and the resources available to correct them are in the hands of those in the work areas. Where defects are never passed along throughout the process and where people stop to fix problems on their own. Where work moves along at a consistent pace every day, and Mondays are like Wednesdays are like Fridays, where the first Tuesday of the month is like the last Friday. Where you can predictably schedule, repair and deliver all work through the process.

How much better could you be than your competition? The reality is that very few will actually go there, but for those of you who do, the world will be a much better place. Everybody can win in this world — the customer, the insurer, the employees and the shop.

Again, lean is only learned by doing, so get doing.

Contributing editor John Sweigart is a principal partner in The Body Shop @ (www.thebodyshop-at.com). Along with his business partner, Brad Sullivan, they own and operate collision repair shops inside new car dealerships, as well as consult to the industry. Sweigart has spent 21 years in the collision repair industry and has done everything from being an independent shop owner to a dealership shop manager to a store, regional and, ultimately, national director of operations for Sterling Collision Centers. Both Sweigart and Sullivan have worked closely with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. You can e-mail Sweigart at [email protected].

Comments? Fax them to BodyShop
Business editor Georgina K. Carson at
(330) 670-0874 or e-mail them to [email protected].

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