Lean happens in two distinct phases.
Phase one is kaizen, the process of thoroughly understanding what happens in your business and redesigning the process so that more time is spent producing value and less time is spent creating waste. (If you’ve been reading along for the last year or so, you’ll know that a heck of a lot more goes into kaizen than that simplified description leads you to believe.) This new process now must be practiced until the operation reaches some level of stability. I’d guess that 75 to 80 percent of the time, the designed process is executed.
Last month we discussed some of the things that get in the way of creating this stability and what you should do to overcome them. This “process stability” needs to exist before an organization can really begin to reap the big rewards of lean – and, in a large percentage of organizations, never happens. These organizations either go back to the old way over time or continue to use some of the clever tools of lean but never achieve results better than the top 25 percent of their industry.
Although kaizen alone can deliver some improvement, it’s the second phase of a lean implementation that delivers the real stuff. This is the process of continual improvement.
More Difficult Than It Sounds
Continual improvement, while sounding
like a fairly simple process, is really one of the most difficult things for many of us to understand and implement. Improvement, as most of us know it, is something that happens only occasionally. When you think about adding the word “continual,” it just seems like too much to stomach. Improvement, for most of us, is a fairly large undertaking, with equally large expectations. For example, a big improvement for some of us may be losing 10 or 20 (or more) pounds. There’s nothing easy about it. You need to make some diet and exercise plans, set a date to do it and start … and start over again … and so on … until, in some cases, you stick to it and actually lose the weight. Not easy, not fun and nothing that anyone could ever consider adding the word “continual” to. Could you handle it if, right after the 20-lb. weight loss, you had nightly classes, seven days a week, to quickly get your master’s degree, and right after that, you were going to begin training to climb Mt. Everest? It’s just not feasible for the majority of us.
Although improvement is something we all want, for some reason, we think of improvement as a fairly large undertaking. Therefore, improvement in our organization is infrequent due to the expectation we set and the tolerance levels of our people.
But why does improvement have to be these big leaps in performance? Is this a cultural thing with us Americans? Who has set these expectations? Is it our perception of improvement that gets in the way for most of us?
When we first started to learn “lean,” our sensei would continually, and usually with immense irritation, remind us to “never let best be the worst enemy of better.” I wasn’t sure what that meant initially, but I knew whatever he was saying was important enough for me to pay attention.
What he observed, and was trying to correct in us, was this seemingly competitive process that we would go through as a group when trying to solve a simple problem. Although many good ideas were thrown out, we all had a need to have a better one. We could spend half a day trying to decide how to turn the shop lights off. His point to us was this: If it’s a better way than how you currently do it, then just do it that way and move on. If it’s not the right decision, a better one will appear when the problem you’re trying to solve gets in the way again.
What we needed to learn was that improvement is improvement. It’s not the amount of improvement that matters; it’s the fact that you are improving. This is what separates the wheat from the chaff in organizations.
You see, improvement is the reason, not a component or a required activity of the business. It’s the objective. The purpose of the business, and everyone in it, is to be improving. It’s not about producing your product; it’s about improving the process that produces the product.
In lean organizations, you come to work each day to work on improvement, not on cars. The “working on the cars” part has to happen so we can observe the problems with fixing cars and then can figure out how to improve it. That’s continual improvement. It’s focusing on the process that delivers the outcome, not the outcome.
It makes sense to say, “If I focus on the thing that delivers the results, and not the results, then the results have to better.” It’s just like golf. If you focus on making a birdie from the tee box, you usually make par or worse. If you focus on taking the club back and through on plane, you make a great shot that sets up the next and the next and the next. And when you do that, you have a great round. Maybe even some birdies.
Small Improvements Add Up
Toyota has always used analogies and clever visuals to help people understand what it is they’re trying to teach. The story of the Tortoise and the Hare is one often referenced when trying to teach the principle of continual improvement. It’s the message of “slow and steady wins the race.”
In a lean organization, you’re looking for very small improvements to the business process. These improvements, at times, are so small that they can go unrecognized. For example, in the collision repair process, a possible improvement may be that the paint shop has relocated the color deck so it’s closer to the area where they check for color match. Not a big deal, right? Let’s say that change saves a tech from walking 50 feet each time he paints a car. Maybe it shaves off three minutes per car of average processing time – not much improvement and probably by itself won’t ever be noticed in the results of the business.
But what would happen if improvements just like this happened every two weeks, let’s say 26 times per year? That would be a total of 78 minutes of newly created available capacity for the year. If your shop produces, say, four cars per day on average (that means you’re delivering a car every 120 minutes), adding this available 78 minutes per day means you can now produce a little more than half of a car per day more than you do now, without adding any resources/costs (depending on how you’ve structured your organization). And almost all of this extra production is profit.
To put that in financial terms: Call it half a car per day more or $1,000 per day in revenue. Take out parts cost (say 40 percent of that is parts sale and 70 percent of that is their cost – $280). That’s $720 in profit. If you pay hourly, it’s almost all profit (minus some materials and energy – maybe). If you pay commission/flat rate, it’s less, probably half. So split it. Call it $500 – times roughly 22 days in a month. That’s $11,000 in profit per month, or $132,000 per year. Not too shabby. Three minutes, every two weeks. Heck, do it once a month. Still not bad results, right?
So it’s the tortoise that we need to emulate – very small improvements, always plugging away, usually going unnoticed. It’s a very calm and paced process, no panicking – just systematically moving along. Let the hare get all the attention. Let him sprint like mad, let him have to keep stopping to rest, let him try all the flashy gimmicks.
By the way, did you notice that Toyota announced this past December that it’s on track to become the world’s largest auto manufacturer in 2007? Have you seen them offering employee pricing to unload inventories? Toyota doesn’t build big flashy cars all loaded up with gimmicky junk. Do they seem more like the tortoise? They build simple, practical cars that last a long time and get decent fuel economy.
It’s not their lead on the hybrid that’s pushing them ahead, it’s not their fuel economy and it’s not a perceived cost of labor advantage that makes them more profitable. It’s their production system, their business model, their way of thinking.
Why does it take GM and Chrysler approximately 30 hours to build a car and Toyota less than 22? (See the 2006 Harbour report on North American Automotive makers’ productivity – www.harbourinc.com.) It’s relentless, incremental, small improvements to the way they work.
Unlocking Your Performance
Continual improvement is the key to unlocking performance in a lean organization. But understand: It’s not an occasional project, diet plan or tool. It’s what they do; it’s all they do. Improvement is their purpose for existing. It’s the business they’re in – the improvement business, from the top of the organization down to entry-level worker. But it’s gradual, daily movement toward a better way.
There’s a great story in “The Toyota Way Fieldbook” (McGraw-Hill 2005/
Jeffery Liker, David Meier) that quotes a Toyota manager trying to explain this way of working to a new manager. He draws a picture of a stick figure climbing a set of stairs and explains, “Every day, we take a little step up. Then over time, we are all up.”
While this is clearly a simple philosophy, the interesting part is that beyond a simple “bite-sized” approach to improvement, the drawing exemplifies the overall efficiency of this approach by saying that, “You must take one small step up in order to see the next step” (shown by moving the stick figure up the stairs and drawing a new line from the eyes of the stick figure to the now visible next step). It’s a level of efficiency that we haven’t even considered – that consistent, small changes are more effective than occasional big changes. It’s impressive stuff.
The continual improvement phase ties together all of the other pieces. Everything we’ve written about is built in order to get to this point. Without the connected business system that flows from the first step to the last, at the pace pulled by the customer working in a standard, documented way, you have nothing to improve. The entire system is set up so that it can begin to be fixed.
Changing your business so work can flow in this described way doesn’t make you better. But it does give you a chance to get better. If you start taking these little steps toward “better” and never stop, mathematically, no one can ever catch you.
If you want to take your shop lean, I suggest you go back and read – or re-read – this series. There’s lots of good information here to get you started. And feel free to contact me with any questions. Until next time …
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. Both Sweigart and Sullivan have worked with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. Contact him at [email protected].