Manufacturing


Lean Thinking – How enlightened are you?

Whether we are aware of it or not we live our lives, at work and at play, at different levels of consciousness. In the workplace, we graduate through 4 different levels of conscious lean management, at increasing levels of benefit to the organisation and its stakeholders, towards full lean enlightenment.

  1. Basic: The Lean Operations level

The operational level is concerned with the physical development, building and delivering products and services to our customers. It involves handling, storing and accounting for these goods and services. For many employees this is their primary day to day concern i.e. how effectively they manage the operational element of the business.

Many lean programmes start from the bottom up, and are concerned with improving processes at this level. Indeed, senior managers who may have a limited understanding of the lean approach to organisation management, often insist on a pilot project or proof of concept at the operational level. The advantage of running a lean programme at the operational level is that improvements in process performance can be readily seen, measured and understood by the sponsoring managers. The disadvantage is that outcomes are often confined to a series of relatively small areas e.g. the shop floor or an office. The benefit to the organization as a whole may plateau within a couple of years, if lean initiatives focus on the operational processes only. Many times, I have heard continuous improvement personnel complaining that they have addressed all the ‘low hanging fruit’ and are at a loss on where to progress to next.

  1. Intermediate: The Lean Systems Level

The systems level is concerned with the interconnectedness of various operational activities, some of which are outside the four walls of the organization. For lean leaders working at the systems level, their concern is to improve systems performance in order to benefit the organization and its partners. Systems often involve external commercial and legal parties, such as suppliers, regulators and customers.

A good example of lean systems thinking is supply chain systems management. The manner whereby customers co-design with manufacturing companies; configure their own products and services; influence sales through feedback on social media outlets, and receive goods and services, will continue to evolve at a rapid pace. The former supply chain make-store-sell-move model is becoming increasingly redundant. Those who think of supply chain management at the operational level i.e. the physical handling and movement of goods and services, are doomed to be left behind.

In order to consider supply chain management at a system level, a lean organization will start with a concept of delivery service to the customer e.g. ‘We will deliver any product, to any customer, within a 10-day lead time’. After that the organization engages with its upstream and downstream partners to design a supply chain system that will most effectively deliver to that goal. By a supply chain system, I mean the model that will be used to achieve the goal e.g. design-to-order, build-to-order, build-to-stock and configure-to-order etc.  On our lean journey, we are most concerned that we are flexible, responsive and reliable in our delivery service to our customer, and that we consistently meet our commitments. Increasingly, organisations compete, not on the basis of quality, but on the ability to delivery to the customer what he wants, how he wants it and when he wants it.

The advantage of running a lean programme at the system level is that the benefits, over time, cover a wider area, deliver higher level improvements, and help to enhance organisation productivity and competitiveness. Because of their scope, system improvements take longer and therefore provide a roadmap of improvement activities for those involved in continuous improvement. The approach deepens relationships with partners, establishing heretofore unthought of interdependencies that benefit all. It is a win-win arrangement of ideas and information system integration.

  1. Advanced: The Concept Level

It was Henry Ford’s ambition to make the motorcar affordable for the ordinary American. Thus, the concept of affordability was translated, in 1913, into the physical mass production of Model T Ford cars.  His innovation reduced the time it took to build a car from more than 12 hours to two hours and 30 minutes. Lean organisations operating at the concept level are dedicated to developing the creative power of their employees and research partners. Lean organisations will regularly and relentlessly seek best practice outside their own organisation, even in unrelated sectors. They seek to understand how the concept of a smart design in one sector, can be adapted to benefit themselves, their customers and the community at large.

In a lean organisation, all levels of employees are engaged in contributing imaginative improvement ideas on a regular basis. At a micro level within the organisation, this is manifested in a dynamic 5S programme.  During regular scheduled 5S meetings, teams of employees in each department or area are allowed the space and freedom to innovate in terms of area layout, fixture and tool design and process re-engineering. This lean 5S adventure in continuous improvement is a far cry from the pale imitation 5S programme that consist of a tidy work place with accompanying audit checklist. Such programmes often have the effect, after an initial flurry of change, of maintaining everything exactly as it as it is, forever.

The advantage incorporating the development of innovative capacity into the lean programme, is that organisation will, over time, develop unique products, services, and delivery methods that provide advantages to customers relative to the competition’s offerings. Some of these may be game changers, and bring about a complete technical and infrastructural revision in how products and services are designed and delivered to the customer.

  1. Pinnacle: The Ethos Level

The ethos level is concerned with guiding principles or values of the organization. We are all used to, and support, organization values such as equality of opportunity, parity of reward and recognition, and respect for diversity. Increasingly, organization guiding principles are broadening to include how the organization serves the customer, the community and the planet. At the Toyota Motor Company, which manufactures in 27 countries worldwide, the 2nd of their 7 guiding principles states “Respect the culture and customs of every country and region, and contribute to economic and social development through corporate activities in their respective communities.’  Since 1992, the Toyota Motors UK Charitable Trust, through the social contributions programme, has donated over £6.3 million to many local charities and organisations.

Senior management team members lead by example in implementing and living the principles on a daily basis. I deliberately cite the practice of leading by example, because if those at the helm do not live the principles, then they are not worth the extensive rage of posters and marketing give-aways they are written on.

When it comes under stress from market conditions such as new entrants, new technology or new legislation, the guiding principles provide a compass for the organization,  If the organization can get it principles right in terms of service to the customer, employees and the community, then it is more likely that the management team will make the right decisions in terms of adjusting to changing market conditions, no matter how dramatic.

Conclusion

In an ideal world, the lean journey of an organization starts with the development of its concepts for products and services, and their translation into practical delivery to customers. The organization ethos is ideally defined and expressed as a set of principles or values, before it starts trading. We do not often think of lean as having any connection with these activities, however they are at the heart of the development of a lean organization. An organization founded on lean principles will from the get go, as Toyota espouses ‘foster a corporate culture that enhances both individual creativity and the value of teamwork’. If these higher levels of lean consciousness are not present, then the organization will struggle to maintain any gains earned at the operational and systems levels.

If you have any thoughts on the content of this blog, or have any contributing comments or useful examples to share, I would be very pleased to read them or to hear from you.


70 years of IDA Support – A Reflection on Ireland’s Global Trade Success

My mother, Mary Rushe, was born in 1927, the year in which the state-owned Electricity Supply Board (ESB) was established. A farmer’s daughter, she witnessed technical and economic upheaval such as rural electrification and the arrival of the motor car and farm mechanisation; bade farewell to many cousins who immigrated to the United States out of dire economic necessity; experienced rationing during the WWII years or ‘the emergency’; and left her post as a secondary school teacher, without question, when she married my father in 1955, because of the ban on married women in the civil service. The decade when the marriage ban was lifted (1973), and my mother returned to work 6 children later, the social profile and ethical belief system in Ireland had begun to change dramatically. At 92 years of age she has witnessed a level of change in all aspects of life, the scale of which generations before her could not have countenanced.

As we are an island nation on the western seaboard of Europe, it is only natural (if short sighted) that the economy, in the early years of the Irish Republic, was inward-looking, with high tariffs on imported goods, and limited export trade. Political leaders such as Sean Lemass (TD, Minister for Industry and Commerce and Taoiseach, in the years 1924 to 1969) and T K Whitaker (Secretary to the Department of Finance, Governor of the Central Bank and Senator, in the years 1956 to 1982), heralded a new era of forward-thinking economic strategy in the 1950’s, 60’s and 70’s.  Since its foundation by government in 1949, the mission of IDA Ireland has been constant, that is to promote the growth and development of industry in Ireland. It has not been all plain sailing, far from it, but what a glorious success story the IDA has been in our tiny open island economy.  IDA Ireland representatives have worked hard across the world, challenging the perception of Ireland as a backward rural country, and promoting its educated workforce and business-friendly tax incentives, with the added benefit of access to the common market when Ireland secured EEC (now EU) membership in 1973.

From the mid-1970s onwards IDA Ireland focused on attracting pharmaceutical and electronics manufacturers, two sectors pinpointed as having significant growth potential in global terms. The first wave was purely components manufacturing, but later R&D and higher value work followed. By 1982, some 130 of the world’s leading electronics companies had manufacturing facilities located in Ireland. This is the Ireland into which I was born, and my adult life story has been very much moulded by the success story that is foreign direct investment in Ireland. For over 30 years I have worked as an employee and consultant with over 40 companies who are operating successfully on this island. I am only one of the 229,000 people employed in jobs in foreign industry in Ireland.

The IDA now has a network of 30 offices globally (nine in Ireland) and a total staff of 340. Year-on-year it continues to promote investment in Ireland in the face of continuing challenges, threats and opportunities, from Brexit to global tax reform and beyond. However well it does its job, neither the IDA nor any development authority, can compensate for national fiscal recklessness. Ireland is lying in 24th place in the World Economic Forum global competitiveness index, and the level of debt per capita the highest in the Euro zone, so we have no room for complacency in the current wave of economic stability. We can only be grateful to IDA policy and practice that has ably supported Ireland in weathering the post Celtic Tiger economic crisis.

Last April, The American Chamber of Commerce in Ireland helped to celebrate the IDA’s 70 years in business by presenting the IDA with a Special Recognition Award. CEO Martin Shanahan received the award on behalf of the IDA. I am sure we all join with AmCham in recognising this incredible organisation for a major contribution made to transforming Ireland into an inclusive home of talent and innovation with global impact.

To view the current IDA policy and strategy, see “Winning: Foreign Direct Investment 2015-2019”

https://www.idaireland.com/about-ida/winning-fdi

 

 

Acknowledgement: The author is grateful to content authors of the following sites, on whom she drew for this blog.

https://www.idaireland.com/newsroom/blog/january-2019/marking-70-years-of-ida-ireland

https://www.idaireland.com/about-ida/winning-fdi

https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018


Is your organisation living Lean Values?

For many years now we have been supplied with a rich volume of literature, much of it originating in the United States, on lean practices and principles as exemplified by the Toyota organisation. From ‘Lean Thinking’ the seminal lean textbook published by Womack and Jones back in 1996, to ‘The Toyota Way’ published by Liker in 2004, there has been no shortage of literature to guide us along the lean path. The former gave us 5 lean values to live by, and the latter gave us 14 management principles to implement.

So far so good in terms of academic analysis, but what does the Toyota organisation itself espouse as guiding principles or values? A visit to their global website reveals Toyota’s current guiding principles. These form the foundation of the company’s vision and philosophy.

Principle 1: Dedicate our business to providing clean and safe products and to enhancing the quality of life everywhere through all of our activities. Generating value for the customer, society and the economy.

Principle 2: Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide. In doing so base your management decisions on the long term, even at the expense of short-term financial goals.

Principle 3: Create continuous process flow to bring problems to the surface. Essentially you need to completely remove the amount of the time that any work project is sitting idle or waiting for someone to work on it.

Principle 4: Support individual creativity and value teamwork through harmony. Eliminate overburdening people in the production schedule. Work to level out the workload of all manufacturing and service processes.

Principle 5: Honor the language and spirit of the law of every country and region, and undertake open and fair business activities to be a strong corporate citizen of the world.

Principle 6: Contribute to economic and social development through corporate activities in your respective communities. Understand your place in history and bring value.

Principle 7: Eliminating waste is just one-third of the equation for making lean successful. Build a culture of stopping to fix problems. Again it’s about thinking long-term. Ensure your company culture aims to quickly solve problems and put in place countermeasures to enhance quality productivity in the long run.

Principle 8: Use technology to support people not to replace people. Remove or modify technologies that conflict with your culture or that might disrupt stability, reliability and predictability.

Principle 9: Grow leaders. Grow leaders from within your organisation. Leaders must be role models and teachers for the company’s philosophy.

Principle 10: Work with business partners in research and manufacturing to achieve stable, long-term growth and mutual benefits, while remaining open to new partnerships. Have respect for them and treat them as an extension of your business.

The above principles were established in 1992, and revised in 1997 (translated from the original Japanese).

Those of us looking for concrete guidelines and tools for lean implementation may be disappointed with the above list. However they provide more insight into Toyota’s living values, and the secrets of their success, than any workshop on leader standard work or value stream mapping.

How do they compare with the values in your organisation? Is there an opportunity for modification? Is the management team in your organisation leading by example and living its values? This blog has led me to cross-reference our own Mission and Values which you can download from our website here. There is always room for improvement and I hope this article has given you some insight into how respect for the individual and teamwork have contributed to Toyota’s success.


The role of the contract Lean Six Sigma Black Belt

Black Belt

The Certified Lean Six Sigma Black Belt (BB) is a professional who is well versed in the Lean Six Sigma methodology, who leads improvement projects, typically in a full-time role. A Lean Six Sigma Black Belt possesses a thorough understanding of all approaches and tools within the phases of lean six sigma project. They understand how to perform and interpret Six Sigma tools and how to use standard principles of Lean.

A BB is results driven, trained in advanced project management and statistical analysis tools. He/She is expected to contribute between €250K and €1M to the company’s operating profit each year by undertaking process improvement projects that lead to enhanced customer satisfaction, and lower cost to the company.

Why use contract Black Belt support?

Employing contract BBs has become popular for every employer type, ranging from multinationals to SMEs and even start-ups. One of the reasons why it’s beneficial for companies to employ a BB contractor to work on specific projects, is the specialised expertise that they can bring to that role. They can also adapt quickly to the organisation’s processes and culture, and deliver measured value on a quick return basis.

The contract black belt service compliments existing operational excellence department resources, or can act as a stand-alone professional support to the management team and project teams on site. The advantages to the organisation are many, and include:

  1. Senior project manager with cross-sector experience;
  2. Access to a wide and deep knowledge store of programme management approaches, and lean six sigma data analysis and problem-solving tools;
  3. The support of a professional who is senior enough to influence management thinking, without having the natural hesitation that might inhibit a more junior permanent employee;
  4. Use of support days in line with the organisation’s needs, and
  5. The freedom to wind-up the contract when it best suits the organisation.

Black belt duties

Duties of the black belt will vary from company to company, however will most likely include the following. In consultation with the management team and others:

  • Development and maintenance of the continuous improvement roadmap;
  • Project selection and team selection;
  • Project planning, team mentoring and individual team lead mentoring;
  • Process problem-solving with teams in manufacturing, laboratory, warehouse and office areas;
  • Data analysis and report writing, with recommendations and project plan

Support days & duration

The range of support days varies typically, from 3 days per month to full time 20 days per month.

Funding  

The organisation may be eligible for IDA or Enterprise Ireland lean funding, under the Lean Business Offer suite of programmes. Talk to us about it today.

 

 

 


Attracting (and keeping) the right customer – The software industry in Ireland

The major difference between a person with a lean mindset and one who has not, is that the lean head is always asking ‘Who is my customer?’, ‘What does my customer want?’ and ‘Do I know how well I am satisfying my customer?’ If we regard Ireland Inc. as a supplier of resources to potential overseas customers (i.e. the multinationals), there are many bodies corporate who ask those questions on our behalf, in order to attract and retain the right customer. The National Competitiveness Council, the IDA and our educational institutions, are just a few of the agencies who are active in ensuring that Ireland Inc. has the right mix of resources to attract the right customers.

These resources, or wealth enablers, come in a variety of forms and include political systems, tax incentives, regulatory and legal systems, availability of talent and geographic and climatic factors, to name the some of the most influential. They are not wealth generating in themselves, however they create the right environment to attract the right customer, and associated wealth, into the country.

If we take a look at the software sector as an example of ‘the right customer’, many companies have been attracted to set up in Ireland. As of 2018, Amazon, Cisco, EA Games, eBay, Facebook, Google, Groupon, Mastercard, Microsoft, SAP, SmartBox, TripAdvisor, and Yahoo have all established centres here. Outside of the United States, IBM Ireland’s Software Lab is one of its largest research & development labs focusing on cloud, analytics, mobile, social, and security. Ericsson’s operation is Ireland’s largest agile enterprise software development site, creating their next generation Network Management Systems, whilst Intel’s Quark family of processors was developed in Ireland. Even Aon established their Global Innovation Centre in Ireland.

The fastest rise in recent years has been the implementation of cloud and digital services bringing a new wave of software development and analytics. Millions of euros and dollars have been invested and thousands of jobs have and still are being created. (Please don’t anyone mention the disaster that was Apple’s proposed data centre in Athenry, Co. Galway).

But why Ireland? What have been the specific resources we supply to attract such customers and their investment? Well quite simply, Ireland was ranked 1st in the world for attracting and retaining talent in the 2017 IMD World Competitiveness Yearbook. Of course, having the highest education participation rate in Europe and the youngest population also helps the country become the fastest-growing tech population in Europe.

We all know of Ireland’s corporate tax rate of 12.5%. What is less well known is that Ireland also has a 25% Research & Development Tax Credit and a 6.25% preferential tax rate on income arising from intellectual property. Not alone that but there are also foreign direct investment benefits for Multinationals when engaging with organisations like IDA Ireland.

Okay so we have the talent, an educated young workforce, attractive tax rates and incentives – but just as importantly is our ease of doing business. Last year (2017) Forbes ranked Ireland as the 4th best country in the world to do business. This is where good lean management and building a strong track record helps businesses excel in the global market. Even the Irish government are planning to increase the number of people working in tech to 3,000 per year through the Tech Life Initiative.

So, although Brexit is bringing a certain amount of uncertainty, it is still a time of positivity as a lot has been achieved since the arrival of IBM in 1956, and if we manage it properly we can expect a lot more growth and development over the coming years.

Not bad for a little country with such a short independent history. With every upside of course comes a downside. Our model is easily copied and competitiveness ebbs and flows. As long as the corporate bodies in whom we trust to manage our competitiveness keep asking ‘Who is my customer?’, ‘What does my customer want?’ and ‘Do I know how well I am satisfying my customer?’ we will continue to thrive.

 

See IDA infographic here