Taking Responsibility for Pull

I am always surprised how little companies know about the further reaches of their supply chains, and how few take real responsibility for designing them. They seem to have evolved over time as different purchasing directors have come and gone. This is not just about who makes what, at what price and where. But much more significantly it is about how all the replenishment loops upstream of the pacemaker process for the whole value stream are coordinated across many different suppliers. It is probably true that you get the suppliers that you deserve!

So where is the pacemaker process for your end-to-end value stream? In car making the whole system is obviously triggered at the assembly plant. However for many consumer goods the value stream is or should be triggered by customers pulling products from the shelves in the retail store. Wherever it is, in my view the lead firm has the responsibility to determine and coordinate the way the whole value stream is configured. It is also their responsibility to establish the framework for how all the suppliers and sub suppliers work together to continually reduce costs over time and across product generations. 

And it is the responsibility of every firm to pull all the components they need from their immediate suppliers, by picking them up as frequently as possible, rather than waiting for suppliers to fill a truck and deliver to them. This helps to compress time and improve responsiveness across the value stream and is the most effective way of eliminating noise and created demand amplification in the order signals passed upstream. Noise creates the most insidious waste of all – excess stocks and excess capacity to deal with the peaks and troughs of orders – for which everyone denies responsibility!

I was reminded of this in reading a remarkable article in the New York Times on 12 May 2005 (Heavy Load by Norihiko Shirouzu and Jathon Sapsford) describing how Toyota has designed a completely new production system for its low cost van and pick up for developing countries. This IMV project, as Toyota calls it, bypasses their traditional production sources in Japan and is made up of a network of plants and suppliers stretching from Argentina to India, Indonesia, Thailand and South Africa. Their objective is to produce a series of rugged vehicles for developing countries that cost 25% less than previous models. The first of these vehicles has just gone on sale in Thailand. 

In addition to normal target cost down exercises on every component, Toyota also went to great lengths to correctly configure the entire supply base for this family of vehicles. “Toyota set up a war room for IMV  production at its office in Bangkok. On the wall is a long line of coded numbers, each representing a component, from wipers to heat sensors to nuts and bolts. Red lines fan out from each component to its subcomponents, which in turn have more red lines going further out to further subcomponents. In some cases, the components are traced back to 12 levels of suppliers.” It took time to map those supply chains. But once they did they discovered all kinds of places where subcomponents were going back and forth between suppliers, needlessly raising costs. 

This investment in designing a completely new production system is obviously a big undertaking. However it gives them am extremely effective base from which to triple their sales in developing countries. How many companies going to China or India have done this level of analysis or shown this kind of strategic thinking? 

Closer to home the most significant example of a firm pulling products from its suppliers is Tesco. Their move to factory gate pricing and organising inbound distribution is being followed by other supermarkets. The implications of this move will be felt across the economy as almost all consumer goods are now being sold through supermarkets. As others follow, Tesco are well placed to take the next step and actively reconfigure their supply base to eliminate wasted trips and time and to encourage their suppliers to pull products in turn from their suppliers, and so on right back to raw materials. Have you thought of following in Toyota and Tesco’s footsteps to pull products from your suppliers?

Yours sincerely

Professor Daniel T Jones

Serving Consumers

In my previous e-letters I discussed the importance of rapid, reflexive replenishment in compressing the distribution pipeline and in producing exactly in line with consumer demand. This means rethinking the way the pull signal is transmitted upstream and the way products are made and shipped all the way back to the consumer. The ability to respond quickly and exactly to demand is going to be critical for every manufacturer. If they can also eliminate many layers of costs in getting products to consumers, then it may be possible to continue to make these products in high wage countries. 

However while speed and accuracy may be necessary conditions for survival, they may not be sufficient. Being closer to sophisticated consumers should give local manufacturers an edge in understanding their current and future needs. But much of the attention is focused on speeding up product development time and adding new features to products. All well and good. However this misses an increasingly important piece of the story – how consumers access and use these products. At the same time many companies are losing direct touch with consumers as they outsource customer support and help lines, as well as production. 

What is needed is a simple method for defining value from the consumers’ perspective. This is the first principle of Lean Thinking. Jim Womack and I have been thinking a lot about what lean consumption might look like as a complement to lean production and lean supply chains. The key is to recognise that purchasing a product is not an isolated transaction but a series of steps just like production – a consumption process. And the purpose of this consumption process is not the product itself, but the use of the product, together with the relevant services and knowledge, to solve a consumer’s problem. 

On a personal level this may be getting a medical condition diagnosed and treated, colleting the ingredients for the family meal or getting your home office and communications equipment and hardware to work together so you can communicate with friends. But it is just the same in our professional lives, where we are both consumers of products and services from others and providers of products and services to our customers. 

In each case there is a consumption process, mirrored by a provision process, mediated by a series of interactions between them – telephone calls, exchange of information, delivery of products etc. As with production we can list the consumption steps and record the time they all take, carefully differentiating the few steps that help consumers solve their problems from the rest. We can also note how helpful or frustrating the interactions with the provider were and whether they were necessary or not. 

Learning to see the consumption processes of the different types of consumers that use your products is going to be a key skill in the years ahead. To recognise how badly designed and dysfunctional both these processes are just reflect on your recent experiences as a consumer (whether consuming on your own behalf or in paid time on behalf of your business). Here is a very typical example. 

On the busiest day in the year in our little three person office our printer and fax machine broke. It was just over one year old. A quick call to Stephen, our technical expert, confirmed our diagnosis. The next call to PC World revealed it would be too expensive to send someone to fix it, but that if we rang another number we would get vouchers to buy another machine. However these came from a different firm altogether and it took three more calls to find out how much we would get back and that we could not directly use these to buy another machine. They would follow a week later by post! 

So at the end of the day I get in my car and go to PC World to get a replacement machine. But of course they do not have this machine any more, only an inferior replacement that is far less robust. But it will have to do for now. 

Next morning the new printer refused to talk to our PCs. After reloading the software several times we were still stumped. Three calls later we get hold of someone at Hewlett Packard who after much discussion concludes the disc with the software must be faulty and we should download the software from their web site. After more frustration our expert finally gets it all to work. 

Total working time from last good print to the next good print was six hours! The total cost of our time and travel and Stephen’s time was considerably more than the cost of the printer! Add in the cost of the folks answering the eight calls to their “help lines” and you begin to see how much time and cost was wasted because of a broken process. True enough the vouchers arrived a week later and we will have to think of something else to spend them on. However this kind of service, or lack of it, makes you mad. Shame on PC World, their warranty provider and Hewlett Packard! 

It may be a trivial example, but this kind of thing happens all the time. In fact it is repeated day after day in both our private and business lives. But we have learnt the art of shrugging our shoulders and forgetting precisely what happened, in the vain hope that it will not happen the next time. But of course it does! 

The real problem is that no one had thought to define value from the consumer’s perspective – as a continuing ability to print. And none of these firms are using the information on the problems we rang them about to eliminate the root causes of the problems and redesign the process – and to eliminate the need to make any of these calls in the first place.

It would not take a rocket scientist to redesign this provision process to save time and cost for both providers and consumers. It would however be a brilliant place to start thinking about new ways of solving consumer problems.

Yours sincerely
Professor Daniel T Jones

Lean from the Top?

Flying to and from Australia gave me time to reflect on what appears to be a significant increase in interest in lean. Maybe, just maybe, we might be on the brink of a new era for the spread of lean. 

In recent months we have been approached by a number of large companies about planning their lean transformations. However what is different this time is that the impetus is coming right from the CEO. In each case the new CEO has declared that one of their key corporate objectives is to deploy lean throughout their organisation and across the world. It may not be a coincidence that GE recently declared their future was going to be Lean as well as Six Sigma. Where GE goes today many others will most likely follow. 

This is good news for all those already struggling with lean in the trenches. For too long frustrated staff in operations, engineering, planning and logistics have wanted to do the right lean things, only to be frustrated by the lack of real interest or understanding from top management. Too often they have given up and sought a position in a more lean friendly environment elsewhere. 

However just as this top management commitment is welcome, it needs the right kind of response to bear fruit. It is important to lead top management to an understanding that there is a lot more to lean than meets the eye. A good way to begin is by asking a series of key questions and opening up the discussion from there. Out of our recent discussions my colleagues Ian Glenday and Dave Brunt came up with five questions. You might try answering them yourself before asking them of your top management. 

Is the prime focus of lean in your company waste reduction? Almost certainly the answer will be yes. This is a start, but by no means the end of lean. The really big gains from lean come from fundamentally redesigning all the key value creating and support processes to enable the product to flow quickly through your organisation to the customer. And to go through several redesign cycles as you learn to see the obstacles to flow.

Do you ever change plans and schedules after they are issued? Again most likely the answer is yes. The organisation is still driven by a perceived need to be flexible and to optimise asset utilisation by separately scheduling every activity. Paradoxically the ability to respond quickly comes from discovering how to eliminate unnecessary noise in the order signal and learning where you can create stable flow, while reserving some capacity for last minute demand. There is a stable core demand in every organisation, if only you can see it and build upon it.  

Have you drawn current state maps but no future state maps? Again the usual answer is yes. We recently observed that even seasoned Six Sigma black belts struggle in designing future state maps. They are more comfortable coming up with lists of topics for future projects than creating value streams that flow. But they also relish the challenge of learning how to build a value stream in which every step is interdependent and much more resilient to disruptions and backsliding. 

Is the prime focus of your performance measures on the results achieved? Almost certainly yes. As you understand that current performance comes from the way key processes are designed and operated it will be necessary to track key measures of value stream performance in real time.

Finally do you really know what key attributes the consumers of your products really value, and those they don’t? The answer is usually no. Many organisations sell to end customers through layers of distributors, who aggregate different kinds of orders and whose main task is to get rid of the products already made to forecast. Dig deeper and you will realise you have several different types of customer with very different demands. 

Cascading a lean process redesign activity throughout an organisation starts with a dialogue around these kinds of questions. It does not start by deploying lean tools or running a 5S programme. It starts with hands-on training of a core group in lean system design. Their task is then to cascade this knowledge to every plant and office. 

I wish you a happy Easter.

Yours sincerely
Professor Daniel T Jones

Beyond Squeezing Margins

Over the years I have been invited to speak at many supplier days. The best ones share the stories of the lean progress made by the hosts to encourage their suppliers to follow suit, to mutual advantage. However there is always some tension lurking in the background as both sides size up whether this is a genuine step towards win-win cooperation or merely the same old margin squeezing dressed up in a new guise. The truth usually turns out to be a bit of both.

However it is becoming apparent to me that simply squeezing supplier margins is reaching the end of the road. Without any fundamental changes to the way the shared process works, there is a limit to how much margin there is left to squeeze. More seriously, I am now seeing growing evidence that successive raids on margins are now beginning to have a seriously damaging and even perverse effect on supplier performance. Ignore this at your peril.

This was brought home when visiting a supplier making a basket of different components, which they deliver to a customer for assembly into a complete piece of equipment, made in a variety of different configurations. At the moment the market for this product is buoyant and suppliers are having a hard time keeping up. This is a well intentioned supplier, taking action to respond to pressure from its customers to reduce its prices. However these actions have not always had the intended consequences, for them and their customers.

First, they decided to upgrade their machining plant by buying a completely new set of machines. After a struggle to get all the machines installed and running they are still struggling to get this equipment to work more than 30% of the time! Instead of solving their capacity problems, it made them worse than ever. It turns out the machinery was just not capable of running with these products, to the required tolerances and at the planned volumes. Sure the supplier is making some progress in reducing changeover times and breakdowns, but not nearly enough. This is not just a maintenance problem. More worrying, they were not able to specify the design conditions for what Toyota calls basic stability when choosing the equipment in the first place. It turns out their customer is suffering from the same problem with its new equipment, even though they have been going lean for some years. This is a very expensive lesson for all concerned. Not surprisingly it is a common problem that people do not want to talk much about!

Second, this supplier centralised each of its processes in different “focused factories” across Europe. This was supposed to reduce production costs. But instead most of their products now travel through three or more of their plants before being marshalled for delivery to the customer in their central warehouse. Total lead time through this supplier has gone up and not down, and the probability of having the exact basket of parts ready when the customer wants them has fallen. As a result they are constantly chasing “missing parts”, and their overtime and excess freight bill is enormous.

Third, in order to manage this complex routing through their plants they bought an ERP scheduling system. This turned out to be a disaster. They are still struggling to win the un-winnable war between data that is constantly being undermined by the expediters, trying to end-run schedules based on forecasts that always differ from what the customer actually wants. Schedules to their suppliers jump up and down all the time and not surprisingly on time deliveries from them have fallen.

Fourth, like many they have sourced several key components to low cost sub-contractors in China. Quite apart from all the start up and logistics nightmares, prices in China are beginning to rise. Their sub-contractor is more interested in fulfilling booming domestic demand than their orders, which gyrate far more than planned. They will soon have to find another sub-contractor further inland in China or look for a supplier closer to them in say Romania or Turkey.

This is not an isolated case. Indeed by conventional wisdom they did all the right things. However they were undermined by a lack of real knowledge of the equipment needed to produce their products and by focusing on point economies rather than the cost of the product travelling through the entire supply chain. Every supply chain contains many such stories. Rather than walking away, there are several positive steps that should be on the agenda for the next supplier day.

First, establish an expert working group to pool and upgrade the collective knowledge about specifying right-sized equipment that is fully capable and available. This is a strategic foundation underpinning the shared enterprise.

Second, the customer should, like Toyota, begin to assume responsibility for organising inbound logistics, picking up products from suppliers using frequent milk-rounds. This is brings the heartbeat of the supply chain to the supplier’s door.

Third, by creating level schedules for high volume products and separately scheduling capacity for low volume make-to-order products the customer can create the conditions where suppliers can follow suit. This inevitably leads to freeing up previously hidden capacity and achieving and sustaining record levels of output, while also freeing up the time of many of the planners and expediters to focus on improving the process.

Fourth, suppliers and customers should jointly map their value streams back to raw materials, as we described in Seeing the Whole, over time compressing them by regrouping as many value creating steps as possible in one location, either close to the customer or within trucking distance.

The path beyond margin squeezing is no less relenting. But it needs leadership from the customer to reshape its supplier base and to build a deeper relationship with fewer suppliers, each with a deeper knowledge to solve bigger problems with you on a continuing basis?

Yours sincerely

Professor Daniel T Jones

Rapid, Reflexive, Replenishment

Maybe a good New Year’s resolution for us all is to begin to take responsibility for leaning and compressing our entire supply chains. Ultimately the success of every business is determined by the success of the supply chains of which they are a part, just as a supply chain is only as strong as the links in the chain. Whether we like it or not a supply chain, or more accurately an extended value stream for each product family, is a shared process between all the parties, and needs to be managed as such. 

But where does your value stream begin and end? Probably back to the raw material processing for your longest lead item. At the other end I would argue it does not just end with the consumer purchase of your product – but through the life of the product to its replacement or disposal. Even if we just count back from the point of purchase, how long is your supply chain? Longer than the 319 days to make a cola can or double that to make a pharmaceutical pill? This is something every business should know. 

The second fact everyone should know, but few really do, is how well does this value stream really serve the needs of its end customers? The results will probably shock you. Grocery retailers setting up to supply orders placed on the Internet discovered they could only fulfil about two thirds of the items customers actually ordered, even though the availability of individual items was close to 98%. As a consequence many customers are dissatisfied with the substitutions made on their behalf. Think about how often you found the shoe size you wanted in the style you chose – and then remember that at least one third of the shoes in stock, which you did not want, will be remaindered at the end of the selling season. In other words, how do you disappoint your customers? And how much effort and hassle is required on their part to get what they want from you, if it does not go right first time? 

The true performance of your value streams can only be understood by taking a walk. I was recently reminded of the first value stream walks we did with a combined management team from Tesco and its key suppliers back in 1996. We walked the path of several products back from the store through two warehouses to production and packaging. No one had done this before and it opened their eyes and triggered Tesco’s lean journey. 

After a bit more digging, particularly to follow the order through the information processing maze, it became clear that the way to both improve the fulfilment of the shopper’s basket and to cut swathes of inventories and cost from the system as to dramatically compress the value stream through a series of tight, continuous replenishment loops.

Store sales should trigger replenishment of exactly the same quantities from Distribution Centres. Shipments from Distribution Centres should trigger daily pickups of exactly the same quantities from suppliers. These, in turn, should trigger daily production of the exactly the same quantities, and so on back through packaging and the production of ingredients. The ultimate example of a one-touch, flow-through product is soft drinks placed on rolling dollies at the end of the production line, which are wheeled through distribution to become the shelf fixture from which the customer selects the product. The same logic applies to slower selling products (the majority in most supermarkets) but with either an appropriately longer replenishment cycle – every three days or every week – or by more frequent deliveries of mixed-product shipments of the required quantities.

The model for us, and still the most impressive supply chain in the world, is the Toyota aftermarket parts distribution system we described in Lean Thinking. This still sets the global standard for how to run a lean replenishment system, with lean Distribution Centres, milk-run mixed-load deliveries picking up products and cross docks. 

In the early 1990s Toyota built two highly automated warehouses in the USA and Japan and discovered these could never match the efficiency and flexibility of their manual lean warehouses. They also knew from experience that big centralised ERP scheduling systems can never beat a series of simple reflexive pull loops. Economic Order Quantity logic leads to noise and expediting rather than the optimal use of assets. WebVan, the home shopping firm in California, went bankrupt trying the automated route. And Sainsbury in the UK and Coles Myer in Australia are now struggling because they followed the same path. When will we learn? 

While manufacturers can learn a lot about rapid replenishment from retailing this is not the only place to look for inspiration. Earlier this year I visited a plant making contact lenses. They were busy planning an even bigger, faster machine. This sounded like “hurry up to wait” to me. True enough these lenses went through three different warehouses, each containing mountains of stock and no doubt highly automated, before they reached the customer. And demand for contact lenses is by definition very flat! I suggested they make and ship just the right number of lenses directly to each customer’s home or design simple, but less “efficient” machines that could make these lenses in a local dispensary while customers waited. The room went quiet at this point, until someone said “We never thought of that!” 

What would happen if you applied the same logic to your supply chain? How short could it be? What difference would this make to your customers? What would this do to your investment, design and production costs, and the location of your activities? And how would this change your impact on the environment? 

I look forward to hearing both stories of how long your existing value streams are – and given a blank sheet of paper, how short they could become. 

Yours sincerely
Profeesor Daniel T Jones

Planning for Flow

We have recently visited several food and pharmaceutical manufacturers as they get started on their lean journeys. One of the most challenging was a huge plant making the base ingredients for the pills we buy in our local pharmacy or supermarket. It looks like a cross between an oil refinery and a brewery.  

This plant makes hundreds of different products, each of which goes through a dozen or so processing operations, taking about 15 months from start to finish. These base chemicals are then shipped to another plant to be turned into pills, from which they pass through several warehousing steps before reaching the point of sale. I was staggered to discover that it takes almost twice as long to make a pill as the 319 days it took to make the famous soft drink can in Lean Thinking! 

Not only was there no flow, but quite obviously there was also no pull or levelling either. Indeed we were told that production schedules in both plants change all the time and that fire-fighting is endemic. Like many firms they have pursued lots of initiatives and IT fixes to try to improve their forecasts and schedules, but have little to show for them. This suggests to me they are addressing the symptoms and not the root cause of the problem, which lies in the logic on which their planning is based. The second hurdle to overcome is the strong belief that flow, pull and levelling are impossible dreams in a process industry. 

The logic behind the way production is planned today is based on four key assumptions. First that customer demand is erratic and unpredictable. Second that therefore one needs to be “flexible” enough to make any product in any one of the many mixing tanks, fermentation vessels etc. Third that one will get “optimal use” from all these assets by scheduling large batches (or Economic Order Quantities - EOQ) through each operation in turn. And fourth that the data on which these plans are made is accurate enough to be relied upon. On closer inspection none of these assumptions turn out to be true. 

The consumption of pills, and most food products for that matter, is actually quite steady and does not vary a lot. Most of the variation in orders received by plants is “created” by the way information is batched and passed upstream and by the delays in the many “just-in-case” warehouses on the way to the customer. This would suggest that levelling production in line with demand is both desirable and possible. 

If this is the case then why let the tail wag the dog? Why mortgage the performance of the whole plant for the “flexibility” required for a tiny fraction of production? Is it not more important to create a flow for high volume products so they can be produced in line with demand, rather than constantly recalculating the plan for every product based on EOQ? 

It is also common to find that isolated pieces of equipment whose use is “optimised” using plans based on EOQ end up producing saleable product for a much smaller fraction of the time than equipment whose capability and availability has been improved so they can be linked to enable products to flow through them without interruption. 

Finally people are beginning to realise that centralised control systems can never cope with the minute by minute disturbances that happen all the time on the ground. Events change faster than the plan, beginning a vicious circle of bad data feeding bad plans. Radio Frequency tags (RFID) on every product may help, but may also lead to data overload that turns out to be nightmarishly expensive to fix. Most firms do not know the level of data inaccuracy in their systems. In my experience when they take a look they get a nasty shock. This suggests they might be better off by creating rapid, reflexive replenishment loops all the way back from the customer, which pull rather than push products through production and distribution. 

In our experience, once the fragility of these assumptions has been laid on the table it is possible to open people’s minds to creating flow, pull and levelling. The place to start is by using a simple, but powerful tool developed by my colleague Ian Glenday, which we have come to call the “Glenday Sieve”. By ranking the products (SKUs) by volume, it reveals how skewed the distribution is. It is very common to find that five percent of the product lines account for half the output of the plant. At the other end of the scale one third of the product lines account for less than one percent of output. 

In fact almost every plant (hospital, office process, etc.) has at least two different types of flow that need to be planned and managed differently. In one case you know the high volume products you will produce every week, but not the precise volume. In the other case you probably know the overall capacity needed, but not which products will be required that week. Start by separating out the high volume products, before moving on to analyse what needs to be done to the remaining product lines in order for them to be able to join the flow. 

One of the quickest ways to overcome the sceptics and demonstrate that flow and levelling are possible in a plant that has never experienced flow is by dedicating a set of equipment to produce the high volume products in a regular, fixed sequence. At least to start with. This can be done the following week. This will quickly reveal all the problems with the equipment itself and with the lack of standard work. Provided management can keep its nerve as problems crop up and signal their intention to make flow happen, then the sceptics will come on board. The biggest surprise is that within weeks you can make a lot more products through this equipment than ever before. Now you have secured top management support. 

As employees learn through repetition (and incorporate this into standard work), as equipment availability is improved and as change-over times are cut then you can step-by-step reduce batch sizes, add lower volume products, increase the frequency of the cycle and flex the volumes in each cycle in line with demand. Raw material deliveries for these products can be synchronised with production and planning becomes extremely simple, requiring no fire fighting. 

In parallel there is a lot of work to be done to analyse whether the company needs the tail of low volume products and if so how to schedule these – on separate equipment, at a different time or by reserving some capacity for them in a mixed-model pull system. The end objective, which now begins to look possible through it may still be some way off, is to be able to make every product every cycle in line with demand (to Takt time) with levelled production. A realisable dream. 

As lean thinkers we need to pay close attention to both the needs of the type of process we are dealing with, but also to the tactics that build management support to make it happen and the knowledge base that will sustain it over time. Circumstances will differ, and therefore the emphasis and sequence of actions will too, but the underlying logic and objectives are common. 

I wish you a restful break before getting back to your lean journey in the New Year. Thank you for your interest and support in 2004. 

Yours sincerely
Professor Daniel T Jones

Is Lean So Hard?

We recently had a visit from the Managing Director of a small engineering firm seeking help on his lean journey. His first port of call was his local university, one of the most prestigious in the country. They sent two postgraduate students to show him how to draw a Value Stream Map. However they stumbled when it caine to deciding what to do next. I see this all the time - firms with Current State maps but no Future State map and no Action Plan to implement it. Yet this is one of the key steps in going lean.

By chance I met these same postgraduate students at the Manufacturer Live event in Telford in September. They stnick tue as smart students with a good knowledge of the lean tools. Yet they confessed they did not know how to construct a Future State map for this plant, despite having read the right books. This set me thinking. With the plethora of advice on lean and all the workshops on value stream mapping, why is it so hard to make this essential step, even for the smartest people? What is holding you back?

There are of course some obvious reasons. If no one is given responsibility for straightening out the value stream as it crosses departments then no one is really going to bother to draw a Future State map, let alone implement it. If you do not have support from top management then even the best intentioned lean initiatives are going to run into the sand. Also if your first map reveals so much low hanging fruit then it is not surprising if people go after that, rather than do the more heavy lifting in changing the way things work.

Another common reason is that employees recognise the need to move from making large batches to flowing products through the plant. But they are frustrated in doing so by the lack of basic stability in their operations and in their equipment. Which is why so much attention needs to be devoted to creating standard operations, improving machine availability, reducing changeover times, improving bottleneck processes, etc.

But even if this is a long road there is a danger of pursuing this work without a clear plan of march. You can spend a lot of time creating islands of stability that are hard to sustain unless they are tightly linked. A Lean Value Stream Plan from a Future State map is the way to leverage the synergy between Six Sigma, TPM and Lean and to create flow that lasts.

Another stumbling block seems to be the concepts of takt time and the pacemaker process — how to establish the appropriate rhythm for the value stream and where to trigger it. A really helpful insight is to recognise that you are almost certainly making several different types of products with quite different demand characteristics that require different and not common solutions. People often think lean is about building evetything to order — whereas this is not always the case — in manyy cases it is about rapidly replenishing stock the customer has just purchased.

If you start by analysing you product families by process route and by
frequency of demand and you will discover a few high volume products that account for the bulk of your output. These should be made-to-stock with the customer pulling from a pacemaker at the end of the value stream. At the other end of the scale you may well have a tail of low volume products. accounting for a small fraction of your output that have to be made-to-order from a pacemaker at the beginning of the value stream. Map these value streams separately and treat them as two quite separate projects. Over time it may well be possible to combine these two into a mixed-model pull system, but probably not initially.

The final stumbling block is hidden in your information flow. Where sabilitv is the foundation for creating flow, heijunka or levelling is the foundation for creating pull. Without levelling you are fighting an uphill battle against constantly changing schedules and fire-fighting. We have been brainwashed to think that the only way round this problem is by holding stocks and better IT systems that can improve the forecasts on which our schedules are built. In fact there is a lot we can do to smooth the order signal from our customers. However constantly changing schedules are in fact a symptom of a deeper problem - the batch logic in our scheduling systems. I will return to this topic in a future e-letter.

You may well have encountered different obstacles in deciding what your Future State map should look like. Others of you might have created your Future State maps but have struggled to implement them. I would be interested to hear about both problems, and how you think they can be overcome. Difficult questions are rich food for Lean Thinkers to ponder upon. If we can’t crack this one then we arc not going to make much progress with lean.

Yours sincerelv
Professor Daniel T Jones