Sometimes, consultants sell lean as a quick and easy way to success that pays for itself. Unfortunately, this is usually not true, as many companies have found out the hard way. Getting lean in a company is similar to getting a lean body; it is usually neither quick nor easy. Let me show you the different phases of a lean transformation.
The Typical Phases of a Lean Transformation
A lean transformation is a long-term strategic orientation of a company. It is more than just a lean project. In my experience, such a lean transformation goes through multiple stages. After the start, the company goes through the famous valley of tears before the performance starts to improve, first rapidly and eventually slowly.
The Valley of Tears
At the beginning of a lean project, there is usually (but not always) the valley of tears. If you try to lose weight, your body may feel uncomfortable with the exercise, and the weight loss is probably much slower than hoped for.
Lean manufacturing is similar. By changing the system, you may upset long-established traditions and customs. Some people may fight against the change, visibly or hidden. Others may have trouble adjusting.
Most often, however, the reason for the difficulty is that the new system may still have some kinks and bugs in it. These need to be sorted out (hint: This is the C&A of the PDCA!). If you do not sort out the many little details, you may be stuck with a system that is worse than before.
Also, for your transformation, you need manpower, definitely your own, and sometimes also additional (and more expensive) hired consultants. Your people will have less time for other things during the transformation, and you may have to spend initial money with a rather fuzzy outlook about when (and if) you will get the expected benefit (which is one of the reasons accountants often have problems with lean).
Furthermore, the learning curve cannot be underestimated. There is no way a lean project is guaranteed to work. In fact, in my experience, only 50% or less of the projects actually have a benefit (albeit the reporting to upper management often makes it look better than it is). Yet, without trying you will never improve. Overall, at the beginning there may be more mistakes than later on during the transformation.
In any case, the new system may not (yet) run as smoothly as intended, and actual performance may be worse than at the beginning. The duration of the valley of tears may be from a few months to years, depending on the details of the project. Of course, done wrongly you may never come out of the valley at all. But, more on this below.
Climbing: Rapid Improvement
If you do it right, you will eventually leave the valley of tears. If you keep up the effort, then you can expect rapid improvements. Your changes start to become effective. Done correctly, they may have a domino effect throughout your value chain.
In the Western world, lean is often seen as a reduction of waste (muda). In my view, however, the reduction of unevenness (Mura) is even more important! Reducing waste will usually only affect the spots where the waste is reduced. Reducing unevenness is tougher, but this will often have beneficial effects throughout the value stream. In any case, done correctly you can expect to improve rapidly.
As for the time scale, it depends on how far you are away from the top. Here, we are easily talking years.
Slow Growth: World Class Performance
Eventually, your improvements will start to slow down. While you still put in a lot of effort, your resulting performance is growing slower than before. Congratulations, you are now probably among the best companies in your industry! Further improvement is still possible, but it will become more difficult to improve.
For example, it is doable to go from 60% of the deliveries on time to 85% on time. It is more difficult to go from 85% to 95%. Getting from 95% to 98% will be even more difficult, as is 98% to 99%. The closer you get to 100%, the more effort is needed to improve further. Hence, your overall performance can still increase, but it will become harder and harder to improve. At one point it will take all your effort just to maintain the current situation.
No matter whether you exercise your body or transform your company, you are in peak performance. However, both in lean transformation and in personal exercise, if you stop, your performance will suffer. It takes a continuous effort to stay on the top.
The Way Back Down
Like fitness, lean is a constant effort. The moment you stop, you will slide back down. The environment in industry is constantly changing. New products are introduced, old ones run out, suppliers and customers may change, laws may change too. Technology will both generate newer and better products as well as better and faster machines and tools. Just standing still will mean that you will fall behind.
Kaiaku, the Opposite of Kaizen
Even worse, depending on your situation, you may end up with worse performance than before. In Japanese, there is even a word for that: Kaiaku (改悪, changing for the worse). This is for situations where an ill-fated attempt at improvement results in a system that is worse than before. It is the opposite of Kaizen (改善, continuous improvement).
In my experience, this is not uncommon. A lean transformation often consists of multiple individual lean projects. These lean projects introduce changes. At least initially, not everything may work out as planned. This is where the C&A from the PDCA comes in. Check what is not (yet) working, and keep on improving it. In my experience, this debugging often takes more time than the initial implementation.
Unfortunately, in many Western companies, a nice presentation about improvements is all management ever wants, and the problems created on the shop floor are often ignored. I have seen way too many examples of this. From new ERP software that created chaos, to Industry 4.0 solutions that looked nice on paper but did not work, to make-believe kanban cards that were just another hassle for the shop floor with no positive effect. And, don’t even get me started on leveling!
The Low-Hanging Fruits
Consultants often talk about low-hanging fruits (i.e., quick and easy projects with a high return on your effort). Yes, they do exist. Often, there are situations where you can find easy projects that quickly generate quite a bit of return.
In my experience, these are often associated with inventory reductions. In many plants I had good success with SMED (i.e., improving tool changeover speeds), which allowed us to reduce the lot sizes or produce more. At one plant I was able to give an extra month of production every year through a simple SMED. Overall, such win-win situations do exist.
Yet, in my experience, they cannot be taken for granted. Additionally, they are hard to repeat. You can “SMED” your way through your value stream only so often before further improvements become difficult.
In any case, I hope your transformation will be successful, and that you reach peak performance with or without a valley of tears. Now, go out, climb that curve, do not slice back again, and organize your industry!
PS: My post inspired Juan Carlos Viela to write two posts (in Spanish) that include interesting data on the valley of tears: Medir es importante I/II and Echar a andar. Las curvas del cambio II/II. In case you don’t speak Spanish, you can try Google Translate for Part 1 and Part 2.