Deming and Lean
One of the things that we all have in common at Lean Advisors, is admiration for the work done by Deming in the area of 'Management Science'
Background on Deming
One of the things that we have in common at Lean Advisors, is an admiration for the work done by W. Edwards Deming in the area of 'Management Science'. Deming was born in Sioux City, IA in 1900. As a young boy, he moved with his family to Wyoming, where his parents tried unsuccessfully to build a productive farm on 40 acres of land in Camp Coulter.
Deming's parents instilled a deep respect of the importance of education into young William - as they were fairly well educated themselves. In 1917, Deming went to the University of Wyoming, and in 1921 graduated with a B.S. in electrical engineering. In 1925 he received a master's degree in mathematical physics from the University of Colorado, and in 1928 a Ph.D. from Yale in math and physics. He is the recipient of many top honors and awards, and has written several books, and 171 papers. He passed away in 1993.
Demings 14 Points of Management
Deming is best known for his work in Japan after WWII where he taught management and engineers quality methods and techniques. His teachings dramatically altered the economy of Japan, and made a huge impact on the developing Toyota Production System. His system of profound knowledge has 4 interconnected parts to it: 1. Appreciation for a system, 2. Knowledge about variation, 3. Theory of knowledge, 4. Psychology. All of these are very apparent in Lean. As part of his philosophy, Deming created his famous 14 Points for Management, which we will discuss in relation to Lean.
1. Create constancy of purpose toward improvement of product and service with the aim to become competitive and to stay in business and to provide jobs.
This first of Deming's points means to pick a direction, and make sure that everyone goes in that direction. If Lean is the direction that you have chosen, then all other initiatives feed the lean strategy. It's no good to have many directions - the people will be confused, and resources burnt without meaningful progress.
The concept of being more competitive, and improving your products and services is related to the first point of Lean - "Specify Value". Value is related to what the customer wants and needs. The first step in a lean strategy is to specify the value that you provide to your customers, and constantly improve your value proposition in order to grow and remain competitive. It is a safe bet that a competitor somewhere down the road from you is using lean to dramatically improve their value proposition. Once you have decided on a strategy, then "stick to the knitting". A new program every month only confuses everyone. Remember that lean is not a downsizing exercise - the point is to improve and grow the business to continue to provide jobs. There are several prominent examples of plants that have literally been saved from closing through a lean strategy that made them ultimately more competitive. Nor is it a program, it's a natural progression in the evolution of manufacturing from craft, to mass production, to lean production.
2. Adopt the new philosophy
In Lean, management must take a role that enables improvement and change. Leaders must be both champions and change agents. They can do this by ensuring that the appropriate lean education and tools are provided to accomplish the change. Instead of managing by day-to-day numbers, they can understand that every process has natural variation, and they can stop reacting when no reaction is warranted. Prior to the 1980's leaders took a very hands on approach to management in a "Do as I say" style. In the 1990's leadership swung the opposite way towards a total empowerment approach - often sacrificing the ability to sustain a unified corporate direction as a result. In a lean approach the leader says, "Follow me", and leads through a combination of example, trust, and expertise.
3. Cease dependence on inspection to achieve quality
Eliminate the need for inspection on a mass basis by building quality into the product in the first place. This point relates closely to the concept of continuous flow, and the idea of never passing a defect to the next process in a value stream. Implementing continuous flow is the 3rd step in a lean strategy. Once you do, you can expect dramatic improvements in quality, as each piece is handled one at a time - therefore building inspection and fast feedback into every step of the process. If done properly, continuous flow means that final inspection is really a waste - as quality has been built into the value stream at source. Mistake proofing is another lean tool that helps alleviate the need for final inspection. Once problems have been identified at source, and the root causes uncovered, mistake-proofing devices are used to ensure that the problem never happens again.
4. End the practice of awarding business on the basis of price tag
Instead minimize total costs. Move toward a single supplier for any 1 item, on a long-term relationship of loyalty and trust. This point relates directly to the way in which Toyota develops relationships with their suppliers. Instead of having many suppliers for the same part, and creating all kinds of waste in the management of the supplier relationships, Toyota only selects 1-2 suppliers and builds a strong, mutually beneficial relationship with them. They send in assistance to help the suppliers make their business better, and therefore more profitable. The result is a long-term relationship that fosters loyalty and trust. Additionally, a macro value stream approach ensures the total costs are minimized in the whole system.
5. Improve constantly and forever the system of production and service to improve quality and productivity, and thus constantly decrease costs
This point relates directly to the 5th point of Lean - seek perfection. Continuous improvement in the form of kaizen, and radical improvement in the form of kaikaku are both an integral part of Lean. The need for improvements is dictated by the system, and is brought to the surface and defined through value stream mapping. As a result of lean improvements, costs dramatically decrease, quality improves, delivery is on time, and the customers are more satisfied. In the most progressive companies, continuous improvement is pervasive in their culture. Everybody comes into work every day thinking of ways to remove waste. Even the CEO. And everyone is given the tools to improve. Deming also said, "Every product should be thought of as one of a kind. There is only one chance at optimum success."
6. Institute training on the job.
This is one of the key roles of Lean Advisors Inc. We seek to provide you with the lean tools and techniques that will allow your workforce to make improvements to your value streams. The focus is always on a transfer of knowledge to your people so that they can sustain change on their own. Workshops are always conducted in a 'hands-on' manner so that the training occurs right in the workplace - where it's most beneficial. The training is also completed in a lean fashion: just-in-time for the new skills to be used on improvements as they are needed. It's no good teaching someone new skills that they won't use for weeks or months: to remember new skills you have to practice them. Just like playing a sport.
7. Institute leadership.
The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. At Toyota, the system of management is much different than in most North American companies. Supervision at Toyota is focused on mentoring and educating the workforce. They are also focused on improving the system using scientific method - rather than constantly pushing the workers to work harder. Rarely at Toyota does a supervisor tell someone exactly what to do. Instead they lead them to the right method by asking the right questions and becoming a mentor. Supervisors command respect because of their deep understanding and expertise, rather than because of their position in the company.
8. Drive out fear, so that everyone works effectively for the company
This is one of the biggest barriers in implementing a lean approach. For example, if old-style measurements are left in place that reinforce batch production behaviors, people will sub optimize the value stream to achieve these measures out of the fear of losing a bonus or reward. (Or even their jobs). Fear drives people to distraction. They concern themselves about survival and personal 'wins' instead of thinking about what is best for the company. As long as you are better than average you survive. We need to remove this fear by changing the measurement and reward systems so that sub optimization stops, and we can focus on creating the best end-to-end value for the customer. There is also the fear of new knowledge, which may expose your short falls. For example SPC or Lean!
9. Break down barriers between departments
People in research, design, sales, and production must work as a team to foresee problems of production and in use that may be encountered with the product or service. Organizing around value streams, and value stream management are also key components of a lean approach. The main role of a value stream manager is to be able to cut across organizational boundaries to quickly and constantly improve the value stream. Old style functions can still be left intact to foster and improve functional expertise - but someone has to have the lead responsibility for understanding a value stream and improving it. This is the value stream manager. One of our key observations from the many companies that we have been to is that organizations that have value stream managers make faster, more sustainable lean improvements than those that have traditional functional managers.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity
Such exhortations only create adversary relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force. Instead of posters and slogans, it is important to actually change the culture of the company to one of continuous improvement based on the elimination of waste. Sometimes slogans imply that the people are at fault, and therefore they could create good products on their own. They just weren't smart enough to know this until they read the poster. It's critical that visual management methods are used so the workers know how they are doing and where potential problems are at a glance. These are different than posters with slogans on them so replace them with visual information that helps the workers to do their jobs better.
11. Eliminate work standards (quotas) on the factory floor
Substitute leadership. (11b) Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership. When we do value stream mapping, we do not use work standards. We walk the work floor and record what is actually happening. Standards are only valuable in the initial design of work from a green field - in order to understand the sequence and timing of the steps required to produce a product/service. Once work is actively taking place, production never really occurs to an observable standard. Working to standards may create the waste of overproduction. What is really important in a lean approach is that work is always completed in a standard way so that cycle times can become predictable and synchronized with takt times.
12. Remove barriers that rob workers of their pride of workmanship
The responsibility of supervisors must be changed from sheer numbers to quality. (12b) Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means inter alia, abolishment of the annual merit rating and managing by objective. The use of a rewards, annual merit systems, or recognition systems often leads to winners and losers in the value stream. This can lead to sub optimization of individual points in the stream to the detriment of performance in the whole stream. In a rowboat, you want all of the rowers to be rowing together to achieve a common goal. If one rower gets rewarded for rowing faster than the rest, then she/he will do so, and the result is that the boat will go off course. The worst situation would be to have a competition between all of the rowers in your boat! A lean approach focuses on achieving a balance in the value stream based on the pull of the customer.
13. Institute a vigorous program of education and self-improvement
In Lean, this relates back to point 6. Remember that education is never 'finished'. It's a never-ending story - you always have turnover amongst your people, and refresher training to do. This goes for executives too. We've been to many companies where the executives are too busy firefighting to actually go for lean training. The result in an enlightened workforce, but lack of understanding and knowledge about Lean at the senior levels. In Toyota, executive power emanates from knowledge, expertise, and trust - not the ability to firefight. People should be allowed to gain more knowledge in general. It benefits everyone. For example, education on quality will help to broaden a Lean adopter's horizons. However, you don't want to waste your resources educating people about wrong, or obsolete methods.
14. Put everybody in the company to work to accomplish the transformation.
The transformation is everybody's job. It's no good keeping a lean strategy in a back room where only a few people see it. Everyone has a role to play in accomplishing the transformation, and they have to understand the direction. For example, we need the hourly worker's input when we conduct a kaizen on the shop floor. They are the ones that do the work everyday, and they can be extremely helpful in the identification and elimination of waste. Learning to see waste in a value stream means that you have to learn a new language of improvement. A language is only beneficial if everyone speaks it. So it's necessary to educate everyone in the organization on the language of lean.
Conclusion
W. Edwards Deming made a huge contribution to the science of management. His insights into the psychology of the workplace still hold true in the new millennium, and are directly related to the implementation of a lean strategy. They can be used to help you to implement Lean in your organization.