About the Author As a Senior Continuous Improvement Facilitatorat the Kaizen Institute, Gautam Thakur has more than14 years of experience with achievement of significant results for the deployment of Lean/Six Sigma initiatives for Fortune 500 organizations. In addition to his extensive work in facilitating and coaching teams on continuous improvement principals and methodologies.
Our client, one of the biggest potash miners, was interested in implementing 5S workplace organization for their Under Ground (UG) Warehouse to satisfy internal stakeholders and operate in the most efficient manner. This created an opportunity to form a team for 5S improvement project which is composed of Kaizen Institute Consultant, Mine Maintenance Superintendent, UG Warehouse Supervisor, UG Planner, Purchasing Manager and other crew employees. We were engaged to develop a roadmap for the project and to guide the team successfully towards the end objective of workplace organization from a Lean perspective.
There were a number of issues contributing to the business case which makes our client believe that why this kind of project was necessary:
All the warehouse stocking parts were mixed up and it was almost impossible to locate them.
There was a high degree of customer dissatisfaction when it comes to inventory stocking levels for warehouse items.
The visual management was completely out of picture and there was no accountability at any of the levels to answer questions.
The investment to set up a new warehouse was approved for $2.2 million. In order to get the real value of this level of expenditure, Kaizen Institute was engaged to lead a local cross-functional team through the process of organizing the workplace and eliminating waste in the entire value chain.
Our Project Plan
We started by using SmartDraw to create a Kitting parts storage process flow in the warehouse area. The program allowed us to layout a process map and identify opportunities for improvement by clearly outlining out the roles and responsibilities of all stakeholders.
Employing a Lean approach, we started with 5S to optimize the existing space which helped us in freeing up additional space to stock relevant parts. The 5S process is a systematic approach to workplace organization and is widely considered the first step in implementing a Kaizen/Lean culture to reduce waste and improve productivity.
Benefits of 5S
The 5S’s should occur in this order, and there must be a plan in place for performing the tasks on a regular basis. Utilizing the 5S process to achieve an organized workplace also has several supplemental benefits. In addition to the immediate visual improvement, organizations will realize:
Creates proper environment for standard work
Higher Product quality: By having an organized workplace, the quality of the work will go up.
Reduce costs: There will be less waste which will ultimately lead to lesser costs
Reduces downtime and equipment failures: Having all the tools in an organized manner will significantly reduce the time needed to look for tools while performing a job.
Improves Customer delivery times: Reduction in Lead time for critical items will expedite the process to complete jobs on time.
Reduces hassles in the workplace
Creates a safer work environment for all employees.
Improved Image: An organized workplace is a professional workplace; this is visually apparent when observing an organized workplace.
A PDCA diagram was implemented through SmartDraw which helped the team to understand the importance of Sustainment phase in 5S process.
Root Cause Analysis
SmartDraw was utilized to conduct a root cause analysis exercise with project team to list out the factors related to high lead time for the warehouse items.
This helped the team to first identify and then take required actions to reduce the lead times for some of the warehouse stock items.
As a result, the project team generated a cost savings of $3.8 Million through identification of right parts needed on time to run the warehouse, opportunity savings, Optimum inventory levels and Acceptable Lead times for critical parts. This was a significant improvement when compared to the original situation of the warehouse. The client was really pleased with the effort being put into this and it has now become the benchmark for other sites to follow.
About the Author As a Senior Continuous Improvement Facilitatorat the Kaizen Institute, Scott Masich has more than15 years of experience with achievement of significant results for the deployment of Lean/Six Sigma initiatives, strategic planning, balanced scorecard, and alignment implementations. In addition to his extensive work in facilitating and coaching teams on Lean Manufacturing principals, he has well over 20 years of budget, capital planning, and project management expertise.
Our client, a potash mine owner, was planning to expand existing maintenance shops to meet increased demand for support to the mill operation. The expansion also created an opportunity to build a new office infrastructure such that all surface support staff could be housed at a common location. The Kaizen Institute was engaged to review the expansion for verification of fit-for-purpose layout from a Lean perspective. There were a number of on-going issues leading our client to the belief that an expansion was necessary:
Existing departments within maintenance were each asking for additional shop floor space to meet demand accordingly.
Separating welding and fabrication from equipment disassembly, machining, rebuild and reassembly was considered important for improvement to overall equipment reliability.
Locating engineering and maintenance closer together would enable better technical support for both projects and maintenance functions.
A capital expansion to the existing Maintenance Facility was approved for $35 million. This capital expenditure did not provide a suitable return on investment and the Kaizen Institute was engaged to lead a local cross-functional team through the process of reducing costs and eliminating waste in the existing facility.
DIAGNOSIS & APPROACH
We started by using SmartDraw to create a current layout of the facility (shown above). The SmartDraw program allowed us to create everything to scale making it very easy to analyze and find opportunities for improvement.
Employing a Lean approach, we evaluated the usage of existing shop floor space. We started with 5S to optimize usage of existing space as well as free up additional space. The 5S process is a systematic approach to workplace organization and is widely considered the first step in implementing a Kaizen/Lean culture to reduce waste and improve productivity. Generally speaking, the steps of 5S involve going through items in a workspace, removing what’s unnecessary, organizing items, cleaning, performing maintenance, and making sure these things become habits.
SmartDraw Tip: To access the Lean Diagrams and Template Category simply navigate to the Left Panel. Select Lean. In the 5S sub-category select 5S Glossary template. The category enables you to create a number of diagrams such as as value stream maps, spaghetti diagrams, kanban boards, process maps, root cause diagrams and much more!
The 5S’s should occur in this order, and there must be a plan in place for performing the tasks associated with these steps on a regular basis. Utilizing the 5S process to achieve an organized work space also has several supplemental benefits. In addition to the immediate visual improvement, organizations will realize:
Improved Quality: Having an organized work space with everything in its place will result in fewer mistakes made.
Improved Productivity & Efficiency: Reduced clutter and designated storage locations improves inventory management and reduces the time to locate and obtain material. It is often found that an increase in usable space is also achieved.
Transparency & Visibility: Abnormalities, additional wastes and problems surface much more quickly with increased visibility within the work space.
Boosted Morale: Employees often feel an increased sense of workplace ownership and motivation with an organized workplace; no one likes to work in an environment of disarray. Participating in the 5S Process and witnessing the dramatic before and after results also provides a sense of empowerment.
Improved Image: An organized workplace is a professional workplace; this is visually apparent when observing an organized workplace.
Improved Safety: Properly stored and organized items reduce housekeeping and ergonomic related hazards, and also make hazardous conditions more visible. The discovery of reduced accidents and injuries are typically identified after utilizing the 5S Process in the workplace.
We also employed Total Flow Management to optimize the positioning of shop equipment and flow of material through the shop. Total Flow Management (TFM) focuses on streamlining material and information flows. Diagnosis is performed through the identification the 7 wastes in the operation which result in improved Production Flow, Internal Logistics, and External Logistics.
Using SmartDraw, the team created a Future Layout to scale (shown above). With the ability to move items in the “virtual world” we eliminated the need to expand the existing facility.
As a result, the team eliminated the need to expand the existing facility and avoided a capital spend of $24 million. This was a significant reduction to the original spend and the client was able to apply the funds to projects that provided more value to the company.
So before you decide to spend millions of dollars on your next capital project, assemble a small team and ask them to think creatively to eliminate the need for the project altogether.
Back in 1994, Lean wasn’t actually a thing. In fact, the Internet was barely a thing. But that’s when Paul Stannard founded SmartDraw—and without even realizing it at the time, he had launched a Lean Startup.
Was SmartDraw the first example of lean startup success? That is probably a stretch. But there’s no question the company is both lean and successful.
The Lean Startup philosophy was first proposed by entrepreneur Eric Reis in 2011. It follows three basic principles: be innovative, create something useful, and don’t waste time and resources doing it. It runs on the build/measure/learn feedback loop.
Interestingly enough, these principles were at the very core of SmartDraw from the beginning—and still are.
Today, things have come full circle. The Lean tools in SmartDraw are now used by entrepreneurs, managers, and organizational leaders as they set out to achieve their own lean startup success.
Leadership author Rodger Dean Duncan recently interviewed the SmartDraw founder and CEO to get his thoughts as to how entrepreneurs in today’s world can achieve lean startup success. Much of his advice is taken from real-life lessons—and not all of them were victories.
“My first startup ultimately failed. The Lean Startup idea encapsulates many of the lessons I learned from this.” – Paul Stannard
The term Lean is often followed by the term manufacturing, since that’s where the idea first took root. So it’s natural that many people—maybe most people—outside of manufacturing aren’t aware of Lean methods.
If you aren’t familiar with Lean, it is what I like to call an organizational lifestyle change. Just as a commitment to good health requires a person to adopt a lifelong goal of exercise and healthy eating habits, Lean requires an entire organization to buy into its approach.
There are three basic goals of Lean.
• Focus on providing the best possible customer experience
• Minimize waste in the development/delivery of goods and or services
• Continually strive to improve in all areas
But will Lean principles work in non-manufacturing endeavors? For example, does Lean work in healthcare?
The overwhelming evidence says the answers to these questions are yes and absolutely, yes. Applying the above ideals of Lean to healthcare, we get a goals cycle diagram that looks like this:
Does Lean Work in Healthcare? These Case Studies Say it Does
Here are just a few case studies, with links to the stories, validating how Lean does work in healthcare.
Banner Health – Doctors and nurses teamed to improve emergency room processes and reduce litigation risks. The result was an 89 percent decline in patient complaints prior to discharge.
New York City Health and Hospitals Corp – Cut a $10 million inventory in supplies, many of which would expire unused, by switching to a just-in-time inventory system. Inventory was cut in half for a one-time windfall of $5 million.
Delnor Hospital – Implementing a Lean system, the average length of a patient’s stay was cut by 10 hours. This made a contemplated $80 million expansion unnecessary.
ThedaCare – This operator of multiple hospitals and clinics slashed inpatient care costs by 25 percent. The improved productivity and savings on supplies saved the organization $27 million over four years.
Next, you will examine your current state to assess areas of waste. For example, long patient waiting times, paperwork bottlenecks, communication gaps or even inventory control issues.
Data will be collected to determine how much time is spent in each step. Specifically, you’ll be looking to break time into two elements: value add time (this is the time that adds value within the process, such as examining a patient) and non-value add time (time the patient wastes waiting to see the doctor or time wasted by admin staff trying to locate patient files, for example).
Once all of the data are gathered and the current state map is complete, a future state value stream map will be created. The goal will be to take the practice from where it currently exists to this future, Lean state.
Obviously, this is an oversimplification, but hopefully you get the idea. By focusing on making every step in the various processes of your practice more effective and efficient, and by focusing the entire organization’s efforts on maximizing the patient’s experience, everyone benefits.
Starting a business may be one of the most exciting things you’ll ever do. But it isn’t something to take lightly. According to a Harvard Business School study, about three in every four business startups fail.
Naturally, entrepreneurs should do everything they can to improve their odds. Many are turning to a strategy known at the Lean Startup.
Here are three frequently cited obstacles to startup survival and how the Lean Startup strategy seeks to overcome them.
These obstacles also apply to many mature companies. The Lean Startup strategy is the answer for both new and existing organizations, according to its proponents.
Yet others disagree. Some of them strongly disagree.
To help you decide whether a Lean Startup is right for you, let’s take a look at this seemingly logical concept and the reasons why some regard it as fool’s gold.
Lean Startup Philosophy
The Lean Startup strategy is actually pretty simple. It encourages the entrepreneur to get a minimum viable product (MVP) into customers’ hands as soon as possible, then test it, learn from it, and refine it into a finished product. Doing this allows the business to learn what customers want and to focus its development efforts accordingly. This is known as the build-measure-learn feedback loop.
Here’s how the Lean Startup aims to overcome the obstacles mentioned above.
Obstacle 1: Incomplete Business Plan
A recent article, “Why the Lean Start-Up Changes Everything,” by Steve Blank, appeared in the Harvard Business Review. (Blank is an associate professor at Stanford University; Eric Reis is one of his former students.) It discusses the “fallacy of the perfect business plan.” Blank likens the futility of trying to accurately predict a five-year business forecast to a comment Mike Tyson once made about his opponents’ prefight strategies: “Everybody has a plan until they get punched in the mouth.”
According to Blank, most businesses don’t survive their first contact with customers. So while existing companies execute a business model, startups look for one. The Lean Startup is “designed to search for a repeatable and scalable business model.”
The Lean Startup philosophy is more interested in getting a product into the hands of potential customers quickly than spending a lot of time on hypothetical business forecasting.
Obstacle 2: Untested Market Demand for the Company’s Product
Developing a finished product is often a time-consuming and capital-intensive undertaking. Worst of all, a traditional approach may produce an untested product that misses the mark and results in failure of the enterprise. The Lean Startup works around this issue through the MVP and a concept known as the “pivot.”
The MVP, or minimum viable product, is a product that has just enough features to be deployed for testing to early adopters. This is a group of prospective customers who are savvy enough to understand the company’s vision through an early prototype model, and willing to offer feedback. The idea is for the company to avoid, as early as possible, building a product that customers don’t want. Developing an MVP is the first step in the build-measure-learn feedback loop.
In a pivot, a business hypothesis about the product, business model, or engine of growth is tested. If it fails, then a corrective course of action is taken.
Creating a product in this manner becomes an iterative process between the business and its prospective customers.
Obstacle No. 3: Lack of Adequate Funding
It’s no secret that most startups fail due to under-capitalization. But is it just a capitalization problem? Or is the real issue that all too frequently, startup capital is depleted during the development of an end product that customers simply don’t want.
The Lean Startup approach is intentionally geared to reduce the need for heavy upfront capital investment. This is done by quickly (a) building a basic product (the MVP) for launch, (b) testing the market’s acceptance of it, and then (c) iterating the product or service through innovation and customer feedback.
Whether a start-up or an existing business, Blank is adamant about one thing: companies have to understand what their customers want. “It’s easier to avoid failure if you build a customer-centric business. You need to get your hands dirty.”
Counterpoint: Drawbacks to the Lean Startup
It certainly wouldn’t be fair to discuss all of the wonderful things about the Lean Startup without mentioning that the concept also has detractors. One of these is entrepreneur/author Jon Burgstone. In an article he wrote for Inc Magazine, Burgstone discusses what he sees as a major flaw in the concept of going to market with a minimum viable product.
While he agrees with the concept of customer feedback, Burgstone says that taking a “lackluster product” to the market is, well, “insane.”
He points to Facebook, Google and Apple’s iPod (more thoughts on this later) as examples of products that weren’t the first to hit the market in their respective niche. Rather, they took similar, “lackluster” products and made them viable.
“Perhaps smart entrepreneurs should watch the efforts of lean entrepreneurs and then pull an Apple, Google or Facebook on them,” Burgstone says.
Unfortunately, Finneran’s software startup took an opening round, Iron Mike-style punch in the nose. The first customer demo was a disaster. “Though charmingly polite, our clients were humiliated by the demo and too irritated to ‘iterate’ our minimum viable product with us.”
There were lessons learned. Finneran calls them “unlean” lessons.
The ideas of using “early adopters” and “earlyvangelists” may be unrealistic. “For every customer or prospect we talked with, the risks of innovation (failure and losing their job) far outweigh the hypothetical benefits we proclaimed. Customers just want reasonably priced software that does its job, not help you launch your Lean Startup adventure.”
Finneran offers four “unlean lessons” for anyone considering a software startup:
1.Mediocre execution will kill your startup.
2.Forget MVP—narrow the scope until you can develop an extraordinary product.
3.Fund your marketing budget sufficiently.
4.Beware of any “shrink-wrapped utopia offered by the entrepreneurial dream industry.”
So, What Is the Answer to the Lean Startup Question?
Is the Lean Startup a viable, valuable alternative to the entrepreneur? Or is it just another idea offering great promise but lacking real rewards?
Before I offer my $.02, I will tell you that I’ve done a number of business startups in my life. All of them were before I knew anything about the concept of a Lean Startup. So whatever knowledge I have is purely observational, not experiential. But to me, the concept makes a terrific amount of sense.
I’ll also tell you that it’s a lot easier to be a critic than an innovator. So I applaud Steve Blank and Eric Reis for their innovations.
As to the two dissenting opinions offered, I’ll give John Finneran his due. At least he attempted to follow the Lean Startup formula. It clearly didn’t work for him. Was this the fault of the method or the practitioner? I can’t say, but I think his “unlean lessons” are worthy of entrepreneurial heed.
Both Finneran and Jon Burgstone throw MVP, categorically, under the bus. In doing so, I think they’ve both gone too far. I believe they’ve misinterpreted what an MVP is supposed to be.
Burgstone calls the MVP a “lackluster product.” Have I misread or misunderstood what I’ve learned about the Lean Startup philosophy? I don’t think so. To me, there’s a huge difference between a “minimum viable” and a “lackluster” product.
For example, Burgstone cites the iPod as an example of a new device that replaced a lackluster product to dominate its market niche. This is true. But he overlooks an important historical detail. The iPod started out as an MVP—prototyped, tested, and iterated based on results of feedback. One has to wonder, had Apple focused all of its attention on developing a final product, would it have been the awesome iPod we know today? Or might it have been something… dare I say… lackluster?
The key point is this: Minimum Viable Product and Lackluster Product are not synonymous. If your product is a piece of crap, by definition, it’s not viable. An MVP should be an awesome product—with the minimum feature set needed to make it worthy of testing. No more, no less.
To throw out the entire Lean Startup concept over a misinterpretation of what constitutes an MVP is, to me, a potentially huge mistake.
So, is a Lean Startup right for you? As with anything, much will be determined by the practitioner. Producing a shoddy product and hoping market testing will make it viable won’t work. Insufficiently funding your startup with enough capital will, most likely, be fatal.
You have to be informed, prepared, and capitalized.
So go ahead and be Lean. But be smart, too.
And build something awesome.
According to research done by Shikhar Ghosh, a senior lecturer at Harvard Business School, based on a study of more than 2,000 companies that received venture funding from 2004 to 2010.
First off, let’s get one thing out in the open right up front. I am not an Agile or Lean expert. And I realize the origins and uses of Kanban boards are primarily related to process-oriented industries. However, I have found Kanban boards to be extraordinarily helpful for a non-traditional project manager like me.
If you’re a non-traditional project management professional, here are four reasons why you should use Kanban boards.
1. Kanban boards keep project tasks organized in a simple manner.
I have tried using Gantt charts and other project charts in the past to keep my project tasks organized. What I realized is that those tools are for projects with layers of complexity that mine don’t have. I simply need a project chart that divides my work into three basic areas:
what I am working on,
what I’ve completed, and
what I have yet to start.
Kanban boards do exactly that. I don’t waste time setting project milestones or creating and adjusting task dependencies—even if there are some. All I need is a high-level view of task status.
2. Kanban boards are easy to understand.
One of the best reasons to use Kanban boards for task management is that anyone can glance at the Kanban board and quickly understand where everything stands. Other project charts, in my opinion, can be overwhelming to read. Often, I have no idea what I’m looking at. Kanban boards quickly and easily communicate the current status of tasks—without information overload.
3. Kanban boards focus on current status.
Okay, so I ended the last paragraph with a buzz kill by already stating this. But it garners a little more depth than mere assertion. For non-traditional project managers like me, this is important. Why? Because I’m a bottom-line type of guy.
I already understand that projects and tasks have team member responsibilities, dependencies, milestones, and a whole array of layers that are essentially rolled up in the Kanban board. But ultimately, all I want to know is: where does this project (or task) currently stand?
Here’s an example. During a meeting, I often need to communicate the details of a project or specific task. I find that a simple Kanban board works much more easily than a Gantt chart. The Kanban board allows a simple walk-through without a lot of distracting details. Any details can be delivered orally—if they require discussion at all. This brings me to the final reason why you should use Kanban boards.
4. Kanban boards eliminate long meeting discussions.
Meetings can be a huge time suck—for you, for those you manage, and for those who manage you. Robust discussions can many times be very helpful for brainstorming ideas and other strategic purposes. But project status meeting discussions can very easily become long and laborious. Kanban boards are perfect for hitting the high level points of projects and task status. A non-traditional project manager like me can cover a lot of ground in a short amount of time keeping people up-to-date. If a specific detailed discussion is needed on any point, we can wrap it up and quickly move on down the line to the other cards on my Kanban board.
Is Lean thinking an all-or-nothing proposition, or are there acceptable shades of gray?
There seems to be a pretty hard-core group of Lean advocates out there who divide the application of Lean into two segments: “Good Lean” and “Bad Lean.” In this world view, things are black or white: Lean thinking is either practiced correctly or incorrectly. There are no shades of gray.
But is that true? I find it hard to comprehend. To me, the very nature of Lean methodology is not an all-or-nothing proposition. Lean thinking, like almost everything else, is ever-evolving.
At the core of Lean philosophy is the principle of continuous improvement. I can imagine that Darwin himself might say the Lean method emulates natural selection. Species either adapt, through continuous “improvement,” or they die.
But just as species don’t evolve in a single step, neither do organizations. So it seems unreasonable to expect that a company choosing to adopt Lean methods will go from “No Lean” to “Good Lean” in one fell swoop. Adapting to a Lean culture, and implementing all of the processes that would constitute “Good Lean,” should be allowed to evolve—even if it means slogging through a gray primordial abyss for awhile—right?
I would say yes, as long as everyone stays focused on the big picture—maximizing customer value while minimizing waste.
Here at SmartDraw we embrace Lean thinking, but admittedly operate in the gray area. Many of us wouldn’t know a Kaizen burst if we backed into one in our Corolla. But our particular shade of gray Lean is helping us improve in those big picture areas, just as exercise improves your health even if the technique isn’t perfect. For example, Lean thinking helped us to develop Automated Value Stream Maps—because we see no reason for taking eight steps to accomplish something that can be done in five. That’s taking a Lean approach to a Lean tool. Perhaps we accomplished it while practicing what purists might label “Bad Lean,” but the result was a good thing. It produced a better tool for our customers (most of whom, I’m sure, practice only the very best Lean).
Are there acceptable shades of gray within the journey from “No Lean” to Good Lean,” or is everything that falls within that area simply, “Bad Lean?” I contend that as long as the organization is committed to the highest principles of Lean—continuous improvement focused on the best possible customer experience—then this is “Good Lean.” It’s just performed in evolving shades of gray.