IBT is on a journey to become a “Lean Enterprise.” This article outlines the reasons and the challenges faced by IBT and other organizations that are turning to Lean techniques to better satisfy customer needs and improve their competitive position.
Today’s competitive environment is causing many companies to pursue Lean. The trend to Lean has been driven by the success of Toyota and its Toyota Production System. Currently, thousands of US companies have realized the benefits of implementing Lean concepts.
Many have realized that Lean’s benefits are not limited solely to manufacturing companies. Lean is being applied across many industries and in many businesses to streamline operations and processes. As competition becomes increasingly fierce and operational costs rise, many businesses believe transformation is necessary in order to survive. A Lean Enterprise strives to improve all functions, from the front office to the shipping dock and to provide improved returns to company stakeholders.
Becoming a Lean Enterprise requires becoming comfortable with change and pursuing excellence in everything. The organization must be willing to change the ways it operates and challenge the ways of the past. Change can be traumatic, but is necessary for the organization to improve. Without changing, an organization only gets the same results as in the past. Their improvement initiatives must be focused on what is demanded by the customer.
IBT needs to provide a quality product at a competitive price – and deliver it on time. At the same time, IBT needs to be able to fund improvement initiatives and meaningful marketing programs that will help grow our business. Initiatives should be focused on adding value to our customer, while eliminating waste within our organization.
A value added process refers to any activity a customer is willing to pay for during the placing of an order and receipt of product. Waste is any activity or cost the customer is not willing to pay for. This means it is necessary to have a continuous and relentless effort toward eliminating waste within the organization. The eight types of waste include: inventory, over-processing, transportation, excess motion, defects/rework, over-production, waiting and underutilized people.
The path to becoming a Lean Enterprise starts with an idea of the results the organization is expecting. In addition, we also need to measure our progress, so we know if we are moving in the right direction.
In general terms, we should expect the company to be profitable and provide a meaningful return to our stakeholders. We should be customer focused and work to exceed customer expectations. We want to be concerned about the welfare of our employees. We want the business to grow and prosper.
A set of metrics defines the goals. These are aggressive goals. We must be equally aggressive to applying Lean tools in reaching them. Typical goals might include the following:
- 10 to 20% improvement in inventory turns
- 10% improvement of measures of safety, year over year
- 10% reduction in costs through improved productivity
- 25% improvement in total order throughput time
- 99% or better service levels, internally and externally
We need to develop new mindsets to attain our goals and be relentless in pursuing our improvements:
- Allow change to happen and eliminate barriers quickly.
- Don’t accept “can’t” when pursuing a “waste free” state, where we consistently operate efficiently and productively.
- Utilize “try storming” and accept some wrong turns along the way.
- Apply value stream mapping to determine where opportunities lie and Kaizen Events to effectively facilitate the changes.
- Utilize Six Sigma techniques when problems become complex and the solutions become less obvious.
- Empower people to make changes and encourage working in teams to achieve better results.
- Use teams to resolve problems, which will result in “buy in” from those involved and thus ensuring support from those implementing the improvements.
Changing an organizational culture into a Lean Enterprise is difficult and challenging. The change of culture and old habits takes time and must be followed up relentlessly to ensure improvements are sustained. Implementations do not always go smoothly. Not all employees will be supportive of the changes.
Improvement initiatives do not always achieve the expected results. Financial and logistical barriers will sometimes prevent an organization from making desired changes or from changing to the extent desired. We need to make sure that we don’t entirely focus too closely on any one initiative, but foucs, instead, on the overall continuous improvement of the organization.
We need to recognize and encourage those who embrace the positive changes, while at the same time, we need to communicate to all employees that participation is not optional.
The Industrial Distribution marketplace continues to be increasingly competitive. Lean techniques provide our company with the effective tools to lead. IBT’s current initiative to become a Lean Enterprise is part of our ongoing pursuit of excellence and our drive to exceed customer expectations. Achieving positive results will allow us to retain our place as a driving force among Industrial Distributors.
About the author:
Bruce Loyd is Manager of Engineering at IBT, with a department responsible for the design, engineering, construction and installation of turn-key material handling/warehousing systems, motion control systems and associated system controls.
Bruce has a more than twenty year background and his career has included project engineering, engineering management and general operations management. His perspective ranges from the factory floor to the executive suite.
Bruce was introduced to Lean Manufacturing in 1998. He was responsible for implementing a Lean Manufacturing program for a major manufacturer of office furniture. He has also had Lean training at the University of Alabama in Huntsville.
Bruce’s engineering degree is from Kansas State University and his Masters in Business Management from Baker University. In previous positions, he worked in Wichita and Lawrence, Kansas, St. Joseph and Kansas City, Missouri and Alabama. He grew up in Johnson County, Kansas.