SATURDAY, AUGUST 18, 2018
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Methodology Lean Why Lean Manufacturing Fails

Why Lean Manufacturing Fails

During both prosperous and difficult times, successful businesses naturally look for new ways to improve performance. However, in recent years, as the world economy suffered through one of the worst recessions in history, many companies turned in droves to Lean and other variations of continuous improvement programs to rescue their sagging businesses. But, did they really learn during this process?

Despite the enormous popularity of Lean, the track record for successful implementation of the methodology is spotty at best. Some recent studies say that failure rates for Lean programs range between 50 percent and 95 percent. To analyze this level of performance from a Lean, problem-solving perspective, continuous improvement experts should be asking: Why do so many companies fail to achieve Lean success?

While the causes are numerous and extensive, I will focus on one of the most significant reasons: failure to understand the theories and concepts of Lean and their relationship to the entire business.

What Is In a Name?

First of all, there is the name itself. The commonly used term Lean manufacturing perhaps could be the worst-coined phrase for this type of continuous improvement methodology. It automatically emphasizes two things that conjure limited expectations of the functionality of this business methodology: Lean and manufacturing.

The dictionary definition of the word lean (lacking in richness, fullness, quantity; poor) brings up unfortunate connotations. When mentioned in business circles, Lean is often associated with trimming down, reducing or (most notably during the Great Recession) lack of sales or work. Thus, when the word Lean is spoken, most people immediately think of doing more work with fewer people. Because no one prefers unemployment to a stable job, figurative walls are automatically erected to defend against the inevitable layoff.

Companies considering Lean also need to understand that manufacturing is a woefully inaccurate term to describe the full uses of Lean concepts. Lean is a business methodology, not simply a manufacturing tool. It requires complete and total commitment from the highest executive levels and must cascade down to all departments and throughout all levels of business.

Lean does involve manufacturing, of course, but it also directly affects sales, customer service, human resources, research and design, finance, administration, purchasing, scheduling and building maintenance. Failure to understand how improvements (or lack thereof) made in one area will affect another can result in transformation failure. If your manufacturing team improves processing time from five days to one day, but your “pre-production” team still requires 25 days to get the order to manufacturing, you haven’t gained much on the competition.

‘Flavor of the Month’ Resistance

Given that so many companies have misused the Lean approach, resistance is to be expected. This push-back also creates barriers to the change that needs to take place for an effective Lean transformation. Meanwhile, the understandably skeptical staff considers the methodology to be just another flavor-of-the- month that will eventually be abandoned.

But how does a Lean transformation become another flavor of the month? Businesses in all sectors are jumping on Lean. Some truly do the research and understand what they are getting into – usually realizing it is far more than they had foreseen. However, far too many believe that simply applying the tools (5S, Kaizen, value stream mapping and so on) will get them on the road to quick success. They do not take the time to learn of the theories and concepts needed to sustain the transformation. They do not review those theories and concepts thoroughly and align the business to the methodology.

Here lies an additional level of cause. As flavor-of-the-month management is so readily displayed in business today, the faith required for a Lean transformation often does not exist. Too many businesses initiate change, only to fall away when they cannot overcome this barrier.

Arguably, there are several solutions to this lack of faith in Lean. For instance, businesses committing to Lean transformation should not use the time benefits gained from Lean as an excuse to pile more work onto their employees. Simply adding more work to the pile only lowers productivity, morale, and both the physical and mental health of the staff. Taking the time to work with the employee, learning to identify necessary tasks, removing unnecessary work and discovering more available time to do more valuable work (without increasing the overall workload) will result in better understanding between employee and manager, more trust, communication, and overall employee performance.

Nor can a business use Lean as a tool for headcount reduction. Certainly, layoffs made headlines across the globe during the Great Recession, including some companies touting Lean. Many companies used the downturn in business as the excuse for layoffs, claiming they were not Lean-related, but that is like claiming it is not your fault the house burned down while holding the empty gas can and the matches.

Total Commitment

The single most significant key to a Lean implementation is that all parts of the business must make the transformation through total commitment to Lean theories, concepts and tools. For example, if your finance team is still using standard cost accounting, you will not see the financial gain of implementing Lean. If finance has no desire to change, the executive level must step in and drive change.

When Lean is implemented to reduce staff sizes or add work without eliminating waste, or is focused too heavily on manufacturing, the transformation is bound to fail. Some improvements will be made, but they will be neither sustainable nor, more importantly, continuously improved upon.

Newtonian laws state that every action has an equal and opposite reaction – it is a simple theory. The difficulty lies in understanding the reaction, preparing for the reaction and working with the reaction. Failure to understand the relationship that a Lean transformation has with the entire business will cause an unexpected, and unwanted, result.

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Comments

Nosybear

Nice article, Mike. I’d add the second worst naming in process improvement history is six-sigma. It takes a long time and a high level of mastery to understand that the tools are useful only as methods to arrive at solutions. The disservice we do to our trainees is to emphasize them in training without teaching the models they support. When I’m asked what I do for a living – I’m a Six-Sigma Black Belt – I say I apply the scientific method to business problems. Lean is no different or put another way, the difference between PDCA and DMAIC is trivial – both are methodologies. The mental model is the scientific method. Our jobs are to apply the mental model to business processes. We need to emphasize this model of thought over the tools that all of us learn and some believe to be adequate to change their respective businesses. Your article points this out nicely.

Reply
John nicholas

You say “Some recent studies say that failure rates for Lean programs range between 50 percent and 95 percent.” Please list the studies. I haven’t found a single reputable study to substantiate the claim that lean programs commonly fail.

Reply
Eric

I am looking for them as well. Please let me know if you find any.

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Jeremy Old

I have not seen any statistics but sympathize with the comment of 50% plus failure rate. I have often seen lean being applied ad hoc at a lower level, often starting with a small team doing the 5 ‘S’ program and so on or doing a process mapping exercise. What happens then is that although there are some definite localized improvements, as time goes on these are eroded by changes in the structure, personnel, and processes and of course changes in management commitment. Lean can only work with complete commitment from the top and this means more than inspiring words being spouted from the CEO. Implementing lean takes a change in management thinking from top down command style and control to a collaborative problem-solving style. And this means losing a lot of ingrained habits that work against lean principles. Personally I find introducing a team planning initiative and or ‘Gemba’ is probably a key way to help the senior management adapt to a more collaborative style. Once they have absorbed lean principles for themselves it becomes more practical to implement lean initiatives across the organization.

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Jehanzeb

Could you please post references in order to support your statement regarding 50-95 percent Lean initiative failiure? The intention is not to criticise but to learn. Many thanks.

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philip Edwards

I like this article and, weather its correct or not, always look for why something wont work first. The reason for this is not to be negative but more in practical terms.
I too would be interested in some references to the high failure rate and if the obvious mistakes were corrected and if the resultant corrections had any impact

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Jeremy Old

I like this article, as it is refreshing to find an expert looking at the problem as a starting point to finding a solution. (Standard lean practice to fearlessly learn from mistakes). I also agree that lean has a high failure rate, although don’t have any statistics. As an example, I am to present a lean proposal at the moment to a firm that declares it wants ‘lean’ but I suspect that they want the tools but are not yet committed to changing the way they think, especially at senior level. If you want lean you have to embrace the collaborative nature of lean practice and accept the need to address all problems in the organization with lean methodology. Many companies are not prepared to do this or perhaps are not aware that they have to, hence the high failure rate of lean. Staring the journey right by getting the top people on board is often not an option for a lot of lean practitioners and so they do the best they can under the circumstances. I am sure they get some good results in the short term, but the overall result will be disappointing in the long-term.

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willami batista

Good…In fact all this methodology are ways to show for people how to think in one scientific mode…Remember that all of this start when the ASIA start manufacturing thinks…they try to produce the same US and EU products but the quality was not good and they start to study ways to be better…..Todays we had the same problems in the western…many people without good performance need to get one place in the job market and we need ways to make this people make something good.

Reply
Chris

“For instance, businesses committing to Lean transformation should not use the time benefits gained from Lean as an excuse to pile more work onto their employees. Simply adding more work to the pile only lowers productivity, morale, and both the physical and mental health of the staff. Taking the time to work with the employee, learning to identify necessary tasks, removing unnecessary work and discovering more available time to do more valuable work (without increasing the overall workload) will result in better understanding between employee and manager, more trust, communication, and overall employee performance.

Nor can a business use Lean as a tool for headcount reduction. Certainly, layoffs made headlines across the globe during the Great Recession, including some companies touting Lean. Many companies used the downturn in business as the excuse for layoffs, claiming they were not Lean-related, but that is like claiming it is not your fault the house burned down while holding the empty gas can and the matches.”

As in my manufacturing experiences over the last 20+ years, the big problem with lean is GREED. The tools are too often implemented to reduce laborers and add more workload to those who remain and to line the pockets of the executives with the the profits\savings.

Reply
Rakesh Kumar

Hi Mike,

A Very good article, I like the way where you tried to explain that the method isn’t the problem but mis-understanding the method is big problem. I agree with you that these days the corporate world or be it the manufacturing industries are failing because they fail to understand the business methods and they tend to fail to achieve their goals.
When they see failure the famous game which we all know “Blame game” starts, the method wasn’t good and blah blah blah!!!
We are suppose to understand the importance of our business and at the same time people involved in doing the business..

Reply

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