The following column comes through special arrangement with the Lean Enterprise Institute. It is an article written by Lean expert Art Byrne, Retired CEO, The Wiremold Company and author of "The Lean Turnaround" and "The Lean Turnaround Action Guide."
Since I started my lean journey in January of 1982 as a general manager at the General Electric Company, I have heard about every excuse companies use to justify not practicing lean. Managers claim that lean doesn’t apply because they don’t make cars, or because they are a service company or a custom products company, or — one of my favorites — “We tried that ten years ago, and it didn’t work.”
News flash: lean can work in every company. And yet most efforts fail because people fear change that they don’t understand — and very few people don’t understand how lean works. CEOs who learn about the potential for tremendous gains rarely pursue a lean transformation in earnest. They rarely take the time to truly understand how lean works. If they try anything, they will skim the cream off the top and treat lean as nothing more than a cost reduction program.
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So, of course, lean initiatives usually “fail”: This superficial, incremental, and short-term approach captures none of the enduring promises of lean, which, done right, brings about a superior culture, market share gains, lower costs, better quality, and tremendous improvements in enterprise value.
How Lean Works
How? Let’s start by defining what companies do, regardless of industry:
They bring together a group of people
to run a bunch of processes
that deliver value to a set of customers.
Becoming lean means learning to deliver more value to your customers by removing waste from your processes, which, in turn, results in shorter lead times, better quality, lower costs, and quicker responsiveness to customer needs. You can make this happen only by training and then tapping all your people to see and remove the waste they find in their work processes. In this way, lean is really “all about people.”
These universal principles apply to any company.
Applying Lean Fundamentals
So how do these principles apply to your company? Well, let’s examine this question through the lens of the lean fundamentals that I discussed earlier this year — and which apply to any company. Specifically, they are:
• Work To Takt Time
• One-Piece Flow
• Standard Work
• Pull System
When we combine a simple definition of a company with the lean fundamentals, it is impossible to think that any company is “different” and not a lean turnaround candidate.
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Adapting Lean Fundamentals
That doesn’t mean that the focus of lean efforts will be the same in every company. For example, in large “process” type companies where the equipment is large and batch in nature, the idea of “sell-one-make-one” doesn’t make much sense. The lean thrust in such a company would be to make smaller and smaller batches, allowing it to be more responsive to the customer without requiring massive excess inventory. Here the focus would be on setup reduction, which I know from experience is great opportunity that lean enables you to capitalize on. I have been personally involved in reducing a rolling mill setup from 14 hours to 6 minutes, a 750-ton injection molding machine from 5 hours to 5 minutes, and a 150-ton punch press from 3 hours and 10 minutes to 1 minute.
 The focus for service companies might be on value-stream mapping and creating one-piece flow. For example, I once helped a life insurance company reduce the time it took to respond to a request for insurance by 63% while increasing the number of lives an underwriter could underwrite per week by 487%.
At hospitals, I have seen how applying simple lean fundamentals results in vast improvements in throughput and quality in areas like the emergency room, open heart surgery discharge procedures, heart cauterizations, and even the laundry room.
For example, I was once asked to do a kaizen event to solve the problem of what they presented as “mental patients in the emergency room.” My first reaction, of course, was, “You want to do what?” But then I realized that the emergency room wasn’t different from any other type of business, so we should be able to apply the lean fundamentals and solve this by focusing on the people and processes. So, we started by asking, “What is the takt time?” Then, we investigated the rate that people with mental a health condition entered the emergency room. Doing so led to the question of “What is the flow?” And because there wasn’t any in place, we were forced to create flow, which pushed us to develop standardized work, as there was none of that either. Once we established these practices, we could create a pull system to move the patients through the process. By the end of the week, we had gone from “you want to do what?” to an excellent working system by simply treating the ER like any company and applying the lean fundamentals.
You might apply these same fundamentals differently according to your situation. Distributors who run warehouses, for example, might focus on applying lean principles to how orders are picked and shipped. As chairman of a company that made various filing products, I pushed them to apply lean fundamentals to change how they picked orders in one of their warehouses. As a result, we shifted from the traditional way of picking by order to picking by size and time. As a result, we:
• Reduced headcount by 42%
• Freed up 35,000 sq ft. of space, saving $180,000 per year in rent
• Increased the number of picks-per-10-feet-of-rack by 367%
• Reduced shipping errors by 90%
Consistently pursuing these lean fundamentals pays off across the board. For example, manufacturing companies with a lot of assembly work focusing on one-piece-flow and standardized work can:
• Cut lead time dramatically (from weeks to days)
• Free up half their floor space
• Generate double-digit annual productivity gains
• Achieve a 10x quality improvement
In my experience, the (so-called) “custom” manufacturer might have the most to gain — despite what most of them currently believe. They are, in fact, not much different in how they work from a company that manufactures standard products. The main difference is they have much longer lead times. But applying the lean fundamentals will cut their lead times from months to days and deliver a massive competitive advantage.
While lean applies to everyone, the difference is that some are willing to take the lean leap while others are not. This conviction and willingness to embark on this journey have nothing to do with the type of business you lead. Getting started merely requires courage and discipline.
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