Lean Insider

The Toyota "Crisis" -- Is it the Problem or the Response?

2010-02-08T10:56:00.006-05:00

I’m sure all lean practitioners and advocates are quite dismayed and disappointed with the continual reports of Toyota’s problems with their accelerators and braking systems emanating from all the news outlets. Of course, unfortunately, the current situation has also provided endless fodder for sarcastic sniping throughout the blogosphere. Although I think these current woes in no way repudiate Toyota’s noted production philosophy and culture or its massive accomplishments during the past 50 years, the credibility issues cannot be ignored. When reading or watching the news coverage, one realizes that the central topics -- Toyota’s equipment failures and its supply-chain process – have been overtaken by the debate of whether Toyota’s response to the crisis has been clear, timely, and at least adequate.

I’d very much like to hear the opinions of this blog’s audience – Are you satisfied or dissatisfied with Toyota’s response to this crisis? How has this crisis been affecting Toyota’s reputation? Do you think many business leaders and pundits will co-opt this crisis as an opportunity to wrongly declare that ultimately lean methodologies are critically flawed? Most importantly, what do you think Toyota can learn from its own lauded production system during this time?

Quick Wins on the Green Journey

2010-02-05T09:26:00.010-05:00

The third and final part of my discussion with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win) focused on the areas of any organization where quick improvements could be accomplished. Brett has some important suggestions here:

"When starting out on the green journey, one does not have to dive in head first. There are many initiatives that can be undertaken to realize significant cost savings without tying up large amounts of resources. Not only will these initiatives realize cost savings, they will go a long way in gaining the buy-in needed to develop a greener culture.

Here are a few quick wins to get started with:

1. Air Compressors -- Identifying and repairing leaks in air compressor lines can result in hundreds even thousands of dollars in annual energy savings. In addition, many times the PSI level is far too high for what is actually needed. By simply lowering the PSI level a few notches, one will see immediate savings.

2. Peak Shaving -- A close examination of one’s electric bill will reveal a hidden peak demand charge. This charge is based on the one-time largest draw of energy over a 15-minute window. For example, turning on all the lights, motors, equipment, computers and so on at the same time will draw a large amount of energy for a short period of time. With a peak demand charge anywhere from $5+ per kW, one can save a great deal of money by simply staggering start ups. Often times the electricity provider will help with this project at no cost.

3. Computers -- Although the energy consumption of a single computer is relatively low, adding up the energy consumption from all computers represents a significant cost. Many times computers are left on overnight so that updates and maintenance tasks can be performed. By simply scheduling these activities to occur on a specific night, computers can be shut off at the end of each day to realize cost savings.

4. Water Coolers -- It is cheaper to use water coolers that treat tap water than to use water coolers that are fed from a bottle.

5. Hot-Water Tanks and Pipes -- Uninsulated hot-water pipes and tanks result in large amounts of heat loss requiring greater amounts of energy to keep water at desired temperatures. By insulating these tanks and pipes, heat loss is minimized resulting in lower energy consumption and ultimately, cost savings.

6. Side Skirts -- For transport and logistics companies or those with fleets of trucks, there is a simple way to dramatically increase fuel consumption, with very little investment. Side skirts for tractor trailers greatly reduce drag and can increase fuel savings by as much as 15%.

These are just a few of the many quick wins that can be had by putting on the green lens. Harvesting this low hanging fruit is an effective way to start realizing cost savings and build momentum for a more comprehensive green transformation. The key is to have a process or a 'road map' to follow."

A Lean and Green Benchmark

2010-02-03T10:14:00.008-05:00

To continue our discussion of sustainability and green manufacturing, I present part two of my “digital dialogue” with Brett Wills (author of Green Intentions: Creating a Green Value Stream to Compete and Win). In this post, he presents a great case study in “green thinking”:

"In business for more than 30 years, Interface Inc. is a publicly traded company with 2007 annual revenues of $1.08 Billion. They are headquartered in Atlanta, GA and have offices in more than 100 countries.

Interface is arguably best known in the green world for being a leader in industrial ecology by closing the loop on carpeting. Their ability to take back their carpets and make new carpet out of it with relatively minimal environmental impact in the process has shown that green thinking is not only possible it is practical and just plain good business.

Under the leadership of founder and chairman Ray Anderson along with the support of key change agents such as senior engineer Dave Gustashaw, Interface has a vision of being the world’s first environmentally restorative company by 2020. That’s right, environmentally restorative, not environmentally friendlier or even neutral but to actually have a positive impact on the environment.

Interface looks at waste not only form the customer’s perception of value but also extend that thinking to include the environments perception of value. Although they admit they still have a long way to go, their results serve as inspiration for what can be achieved with a commitment to banish all forms of waste. Have a look at the remarkable stats of their 15-year 'lean and green' journey, you will be amazed.

Cumulative avoided costs from waste elimination – $372,000,000
Total waste sent to landfills from manufacturing – down 66%
Total energy use – down 45%
Total renewable energy use – 27%
Percent renewable or bio-based materials in products – 25%
Net absolute greenhouse gas emissions – down 82%
Water – down 75% modular, 45% broadloom
Post consumer/industrial diversion from landfill – 133,000,000 lbs.
Safety – 60% reduction in recordable accidents.

Still think that going green is a financial drag and a “nice to do” in good times?

The trick to achieving results with green is to have a process and road map to follow. The lean and green process provides this map.

* Information extracted from the an article appearing in the Association for Manufacturing Excellence’s Target Magazine (Volume 24, Issue Number 5). The article was written by Dave Gustashaw and Dr. Robert Hall.

Green… Just Plain Smart Business

2010-02-01T09:52:00.008-05:00

My recent posts on "lean and green" and sustainability have generated some emails from practitioners working in this area. Brett Wills, author of Green Intentions: Creating a Green Value Stream to Compete and Win, sent me some fairly detailed insights that I'd like to share here in three successive blog posts. Here is part one:

"Attitudes of customers, employees, and stakeholders are changing. Indicators are constantly showing they are increasingly attracted to those companies who respect the environment and people and are committed to improving sustainable processes. For some, however, there is an illusion that going green is a financial drag. This thinking inhibits the change that is necessary to compete and win in today’s economy. Fortunately, this thinking is rapidly changing as more and more companies continually post results to the bottom line.

Companies like Coca Cola, Kraft, Heinz, Toyota, Interface and HP are showing how going green cuts costs, grows market share, strengthens brands, and increases competitiveness. These companies are clearly illustrating that going green is no longer a 'nice to do' program in good times but a key ingredient to succeeding in the new, reset economy.

The rub is that going green can be difficult if one does not have the tools, techniques, and thinking required for a successful green transformation. The good news is that all the ingredients needed for a successful and profitable green transformation are readily available. In addition, one can quickly learn to apply these tools to immediately realize cost savings and other business benefits with little to no investment and quick implementation.

One such tool is the lean and green process that allows one to quickly uncover the often hidden and costly green wastes laying in an organization. Committing a relatively small amount of time to learning and applying this process will allow one to immediately begin harvesting the low-hanging fruit. These quick wins enable one to get the buy-in and support needed for continuous green improvement.

Whichever way one looks at it, competing and winning in today’s new economy requires a strategy that includes green."

Will Environmental Sustainability Drive Social Sustainability?

2010-01-29T09:46:00.006-05:00

Although environmental sustainability has entered many strategic corporate business plans -- due to either the pressures to comply with stringent legislation or to satisfy the demands of the growing numbers of ecologically minded consumers and investors -- one must wonder if social sustainability will be part of the package. It appears that corporations are finally publicly recognizing their failings in this area. This article commenting on Nike’s recently published fiscal 2007 to 2009 Corporate Responsibility report raised some interesting points.

Many of Nike’s environmental goals seem decidedly lean, such as “to achieve zero waste in the supply chain and have products and materials that can be continuously reused – no pre- or post-consumer waste” and produce products “using the fewest possible materials and designed for easy disassembly, while allowing them to be recycled into new product or safely returned to nature at the end of their life.” But, social sustainability might be the larger issue for companies such as these that have had controversial track records during the past 20 years in regard to the exploitation of unsafe working conditions, employee wages, and child labor most notably in factories in Southeast Asia.

One of the original guiding principles of the Toyota Production System was “respect for humanity,” and Nike appears to be openly addressing the employee problems within the more than 600 contract factories the company uses. Can large corporations that outsource manufacturing to so many different factories – in various developing countries with different laws and reporting standards – ever really manage and influence the systemic mindset and culture throughout these plants? Do you think that corporations whose supply chain is composed of factories working on a strictly defined contract basis (that also produce products for many other organizations as well as competitors) can ever fully partner with them in the Toyota tradition?

Is Lean Green By Any Other Name?

2010-01-27T10:13:00.005-05:00

The concept of sustainability has considerably proliferated during the past few years, and many organizations are recognizing its importance. Techniques and practices that consider environmental impact and minimize the use of energy do not only benefit society, but promote a more effective and successful business. A lean initiative, and the culture it fosters, perfectly complements and supports sustainable practices. Lean’s primary function is to reduce waste, and lean’s power to accurately identify and measure environmental wastes will only result long-term improvements and profits.

The popular terms that have emerged to identify this approach that incorporates sustainability and lean are “lean and green” and “green manufacturing.” When I recently received this announcement for an upcoming lean workshop (sponsored by Sherwin-Williams) focusing on environmental concerns, I was introduced to a new term: “Eco-Lean.” What other terms have you seen to describe these new initiatives? Which one do you think is the most accurate? Whatever term emerges as the standard, the goals and results remain the same, and a provocative thought emerges: capitalism and environmentalism can actually enhance each other.

A Safe Path to Lean

2010-01-25T09:22:00.004-05:00

As most lean advocates know, successful improvement initiatives cannot be driven by legislation or regulatory requirements. Any “program” that is based on mandates from a federal administration is severely limited because compliance merely drives reactive behavior -- “doing” not “thinking.” If lean tools expose and solve process problems, why can’t these same tools improve safety? Robert Hafey, author of the book Lean Safety: Transforming your Safety Culture with Lean Management, offers these insights:

“While attending the AME international conference, held in Cincinnati last October, I introduced myself to a lean thought leader and briefly described a book I had written that suggests to get lean you should start with safety. His comment back was that for most companies that is exactly where they should begin. I failed to ask a follow up question to fully understand his reasoning for supporting my contention but I know why I recommended it in book form -- because it works.

All lean leaders understand the path to real lean, lean that is lasting, is dependent on employee engagement. Resistance to lean that is predicated on cost savings has killed off many a lean effort. Because we work in adult workplaces the simple equation that cost savings = fewer employees is understood by everyone. To discourage this thinking a senior leader may state that no lay-offs will occur as a result of lean but this is not the norm. He could instead take the safe path to lean by asking his employees to focus on safety improvement and thus bypass the initial resistance to lean caused by mistrust and a lack of understanding.

Simply by facilitating safety improvement activities while using a lean tool like the kaizen blitz you can begin to train your employee base in the lean language and many of the lean tools. A team of employees given the gift of time to focus on safety will not only reduce injury risks but they will most certainly reduce the cycle time of the process they have observed. This safe path to lean can initiate a journey toward real lean for any business for it is build upon respect for people first and then cycle time reduction.”

The State of Georgia’s Employees

2010-01-21T11:22:00.002-05:00

Most articles reporting improvement-effort results focus on quantifiable measurements, such as on-time delivery, rate of defects, and capacity. The importance of these types of metrics should not be minimized, of course, but it was refreshing to read Craig Newmark’s (the founder of Craigslist.org) overview of Georgia state employees improved work environment. It appears the initiative hopes to change behavior and morale by transforming the culture. Most importantly, the goals are to instill a sense of pride in employee accomplishments and build team work through trust.

Note the most revealing description of the longstanding outmoded culture: employees opinions were “never solicited or if asked, not acted on. Therefore, many government employees have given up trying to go the extra mile, since no one (in management) cared. “ How many times how you read or heard about a successful lean initiative in which the leaders state that, at the beginning of the journey, the main complaint of the front-line employees was alienation and disfranchisement? Why do so many organizations continue to foster the mentality that those paid to do the job should not participate in improving the job?

A crucial aspect of Toyota culture is the belief that employees do indeed want to improve their work environments and participate in the process. What do you think ultimately drives long-term satisfaction in ones’ work? Is it merely the amount of the paycheck or the amount of ownership of the process?

Special Applications of SMED in Process Plants

2010-01-19T09:21:00.004-05:00

Initial adoption of lean initiatives in the process industry was quite slow. Many of the early lean techniques used in traditional manufacturing, such one-piece flow and u-shaped work cells, had little application in a chemical plant, so most leaders in that industry concluded that lean could only benefit discrete-parts manufacturing.

On tool, however, that can have a major impact on waste reduction in the process industry is SMED (Single Minute Exchange of Dies). Peter King, author of the book Lean for the Process Industries: Dealing with Complexity has some comments about SMED:

"The benefit of SMED in simplifying product changeovers has been widely documented: SMED allows for shorter campaigns, lower inventory, and faster response to customer needs.

SMED has enabled significant improvement in process plants, operations which produce chemicals, paints, plastic films, food products and personal care items. But its benefit goes far beyond product changeovers. Many process lines never undergo a changeover, but have seen dramatic improvement through the application of SMED. A chemical plant may produce a single product 24 hours per day, 365 days per year, and thus never experience a product change. But these plants generally are taken off line periodically, say once a year, for a complete overhaul. These overhauls can take days or weeks, and involve the same wastes that changeovers do: inventory build-up in preparation for the outage, wasted time due to lack of coordination, tasks being done internally which could really be done outside of the overhaul window, and yield losses getting back to on-aim conditions after re-start. SMED has provided great benefit to these plants even though there is never a true product change!

SMED has also been used to improve process operations that can go down due to a process upset. Again, there is no product change, but getting the process restarted after the upset includes all of the wastes that SMED is so capable of reducing or eliminating."

What is Tecumseh Thinking?

2010-01-15T09:18:00.005-05:00

About three years ago, the Tecumseh Products Company (best known for producing refrigeration compressors) closed a manufacturing plant in Wisconsin, and I read interesting commentary about it on Mark Graban’s blog at that time. It appeared to be yet another case of a U.S. manufacturer outsourcing its production to foreign countries with extremely low labor costs.

This month, however, I was happy to read this press release detailing Tecumseh’s recent hiring of Michael A. Noelke (as executive vice president, sales, marketing, and engineering) and James J. Connor (as vice president, treasurer, and chief financial officer). Both gentlemen have strong backgrounds in lean applications and impressive track records of performance improvement results. Noelke’s tenure at Sporlan reveals many noteworthy accomplishments – Sporlan is a division of Parker Hannifin, which embraced a quite successful lean transformation many years ago. Connor’s implementation of lean thinking at Newcor helped that organization rebound from bankruptcy.

Time will reveal the depth of Tecumseh’s commitment to cultivating a lean culture, but a general question to all U.S. manufacturers remains: Is any lean overhaul powerful enough to challenge the lure of outsourcing production and competing primarily on the basis of low labor costs?

Toyota's New Line of Products... Hospitals?

2010-01-13T09:33:00.004-05:00

The adoption of lean initiatives within the healthcare industry has gained some notoriety in the mainstream press, and I'm sure most lean advocates can't rejoice enough. Many would agree that the ultimate victims of the built-in process variation and waste within the systems of the healthcare industry, from hospitals to suppliers, are the consumers. And, unlike nice-to-have products such as cars and computers, most customers don't have such luxuries as time and choice when "shopping" for healthcare services and products.

A article recently appeared here about the improvements the University of Michigan Health System have achieved after adopting a Toyota-styled approach to administrative and operating process. I think the most important statement about the future of this lean initiative can be summed up in this one quote from Jack Weiner, CEO of St. Joseph Mercy: “We do not view lean as a program. They are cultural transformations because you change how you do the work.” I think it's refreshing that, other than talking about the improvements gained early in the adoption, one of the pivotal leaders is already acknowledging that lean is as much about thinking as it is doing.

What do you think will be the biggest challenges to the adoption of lean in the healthcare industry? Do you think the initial resistance could come from physicians and practitioners who could argue that a lean transformation will ultimately stall because patients will never be "products" and believe that the drive for ultimate efficiency will overlook the nuances and hinder the customized needs of the patients?

When Lean Stalls... Why?

2010-01-11T09:41:00.009-05:00

One of the most common problems arising on any lean transformation journey is “plateauing” – the initiative loses momentum after a flurry of important waste-reducing activities. Unfortunately, this stagnation eventually results in the erosion of most gains and the collapse of the entire implementation process. I recently posed the question, “Why do so many lean initiatives fail?” to Bob Sproull, author of the book The Ultimate Improvement Cycle: Maximizing Profits through the Integration of Lean, Six Sigma, and the Theory of Constraints. He sent me a valuable response, so I decided to post it here:

“During the years, I have analyzed failed and successful initiatives and have come to this conclusion. Continuous Improvement (CI) initiatives fail because of three primary reasons:

They lack focus and fail to take advantage of key leverage points that exists within all businesses.
The typical improvement project takes too long and fails to generate meaningful return on investment (ROI).
Not enough thought goes into the selection of projects.

About 10 years ago, I changed my entire approach to CI, in that I stopped trying to "Lean out" the entire enterprise and began focusing on a company's leverage points. I integrated Lean, Six Sigma and the Theory of Constraints (TOC) and I now use Throughput Accounting (TA) instead of tradition Cost Accounting (CA) to measure success.

In case you aren't familiar with TA, it uses three simple financial metrics as follows:

Throughput (T) - New revenue minus totally variable costs (i.e. raw materials, sales commissions, etc. or those costs that are incurred as a function of sales).
Inventory (I) - Money invested in things a company intends to sell.
Operating Expense (OE) - Money spent on turning I into T.

Both Inventory and Operating Expense have functional lower limits and when exceeded can actually debilitate an organization. Throughput, on the other hand, theoretically has no upper limit, so by constantly improving T, profits improve dramatically.

So how does this work? If you recall Goldratt’s five focusing steps:

Identify the system constraint.
Decide how to exploit the constraint.
Subordinate everything else to the constraint.
If necessary, elevate the constraint.
Return to step 1, but beware of inertia.

I use TOC to identify the operation that is limiting T (the constraint or leverage point) and then apply Lean and Six Sigma to only the constraint to reduce waste, improve flow and reduce variation. At the same time, I subordinate all other parts of the process to the constraint. As soon as the constraint is “broken” a new one appears immediately, so I move the improvement resources to it. The cyclic nature of this methodology assures that I am always working on the right things or those things that result in maximum ROI.

Since I began doing this, the ROI on my CI initiatives has sky rocketed and the rate of return or the time to see improvements has improved dramatically. Significant ROI improvements, when properly applied, occur in weeks versus months when compared to Lean or Six Sigma or Lean Sigma initiatives. I no longer select projects in advance -- Instead, I let the constraint tell me where to focus my improvement efforts."

The "Selling" of Lean

2010-01-08T10:53:00.003-05:00

It appears the most common cause of lean-initiative failures is the lack of senior-leadership support and commitment. Are senior management leaders truly disbelieving the benefits of lean or are the reasons proposed by the advocates not persuasive enough? Some of the common roadblocks I’ve heard discussed are:

Return on investment (ROI) – senior leaders do not fully see the short-term and long-term benefits of a lean initiative. Do they understand that lean is not merely a tool for quarterly or yearly gains?
Lean is a specific “project” -- Lean improvement tasks can be delegated to particular persons within the company to fix certain areas. Do leaders fully grasp that lean is a cultural transformation not a process technique?
Compliance not commitment – senior managers do not impede the initiative, but they do not outwardly lead it or actively participate in its implementation. If senior leadership appears reticent, does this attitude also dissuade engagement by operators and frontline staff?

What are some other reasons for senior leadership’s lack of support? Are advocates making ineffective and incorrect “sales pitches”? Please share your experiences and suggestions.

Hyundai Culture?

2010-01-07T14:38:00.005-05:00

I was quite intrigued by a recent article detailing the growth and success of Hyundai Motor Company that appeared in Fortune magazine.

The crucial moment on Hyundai’s path to significant success occurred in 1999 when Mong-Koo Chung assumed the reins as chairman, replacing his father in that position. Chung’s primary focus became “quality, not volume” and he initiated rigorous benchmarking of Toyota. Speed ahead 10 years, and Hyundai is currently the fastest growing automotive company and just recently surpassed Ford in terms of volume.

Hyundai’s rapid success and transformation obviously could not have occurred without the plan set forth by Chung, and most of us believe that lean initiatives cannot evolve into major transformations without steadfast and inspirational leadership. Buy-in, and eventual adoption, throughout the employee ranks crucially depends more on what leaders do than say – name one lean initiative that has succeeded when the leaders have merely “talked the talk.”

Most of us, however, believe that benchmarking Toyota encompasses much more than just adopting specific tools and techniques – Toyota adds value to customers, the community, and society through people.

One aspect that is not touched upon in this article is the people who work for the corporation and the culture that exists there. What type of culture do you think exists or is growing at Hyundai? Do you think Hyundai’s success is sustainable?

Note the eyebrow-raising side story in the article -- In the midst of all this growth and success, however, in 2006, Chung was “was indicted on charges of embezzling some $100 million from Hyundai and its subsidiaries for a political slush fund.” It appears he was indeed guilty but “an appeals court decided that he was too valuable to the Korean economy” to be removed from his position and serve jail time (!). Do you think this event could not have had major repercussions if the company is indeed trying to foster a learning-and-teaching culture?

A New Year Brings "Old" News but New Questions

2010-01-04T17:00:00.010-05:00

Shortly before the Christmas holiday, Reuters published an article explaining how U.S. manufacturing companies are discovering and adopting lean methods to compete with plants based in China:

http://www.reuters.com/article/idUSN1817274520091218?type=marketsNews

To many of the long-time proponents and advocates of lean initiatives, this article’s headline most likely elicits a sigh and a “So, what else is new? We’ve known that for years!” response. In addition, most would agree that truly incorporating lean methodology transcends a mere “fix” because it should ultimately result in a cultural transformation.

One aspect of outsourced manufacturing that is hardly addressed is the future sustainability and profitably of these specific plants located in China. U.S. manufacturing companies might be outsourcing work and jobs to China, but are any lean principles being outsourced as well? The benefits of outsourcing currently rest solely on very low labor costs – but how long can this situation last? If low labor costs drive the profitably, are these companies not on the road to evolving into the wasteful mass-production facilities like many U.S. plants of the 20th century?

I always enjoy reading about an organization’s adoption of lean principles and the results gained, but, unfortunately, most of these initiatives in the U.S. are reactive responses to a downturn or crisis. Methods and techniques are implemented and initial results can be compelling, but often these initiatives plateau with measurable decreases in waste and never reach the level of a companywide transformation. In China, it appears these plants are perfect greenfields for lean culture, but will the leaders of these companies take heed? Should they? Please share your perspective.

Finally, I would like to thank my colleague Ralph Bernstein for the outstanding work he’s done writing and steering this blog for more than three years. His entries were not only insightful, but quite thought-provoking and entertaining. I wish him the best in his pursuits.

So Long

2009-12-23T09:08:00.000-05:00

The Lean Insider blog will be taking a break for the rest of this month, as we all devote ourselves to holidays, celebration, family and doing things likely to make us less lean.

I will not be returning to the blog from that break, but will be off pursuing new opportunities.

I’ve been writing Lean Insider for close to three and a half years. It’s been a lot of fun, and I hope you’ve found it to be at least occasionally informative and/or entertaining.

You may see postings here from my Productivity Press colleague Mike Sinocchi. As our senior acquisitions editor (meaning he has edited vast numbers of our books), he is well-versed in the concepts and language of lean, and I’m sure will have some interesting things to say.

And I hope that those of you who share our advocacy of lean ideas will continue your pursuit of perfection and the elimination of waste, and your dedication to creating value for customers.

Our best wishes for a happy holiday season.

How Should Insurers Pay Doctors and Hospitals for Healthcare?

2009-12-21T09:28:00.002-05:00

In the debate over reforming healthcare, one issue that is rarely discussed is how to reform the way insurance companies pay for healthcare.

One recent change that received a lot of publicity was a decision by Medicare (and some private insurers) to stop paying for treatments required as the result of serious medical errors – so-called “never events.”

A couple of recent postings in The Wall Street Journal Health Blog have explored the issue of reimbursements. One posting noted a push by Blue Cross Blue Shield in Massachusetts to shift away from paying for every procedure to a system in which a flat fee is paid to take care of people, healthy or sick – with bonuses for meeting certain targets concerning patients’ health. (An interesting idea.)

More recently the Health Blog reported on a study published in the Journal of the American Medical Association. The study stemmed from the idea that doctors should be paid for the quality of the care they provide, not the quantity. Some people propose doing that by measuring how a doctor’s practice compares to (or deviates from) national averages for particular quality measures, such as blood-sugar control in diabetics. The study examined whether small practices see enough patients for valid conclusions about quality of care (and concluded that the number of patients is too small at many practices for valid comparisons).

I have problems with that last concept. In any situation where quality matters, we lean advocates believe you should not be striving to match others, but striving continuously to achieve perfection.

However, that begs the question of what should be the basis for payment. The Health Blog notes that the same issue of JAMA that reports on the study also contains an editorial written by Don Berwick of the Institute for Healthcare Improvement, who makes some suggestions.

They include asking patients “how well they feel treated,” to measure qualities such as timeliness and responsiveness. Another possibility, he says, is moving toward measuring actual outcomes that are the reason people go to the doctor: “health, function and comfort.”

From a lean standpoint, measuring outcomes makes the most sense. It all relates to value, which is what lean is all about. Payment should be made for that which the customer defines as value. And if the customer is the patient, value is most likely defined as good health.

But it’s more complicated than that, since medical outcomes cannot be guaranteed. For example, doctors may do all the right things in treating someone critically ill, yet the patient may die anyway. The doctors still deserve to be paid for their efforts.

It is a tricky, complex situation with no easy answers. Any suggestions?

Book Talk: Lean Book Gift Ideas for the Holidays

2009-12-18T09:02:00.000-05:00

What lean book would you give for the holidays this year?

There are many different types of lean books, and what you buy for a particular person depends on who they are and what they would find interesting or useful – not just on whether the book is good.

So I’ll offer some suggestions in different categories. But I encourage you to post comments with alternative suggestions.

Healthcare: We now have a sizable number of books for those in healthcare, including Healthcare Delivery in the USA, Lean Hospitals, Health Care Will Not Reform Itself and Pursuing Excellence in Healthcare, as well as a variety of healthcare books that do not have a lean focus. For those seeking something for training purposes, consider 5S for Healthcare, the first in a new series of such materials, or Value Stream Mapping for Healthcare Made Easy. Also, some soon-to-be-available books include Optimizing Emergency Department Throughput and Successful Collaboration in Healthcare.

Green and Lean: Green Intentions and Compression are the two books we have published so far about the relationship between lean principles and sustainability. Both are works that could prove fascinating to anyone interested in this area.

High-Level Lean: We have many books for those in the highest leadership positions (check our Leadership – Strategy section). Our newer books include Flexibility: Flexible Companies for the Uncertain World by Gil Eapen and Critical Success Factors Simplified by Marvin Howell.

Information Technology: We publish several IT-related books, including Lean Six Sigma Secrets for the CIO, A Tale of Two Systems, Lean Performance ERP Project Management, and Lean Software Strategies.

Accounting and Metrics: An important and often overlooked area. Recent publications include Making the Numbers Count and The Basics of Performance Measurement, Second Edition.

Training: Our Shopfloor books are always a good bet. Also browse through our sections of 5S and Visual Controls, Mistake Proofing, Quick Changeover, TPM and Value Stream Management.

Case Studies: Our newest book in this area is Mr. Lean Buys and Transforms a Manufacturing Company. Consider also our Insights on Implementation series, as well as Andy & Me, which is fictional, but an enjoyable and educational novel.

I’ve only skimmed the surface of our hundreds of products. Please add your own recommendations.

Happy shopping!

Lean is Basis for Acquisition of Consulting Firm

2009-12-17T09:48:00.000-05:00

An item about a consulting-firm acquisition caught my eye the other day. Broadlane, a Dallas-based company that describes itself as a “cost-management company for healthcare providers,” is buying another consulting firm, Healthcare Performance Partners (HPP).

I’m not familiar with either firm, but what I found interesting is that Broadlane is buying HPP because the latter firm’s specialty is providing lean and Six Sigma consulting and training to healthcare organizations.

According to Tom Sherry, chief operating officer, Broadlane, “While Lean and Six Sigma have long been cornerstones of manufacturing, healthcare providers are only now beginning to more broadly implement these approaches to remove waste and cost from their systems while improving quality of care.”

In case you hadn’t heard, it sounds like this lean thing is catching on in healthcare.

Medical Imaging Errors Cry Out for Lean Improvements

2009-12-16T09:17:00.000-05:00

We lean thinkers know that when errors or defects are widespread, the problem usually lies in flaws in the process, not with individual errors. Those flaws often involve a lack of training, or a lack of standard work to ensure something is done the same way every time.

That seems to be the case when it comes to medical imaging. According to DiagnosticImaging.com, insurer Blue Care Network hired consulting firm RadMetrics to study the work of imaging providers. They examined 3,794 studies from 100 providers, with disturbing results.

11% of the sample studies had significant quality defects that potentially led to missed pathology or inappropriate therapy. They included studies where the selected field-of-view made it impossible for the clinician to fully appreciate the presence or extent of disease. Ultrasound studies were performed with the wrong transducer. Prostate ultrasound was performed without an endorectal coil. Obsolete equipment produced spinal images so poor that the edge of the spinal facets could not be seen. Brain CT produced artifacts that mimicked brain tumors.

In addition, about 20 percent of the studies involved coding, compliance or billing mistakes.

By the way, credit should go to the Health Business Blog, which is where I first learned about the DiagnosticImaging report.

A lack of standard work procedures in the imaging industry has to be a key reason for this problem. Inadequate training is the flip side of the same issue.

I hope that whatever agencies or organizations are involved in the training or certification of radiologists and their businesses become aware of this problem and take steps to address it.

Lean Jobs: High Demand for High-Level People

2009-12-15T09:03:00.000-05:00

The job market is strong for senior executives who can lead lean enterprise-wide transformations. And overall, lean employment in the year ahead is likely to be better than this past year.

Those are the beliefs of Matthew Ayers, vice president of executive search for Stiles Associates, a recruiting firm specializing in filling lean jobs.

“We’ve weathered the storm of 2009,” he says. “We’re very optimistic 2010 will be much stronger.”

Ayers says his firm saw companies putting searches on hold beginning around March and April of this year. But after what he describes as a slow summer, “the past month or two, it’s really lit up. Whether it’s folks looking for releasing funds in their budgets, or to capitalize on Q1, the lean world is on fire right now.”

Stiles Associates specializes in higher-level lean positions, “from the plant manager and lean deployment leaders to the CEO,” Ayers says. (And occasionally “we do have clients who ask us to build their entire lean team,” he notes.) The biggest demand, he says, is for people with the highest levels of experience.

“The folks that really know how to come in, and know policy deployment, can cascade lean across the business, the folks that have the ability to lead and orchestrate those rollouts are in big demand,” he comments.

So much so, in fact, that despite the large numbers of people looking for work, it can be challenging to find the top people. “The folks that are highly sought after, that have a reputation with them of successful transformations, are not on the market as long as you would think,” he adds.

Stiles Associates works with several private equity firms, which are seeking lean executives for the companies in their portfolios. And those companies cover a wide range of industries – pharmaceuticals, textiles, packaging, discrete manufacturing, life sciences. In addition, Ayers says, “we do a lot of work in healthcare. We have seen the interest in healthcare continue to be very strong.”

In what Ayers agrees is a change from the past, companies today seem more willing to consider candidates from outside their own industry.

“More than the majority of our clients do not have a problem looking at completely different industries. It’s all about personality and cultural fit,” he comments. “That does represent a change from the past. In the past, the majority of our clients would say ‘would you find us a head of a line and recruit specifically out of Toyota.’ We’ve been able to educate clients. They now look at other mature companies that have gone through a lean transformation.”

Ayers’ advice to employers is “really know who you’re going to be hiring. Invest the time to properly screen when referencing. Spend the time and spend the money to go out and find the proper fit.”

For candidates, he suggests, “because there are some very good folks at the middle to senior level out there on the market, continue to work your personal network. Networking is so important in this day and age.”

He adds, “Candidates at a senior level should not be posting their resumes on job boards that are too junior. Find somebody you can trust. You should be represented by a retained search firm. Do your homework on the search firms, and only work with a handful, I recommend three to five.”

Book Talk: Flexibility

2009-12-11T10:05:00.000-05:00

Corporations like the future to be predictable so planning is easier, but that’s not the way the world works. Life is full of uncertainty, and businesses have to be prepared to deal with it.

A new book scheduled for publication next week by our sister division CRC Press addresses this issue. In Flexibility: Flexible Companies for the Uncertain World, author Gill Eapen contends that the best way to manage effectively in an uncertain world is through the conscious application of flexibility — an ability to absorb constantly shifting variables and adapt quickly. He Presents specific ways to improve performance, reduce risk, and improve the probability of long-term organizational success

Eapen is the founder and managing principal of consulting firm Decision Options. He has worked with dozens of companies, including Fortune 100 companies, and is also the author of Decision Options, The Art and Science of Making Decisions.

This is a thoughtful, high-level book that anyone involved in strategic planning may find well worth reading.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.

Miami Hospital Targets Waste in Use of Antibiotics

2009-12-10T09:37:00.001-05:00

A recent article in the Miami Herald describes efforts by a team at the University of Miami-Jackson Memorial Hospital to eliminate waste, but in an area I hadn’t seen discussed before – overuse of antibiotics.

Such drugs often are overused, and as the article (by John Dorschner) points out, too much medicine can be a bad thing.

Though proper use can mean cost savings, ``the key factor for this program is patient safety,'' said Thomas Hooton, a University of Miami professor who was once head of the antimicrobial program for the Infectious Diseases Society of America. ``And there is a cost to society.''

Microorganisms are constantly becoming resistant to antibiotics, which are everywhere these days. A patient flushes them out of their body and into the sewer system. Livestock get fed them by the ton.

As bugs become resistant to the older drugs, doctors have to use newer, often more expensive alternatives. That's why institutions around the world have developed antimicrobial programs.

The article notes that antibiotics should be given to certain surgical patients, but the patients should stop receiving the drugs within 24 hours of surgery. To make sure this is done, the hospital has made the anesthesiologist responsible for administering the antibiotics.

That is a process improvement, in keeping with lean principles (though lean is not mentioned in the article).

A more challenging problem is doctors in private practice who prescribe unnecessary antibiotics because patients insist that they do something, and don’t want to hear that the drugs won’t do anything for their particular illness.

Goldschmidt, the UM dean, said the University of Miami and Jackson are working together to establish an evidence-based system that can serve as a blueprint for efficient, effective care by using computerized physician order entry, in which doctors work from a template for specific conditions, in ordering tests, prescribing drugs and such.

I’m not sure that is a lean solution, though it might be considered standard work. I’d like to hear other approaches, if any of you know of some.

But certainly any effort to eliminate waste is positive, if done properly. And that’s the kind of lean thinking I like to see.

Capacity is a Problem for Nursing Schools

2009-12-09T09:55:00.000-05:00

I’ve written in the past about the need to increase the capacity of medical schools because of doctor shortages. The same thing is true when it comes to nursing schools and the current shortage of nurses.

Nearly 40,000 qualified applicants were turned away from undergraduate nursing-school programs in 2009 (though enrollment did increase 3.5 percent), according to a just-released annual survey by the American Association of Colleges of Nursing.

An article in Health Leaders Media, written by John Commins, summarizes the report’s findings.

Based on data received from 318 schools of nursing, the primary barriers to accepting all qualified students at nursing colleges and universities continue to be a shortage of faculty (60.7%) and an insufficient number of clinical placement sites (61%). With cuts in state funding to schools of nursing last year, the number of schools reporting budget cuts/insufficient budget as a primary reason for turning students away more than doubled from 14.8% in 2008 to 31.1% in 2009.

The article also notes that there is some good news: Enrollments in graduate nursing programs increased significantly, about 10 percent in master’s programs and about 20 percent in doctoral programs.

I write about this because one of the biggest benefits of lean principles is often an increase in capacity.

In this case, the limiting factors listed above seem to be largely outside the control of nursing schools. But if the schools and the agencies they work with can cooperate to view the system holistically, and use lean thinking to study the way applicants/students flow through the system, I suspect a lot can be achieved.

I hope it will be.

Industry Week Article Overstates Progress at the Big Three

2009-12-07T09:23:00.001-05:00

Industry Week’s current issue is featuring a story about the progress GM, Ford and Chrysler are making in becoming lean. The sub-headline on the article is “Continuous improvement has taken hold in Detroit -- and not a moment too soon.”

But has it? I question the article’s conclusion because I believe it misses a major point.

The article, by Josh Cable, notes how quality and productivity have improved at the Big Three, basing that conclusion partly on figures from the most recent Harbour Report, which measures productivity. I’ve quoted the Harbour Report myself.

Additional information in the article notes the increased emphasis the Detroit automakers are putting on having flexible operations that can adapt quickly to changes in the marketplace.

All of this is true, and yes, progress has been made. But there is a word missing from the article that goes to the heart of a lean transformation.

Culture.

Applying lean techniques to make your processes more efficient and flexible is all well and good. It does produce benefits.

But to become a truly lean organization, you need to transform your culture. You need to become an organization where everyone, from the corner office to the shop floor, thinks in lean terms, never viewing the job as done, always striving for perfection, and endlessly pursuing continuous improvement.

Do the Detroit car companies think that way? Perhaps some people in those organizations do. But I am not convinced that any of the Big Three has achieved the kind of enterprise-wide cultural transformation that would put them in the same league as Toyota.

I hope they make progress in that regard. But I’m not holding my breath.