Lean and Operational Excellence
It is a mistake to think of lean as just one of the many tools in the Operational Excellence portfolio. Operational Excellence is really a label for a number of different “best practices”. Lean, on the other hand, is a very specific set of integrated practices, tools and behaviors derived from a very clear reference model. Lean was built from years of practice and experimentation at Toyota and at companies in other sectors that have followed its example. It did not emerge from applying theories to business practice.
Properly understood, lean is a much more fundamental and comprehensive approach to solving business problems and creating value for customers. It is also much more than engaging employees in continuous improvement and the elimination of waste.
One of the key points that distinguishes lean is its scope – which encompasses the entire value-creating process – such as a global supply chain or a patient's journey from beginning to end. Instead of developing new support systems – such as better forecasting or decision support systems – lean focuses on the actual work that creates the value the customer pays for. This is what lean thinkers call value streams.
Lean brings many different tools to support this, so that each value-creating step can be performed right the first time at the right time, then connects the steps in a physical flow or through pull signals and then levels the workload to align capacity with demand. As the primary value-creating work begins to flow, lean applies these tools to synchronize all the support activities that enable the primary value stream to flow, and all the elements a customer needs to solve their problems – such as test results, medications and therapies for a hospital patient. This, in turn, requires the right lean management to ensure that work flows according to plan, to prioritize issues and remove obstacles, in order to keep things flowing and to support solving the root cause of the problem.
The real result is a value-creating system designed backwards from the definition of value for the customer, and around the activities that create this value, more correctly and with far less wasted effort and cost. While most organizations begin implementing lean in their existing activities, the true potential of lean comes from the opportunity to redesign the next generation of products or services and the value streams that deliver them without the influence of existing assets. Manufacturers, for example, are now looking to local suppliers instead of distant low-cost suppliers, and polyclinics are now offering services that were previously available only in big-city hospitals.
Another thing that distinguishes lean is its depth. The more activities are connected and synchronized and the time or physical inventory between them is removed, the more the operation of the whole system depends on the skills, behaviors and direction of each employee.
On the one hand, such an integrated system multiplies the likelihood of disruptions, which must be responded to quickly. On the other hand, it provides extremely valuable feedback on the causes of these disruptions and on other changes that might otherwise be hidden or lost. It is precisely to leverage this feedback that the core lean skills lie not just in tools and techniques, but in using the scientific method to define and diagnose a problem, understand the facts, try out various countermeasures and verify which one solved the problem. Since problem solving can only be done by combining detailed knowledge of the work with the context of the problem, these skills need to be learned by every employee, not just by specialists. Developing these skills and using the experimental approach to constantly improve the performance of each value stream is something learned by doing, not in a classroom.
To enable value streams to run across facilities, departments and organizations, someone has to take responsibility for creating the conditions for collaboration among everyone involved. Lean chief engineers, project managers and value stream managers are responsible for the performance of their product, project or value stream, while authority over the resources needed to deliver it remains with the vertical department of the functional leaders. The keys to making this work are: agreement by all parties on the facts of the current situation and commitment to a single agreed plan for moving forward. The team then reviews deviations from the plan very frequently, removes any obstacles and captures all learning for the future. Lean thinkers use visual management everywhere precisely because it reinforces collaborative behaviors.
Highly transparent and interdependent systems surface literally thousands of things that could be improved in the organization. A lean leader's skill is being able to set direction and focus everyone's efforts on a few vital things that will make the big difference for the organization, for its customers, employees and shareholders. This means being able to translate organizational objectives into measurable gaps that need to be closed and using strategy deployment to create a dialogue down through the organization, in order to agree on the actions that will contribute to closing those gaps, so that these can be properly resourced and others dropped. It also means diagnosing and addressing the hidden causes of instability – such as the amplification of orders passed upstream or delayed medical discharges that cause queues in a hospital's admissions. Finally, leaders must act to use the available capacity or monetary resources to reduce costs and increase sales without requiring additional capital.
Portuguese translation by Tamiris Masetto Manzano.
