Every manager is familiar with the acronym KISS or ‘Keep It Simple, Stupid’ in full. Simplify a process or a strategy, and you make them easier to implement. Go for a complex and complicated solution, and you greatly increase the chances of going seriously wrong.
KILS or Keep It Lean, Stupid is a very close relative to KISS - and the alternative to KILS can literally kill a business. On the other hand, leanness is life: indeed, a whole new way of business life. Try these three deceptively simple questions for a start:
• Just how old is the information you are acting on today?
• How many days ago was the order triggered that you are now producing?
• And how many days ago did the customer ring up about the problem you are now fixing?
SHOCK ANSWERS
The answers may come as a shock. ‘I recently came across two striking examples where the delays in passing the information upstream were substantially longer than the time it took to make the product or to solve the customer’s problem’. The writer is Professor Daniel T. Jones, chairman of the Lean Enterprise Academy and Britain’s leading exponent of KILS. The field is, of course, led by the Japanese experts and the companies which they advise.
According to Jones, Toyota applies the KILS gospel all the way up to parts distribution; and that means no truck with ‘big, centralised systems designed to optimise each activity in isolation - production, transport, distribution, etc’. Instead, you adopt this three-point plan:
• Separate production and shipping instructions from materials and capacity planning
• Cut the number of decision points to one, shared by all departments
• Frequently replenish exactly what was used or sold by the business.
Jones claims that ‘This removes most of the signal noise and optimises the flow of the whole operation rather than each operation. And it is simple and foolproof... any deviations can be spotted and responded to as soon as they happen’. Nor are the beneficiaries of the management style limited to Japanese: ‘After many years Tesco and some of their suppliers are also close to triggering production and shipping in response to continuous, real-time data from their sales tills’.
None of this is pie-in-the-sky. Tesco owes much of its clear superiority over UK retail rivals to its advanced ideas on systems and IT in general. I have been warning for years that the digital revolution faces non-revolutionaries with the threat of competitive disadvantage. You may ignore the threat in safety only as long as your competitors are equally far behind the pace of the possible. If any one of them breaks clear of the pack, though, you’re in trouble.
Tesco is following where Wal-Mart led the way, becoming the world’s largest retailer by far from a nondescript town in the Midwest.
Sam Walton’s basic inspiration was to see that such nondescripts, small-to-middling towns, had been unwisely ignored, and were ripe markets for discount stores. The consequent astonishingly fast spread of his business across the US, like its amazingly low costs, was made possible by pioneering use of electronics to streamline the operations continuously.
But one of the oldest truths of IT in general, and automation in particular, is that you mustn’t put new wine in old bottles. In other words, the system needs sorting out before you install the computers. There’s no sense in automating an inefficient operation - like the ones described by Jones, which spend more time sending messages about production than actually making the goods.
KNEE-JERK REACTION
The lean champion condemns the ‘knee-jerk reaction’, which is to buy a new IT system to magic all the troubles away. ‘Flow’ is the key to leanness. What determines levels of cost and effectiveness is the progress or flow of goods and services from the moment an order is placed to its delivery on time. Mapping such flows in an unreformed enterprise invariably reveals glaring defects and delays - at worst, the map will be a ‘spaghetti diagram’, when it should be a straight line.
Mapping the information flow will have just the same unpleasing result; in fact, Jones says that the spaghetti situation will be shown as ‘far worse than the shop floor!’. The costs are hidden but huge. You are paying for the ‘extra buffer stocks and the excess capacity you have to keep, for the time your managers and staff spend expediting and chasing and for the lost sales and discounts’ needed to clear unwanted products.
Note that the problems are not restricted to manufacturers. Information is the lifeblood of any organisation. If the system misfires or causes delays and customer dissatisfaction, once again the costs are seldom measured – but they are real and large. Lean thinkers always look very closely at the current process, and they always ask what the professor describes as ‘fundamental questions’. The idea is to enable everybody to thoroughly understand the pattern of demand.
GETTING OUT OF STEP
The results of letting actual demand and the demand in the system get out of step are dire. Nobody knows this better or more painfully than John Saunders of Cisco, once billed as best in the West for his business management skills. Since Cisco makes highly sophisticated electronic gear for telecommunications, people were too easily sold on its claims to possess a state-of-the-art information system that enabled realtime management throughout the business.
When the market suffered a major setback, all the publicity unravelled. The orders that Cisco had been reporting and accounting for in realtime had been grossly inflated - partly by customers placing phantom orders to secure their places in the real queue. What Toyota calls ‘created demand’ caused Cisco to accumulate a gigantic surplus of inventory. Its market value, once insanely bigger than that of General Electric, tumbled dramatically – and taught Saunders and his team the mortal dangers of believing your own publicity.
There’s a fundamental principle that meets the demands of both KISS and KILS. You make in a day only what you sell in a day. The logic is immediately obvious. The principle takes away the need for buffer stocks and removes the so-called ‘signal noise’ which distorts your view of what is really happening. But the missing pieces are equally obvious. If your reports of sales are as distorted as Cisco’s, you’ll still be over-producing. Even if you’re not, that doesn’t mean that you’re producing well. The not-so-little matters of cost and timeliness still have to be taken in hand.
That can pay enormous dividends. Again, KISS and KILS combine forces. Cutting costs hinges above all on eliminating waste in ways which also save time. The results are featured with irresistible persuasion in a book entitled Kaikaku, by Norman Bodek - who is as enthusiastic as Jones in preaching the sovereign merits of ‘Lean’, which he describes as follows:
‘The Power and Magic of Lean is to discover those hidden treasures in your company: to find and eliminate all of the non-value-adding wastes and to bring out the infinite creative capacity from every single worker’.
RADICAL CHANGE
The book’s title is somewhat misleading, since kaikaku means ‘radical change’, whereas most of Bodek’s examples demonstrate the power and magic of kaizen, or ‘continuous improvement’. But the impact of Lean can be so large that it truly adds up to radical change.
The English plant of Heinz, for example, faced a major problem in meeting orders from Tesco and Sainsbury for own-label tomato ketchup. It took four hours to change the line over from its own brand. Mountains of inventory were needed, and profits suffered.
The engineers were put to work. They cut the changeover time from four hours, not by half, or even three-quarters, but by over 96% to a mere eight minutes. They owed this stunning success to the work of Dr. Shigeo Shingo, the hero of Bodek’s book, and the man who shares responsibility with the more famous Taiichi Ohno for the Toyota Production System – the spiritual and practical home of Lean. Shingo’s modus operandi couldn’t be more direct; take the ‘Five Whys’.
If somebody comes to you with a problem, ask ‘Why?’ it has happened and go on asking ‘Why?’ until you have uncovered the root cause of the trouble.
Bodek gives the example of soldering misconnects. Shingo wanted to know why these happened. Answer: ‘Well, sometimes the solder doesn’t melt properly’. ‘Why does that happen?, asked Shingo. It took two more Whys for an engineer to come up with the root cause, to which a solution immediately appeared. Managers unversed in the principles of Lean, even if they ask the first Why? (which is often neglected), are too easily satisfied and don’t continue with the magic word to the equally magical conclusion.
The pioneeers of Lean delight in finding simple ways of solving problems that can appear to be complex. So On-Error-Training (OET) is a method for solving problems and simultaneously training people in how to correct errors. As Bodek writes, the process is amazingly powerful and simple. It has five rules:
1. Himself/herself Rule. Whoever detects the fault gets the prime responsibility for finding the root cause.
2. Quickly Rule. You get just 30 minutes to solve the problem.
3. Actually Rule. The ‘leader’ demonstrates to the group how the defect arose.
4. Support Rule. The supervisor and everybody else must support the ‘leader’ in finding the solution.
5. Don’t Speak Rule. Notwithstanding Rule 4, ‘the supervisor or manager must keep quiet to give the workers a chance to solve the problem on their own’.
The point that leaps out from the Five Rules is that Lean isn’t merely a matter of technical know-how (although that has a crucial role), but that human interactions and people management are even more important. W. Edwards Deming, the American who introduced Statistical Quality Control to the Japanese post-war, was no dry-as-dust scientist, but a humanitarian. He believed profoundly in the ability of people to exercise initiative and improve their performance – if the system could be kept out of their way.
The better the workplace, the better its management and encouragement of people. Shingo nominated a Matsushita washing machine plant as the best in the world, so Bodek paid it a visit. Of the fifteen features that distinguished the plant, the first two were strictly humanist: ‘people were encouraged to continuously improve their skills and utilise their energy’; and ‘people’s personal lives and well-being were always considered through athletic programmes and job enrichment activities’.
Likewise, the Toyota Production System, when attacking waste with vim and vigour, lists among the specific advice (‘cutting down on the distance that things move throughout the plant’) some very broad and humane recommendations - above all, ‘utilise the inherent talent of your workers’. They won’t be using that talent if they are waiting around, just looking at the machines, or spending hours on changeovers that take Matsushita seconds. That’s the result of another potent cause of waste: ‘Not managing properly’.
Those three words sum up what it’s all about, and why gurus like Jones and Shingo get so incensed by men and women who don’t follow the simple gospels of KISS and KILS. After all, there’s no great advantage in managing improperly; especially when the proper alternative makes your life and the lives of all your people easier - much easier, and more profitable.
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