Introduction
At the beginning of 2020, the novel coronavirus COVID-19 spread from its place of origin in Wuhan, China around the world in a matter of weeks. As workplaces, countries, and entire economies shut down to contain the spread of the virus, the world began to get a better understanding of the fragility of the processes and supply chains on which we had come to rely over the last several decades. To shore up the resiliency of today’s global systems, organizations should look to the principles of lean manufacturing. Most organizations today have at least a basic understanding of lean concepts. Many likely consider themselves adherents to the basic principles of lean. But what is lean? What does lean look like in different industries? In this Insight Report, we’ll look at some of the background of lean, how its principles can be applied in different industries, and how it can contribute to creating more resilient organizations in a post-COVID-19 world.
What is Lean?
Lean has its origins in the approach presented in Frederick Taylor’s 1911 work Principles of Scientific Management, which encouraged training and incentive for workers, strictly regimented approaches to completing tasks, and continuous improvement of the overall management system. Japanese engineers and management consultants like Shigeo Shingo and Taiichi Ohno studied Taylor’s work, which led to the foundations of the Toyota Production System (TPS). TPS allowed Japanese automobile manufactures to become highly profitable and to dominate the international market throughout the 1970s and 1980s.
Lean came to prominence in North America and Europe with the publication of The Machine that Changed the World by Dan Jones, Jim Womack, and Daniel Roos in 1990. This book provides an in-depth look at the way lean principles have been incorporated into the Toyota Production System in Japan. Womack et al define lean as a way of providing maximum customer value while minimizing effort, equipment, time, and waste in the production system. They define five lean principles:
1. Value is defined according to the customer’s perception of it.
2. Organizations must map the entire value stream and eliminate anything that doesn’t contribute to customer value.
3. Products and services must flow smoothly to the customer with no interruptions.
4. Customer requirements pull value upstream along the process.
5. Perfection with no waste is the goal of the production system.
Lean emphasizes learning and knowledge along the entire production system. Workers come to see problems not as mistakes to be ignored or punished, but as opportunities for learning and continuous improvement. Management also engages in continuous learning, especially through gemba, which takes place when management learns about the production system by spending time in the places where the work is being performed. The principle perhaps most commonly associated with lean is waste reduction. Lean identifies eight different types of waste that need to be eliminated in the production system.
1. Transportation: Moving materials from one location to another can be a source of wasted effort and time.
2. Inventory: Excessive inventory means that the value of the material and labour is locked in the stored product until it is sold.
3. Motion: Inefficient machinery, production processes, or employees produce unnecessary motions that lead to waste.
4. Waiting: Interdependent processes that aren’t synchronized have a lag time that leads to waste.
5. Overprocessing: Putting more value into the product or service than the customer requires is not necessary.
6. Overproduction: Producing more quantity at a faster rate than the customer wants leads to wasted effort.
7. Defects: Errors and defects require time to fix and lead to wasted time and effort.
8. Unutilized Talent: Workers can have helpful skills and ideas that could create efficiencies in the production system, but which go to waste if leadership doesn’t engage with them.
“The goal of lean is to reduce waste as much as possible in an ongoing effort of continuous improvement.”
The goal of lean is to reduce waste as much as possible in an ongoing effort of continuous improvement. Perfection and zero waste might never be realistically achievable, but they should always be the goal.
In addition to understanding what lean is, it’s also important to understand what it is not. First and foremost, lean is not about reducing inventory and headcount under the assumption that doing so will lead to efficiency. While lean is about doing more with less, it requires rigorous process efficiency to meet that goal. Reducing resources should be the result of process efficiency, not the catalyst for it. Simply reducing resources without ensuring more efficient processes is not lean and will definitely not lead to success.
Lean is also not simply about applying Six Sigma tools like 5S or Kaizen and expecting those to produce efficiencies. Tools are only one element, in addition to people and processes, that must be used in tandem in any organization looking to become lean.
Where is Lean Used?
Although lean has its origins in manufacturing, it has become an important part of many different industries. In this section, we’ll look at a few places where lean has had a significant impact.
Healthcare
The application of lean principles to health care has only come about in the last two decades, despite lean having been around much longer than that. Lean healthcare is an approach that can be used anywhere from individual clinics to hospitals to entire healthcare systems.
The complexity of the healthcare system represents fertile ground for creating process efficiency. Patient care, billing, medical and PPE supply chains, training, and policy create a complex web of elements that can be both interdependent and conflicting. Since this system extends beyond the immediate facility into the community, the potential for process overlaps and gaps is considerable. Further, the enormous costs associated with most healthcare systems makes the application of lean principles a particularly important priority.
The goal in lean healthcare is to reduce costs, remain innovative, and add value for patients. Lean healthcare requires buy-in from every member of the system, which means that everyone must understand the importance of the culture of quality that contributes to this goal. Employee training and communication are vital.
Lean healthcare translates the eight types of waste to meet its lean priorities as follows (NEJM Catalyst, 2018):
1. Reduce waiting time for patients and employees. This includes time spent in waiting areas, appointment waiting lists, and latecomers to meetings and appointments.
2. Reduce unnecessary inventory of equipment, printed forms, etc. This should only include medication and PPE if there is the possibility that they might expire before being used or if they present the risk of being stolen.
3. Eliminate errors and improve quality of care. This includes errors in diagnosis, surgical errors, and infections acquired in the hospital.
4. Improve patient flow by eliminating unnecessary movement of patients and equipment.
5. Reduce employee motion by incorporating ergonomic design in the hospital.
6. Eliminate overproduction by reducing duplication of tests and tasks.
7. Reduce overprocessing that does not contribute to the quality of patient care, such as duplicated data entry, unnecessary tests, and duplicate forms.
8. Learn about the untapped potential of healthcare workers to minimize wasted time and to maximize time spent providing superior patient care.
Services
Lean can have significant impact in service areas like call centers, retail, and restaurants. Direct interaction with the customer is an important source of VoC (voice of the customer) information, so the opportunities for learning and continuous improvement in the service industry are immediate. In addition to face-to-face customer interaction, much of the work in the service industry takes place behind the scenes in the form of order processing.
Bicheno and Holweg (2000) adapted Ohno’s eight types of waste for the service industry as follows:
1. Eliminate delays for customers waiting for services or delivery.
2. Reduce duplication of data entry and documentation.
3. Prevent unnecessary customer movement by improving ergonomics of the service environment. 4. Provide clear customer communications to avoid confusion or the need to seek further clarification.
5. Ensure correct inventory and stock.
6. Avoid losing customers through lack of support or attention.
7. Reduce product defects.
8. Prevent quality errors in service processes.
Government
Given their excessive bureaucratic processes and limited budgets, government services present many opportunities for the application of lean. Eliminating waste in the provision of government services provides more value for programs supported by taxes, builds a culture of continuous improvement that extends beyond the terms of elected officials, and allows system agility to respond to rapidly developing situations. A typical application of the eight types of waste to government includes the following (Del Marmol, 2020):
1. Reduce defects in the form of missing information, typos, and data input errors.
2. Eliminate overproduction from redundant documentation, emails, and requests.
3. Reduce waiting time for approval cycles and decisions.
4. Ensure utilization of human resources.
5. Eliminate redundant transportation and storage of documentation and records.
6. Eliminate excess inventory and unnecessary storage.
7. Reduce motion from unnecessary travel or motion to locate files or supplies.
8. Prevent excess processing from too many process steps and approvals.
Lean in a Post-COVID-19 World
With COVID-19 causing havoc around the world, lean can provide support to many different types of organizations. Here are a few important places to look for help from lean.
Being in Lockdown Doesn’t Mean Gemba and VoC Can’t Happen With many people working from home, one might think that VoC and gemba aren’t practical. But listening to customers and employees, learning about what they need, and helping them solve their problems are more important than ever. Online collaboration tools can make it easy to communicate with customers, and the move to entirely online processes means you can implement lean principles into new online workflows during lockdown.
New Customer Expectations are Emerging
With new workflows during lockdown, customers are adjusting their expectations, and they’re not always adjusting them down. Businesses that tout themselves as digitallysavvy are being put to the test by customers who need quick answers to new problems. Call centres, help desks, websites, and online help menus are important sources for information that customers need. Likewise, your employees can no longer take advantage of quick hallway chats to solve problems presented by process shortcomings. In a digital world, your tools and processes must be rigorous, efficient, and transparent. Business that weren’t in this position before the lockdown are discovering that they need to apply lean principles to their digital processes if they want to meet customer expectations in a post-COVID-19 world.
New World, New Kaizen
An online work culture is drastically different from the traditional workplace. Kaizen, the concept of continuous improvement and waste reduction in lean, is a critical approach to making sure the digital world not only reflects the traditional workplace but improves upon it to meet post-COVID-19 demands. Moving everything online can expose serious process shortcomings that get glossed over in the workplace with excessive meetings and ad-hoc solutions that don’t work online. Kaizen can help you study, measure, and improve these processes to meet your new expectations.
Lean Offers Reason and Learning in a Time of Crisis
A pandemic, unprecedented economic pressure, and staggering job losses can make everyone feel despondent and afraid. To counter this, lean promotes a rigorous approach to thinking through problems, finding solutions, and continuously improving the way you do things. Not only can lean thinking provide an immediate antidote to the pervasive fear of the COVID-19 world, but it can help us uncover ways to learn, innovate, and grow.
Know the Difference Between Waste and Preparation
In the early days of the pandemic, personal protective equipment (PPE) for healthcare workers was in short supply. Many hospitals and clinics simply didn’t have enough PPE to accommodate the huge surge in critical care patients infected with COVID-19. Many people asked the logical question: did lean’s emphasis on reducing excess inventory contribute to this PPE crisis in healthcare? After all, the principles of lean healthcare identify excess inventory of PPE and medication as a primary principle. Although this makes sense on the surface, the answer is “no.” Reduced inventory is a result of lean management, not a starting point. An organization shouldn’t reduce inventory and then claim to be lean. Reduced inventory will only become possible when the process efficiencies of lean allow it to happen and make it a logical step in reducing waste. Preparing for low-probability/high-impact events like a pandemic is part of the culture of quality in healthcare, which means that the definition of reduced inventory must be commensurate with their risk management outlook. Reducing inventory to the point of sacrificing adequate preparation and discounting risk-based thinking is not lean.
Identify Untapped Talent on Your Team
There could be many reasons the dynamics of your team might change, including COVID-19 infections, personal time off to support sick family members, lay-offs, furloughs, and resignations. Regardless of the reason, crises such as a lockdown can require other team members to take on additional duties outside the scope of their current job. In addition, the new environment could present opportunities for innovation or crisis management that would suit the untapped talents of your employees. Make sure you map the tacit skills and training your team might have so you can cover all your responsibilities and find ways to innovate and thrive in a crisis.
Reducing Motion Has Never Been So Important
If you’ve been to the grocery store recently, you’ve probably seen markers on the floor that indicate the direction in which everyone should be walking when they shop. This is done to prevent side-by-side interactions in the aisles as much as possible to reduce the possibility of virus transmission. This is an application of the lean principle of eliminating waste by reducing excess motion. Workplace movement and ergonomics will become top-of-mind in a way most people will never have considered before. Lean has been touting this principle for decades, so make sure you apply the lean lessons on movement to your workplace.
You Need a Lean Supply Chain
COVID-19 showed the world the fragility of its global supply chains. When countries closed their borders and manufacturing shut down, supply chains for everything from PPE to critical components for machines and technology were severely disrupted. The presence of each type of waste in the supply chain, hidden or ignored while everything was working smoothly, was on display for everyone to see. In many cases, the disruption of these supply chains caused serious problems: shortages in PPE could have contributed to the spread of infections; additional disruptions of the food supply chain could be catastrophic. Lean principles such as reducing excess transportation and shortening lead times will play an important role in reconstituting post-COVID-19 supply chains to be more resilient and flexible to meet new demands.
Prepare for the Future
Even if COVID-19 were to miraculously disappear tomorrow, the world of work has been irrevocably changed: consumers have become adept at online purchasing and have new expectations of retail providers; healthcare systems have had a trial-by-fire of their processes; governments have become aware of the fragility of supply chains; online education has exposed the cruel digital divide between the wealthy and the impoverished; the importance of human connection and collaboration, both at home and in the workplace, has become more important than ever. Lean principles of continuous improvement can be your guiding light as you learn to navigate the new world of work and to take advantage of the unprecedented rate of digital transformation we’ve seen in the last few months.
References
Bicheno, J., & Holweg, M. (2000). The lean toolbox (Vol. 4). Buckingham: PICSIE books. Del Marmol, Lorenzo. (2020)
The New Trend of Government in a Nutshell.
https://leansixsigmabelgium.com/blog/lean-government/. Accessed 2020.07.23.
NEJM Catalyst. (2018). What is Lean Healthcare? https://catalyst.nejm.org/doi/full/10.1056/CAT.18.0193. Accessed 2020.07.23.
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