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Have you ever delegated a task and the team or person you delegated the task to goes down the wrong path? This often happens when management delegates a problem-solving task but have already determined what they want the answer to that problem to be. There is a time for delegation
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While there are many books written on the basics of the "supply" side of the supply chain (i.e. strategic sourcing, sourcing/procurement and purchasing), however, there hasn’t been much written on those areas from a Lean perspective. That situation was rectified when Paul Myerson published his significant book entitled Lean Demand-Driven Procurement: How to Apply Lean Thinking to Your Supply Management Processes.
I recently spoke with Paul Myerson and asked him: "Why haven’t organizations placed more emphasis on applying Lean principles to procurement and purchasing processes?" Here is his complete response:
While there are a fair number of books, articles, and blogs written on the basics of the “supply” side of the supply chain (i.e., strategic sourcing, sourcing/procurement, and purchasing), there hasn’t been much written on those areas from a Lean perspective. This is quite surprising, considering not only that supply chain costs (primarily procurement and transportation), can range from 50% to 70% of sales, resulting in what is known as the “profit-leverage” effect (measured by the increase in profit obtained by a decrease in purchase spend), but also helps drive downstream quality, productivity, and efficiency.
If you were to ask someone who knew a bit about Lean thinking how they defined Lean procurement, they would probably say that it’s about increasing productivity for procurement staff so they can spend more time on value-added activities rather than administration. While that is certainly true, it is also important to extend the view to how it connects and interacts with other processes, functions, suppliers, and customers, as today, procurement plays an important role in improving the flow of information and materials throughout the entire supply chain.
It is important to establish best practice Lean procurement functions that go beyond contract negotiation and establish crucial operational requirements, utilizing strategic sourcing activities such as market research, vendor evaluation and integration to support Lean activities such as Just-In-Time and Vendor Managed Inventory (VMI) programs.
Furthermore, inventory management and sourcing supply chain decisions are directly linked to a company’s financial performance and can, as a result, can affect a company’s cash flow and profitability.
Therefore, a procurement organization must consider:
• The prevention of production disruptions due to inventory or material shortages, while remaining flexible to meet changes in customer demand or cope with market volatility.
• The trade-offs of inventory carrying costs and customer service levels.
• Optimal buying quantities that consider the trade-offs of inventory carrying cost and volume discounts.
• Moving from reactive to proactive procurement operations.
In summary, Lean procurement provides opportunities for process improvements and savings through cost reduction, eliminating wasted time and efforts, and improved cost analysis, and can improve contract compliance and develop better, sustained partnerships with suppliers and other business partners.
What do you think of Paul's perspective on Lean procurement? Does your company apply Lean principles to its procurement and purchasing processes? What results have you seen?
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Retrieved from: Blog – JFlinch
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In Episode 2 of Lean Whiskey, Mark Graban and Jamie Flinchbaugh, longtime friends, lean thinkers, and whiskey enthusiasts, join forces to enjoy a casual conversation — mostly about lean and a little bit about whiskey. We start by thanking the listeners of Episode 1 who shared their response to hearing
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Retrieved from: Lean Thinking
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By Pascal Dennis (bio)
Been reflecting about each of these lately, and how they relate.
But what’s Ethics got to do with anything?
We’re in a proverbial knowledge economy. The market caps of, say, Google, Facebook and Apple, dwarf that of Toyota.
Google, Facebook and Apple have comparatively little in physical capital. ‘All’ they have is intellectual capital, and in particular, human capital.
How does human capital differ, from say, physical or financial capital?
Unlike, say, a machine, or a bond, human capital can chose not to deploy. Human capital can chose to walk out the door, in fact.
“That army will win which has the same spirit,” said Sun Tsu twenty-five hundred years ago. It’s never been more true.
Yet Gallup’s latest State of the Global Workplace report tells us that only 13% of employees are engaged in their work!
Big company disease and organizational dysfunction is so deeply entrenched that we barely flinch at such data.
Imagine you’re a factory manager and your machines are operating at only 13% of capacity!
Why are people so disengaged? Gallup doesn’t say. But I suspect that disillusionment, or even disgust, at what the organization stands for, or how management behaves, is a major reason.
There’s more. Millennials (those born after 1980) will comprise 75% of the workforce by 2025. And Gallup tells us that ethical behavior in corporations is even more important to millennials than to their parents.
Of course Ethics matters. People will not follow swine, at least not willingly, for very long. People will certainly not commit their hearts and minds – unless they feel good about what the organization stands for.
Best regards,
Pascal
Been reflecting about each of these lately, and how they relate.
But what’s Ethics got to do with anything?
We’re in a proverbial knowledge economy. The market caps of, say, Google, Facebook and Apple, dwarf that of Toyota.
Google, Facebook and Apple have comparatively little in physical capital. ‘All’ they have is intellectual capital, and in particular, human capital.
How does human capital differ, from say, physical or financial capital?
Unlike, say, a machine, or a bond, human capital can chose not to deploy. Human capital can chose to walk out the door, in fact.
“That army will win which has the same spirit,” said Sun Tsu twenty-five hundred years ago. It’s never been more true.
Yet Gallup’s latest State of the Global Workplace report tells us that only 13% of employees are engaged in their work!
Big company disease and organizational dysfunction is so deeply entrenched that we barely flinch at such data.
Imagine you’re a factory manager and your machines are operating at only 13% of capacity!
Why are people so disengaged? Gallup doesn’t say. But I suspect that disillusionment, or even disgust, at what the organization stands for, or how management behaves, is a major reason.
There’s more. Millennials (those born after 1980) will comprise 75% of the workforce by 2025. And Gallup tells us that ethical behavior in corporations is even more important to millennials than to their parents.
Of course Ethics matters. People will not follow swine, at least not willingly, for very long. People will certainly not commit their hearts and minds – unless they feel good about what the organization stands for.
Best regards,
Pascal
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Retrieved from: Lead With Lean
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Lean started with Kanban, and Kanban is a trust machine. There are four elements elements to Kanban: a Heijunka board reflecting takt time, the Kanban cards, a shop stock, and component Kanbans. You might have come across the short animations […]
The post Kanban is a trust machine appeared first on Lead With Lean.
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Retrieved from: Blog – JFlinch
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I really enjoy connecting with the JFlinch community through my blog and through my social media channels. On occasion, my schedule allows me to provide a live lean learning experience. On June 5th I’ll be speaking at an Iowa Lean Consortium / Ciras event in Des Moines, Iowa. If you live
The post Upcoming Lean Speaking Engagement appeared first on JFlinch.
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Retrieved from: Kevin Meyer
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Just yesterday the Harvard Business Review presented an article by a London Business School professor suggesting that companies don’t always need a purpose beyond profit. I had to take a walk on the beach to get my blood pressure back to normal. He starts off by lamenting that his school tries to instill in its […]
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Retrieved from: Lean Thinking
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By Pascal Dennis (bio)
Lean thinking is moving out of the factory -- downstream into sales, logistics and order fulfillment, and upstream into finance, marketing and New Product Development (NPD).
We're often asked, how do you apply the fundamentals in these areas?
For example, how might you apply visual management in NPD?
A good first step is to decide, What do we need to know to run our business?
Here are typical answers:
a) What's the project loading at each point (P0, P1, P2) in our development pipeline?
b) What are min/max levels and our status at each point?
c) What are the biggest obstacles in each project?
d) Do we have countermeasure plans? What's their status?
e) What are broader system issues? Do we have countermeasure plans? Status?
Now we're ready to engage our teams in developing visual tools that will make the invisible, visible.
In our consulting work we've used funnels, race tracks, football fields, as well as, team boards and the like.
Visual management is also invaluable in NPD physical plants (e.g. Test Labs), and is similar to what you might find in a factory.
For example:
a) What's this week's work?
b) Are we ahead or behind?
c) What are our biggest obstacles? Countermeasure plans & status?
d) How versatile are our people?
e) What's the loading on our machines? Constraints?
The key, again, is to make the invisible, visible.
For more on Lean thinking outside the factory, please check out The Remedy.
Cheers,
Pascal
Lean thinking is moving out of the factory -- downstream into sales, logistics and order fulfillment, and upstream into finance, marketing and New Product Development (NPD).
We're often asked, how do you apply the fundamentals in these areas?
For example, how might you apply visual management in NPD?
A good first step is to decide, What do we need to know to run our business?
Here are typical answers:
a) What's the project loading at each point (P0, P1, P2) in our development pipeline?
b) What are min/max levels and our status at each point?
c) What are the biggest obstacles in each project?
d) Do we have countermeasure plans? What's their status?
e) What are broader system issues? Do we have countermeasure plans? Status?
Now we're ready to engage our teams in developing visual tools that will make the invisible, visible.
In our consulting work we've used funnels, race tracks, football fields, as well as, team boards and the like.
Visual management is also invaluable in NPD physical plants (e.g. Test Labs), and is similar to what you might find in a factory.
For example:
a) What's this week's work?
b) Are we ahead or behind?
c) What are our biggest obstacles? Countermeasure plans & status?
d) How versatile are our people?
e) What's the loading on our machines? Constraints?
The key, again, is to make the invisible, visible.
For more on Lean thinking outside the factory, please check out The Remedy.
Cheers,
Pascal
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Anyone in the world
Most companies know the very visible and measurable benefits to having an engaged and involved workforce -- healthy workplace culture, lower turnover rates, and more satisfied customers. Many Gallup research studies are showing that employee engagement is rather low throughout many industries, and this topic is thoughtfully addressed in a new book by Lonnie Wilson entitledSustaining Workforce Engagement: How to Ensure Your Employees Are Healthy, Happy, and Productive.
I spoke with Lonnie recently, and we discussed his book and the importance of employee engagement. I asked him: "Why are employee engagement levels so low?" Here is his complete answer:
The typical view of an “engaged employee” is some hard-working soul who asks few questions. He just keeps his head down and works hard to get the wash out. Well, that falls far short of real engagement; which is an employee who is not only making a physical commitment (hard working), but an intellectual commitment (problem solving) and an emotional commitment (caring attitude) to his work, to his colleagues, and to his company.
The most comprehensive studies that have been done to quantify engagement levels in the US show that overall engagement is in the 30% to 32% range, with manufacturing even lower at 25% to 26%. These data are disturbing to most…and should be. That was not always the case.
Many years ago, engagement levels were higher, much higher. That changed when we grew as a country and as an industrial giant. In the early 1800s, there were few factories and suppliers were very close to their customers. Think of the local tailors who made your clothes or the local smithy who fixed your wagon. They always worked hard. And at that time suppliers not only knew their customers, they cared about supplying them exactly what they needed and when they needed it. Should problems arise, they would - Johnny-on-the-spot to fix the problems. These craft tradesmen were the epitome of engagement with physical, intellectual and emotional commitment attached to all they did.
Then came mass production to make more products and make them cheaper. Next the railroads made distribution over long distances a reality and the craft worker became a mass producer usually making only part of a product as assembly lines were implemented. This effectively disconnected the worker from both the customer and the finished product. This drove a wedge between reality and any caring attitude they once had.
Next, in an effort to improve both quality and worker productivity, the practice of “scientific management” was created. The most attractive aspect to the business owner was the concept of “best methods”. Known as Taylorism, it was now the job of engineers and managers, not the workers, to develop the best methods. This effectively drowned out any intellectual commitment the workers once might have had.
With the impact of mass production, the advent of the railroads, along with the implementation of “scientific management”; the concepts of emotional commitment and intellectual commitment were effectively severed from the worker and we are left with what we have today in manufacturing … 25% engagement levels. It need not be that way…..we can do much better.
He believes there is a simple reason -- achieving engagement is all about management and the many changes that must be made, and that raises the crucial question: Is management both willing and able to recognize, accept, and execute the needed paradigm shifts? The stark reality is that the changes that must first occur are in the thoughts, beliefs, and actions of the management team. This book gives you a path to follow that may achieve just that. And the remaining question for the senior management is: What are you prepared to do?
How engaged are the employees in your company? Do you feel management is contributing to increasing or decreasing employee engagement?
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Retrieved from: Lead With Lean
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We’re burning the planet – I think we all realize that by now. We know the how – too much production of greenhouse gases, too much production of heat through energy use, too much use of natural rare resources. We […]
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