What’s Next After Lean?

Nothing … Well, Maybe Lean Logistics

By Robert Martichenko, president, LeanCor LLC

One thousand delegates strong attended the 2006 Lean Summit in Sao Paulo,
Brazil, with each participant craving knowledge on ways to eliminate
organizational waste through the use of lean principles. There were several
workshops on lean logistics, which were extremely well attended by people from
all functional disciplines. This is a true testament to the growing awareness of
logistics and supply chain importance.

Delegates at this summit were in very good company. Sitting in the front row of a
very large and crowded conference room were Dan Jones, Jim Womack and
John Shook. These three personalities represent the who’s who in Lean
Thinking. In fact, Dan Jones and Jim Womack authored the The Machine that
Changed the World, Lean Thinking and most recently, Lean Solutions. John
Shook co-authored Learning to See, a highly regarded workbook that is often
used by organizations beginning their lean journey.

During a plenary talk by Dan and Jim, they informed the audience that a very
frequent question they are asked is “What’s next, what’s after Lean?” Their
answer was, in a word, “nothing.” Successful organizations will retrench and
focus on the basics. Success will come to those who focus on the basics and
maintain a relentless all-consuming drive to eliminate organizational waste. The
basics are described as:

1. Customer focus.
2. Vision deployment and constancy of purpose.
3. Process management.
4. Teamwork.
5. Quality at the source.
6. Continuous improvement.

Several minutes later, after the anti-climatic feeling of disappointment had worn
off from their non-prophetic answer, they flipped to their next slide. It revealed
what might be called a true pivot point for logisticians. Dan Jones and Jim
Womack, the thought leaders in lean manufacturing and beyond had a slide that
told all delegates to “implement lean logistics and lean supply chain
management.”

They argued that the future will be owned by organizations that focus on the
customer experience and strive to reduce all waste from the customer
experience. Successful companies will be those who sincerely attempt and
succeed in not wasting the customer’s time and money. (Note: they told two
stories of horrific, personal customer experiences, one buying a computer online
and the other getting a vehicle repaired at a dealership. We have all been there!)

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By eliminating waste in the customer experience, we will in fact become closer to
the customer. As we become closer to the customer, we will understand
customer expectations and true demand patterns. As we better understand
expectations and demand patterns, we can better plan our production capacity to
meet customer demand in a leveled environment. This will result in further waste
elimination (waste in the form of excessive inventories and excessive lead times)
and will continue a self-fulfilling cycle of successful customer experiences and
profitable growth for all parties.

This sounds a lot like supply chain management!

Are We Missing the Big Picture?

At the beginning of the millennium, Toyota Motor Manufacturing announced that
they expect to be number one in automotive manufacturing by 2010. All leading
indicators suggest this will happen well before their targeted date. While their
competitors shutter plants and espouse survival strategies based upon
innovation and global outsourcing, Toyota is building plants in Canada and the
United States. Further, they are asking major suppliers to build their plants
directly beside or extremely close to the new Toyota facilities. And through it all,
Toyota stays focused on the basics. Eliminating waste through disciplined
process management. The following quote by a Toyota senior leader exemplifies
its focus:

“Brilliant process management is our strategy. We get brilliant results from

average people managing brilliant processes. We observe that our competitors
often get average (or worse) results from brilliant people managing broken
processes.”

Toyota Motor Manufacturing

Process management is the future of supply chain management. As Dan Jones
and Jim Womack now teach, supply chain management is the future of the
customer experience. Using the cumulative addition laws of mathematics, this
would suggest that process management is the future of the customer
experience. This makes perfect sense because the customer lives the effects of
all business processes being consolidated and executed in an attempt to meet
customer needs. The more effective the processes, the better the customer
experience.

The conclusion about the future therefore is that there is nothing new under the
sun. It is now time to get back to basics and focus on how we do our work. How
can we ensure that we are always doing the right things right? Additionally, we
need to collectively face some brutal realities about process management:

1. Outsourcing a broken process will not get to the root problems that caused
the process to be broken in the first place.

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 2. Automating broken processes will not result in a better process. In most
cases, automating broken processes will generate results that are worse
than the ineffective manual process.
3. Process effectiveness has a direct and proportional relationship with
process line- of-sight visibility. Process line-of-site visibility has a negative
relationship with supply chain lead time.

Process Line-of-Site Visibility

Developing and sustaining effective and efficient process requires disciplined use
of the plan, do, check, act (PDCA) cycle as taught to us a half a century ago by
Walter Shewhart and W. Edwards Deming. Our ability to execute PDCA is a
function of our ability to see the process. The more visibility we have to a
process, the more effective the PDCA will be, resulting in continuous
improvement of the process.

In logistics and supply chain management, this line-of-site visibility to our

processes is a function of supply chain lead time. The longer the lead time, the
less our line-of-site visibility. For example, if we have a supplier who is next door
to our facility, we will have the ability for a high level of process management. All
supply chain processes, from forecasting through to transportation can be better
managed for no other reason than the short lead time from the supplier to our
facility. In contrast, if we resource this supply to a supplier off shore, lead times
will increase significantly as will our inability to have line-of-site visibility of
process. As visibility of process diminishes, PDCA will become extremely difficult
to execute and therefore continuous improvement will stagnate.

Drawing conclusions from the above arguments, we can summarize our findings:

1. The future will be handed to organizations that focus on the basics.

2. Fundamental to practicing the basics is effective process management.
How do we do our work to ensure we are doing the right things right?
3. Process management relies on our ability to execute the PDCA
continuous improvement cycle.
4. Effective PDCA requires process line-of-site visibility.
5. Process line of site visibility increases as we reduce lead times.

What Does the Future Hold?

A most interesting question for the logistics and supply chain professional today
is whether the current feverish trend of globalization will ever reverse itself. Will
we wake up one morning and decide that extended lead times, variability of
quality and service, increased inventory levels and an inability to manage and
improve process will simply cost us more then building and sourcing in local
markets? If Dan Jones and Jim Womack are correct, then we will see this day,
perhaps sooner then we think. In the meantime, organizations currently fighting
for survival need to take a hard look at how they manage fundamental business

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processes. It’s time to get back to basics. And for some, time may be running
out.

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