"A Classification Scheme for the Process Industry to Guide the Implementation of Lean"

Fawaz Abdulmalek, Jayant Rajgopal, and Kim Needy

Engineering Management Journal

June 2006, pp. 15-25

This article provides a very clear discussion of how Lean can be applied in various degrees to process industries. Lean has mainly been applied to discrete products in manufacturing, but there have been previous successful applications in process industry organizations such as DuPont and Dow Chemical.

A valuable classification scheme is provided in this article in order to characterize process industries into distinguishable groups. The three aspects of the classification, and implications for Lean are:

• Product characteristics—The two primary characteristics here are materials used and product volume. Materials vary in terms of quality, and more importantly in the variety of materials used. Product volume refers to the amount of output/finished product produced. Industries with low raw material variety and high product volumes (such as beverage industries) may not have much need for Lean tools such as production smoothing, small-lot production, JIT, kanban, quick changeover, and standardization. However, tools such as TQM, Total Productive Maintenance, and kaizen would likely be very useful. Conversely, industries with high variety of raw materials and low volumes (such as specialty chemicals and pharmaceuticals) would likely be more appropriate for small lot production, quick changeover, and cellular layouts.
• Process characteristics—"The type of equipment and the facility layout dictate the flexibility inherent in the manufacturing process. This in turn determines the extent to which lean principles can be adapted. In general, dedicated specialized equipment provides the least amount of flexibility, while non-dedicated, general purpose equipment allows for the most." High process flexibility means that tools such as kanban, quick changeover, production smoothing, and work standardization are more feasible. TPM is likely to be the primary approach for non-flexible production characteristics.
• Point in the process when the product becomes discrete—Almost all process industry products become discrete at some point during the manufacturing process (if only by being placed in a container at the end of the process). Textiles and steel become discrete fairly early in the process. Gas becomes discrete late in the process. In general, the earlier the point of discretization, the more opportunities for Lean.

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"Service With a Smile"

Betsi Ehrlich

Industrial Engineer

August 2006, pp. 40-44

The author of this article says that the same paradigm underlying manufacturing mass production is responsible for the current state of customer service. She calls this Mass Servicing, the hallmarks of which are "semi-skilled customer care representatives trained a mile wide and an inch deep handling a high volume of calls for all customer inquiries. The representatives are typically the lowest paid employees in the company, yet the ones customers see as the company." Incentives are often tied to how fast the customer care representative can get the customer off the phone.

An alternative to this approach is Lean Servicing. The elements of Lean Servicing are:

• Customer-centric work cells reduce cycle time and offer seamless one-stop service
• A level service system is achieved through pulling customer demand and maintained through visible metrics, decreasing cycle time, and need for inventory and associated costs
• Servicing to demand decreases the need for indirect labor and associated costs
• Direct workers are provided ongoing training and a voice in the business in return for their continuous improvement ideas and flexibility
• Quality and process controls are built into the servicing process through poka yoke, standard work, and 5S, eliminating the need for quality checks and associated costs and time

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"Answering the Call"

Marcela Dunphy and Roderick Lewis

Industrial Engineer

August 2006, pp. 24-29

While other telecom companies have adopted Lean or Six Sigma "off the shelf", BellSouth decided to devise its own program. This program is called Management System and Operating Control (MSOC), and it "combines process management, work measurement, management controls, and people development."

The MSOC method includes elements from Lean and Six Sigma, and adds performance management at the individual level to address the behavioral aspect of the employee. Key measurement indicators such as performance, quality, service, and effectiveness are combined into a balanced scorecard. To ensure that continuous improvement occurs, MSOC has a "sustainability" element composed of change control and certification.

Since its inception in 2004, MSOC has reduced costs by 20 percent while improving service and quality levels.

The next step for Bellsouth is a system called MORE, which is the knowledge worker model for improved performance and addresses all non-supervisory individual contributors.

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"Fix the Process, Not the People"

Renee Cveykus and Erin Carter

Strategic Finance

July 2006, pp. 27-33

This article shows how Medtronic, a global leader in medical technologies, has applied "Lean Sigma" to core financial processes. Week-long kaizen sessions have emerged as the preferred tool for the fast transformation of transactional business process "because it focuses on specific functional areas where change must happen quickly to gain efficiency and ultimately achieve customer satisfaction....Team members measure and time the existing process, identify the waste, dismantle the old process, and create the ideal state by implementing the new process." Accounts Payable kaizen activities have achieved the following:

• Lead-time reduction of 53% for receipt-through-payment distribution for non-P.O. invoices
• Reduction from 3 days to 1 for front-end invoice processing form mail to index;
• Fifty percent reduction in payment processing time for paper check printing process

The article also includes a case study of a 5-day kaizen event, with explanation of what occurred each day.

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"The New Science of Sales Force Productivity"

Dianne Ledingham, Mark Kovac, and Heidi Simon

Harvard Business Review

September 2006, pp. 124-133

The authors explain that companies are using a new approach to managing their sales force that doesn't relay on hiring a lot of salespeople and hoping some of them are good.

The four levers to boost productivity are:

• Targeted offerings—Make sure that the right products are being sold to the right prospects, by targeting offerings to meet the needs of specific segments;
• Optimized automation, tools, and procedures—Use "detailed pipeline discussions, systematic account and territory plan reviews based on standard guidelines, defined lead distribution processes with tracking throughout the sales cycle for both reps and partners, and electronic dashboards for reps and territories";
• Performance management—Use training and tools to reduce cycle time, and incorporate metrics, incentives, and skill development into compensation systems;
• Sales force deployment—systematically distribute your sales resources so that the needs and challenges of each customer segment are met.

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Lean Maintenance

John McNeil, GP Deltapoint
 

The article above on Process Lean by Abdulmalek, Rajgopal and Needy points out that TPM is likely to be the primary Lean approach for industries with non-flexible production. Such companies (for example, metals manufacture) are prime candidates to apply Lean Maintenance principles which will transform them from reactive also-rans to proactive leaders.

When marrying world-class lean and maintenance practices, the key lean concepts of focus on the customer, pull, smooth flow, waste elimination, and working to a heartbeat all apply. However each takes on a focused meaning that applies most directly to the maintenance sphere. They must reflect the core activities of Total Productive Maintenance which aim to improve overall equipment effectiveness (OEE), improve maintenance efficiency and effectiveness and work early to prevent maintenance at breakdown by adopting a lifecycle mindset toward production equipment.

The customer-focused metric that that drives maintenance improvement is OEE. Pull and flow are inherently contradicted by the idea of preventive maintenance, but in any real operating environment unexpected breakdowns occur and can be dealt with most effectively by using pull and flow principles. Pull and flow also apply to the procurement and replenishment of supplies and parts. Waste elimination is conducted by eliminating the major losses: breakdowns; setup and adjustment; speed losses; idling and minor stoppages; defects; and startup/yield losses. Working to a heartbeat is directly applicable to preventive maintenance scheduling.

For both manufacturing-Lean and TPM, employee involvement and training are essential components of any improvement initiative. In fact this overall approach will have many of the hallmarks of what Erlich refers to as providing "Service with a Smile". Can you imagine a world where maintenance is conducted by customer-centric work cells (reducing cycle time and offering seamless one-stop service); a level service system through pulling regular maintenance demand (maintained through visible metrics); servicing to demand to decrease indirect labor costs; workers provided ongoing training (and a voice in the business in return for their continuous improvement ideas and flexibility); and quality and process controls built into the servicing process through poka yoke, standard work, and 5S (eliminating the need for quality checks and associated costs and time)? If so, you are imagining true lean maintenance.

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