Some of the companies I work with have very nice and elaborate Lean Six Sigma annual assessment and ranking programs. These help to establish a consistent roadmap across the corporation and give a good way to measure a facility. However, my question to them then is, how often and what is the process to question the assessment? What's the feedback mechanism that tells you when there's no value in an activity other than to check the box on the assessment?
Process is bureaucracy, the challenge is to find the balance in just enough that it adds value overall but not so much that it constrains the system. It was at this point that I went back to my operational definition of Lean.
Lean is a cultural methodology that focuses on efficiently delivering value to the customer by reducing lead times through the elimination of waste.
Most lean practitioners of lean have a similar definition. However, most people I talk to do not know what their lead time is, measure it or know what their lead time is worth. I recently had a customer that put one of their interns on a project to assess the cost of their waiting on material to be delivered. In a backdoor manner, they had to figure out what an hour of production was worth. We had a discussion about Lead Time and Production Time to discuss the differences. The intern really got it, he did some further analysis and built the model out some more to highlight the impact that the downtime has on their operations.
Calculating the value of a unit of Lead Time can get real complex real fast depending on what you include and why. It also tends to have a lot of soft dollars rolled into it that makes it tougher to correlate the impact of reducing it straight to the bottom line. I think this is why it gets a lot of talk but not as much action. I think I'll have to work on a model for calculating lead time and its value. I'd like to have it start simple with concrete numbers and then add in some of the soft numbers. If anyone has any models they'd like to share, please email them to me.
All of the companies that have successfully implemented Lean that I can think of, have the common denominator of explicitly focusing on and understanding their lead time. I'd like to see a revolution take place that focuses on lead time. Lean can be used as a strategic tool. I'll share how in an upcoming post.