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How Lean Dynamics can be used effectively

By admin • on November 18, 2009

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dynamics300x2001 How Lean Dynamics can be used effectively

I recently posted the following question on Linked Q&A:

How can Lean Dynamics be used effectively?

Lean dynamics is a business management practice that emphasizes the same primary outcome as lean manufacturing or lean production of eliminating wasteful expenditure of resources. However, it is distinguished by its different focus of creating a structure for accommodating the dynamic business conditions that cause these wastes to accumulate in the first place.

Like lean manufacturing, lean dynamics is a variation on the theme of creating efficiencies and greater value by optimizing flow rather than by maximizing economies of scale. As such, it represents an important chapter in the broader discussion of Taylorism, Fordisim, Alfred Sloan’s standard volume methodology, Peter Drucker’s philosophy on the “theory of the business” and Genichi Taguchi’s analysis of loss. Its general philosophy has grown in popularity over recent years, in large part because of the increasingly challenging circumstances faced by the global business world (particularly evident during the 2008-2009 worldwide economic downturn.)

This need to create greater efficiencies while competing in an environment that demands constant change and innovation seems to be responsible for the emergence of lean dynamics as a recognized business improvement approach.

However, just how can a company use Lean Dynamics effectively?

Here are the answers:

Mark Greenhouse: MD of ResQ Management, increasing profits & improving customer satisfaction through transformation and lean thinking

From experience (my knowledge of “Lean Dynamics” is limited) the best way to use lean to create flow and true change is by being able to translate lean thinking into the different languages of each department.

Take marketing, is Lean in marketing about completing campaign designs more quickly? or is it really about reducing waste of creating too many leads, or too many leads that have no potential, or focussing on understanding the value that your solutions create and how to price and communicate these?

Can the marketing team actually put their finger on the “cost per customer acquired” versus the usual “budget cost per campaign”? We often use this to show them how constantly reducing costs can affect the customer attraction rates.

When it comes to accounting is it about creating reports in a more timely manner? or is it about creating reports which allow accounting to enter into a dialogue with departments and to understand how to quickly turn department and operational KPIs in to financial inputs.

i.e. if you measure the time taken from order enquiry to invoicing and then focus on reducing the time this takes you will impact cash flow. So rather than measuring cash flow post transactions you get an insight into the cash position up front. How many accountants measure “time”?

In both these examples there are plenty of other “translations” that have to take place.

I’ve found when you sit down with a marketing person, the sales person, the operations staff, the accounting team etc,etc responsible for the value stream you can get the team to understand how they create waste for one another, waste which isn’t required by the paying customer.

Unfortunately most organisations have departmental specialists (e.g. marketing) first and then with matrix structures comes product responsibilities (e.g. Nappies New Baby Birth to 15lbs) not the other way round but what does the customer buy?

So to give you a real example we worked with a marketing team constantly striving to reduce costs, this meant that they bulk purchased e-mails, direct mail etc and then sent it all out at once – the lowest cost way, so their suppliers said.

This marketing activity caused the sales team to be swamped with enquiries and they couldn’t handle them all properly, the quality of data collection and sales conversations dropped so the actual conversion rate dropped.

The upshot of this was that marketing thought their campaigns weren’t working so were trying to do new things and “improve” their activity.

However the spike of sales enquiries still lead to the operational team seeing a large spike of activity and to cope with it, you’ve guessed, they operated batch processing to deal with it.

Which meant carrying large amounts of stock and not meeting customer demands; the company involved often sent out the order in several parts, so some customers received the last part they were expecting first! It all depended on which day our order went into the system.

We needed to undo the thinking behind batch processing and it’s links with efficiencies but without getting to the heart of the marketing efforts our work would have had minimal impact.

I do genuinely believe that it is the lack of translation that holds back lean thinking from producing the types of dynamics that lean dynamics alludes to.

Dax Ramadani: Lean Six Sigma Consultant and Process Designer

Lean Dynamics is based on the same core principle of value creation and waste elimination, which results in responsive, short lead-timed processes – sp it should not be treated differently as Lean / Six Sigma / Lean Six Sigma initiatives.

To use this initiative properly, I propose the requirements to be broken down into 3 phase of the journey:

1. In the beginning of the initiative, an organization must first complete the bare minimum requirement of the lean enterprise building block suggested by Mr. Liker in his book The Toyota Way. If you haven’t read the book you can refer to a literature on Lean Enterprise in my web site (pardon the mixed language in the file – the file was derived from one of my local consulting work, but you should be able to get the general idea).

2. In the middle of the initiative, a more understanding and skill of the more advance statistical / lean tools are required, since usually a big portion of the low hanging fruit has been eliminated through kaizen activities. On top of that, cross functional, system-wide optimization might need to take place so management support is needed even more. The organization might already even find one or two failed kaizen, and it is important not to use these as scapegoats to kill the whole initiatives. We need to keep going, keep moving, keep learning – this is where management support (in the form of providing the best resources to complete the kaizens and create improvements, breaking down organizational silos, maintaining initiative promotions, etc) and communication is important. Last but not least, the organization needs to work on further improving their adherence to the Lean Enterprise building block achievement.

3. In the ‘grown up’ phase, we need to ensure we have put control steps in place and ’systemized’ kaizens and 5S events as part of the ‘daily’ management activities. This is also the time to extend the initiatives to R&D and suppliers, to gain even more system efficiency. Usually at this phase the organization has a decent building block but we need to maintain this culture until it is embedded permanently into the organization.

Alessandro Laureani: Lean Six Sigma Black Belt at Hertz – Open Networker

My understanding of Lean Dynamics is that it focuses on the disconnections between different parts of the organization, while traditional Lean or Six Sigma techniques may often focus on each single parts as isolated ones.

As such, Lean Dynamics doesn’t replace other continuous improvement efforts, but rather complement them as part of the overall business strategy.

You may want to check the book “Going Lean: How the Best Companies Apply Lean Manufacturing Principles to Shatter Uncertainty, Drive Innovation, and Maximize Profits (AMACOM, 2008)” from Stephen Ruffa, where Lean Dynamics was first introduced.

Ramit Tandon: Manager Operations at Ashvin Industries

Lean as a concept is more of a philosophy than technique. It certainly has certain tools which can be applied however, for lean to be effective a change in the entire organisations culture is required. For that to occur effective training has to be imparted. This enables the policy makers to identify which aspects of lean one needs and how can it help in achievement of business goals.

As far as the question of achieving greater efficiencies and customisation is concerned. These can be achieved carefully looking at concepts such as standardization, postponement of differentiation, careful forecasting. It would also depend upon of what kind of products or service is the organisation into.

William McIntyre: Specialist, Quality Systems and Supplier Coordinator at Dana Sealing Products Group

I feel as though a Lean Dynamics approach is a thoughts approach at manufacturing, with a touch of common sense. In fact, we should call most of these systems, geared towards waste reduction and building bottom lines, “The Common Sense Approach to Manufacturing”…

That said, from what I’ve researched so far, the LD approach should tackle underlying problems or disconnects within operations as a whole. In other words, another structured approach, loaded with techniques and principles to find an answer to an age old question., What is the Root Cause, and how can we add value within our chosen remedy.

Essentially, adding value comes while initiating prevention. So let’s realize it!

So, to answer your question about using Lean Dynamics effectively… Just stitch the wound and cut the cost on the Band Aids. “The Common Sense Approach”.

What’s your take on Lean Dynamics? Leave a comment below.