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issue: October 2002 APPLIANCE Magazine

AE: The Open Door
Assessing Your Lean Enterprise Transformation

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by Jorge L. Larco, president, J. L. Larco Associates, Inc.

The world has become very competitive. And competing not only means having an adequate pricing policy, but also having competitive performance in terms of quality and delivery, and being able to customize products to customer needs in short lot volumes.

Why Lean Enterprise?

The progressive migration of industries to low-cost environments and the massive differentiation needs required by customers place a substantial burden on companies struggling to continue to exist and provide shareholders with required returns on their investments.

Lean Enterprise is a strategic business system and a state of mind. While it is simple in concept, it is often difficult to implement. It has its origins in manufacturing, but the principles apply to all aspects of a business. It can be applied to businesses where there are a large number of products made during a shift, businesses where there are very low volumes, and in cases when each product may take several weeks to produce. It can also be applied to service businesses.

Companies that have adopted the Lean Enterprise approach and have applied it throughout the entire organization have achieved "sustainable" and impressive performance improvement. Even so, true "Lean" companies are limited around the globe. There have been may starts and many supply-side improvements that have been described in the specialized press. However, true sustainable, continuous performance improvement is hard to achieve. It requires a firm commitment from the top to make Lean Transformation a reality; an unwavering direction that is maintained and communicated thoroughly in the company, where every employee talks, lives, and acts the "Lean" experience; and adequate tools to support the "Lean" transformation.

Transforming a company from a traditional producer to a lean enterprise typically begins with management establishing a clear and comprehensive strategy for integrating the Lean concepts into the business. Then, after communicating the strategy extensively, companies begin to transform the production area, where results can be seen quite immediately and are visually easy to understand and follow. In parallel, the lean concepts and practices have to be implemented in the indirect areas. First focusing on functions that support production such as maintenance, purchasing, logistics, scheduling, shipping, and eventually moving into engineering, sales, finance, human resource, and other departments.

An important tool in the development of the Lean program is an assessment tool that is both comprehensive and complete. The tool should determine a company's initial lean transformation state and identify and prioritize all of the dimensions that need to be addressed to ensure the attainment of a complete Lean Program. In the many transformations that my peers and I have completed in the last 8 years, we used an assessment tool as a means of communicating the lean objectives throughout the company and ascertaining progress throughout the lean journey that each of the groups in the company achieved. Thus, the tool became an element of motivation and challenge.

The Workbook for Assessing your Lean Transformation co-authored by myself, Bruce Henderson, and Elena Bortolan evolved from the indicated experiences and needs. Thus, it has been developed with two considerations in mind - comprehensive lean content and ease of use. The workbook contains our step-by-step program for assessing lean progress in a company's operations. The workbook contains more than 60 color photographs to make it easy to visualize what lean operations should (and should not) look like.

The book is divided into nine chapters, so that readers can address their companies as a whole. The chapters address the evaluation of the company strategy, especially focusing on the Lean Strategy and the six fundamental toolsets of a lean "producer," which are: Workplace Safety, Order and Cleanliness, JIT Production, Six Sigma Quality, Workforce Empowerment, Visual Management, and Continuous Pursuit of Perfection. The book also describes the Lean Enterprise concepts (the broader company that surrounds production operations), including company organization and management style and company support functions.

I know that lean transformation programs can result in reductions in manufacturing lead-time, inventory, per-unit value added, and manufacturing space by 50 percent or more. The workbook can help accelerated achievement of these results and is a valuable instrument for achieving a sustainable transformation.

About the Author

Jorge L. Larco is president of J. L. Larco & Associates, Inc., a consulting firm that provides domestic and international consulting services for manufacturing and service companies. With years of industry experience, Mr. Larco provides expertise in leading global manufacturing companies and implementing Lean Enterprise techniques.


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