August 2006 Lean Division Enewsletter

August 2006 | Lean Division eNewsletter

“An empowered organization is one in which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success.” –Stephen Covey

CONTENTS

• Quality Drives Lean Conference
• The Impending Talent Crisis . . . Six Sigma and Lean to the Rescue by Tim Noble
• Integrating Communication with Lean Manufacturing by Adam Spisak
• Featured Lean Definition, Flow Rack
• Mastering Self-Leadership by Christopher P. Neck and Charles C. Manz, a Book Review
• Featured Web Site, Accel
• Ask the Expert, Measuring R&D
• Online Supply Chain Management Certificate Program
• The Effect of ED Physician Scheduling on Patient Throughput and Patients: On-Demand Webcast
• Managing Patient Flow: On-Demand Webcast
• Creating a Culture of Lean Discipline: On-Demand Webcast
• Submit an Article
• Lean Reads
• Lean Seminars & Certificates – Upcoming Seminar Dates
• Six Sigma Seminars
• Feedback

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Quality Drives Lean Conference

The highly popular IIE Lean Management Solutions Conference will join forces with ASQ’s Southeast Quality Conference in October for the new IIE/ASQ Lean and Quality Conference and Exposition. By joining forces, the conference will be able to provide participants with an expanded selection of presentations and tracks on lean and quality applications.

The two-day conference will feature tracks in Six Sigma, healthcare, quality management, quality systems, quality engineering, lean enterprise and integrated supply chain, lean methods, and lean tools. Two-day post-conference workshop sessions are focused on two of the hottest tools in productivity management: value stream mapping and kaizen.

The new conference will be held October 30-31 in Atlanta. The pre-conference workshops take place October 29 and the post-conference workshops take place November 1-2.

Keynote speakers are:

• James A. Tompkins, Ph.D., President of Tompkins Associates
• Craig Estep, Vice President of Operations for Cessna Aircraft Company
• Tom Guthrie, Vice President of Operations for Cox Communications
• Patrick Stamm, Vice President of Operations for Golden Rule Insurance Company.

Pre- and Post-Conference Workshops include:

• Rate-Based Planning Simulation – The Secret to Building a Lean Supply Chain
• Does Your Company Culture Support High Performance?
• Leading Enterprise Change
• Measurement System Analysis (MSA)
• WhiteCollar™ Kaizen: Rapid Improvement for Service, Administrative and Knowledge-Worker Environments
• Value Stream Mapping – EMS Wireless

For more detailed information, please visit the conference site

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The Impending Talent Crisis … Six Sigma and Lean to the Rescue

by Tim Noble

“Talent Wars” and “Brain Drain” are not the latest must see horror movies due out this summer, but U.S. business leaders might want to sit-up and take notice of an emerging crisis that could play-out frightening results for their organizations in the coming decade.

As 77 million U.S. Baby Boomers begin to retire over the next decade, there are only 46 million Gen-X’ers available to backfill the Boomers’ retiring ranks. Even with a modest two percent economic growth rate over the next 15 years, demand for critical talent could increase by as much as a third, creating a “war” for critical talent. For some companies the crisis may be even more immediate. One recent study of the nation’s 500 largest companies reported that they expect to loose half of their senior management over the next five years. Additional studies suggest that up to 85 percent of major companies surveyed have no formal program or process in place to deal with this impending crisis.

In the past few years companies have been so transfixed on downsizing to contain costs that they have largely neglected this looming threat to their competitiveness. There is no doubt that over the next decade or so, demand for talent will ebb and flow with the economy, however there is no denying this demographic shift and the potential impact it will have on U.S businesses. Too many companies continue to drive their human resource processes blindly, assuming the road ahead has not changed. These companies may be in for a rude awakening when they are unable to achieve even the most modest of business goals due to drastic staffing and talent shortfalls.

A less visible but no less dangerous problem is the loss of knowledge, or “brain drain,” resulting from senior workers departing the organization without passing on their expertise to others. This lack of knowledge management will place many companies in a position to repeat prior mistakes and expose businesses to additional financial and operational risks. Worse yet, if no action is taken, some organizations could be headed for a point of no return with the complete loss of process knowledge in a few years.

Companies that rely solely on a strategy of outsourcing as a potential solution may be in for a shock as well, as existing sources of talent from offshore labor pools, such as India, Mexico and China, dry up as these countries recognize their own needs and provide incentives to retain talent in order to support their own local economic business objectives.

Given this looming demographic shift, the time for corporate leaders to act is now; however, companies must resist the urge to rush ahead without a well-balanced and deliberate approach to managing and leveraging their human capital. Part of the solution may lie with such tools as Six Sigma and Lean. With their focus on process discipline, variation reduction and waste elimination, these tools are well-suited to help companies address this impending crisis.

Six Sigma has long been utilized by organizations to transform manufacturing and transactional processes from art to science by defining and validating key process variables to gain process control and eliminate variation. A key part of this methodology is the capture, transfer and validation of knowledge from process owners, thus making Six Sigma an essential part of any action plan to deal with the dangers of organizational “brain drain.” Companies need to not only view Six Sigma as a tool to drive productivity and service, but also as an essential methodology for critical knowledge management within their organizations. Six Sigma has a built-in tool set that lends itself very nicely to capturing and validating critical process knowledge that may otherwise be lost when key talent departs an organization.

The Lean tool kit can also play an important role in aiding organizations as they deal with this imminent crisis. Lean has a built-in methodology with such tools as “value-stream-mapping” and “standardized work” that can help organizations identify and eliminate non-value-added processes that waste human capital. Lean, with its focus on waste elimination, is ideal for helping organizations to free up human capital for redeployment. However, Lean will need to move beyond its stereotype as a tool set for only manufacturing and be accepted and applied to transactional processes in order to be an effective tool to mitigate the effects of this impending crisis.

Six Sigma and Lean are only part of the potential solution, providing a proven set of tools that can be part of a broader business talent management strategy. Business leaders will first need to recognize that the short-term solutions of the past will not work and accept that the landscape for talent management will dramatically change, requiring a more balanced and comprehensive solution in order to remain competitive in the coming decades.

About the Author

Tim Noble is the managing principal of The Avery Point Group, a leading national executive search firm providing functional expertise and executive search focus in the areas of Six Sigma, Lean, plant management, operations management, supply chain management and distribution management.

Copyright 2006 The Avery Point Group. Reprinted by permission

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Integrating Communication with Lean Manufacturing

by Adam Spisak

To create a clear line of sight between every employee’s actions and business priorities – although a noble goal, companies rarely harness the power in this statement due to the fact that daily crises of the moment often divert actions from planned business objectives. What is rarely discussed is an absolute solution for this endless crisis management circle. The right solution involves creating a management system which takes into account the “fires” that surface daily, and still allows an organization to operate in one uninterrupted direction. During Lean process implementation, the identification of savings using value streams is often a challenging undertaking. Sustaining a high level of urgency and performance in the continuing months and years can prove even more difficult. Daily business operations are often at the root of this sustainment problem – while in continuous operation, daily focus shifts away from lean manufacturing goals and towards daily crisis management.

It is a rarity today to discover an organization which is unfamiliar with Lean Manufacturing Principles. However, within the execution of Lean and other best practices hides a fatal flaw. Lean implementation is often termed an “event”. The mindset surrounding an event is that there is a determined beginning and end. With this in mind, considering Lean as an event is contradictory to the continuous improvement culture organizations strive to obtain. Additionally, today’s business climates are dependent on individuals who have more responsibilities than ever before. In fact, there is a very high likelihood that you reading this article have more on your plate today than you did six months ago.

The key to successfully creating a continuous improvement environment founded on Lean principles lies in developing a process based management approach. The cornerstone of a process based management approach is a robust communication system which uses business scorecards to promote a high degree of business focus (including programmatic targets) throughout all aspects of operations. Process based management becomes the visible and auditable way an organization operates creating a system to integrate Lean principles (or other programs) throughout all organizational levels and functions. It harnesses the energies and talents of all employees in a way that focuses individual and team actions on business priorities.

Fundamental to a process based management solution is to create a cascading scorecard process coupled with an action register system integrated with a routine communication process. Cascading scorecards link all departments to pre-determined key focus areas based on organizational strategy and priorities. Additionally, to maintain urgency and long-term focus on initiatives and programs they too must be reflected on scorecards. Programs integrated into these key focus areas are then reviewed on a regular basis with all department members providing the consistent visibility necessary to translate intention into reality. The goal is to increase connectivity between departments by developing scorecards which measure direct performance against targets, reflecting the department’s specific contributions to the overall organization’s vision.

Yet, the mere presence of a performance tracking tool does not change performance – how the tool is discussed and how accountability is driven against performance does. To ensure outcomes include more than pure analysis, every review of the scorecard must end with specific actions affecting business goals. Used in this capacity, the scorecard creates a culture where every decision is driven by business data. This culture is supported by the visibility and focus achieved by making the scorecard and action register the center of routine communication. Outcomes of this methodical review include (but are not limited to): consistent efforts driving towards root cause problem identification, equitable workload distribution and sharing/documentation of best practices. As an added bonus, this framework provides organizational leaders the ability to address both performance achievements as well as areas for improvement with concrete data making performance management easier and less subjective. Performance management based on visible data reduces the emotions and uncertainty traditionally involved in an exchange but also prevents performance issues in the first place by creating a more disciplined, proactive culture.

Prioritization of all daily activities should center on performance metrics reflected on the scorecard. The utilization of this strategy is applied during a regularly occurring meeting. However, this regular meeting must be brief, business focused and outcome driven. Let me share a quick illustration of how one company, Company XYZ, reinforces meeting urgency. As I paint this picture, there are two pieces of information that you must know. First, each employee at Company XYZ wears a badge/swipe card. Secondly, each conference room is equipped with a digital clock. When employees enter the conference room for a meeting each participant swipes in at the beginning and out at the end. At the end of this meeting, in addition to sharing how long the meeting lasted the clock also displays a monetary readout calculating the salaries of each meeting participant over the allotted time. When meetings last several hours and figures reach thousands of dollars the question is asked, “Did we advance the business by this value?” Company XYZ is looking for the return on their investment. The emphasis of the meeting is to make sure that everyone is educated about the current reality of the business and then determine where to spend time (using documented actions) between now and the next performance check.

To promote an entirely value-added session, specific meeting agenda elements must be in place. First, the scorecard must be visible when meeting participants enter the room. “Red” is used to indicate below target performance and “green” is used to indicate above target performance. These color indicators immediately set the tone for the meeting. As the meeting begins, the meeting opens with an action register (old) review focusing on commitments from the previous meeting. The initial review focuses on actions that have not been completed by determined target dates as well as upcoming issues that may impact current actions still open. Completed actions should be closed and moved into a completed action file. The scorecard then becomes the focus of the meeting. Discussions focus on “red” performance and it is non-negotiable that any scorecard objective which is performing below the target has a corrective action plan documented on the action register. With companies operating using Lean principles, “red” scorecard performance often serves as an area where a value stream needs to be completed. As the meeting continues, actions should be continuously documented and then finalized during the action register (new) review closing at the completion of the meeting. Finally, participants ask the question, “Did this meeting advance the business?” If necessary, changes are made to create a greater return on investment. Consistent application of these tools promotes a business-focused, outcome driven meeting.

World class organizations are continuously redefining effective practices to ensure the highest levels of quality and productivity. With adoption of the latest best practices, such as Lean, a process based management system becomes critical in ensuring both the optimal utilization of set practices and to ensure an organization can respond to changing demands in a timely and comprehensive manner. Process based management is an approach that provides clarity and connectivity for all organizational levels and functions on both initiatives and daily operational requirements.

About the Author

Adam Spisak is a senior consultant with Competitive Solutions Inc. (CSI) an international consulting firm based in Raleigh, NC. He presented two sessions at the Annual IIE Conference in May of 2006. Adam can be contacted by email at or by phone at 800-367-6993 or 800-246-8694.

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Featured Lean Definition

Flow Rack

A rack in which items are replenished from one end of the rack and gradually move to the other end on sloping wheels (gravity flow rack) or powered rollers where a lift truck, person or other device picks up the items.

To view the IIE resource library visit:

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Mastering Self-Leadership: Empowering Yourself for Personal Excellence

by Christopher P. Neck and Charles C. Manz

Mastering Self-Leadership: Empowering Yourself for Personal Excellence is a guide for self-management. The book begins with a quote from Agnes Repplier, “It is not easy to find happiness in ourselves, and it is not possible to find it elsewhere”. This quote lays the foundation for the framework of the book. The book presents methods to enable you to learn to lead yourself so that you can then effectively lead others. The methods explored include self-assessment, self-reward, self-talk, self-punishment, mental imagery, and teamthink among others.