How to Structure a Lean Transformation

Akinori Hyodo, former Factory Manager, Toyota HiAce Factory | #AskSensei Event 5 Summary

When embarking on a lean journey, a strong approach is crucial to move forward in the right direction. We discuss how best to structure a lean transformation, with Akinori Hyodo sharing his advice on this important topic.

Structuring a Lean Transformation

Today’s theme is how to structure a lean transformation. The fact that you wish to introduce lean and have a lean transformation is an indicator that you want to change your company. When you want to change a company, there are usually some management issues that you want to overcome.

As I always say, the introduction of lean to a company is more about the introduction of a tool or a method. Lean is one of the methods or tools that you can use in order to overcome your management issues. Therefore, you must have a clear understanding of your issues before you implement lean.

The first step of your lean transformation is to gain a good understanding of where your organization is currently at. What exactly are your current issues and what is the current situation and details surrounding those issues?

If you can clarify those issues and associated details, you can then proceed to start thinking about what you are going to do to overcome them. Then, you can come up with a medium to long-term plan to address those challenges and create a roadmap to overcome the identified issues and move forward with your transformation. In following that roadmap through to the goals you set out to achieve, you will also have a structure in place to transform your company towards becoming a lean enterprise.

Having said that, depending on the issues, the tools of your approach may vary. For instance, introducing the tool of 5S – which I am sure many of you are already familiar with – may be more appropriate to be implemented first before introducing a suite of lean tools in some situation.

Companies are at a different level when they decide to embark on their lean journey. When the problems are already visible and clear, there are many lean tools and methodologies that can be applied and utilized to address those problems. However, if you don’t understand the issues clearly to begin with, you will find yourself in an awkward and difficult situation when trying to introduce lean. You must remember that lean tools can’t be utilized to their full potential if your problems aren’t clearly exposed and identified in the first place.

I have just referred to 5S here because if you don’t fully understand what your problem is, but you are still trying to implement a change for the better, then stating with 5S is the way to go. Following that, you can then gradually move towards a wider application of lean. This is because, through 5S you will be able to expose and visualize your problems much more easily.

As I often say, if your organization was to just focus on 5S and do it thoroughly and consistently, you will find a very big effect on your business even without embarking on lean.

The reason behind this is that within lean, there is the concept of the seven types of waste, and when you find waste in your work area, you can remove the waste through 5S in order to make improvements to your area.

Regarding 5S, let’s also think about the first S of seiri or sort. What is the definition of sort? This is to separate necessary items from unnecessary items and get rid of those things that are unnecessary. That is the definition of sort, isn’t it? Those items that we rid ourselves of are the same as waste in terms of lean. Through that step, you will be able to see your problems more easily.

So, without getting too hung up on the idea of lean application and just by focusing on 5S alone and implementing it thoroughly, you will get a very positive result. If you set yourself to be the number one 5S company in the world and applying 5S very thoroughly, you’ll be able to get right up to the top echelon of lean companies around the world even without focusing on the broader definition of lean.

One thing I want you to be careful of before embarking on your transformation, however, is to ensure you put a proper structure in place. You need to think through an appropriate structure and organization of people that are going to support you through this transformation.

I also recommend in your company to draw a picture of your plan once you establish a future state of where you want to be in the years to come and think through the steps that you need to take to get to that future. To this end, first grasping and understanding the current situation fully and to confirm the details of where you are right now is so important.

What you need to do, in summary, is to identify the current situation where you start your journey, set the goal of your future state and recognize the gap between these two points. Then, work out the steps and proceed through them to close the gap between your current and future state. In working through this you must formalize your steps and put them into a structure of how your lean transformation comes together.

Audience Q&A

What does a step-by-step TPS lean transformation roadmap look like for Toyota or a Toyota supplier?

How do you start the lean transformation process with only a very limited number of personnel that understand lean? Do you create a lean team?

One point to answer the question is to ensure that in leading a lean journey you have a top-down approach from the beginning to make sure people in your organization understand what lean is. This understanding needs to start at the top of the organization and be deployed all the way down.

Lean is not a tool or set of activities that is limited to only one part of the organization. This is an approach that encompasses the entire organization.

For the organization you are referring to in this question, I am not sure what percentage of the staff have an understanding of lean, but even within that limited number of people who do have a sound comprehension of lean, there are probably a few people who are not fully on board. They don’t fully agree or engage with the implementation.

While it’s important for you to keep trying to get everyone on board, it’s not necessary for 100% of the employees across your organization to understand lean to move forward with your lean transformation. If you wait for everyone to get on board with the idea, you can never start your lean journey. So, I would say you can initially aim to gain a basic understanding of lean amongst 70 to 80% of the organization – not everybody needs to be completely on top of it.

Once you start your lean transformation and start to implement lean, there will be some positive changes and results that people start to see, and some of those who were not fully on board with the idea at the beginning will also start to join.

In any organization, as much as you try to explain something and how things work, you would probably find some people who struggle to picture what you are trying to achieve and what the results would look like. So, a really good way to get the message of its merit across within your organization is to achieve that initial change. Helping those people experience and see that change for themselves will help them to understand the benefits of lean.

Then, how can we achieve that change within your organization quickly? As I say quite often, you first need to set up a structure that supports your lean implementation. How this structure is set up may be different depending on the size of the organization. But, once it is in place, the team should create a model area where they apply and implement lean thoroughly and successfully. This focus area doesn’t need to be very big. This would then prove to people that success can come out of lean and people can see what change looks like.

Through my experience of going to many different companies not only in Japan but also around the world, I have met with many people who explained to me that they had tried to implement lean but things hadn’t worked out well for them. But after talking with them more and asking a few more questions, I often find that the company or the team hadn’t invested enough time in communication with the people of their organization to make them understand the objective of what they are trying to achieve.

I think it’s natural for us humans to resist change. By default, most of us do not want to change the way we have been doing things. It is much more comfortable for us to stay with what we are familiar with. Therefore, you must explain your objectives clearly and what benefits this change would bring for them. You need to have those communication and awareness-change activities with your people and let them see and experience for themselves that the new way is better. You must make sure your people understand the change they are going through is for the better. Please be mindful of this point when you embark on your lean transformation.

Is there a minimum of lean knowledge that should be taught to all employees before launching a lean implementation?

Initially, those at the top of an organization need to have a really strong understanding of lean and the qualities required in leading a lean journey. It needs to start at the top. So, acquiring lean knowledge and undertaking lean training are activities that must start from the top of the organization, before working their way down through the rest of the organization. Lean doesn’t start from the operators.

But, if we talk about what knowledge is needed at the operator level of an organization, all we ask them to do at the very beginning is to call their team leader if they see anything that is not quite right or not standard. All we ask them is to stop what they are doing and call for assistance.

It’s the training we give to people above the operator level that is important in overcoming the issues that operators may notice. At the very beginning, this is the minimum requirement asked of operators.

The best approach when launching a lean transformation is to instill the fundamental knowledge of lean into the minds of those at the top first and then gradually turning to personnel development activities with the managers and supervisors before proceeding down through to the operator level of the organization. This is how we start and move forward.

I want you to understand that our approach regarding the fundamental role of an operator is to have him/her call for assistance when there is a problem. This is because if operators are thinking too much while they are working, you will find that this will lead to quality issues. What is expected of operators is to follow what has been decided.

Be aware that the lean knowledge and skills required at each level within an organization is different. Staff at top management, middle management, and supervisor levels each perform different functions and have different responsibilities, and therefore their lean development must be customized appropriately.

How do we balance looking inside our organization for solutions with looking outside the organization for examples when transforming to “something better”?

Putting it simply, if an organization is looking more outside of their company for answers when faced with internal issues, they are probably not in a position of serious difficulty. If they are trying to deal with the issues that are occurring internally, then the answers should come from inside.

I think going outside to find references, for example, going to see other companies to learn how they are doing things and tackling certain issues, is an important thing to do. But, in reality, even when you visit other companies and see how others are operating, you won’t be able to fully understand what you are seeing in terms of their background, the true issues they are dealing with and the solutions that they have implemented.

When you have a problem within your organization, what you see at the surface level is a phenomenon. But, there is always a root cause sitting behind that phenomenon. The problem you are experiencing is a result of the root cause.

Therefore, if you have gone through the analysis and tried to get to the root cause of the problem but you still haven’t been able to resolve an issue, then at that point, visiting external organizations to see what issues they have had and how they went about resolving them, can be beneficial as a reference for your own organization.

However, just recognizing a phenomenon, declaring “oh, we have a problem” and then immediately going to look outside of your organization for solutions – I cannot quite see the merit in that.

Furthermore, if you don’t have something in your mind that you are trying to solve and haven’t gone through the deep thought process of what the internal solution might be, how and by when you are going to address your issue, etc., your visit to the external organization is going to end up being just an activity of going out to see something different and coming back without bringing back anything of real value.

The message I always have is to give people within your organization issues and problems to think about. This is particularly the case if you are a manager. Put those below you in a challenging situation where they are compelled to think themselves out of the position. This is always our approach and my advice.

If you are looking outside for solutions immediately after you identify a problem, I don’t think you are truly in a troubled and difficult situation. I doubt you are going to find the answers you are truly looking for.

An easy test you can do to see if it is really of value to go looking externally for answers is to ask your people if they would be willing to invest their own money to visit external companies to seek answers. When people are asked this question, I am sure many of them would start looking for solutions internally first. But, when they really need that reference from outside to resolve the particular issue they are faced with, that’s when they will put their own money on the table to get the answer they need externally.

But, to be honest, I don’t think it is their fault that they want to go outside and look for solutions. I actually think it’s a reflection of what people above them are doing in terms of their work. Their managers need to be educated on how to better manage their business and people.

What do you think is the advantage of lean production system application in the current situation of the pandemic? Does it create additional value?

I will answer the question under the assumption that your company has been actually operating during this current pandemic.

Even when your company is in operation, once your customers stop their business as a result of the pandemic, the company will be left with the level of inventory they have built up once sales stop and your products stop moving out your company’s door. This can be a dangerous situation for your company’s existence as you are unable to sell that inventory.

A key principle of lean is not to make anything that you don’t need. If your business is operating in a lean manner, the damage inflicted by inventory will be kept to a minimum.

In addition, if your company is still operating but with much lower volume of demand, you will be able to adjust your production in a flexible manner by allocating the optimal number of operators based on the volume of demand without necessarily reducing overall staff numbers.

If you feel that you have to keep operating according to the usual operating hours, there will be much waste in your process and you will end up making more than what is necessary. However, if your team is able to fulfill the daily demand in two hours of production, then stop right there by applying the aforementioned lean principle. In this way, your company can save unnecessary expenses associated with running the business be it the electricity bill or something else.

As the world starts to open up again, there will be an important principle for companies to follow which is not to go straight back to full production. This is particularly the case with companies that have severely reduced their production volume or even brought it to zero due to a shutdown. Don’t get carried away and start producing more than what the market is actually asking for. Please make sure to stick with the principle of only producing what you sell and what you need.

If it is not necessary, stop producing. This can be a really hard thing for many companies around the world to implement because there is this feeling that “we have everybody here, we have the equipment, we have the time available, therefore we need to produce more”. But, although this can be a really hard thing to implement, you need the discipline to stop once you reach the volume that is necessary for the shift.

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