Wednesday, June 17, 2009

Digging Deeper Into Lean at Volkswagen Group of America – Interview With Jack McEowen – Part II The Story

Well, VW didn’t follow the path of a name-branded Lean approach. Jack had Lean experience with 5 different companies and was very familiar with how it works, and more importantly, what slows it down. Jack describes Lean as being a top-down initiative, but with bottoms-up implementation.
“Of all the things I have observed and learned … it has been that Lean must be supported and clearly articulated from the top, but must come from the bottom up. It has been through this learning process that some traditional methods have been discarded, such as trying to teach everyone to think in terminology or to develop small Lean teams to show everyone how it is done. We were fortunate to have several things happen within a short time-frame. First, Eric Johnston set a vision and propelled that vision to reality by clear and consistent communication and unwavering support of the people he put in charge of reaching the vision. He always called it the "Super Bowl". This vision was a replacement of our existing warehouses with modern and clean facilities, replacement of our legacy systems with SAP, and a renewal of our organization to meet the needs of the new vision. Some of the organizational work included bringing in people with Lean experiences. The first would be Tony Gomes. Tony worked out on the shop floor and focused the passion and competiveness of our people to excel. At the same time, Eric Johnston supported the development of key users - people trained very heavily in the new SAP system and the methodologies to specify system changes and testing.”
Two-Phased Attack of Lean

Lean at VW, unlike other OEMs, was seen from the start as more of an enterprise effort – affecting both warehousing and inventory management. So, it was not just confined to the shop floor, where we typically find Lean. This has huge benefits, since Lean was never stuck to the warehouse floor it could find other paths to improved enterprise productivity, such as in energy management.
“Finally, the push from Eric to get better fast created two teams - one to attack inventory problems and the other to attack warehouse productivity. Eric knew both had to happen for everything to work per the communicated vision. At this point in time, we took a different approach. Specific experts were asked to modify processes and systems to meet Lean goals. So the few imparted their Lean knowledge to the many. We spent a great deal of time during and after the process changes teaching people the value of the changes and established specific metrics for the processes to show the improvements. These included LHY1, LHY5, and Supply Chain Costs as a percent of Revenue, among many others. And we heavily involved the key users in the modifications and testing.”
Continuous Improvement

Name branded continuous improvement efforts sometimes get in the way of getting any improvement done. Continuous Improvement (CI) simply means making things better. Contrast this with Six Sigma:
A business management toolset, initially implemented by Motorola, that seeks to improve the quality of process outputs to a 99.9997% efficiency level by identifying and removing the causes of defects (errors) and variation in business processes. It uses a set of quality management methods like DMAIC and DMADV, including statistical methods, and creates a special infrastructure of people within the organization Executive Leaders, Champions, Master Black Belts, Black Belts, and Green Belts who are trained experts in Six Sigma methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets - cost reductions or profit increases. (DPC: Six Sigma intimidates the hell out of me; I like Continuous Improvement because I understand it and do not need years of training).
Jack described VW’s journey to continuous improvement to me.
“As we were finishing these changes, we shifted gears. We joked that the major changes were easy for someone in corporate to identify. Now came the hard part. We had to develop the ability to continuously improve our processes. We developed principles for the warehouse that included engagement and accountability, benchmarking, and rewards and recognition. It was drafted with a lot of participation from managers and backed by metrics all the way down to the individual. Then we initiated Continuous Improvement teams that took people from all parts of the warehouse, from warehouse associates through general managers, to work on a team on a specific topic looking for a specific productivity improvement in a specific period of time.
CI is easy compared to Six Sigma, and better yet, it’s the same thing, but with a lot less formality, rules, steps, nouns, verbs, training, time and cost. Rather than plan and debate about doing CI, VW just did it.
“We use simple teams and simple communications. You are not judged by the quality of your PowerPoint - rather by the scope and impact of your change. To use a sports cliché, we'll take a bunch of bunt singles any day. This evolves naturally into individuals and ad hoc teams adjusting processes proactively to meet stakeholder requirements. Supply Chain and systems are very similar. The real difficulty is finding things that bridge across all areas to develop teamwork and a deep understanding of the business drivers. Additionally, we talk about the teams and the changes openly and share across the traditional boundary of warehouse and corporate.”
Changing Boundaries

Continuous Improvement and brainstorming is a lot of fun when there are no boundaries – when the sky is the limit and ROIs are irrelevant. Imposing limits gets us closer to reality – this is all about process/machine modification vs. replacement. Practical ideas surfaced at VW and were shared across the enterprise.
“This was a significant change as the general managers became facilitators, something that was familiar from past culture, but from an unbounded brainstorming perspective. This time the teams had boundaries and constraints. This allowed us to focus and quickly make changes. We then began to share the various teams' progress with all warehouse managers monthly so everyone knew what was being worked on and why. As a simple example, we knew almost half of our man-hours were for outbound processing, so that was the first place we looked. The team superstar was not the most senior or the most recognized person on the team. People listened to his ideas, tested the new process and we introduced the change for the entire network with terrific results.”
Lean in the Extended Enterprise

After this year’s conference I talked with Jack about Lean. To Jack, Lean has no boundaries … in fact, he can’t understand why others see these boundaries anymore.
“I must admit I was a little disappointed in the level of participation (at the conference) on that topic (Lean). I found it hard to believe that more people did not want to discuss items like a 47% reduction in KWH used, a 90% reduction in cost per line for power equipment….”
We talked about Lean efforts that focused on energy reduction. This was spearheaded by a corporate Lean staffer. Jack described the utility bill as just being another time-phased metrics report. This was a perfect candidate for Continuous Improvement, and, metrics improvements support a Green workplace and cost savings. The big message here is that Lean is boundaryless and is not confined to expected places in the supply chain.
“A similar approach was done within the headquarters with a grass roots effort supported by management to clean up inefficient processes. The outcome of both of these teams was a level of engagement and empowerment that I have only seen one other time in my career. Our people are committed to doing things well and to solving issues for our stakeholders. This culminated in a succinct strategy that was rolled out to the team early last year. At the foundation of our strategy, you will find our commitment to our people and to their development. Now we are trying to grow the capabilities of our team to sustain our performance. This will be the most challenging part of the journey. It will require the greatest effort and greatest focus to weave these Lean experiences and capabilities into the everyday fabric of our culture.”
Bottom Line on Lean at VWGoA
  1. You need it to be a top-down “or else” initiative by the VP of Parts. The VP need not be a Lean guru. In fact, s/he doesn’t even need to be trained in Lean. The VP simply needs to be committed.
  2. You need the Lean feedstock of someone who has done it before, who can answer questions, who can make decisions. Lean zealots can be good, but they can bring a lot of baggage regarding process precision – exactly the way to do Lean based on prior life experience with other work cultures. More important than Lean zealots are flexible Lean managers – folks who have experience with Lean principles, but are flexible regarding Lean implementation.
  3. You need to embrace appropriate enterprise metrics and use them to set standards for improvement. You need individual accountability of metrics. You need to communicate across the enterprise – goals, targets, and ideas for improvement. This was fundamental to the success at VW and more recently Mopar. It is important that these metrics not be private and personal – they need to be visible and indisputable.
  4. You need to improve with Continuous Improvement processes. These processes can reflect common sense continuous improvement, and need not reflect somebody else’s sense of process complexity and bureaucracy. You don’t need to hold up starting because you need a year’s worth of costly start-up activities – think generic continuous improvement vs. name-brand text book approaches.
  5. You need to embrace the entire enterprise with Lean by focusing on any opportunity to improve metrics with process simplicity and Continuous Improvement.

No comments: