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“In his third book Masaaki Imai asks the important question,
“Why after all these years have so few companies adopted the
lean approach?” He lays blame squarely on the CEO and board
of directors focusing on shareholder delight not customer delight.
The brilliance of this book is that Imai offers a very clear and
detailed approach to solving this problem with his FSL, (flow,
synchronization, and leveling) assessment to determine a company’s
operational and lean status. As in his prior books, Imai is
making an important contribution to managers everywhere, and
I would recommend that all CEOs, board members, and senior
managers read it.”
—Art Byrne, former CEO of the Wiremold
Company, and author of The Lean Turnaround
and The Lean Turnaround Action Guide
Chapter 15: FSL, The New Criteria to Assess a Company’s Lean Status
So far, it has been mentioned that we need to have two sets of public criteria to assess and audit management status of companies, namely, financial and operational. The financial accounting system has been the only existing pub- lic means to review corporate financial performance. On the other hand, there has been no other public countervail- ing means to assess and audit the inner operational lean status of every company. It was also mentioned that existing companies can be divided into two groups, the traditional type and the lean type.
Traditional companies are those cursed ones that have inherited century-old traditional legacies and failed to employ the lean approach originally developed by Toyota during the last 100 years. In our estimate, 99 percent of all companies today belong to the traditional companies, and only 1 percent of companies have embraced the lean strategy. This chapter assists readers to recognize the basic differences between traditional and lean companies and introduces the benefit of assessing the lean status of company.
FSL Assessment and Audit
In my search for the way to assess and audit the lean oper- ational status, I have finally identified the following three key words, flow, synchronization, and leveling (FSL), as the hidden secrets of the lean strategy.
The concept of the flow was first conceived and put into practice in the beginning of the twentieth century in Ford’s moving assembly line of automobiles in the United States. However, it was employed only within Ford’s final assembly line and was not extended to the rest of production opera- tions. The realization of the flow concept running through the entire production operations had to wait until half a cen- tury later when Taiichi Ohno of Toyota honed and refined the TPS with the flow concept in the center.
Ohno would speak of Henry Ford Sr. with great rev- erence and said, “If Henry Ford Sr. had lived longer, he would have extended the flow concept much the same way as Toyota has done.”
While the flow concept has been practiced in Toyota, traditional companies have neglected it as the foundation of management philosophy because of their unusual attention to the volume and speed of operations.
An easy way to find the difference between traditional and lean companies is to go to the gemba of traditional companies and have a look at the flow. You will find that the flow of operations in traditional companies is constantly stopped, separated, stagnated, disconnected, retarded, lost, congested, distorted, staggered, zigzagged, and more. In short, no management will to build a smooth, continual, and swift flow of operations is observed.
Making a smooth, continual, and swift flow of oper- ations is the surest way to employ minimum resources, sustain quality, and minimize WIP, inventory, and total production lead time and cost. Every time a smooth flow is disrupted, cost is increased, inventories are created, quality suffers, the total lead time is prolonged, and flexibility is lost. In lean companies, every time the flow is disrupted, it is a sign that a problem exists and that it must be dealt with at once. In the lean terminology, kaizen means any activity to deal with abnormality of the flow.
Once the flow is extended throughout the entire opera- tions, connecting all processes and functions, one can easily review total operations by following and simply looking at the flow, not only in the gemba but also in upstream and downstream processes.
As long as a stable flow is established among differ- ent processes, only one manager is enough to manage the entire operations. Where a smooth flow is not established throughout the entire processes, an additional number of managers must be assigned at every process. The most ideal flow operation is to have only one manager to oversee the entire operations from the beginning till the end.
Building a smooth, continual, and swift flow of oper- ations, connecting all processes and functions within the company, is the ultimate goal of the lean strategy.
The moment the flow is disrupted, it can be visually detected at once, and restoring work can be started imme- diately because all the employed resources like operators, machines, and materials must stop work. Thus, the flow can bring in the following advantages:
- The moment the flow is disconnected, it is visually detected at once.
- It employs minimum resources.
- It minimizes the WIP and inventories.
- It minimizes total operational time and length.
- It eliminates muda (wasteful), muri (strenuous), and
mura (irregular) activities.
- It stabilizes and improves quality.
- It fosters personal and organizational self-discipline to observe standards and pay attention to details.
- It encourages cross-functional cooperation among different functions and processes.
- It enhances the morale of the entire organization.
- Cross-functional collaboration is encouraged among functional units within and without the company.
Synchronization (Doukika in Japanese)
Synchronization has two functions. One is to produce prod- ucts to synchronize with customer orders among separate processes, and the other is to synchronize the operational
time among separate processes. The smaller the batch size is the better, and the best solution of synchronization is to employ one-piece flow, in which only one work piece flows from process to process in a synchronized manner, which is the most efficient and stable form of operations.
Ohno would say “leveled production is possible only if the production plan at the final assembly process is leveled with the customer orders and all the previous (upstream) pro- cesses are synchronized accordingly. If the previous processes do not practice leveling, there is no way to have final assem- bly under control. What is important is to minimize the gap between the highest and lowest time of every production.”
Observing these situations, Ohno thought that if such baratsuki (variation) should continue, it would soon become out of control as the volumes got bigger, and he considered how to reverse the conventional approach of production control. In particular, he noted that if the last process (final assembly) suddenly required a new item to be added, it would cause all the previous processes to prepare excess supplies and inventories, and the more upstream it went, the workload would become unbearable. Thus, he arrived at the idea of heijunka (leveling), which means to “level off” the volume and timing to deal with the baratsuki that occurs in the course of operations.
Ohno would say; “The easiest way to make products is to produce the same number of the same products with the same takt time every day.”
Of course, since orders are arriving from all quarters, things are not that simple. To tame baratsuki of orders, his idea was to introduce leveling to equalize among every production volume, speed, and timing of operations on a daily basis.
Thus, the flow heijunka (leveling) has become a vital management tool of the TPS and lean strategy to deal with the baratsuki of customer orders and find optimum com- bination among the flow, volume, speed, and timing of operations. Thus, customer orders are the starting point of heijunka. This practice is quite different from the ordinary practice of traditional companies, which starts from sales forecast and not from actual customer orders.
Ohno would say, “Baratsuki in customer orders is the evil that disturbs smooth flow of operations and creates dis- ruptions of the flow.”
Leveling also means to bring down the workload on daily operations. The first step of leveling is to divide monthly customer orders into daily units. The operators’ work and materials to comply with customer orders also need to be leveled on a daily basis so that operators’ work, processes, materials, and equipment can be leveled off to minimize bar- atsuki between the highs and lows of production volumes.
Traditional companies have neglected to take into account the baratsuki in the volume and speed of opera- tions. When baratsuki in customer orders is taken into account by leveling, the following benefits can be realized:
- WIP and product inventory are reduced to the minimum.
- Opportunity loss is minimized.
- Minimum number of resources are employed.
Leveling (Heijunka in Japanese)
In 1962, when Ohno was promoted to director of Toyota’s main assembly plant from his previous position of general
manager of the machining division, he noticed that rela- tively light and easy components were first brought into the assembly plant in the beginning of the month, and opera- tors had a relatively easy time to work on them, but during the latter half of the month, as heavy units and components were increased, operators’ workload suddenly increased and they were obliged to engage in overtime work.
Observing these scenes of baratsuki, he was consider- ing how to tame baratsuki and change the conventional approach of production control and finally arrived at the leveling approach to create a balanced flow of operations to produce products in a leveled manner on a daily basis.
Manufacturing companies must meet diversified cus- tomer orders for different product types, volumes, and deliveries. On the other hand, the company’s available inter- nal resources of employees, machines, materials, time, and production facilities are limited. In considering these con- ditions, Ohno introduced leveling to level off and equalize monthly customer orders on the daily basis.
Ohno would say: “Since the volume of orders fluctuates between highs and lows, the peak must be made lower and the bottom be made higher. Since customer orders fluctuate on the daily basis, we must deal with the baratsuki of orders on an even daily basis in order to maintain an even flow of assembly work.”
He would say: “The easiest and most efficient produc- tion is to make the same product in the same number and in the same manner every day.”
The introduction of the leveling practice requires a min- imal batch size and synchronization of processing time among different processes, and the starting point is the customer orders. When a large batch size is employed, it automatically increases the baratsuki of materials and the operators’ working time.
FSL Assessment and Audit of Lean Operations
So far, two basic functions of the corporation have been reviewed, namely, financial and operational. The financial reporting has provided the public means to assess the com- pany’s financial status, but it must be added that there has been no other public means to assess the company’s inter- nal operational status based on clearly defined formulas. Therefore, at this point in time, it is suggested that a new public means be employed to measure corporate operational status in the name of the FSL Assessment and Audit of cor- porate operations.
Since a majority of companies stay in traditional oper- ations, it is assumed that normal companies have no one who has gone through the transformation from traditional to the lean operations. Therefore, it is suggested that the FSL assessment be introduced for all traditional companies. It will be the first opportunity for them to participate in such an event and recognize the reality of their operational status for the first time. There is only one condition that will assure the long-term commitment of continuation of the lean project, which is top management’s participation. There is a popular saying among lean experts as follows: “If the lean introduction is started and terminated after three months, nothing would remain after three days of operations no matter how many improvements were made during the first three months. If the lean introduction is carried out for three years and then terminated, nothing would remain after three months.” These events could hap- pen when the top management is not involved.
The working environments within and without the com- pany keep changing, and it is likely that the people engaged in the early stages of the lean introduction will have changed their positions or left the company in the meantime.
Assessing the Company’s Current FSL Status
The aim is first to review the overall steps of operations based on the FSL status, and wherever the continual, smooth, and swift flow is disturbed, it is recorded. In the case of minor disturbance, they might fix it immediately on the spot. If professional assessment is desired, an experienced FSL expert may be sent to conduct a one-day review of the lean status every month to record every step in the flow where the flow is disrupted and send the report to the CEO.
At the same time, while walking through the gemba and reviewing the three gemba kaizen activities (standardiza- tion, 5S, and muda elimination), the inspector also reviews additional FSL status and, in particular, the total flow sta- tus, since the flow is the basic sign showing the current conditions of the gemba.
At the end of the day, the report is summed up and sent to the CEO who has a vital role in assessing the FSL status.
The Role of the CEO
During the last 30 years, I have organized many study tours in Japan for Western executives and taken them to
industrial plants practicing lean strategies. The following is a brief summary of their comments on the roles of CEOs in Japan in introducing lean operations:
- There is visible top management involvement and support.
- There is systematic, long-term implementation of the program.
- There is excellent feedback of information from the gemba.
- What goes on in the gemba is clearly understood by top management.
- Pictures, graphs, photos, etc., are displayed as visual signs in the gemba.
- There is heavy emphasis on on-the-job training.
- Pictures and graphs are displayed to show current lean status in the gemba.
- Cascaded training is provided.
- 5S is the foundation of gemba management.
- Small improvements are left to the gemba; large and heavy improvements are dealt with by management and engineers.
- There is total involvement: everybody is involved, including suppliers.
- Technology and machines are not so different between Japan and the rest of the world, but the way they are employed is different.
- The gemba is the heart of the company. The gemba is where money is made.
Those traditional companies that have not yet embarked upon the lean journey remain to be cursed unless the top management has made indomitable commitment to embrace the lean strategy.
In my public presentation on the lean strategy to the CEOs and other top management, I used to say: “There are three utmost important requirements to succeed in embrac- ing lean, and the first is top management commitment,” and I pause here and wait for several people to pick up a pen to jot down what I am going to say next. Then, I continue, “The second is top management commitment, and the third is top management commitment.” At that point, the room is filled with laughter, and I continue to say: “This is not a laughing matter. The problem is that most companies start their lean journey by middle managers with their limited experience and power.”
Then, I close with what I call the “Christopher Columbus School of Management” as follows:
“When he set out, he did not know where he was going. “When he got there, he did not know where he was. “And when he returned, he did not know where he had been.
“And he did it all with borrowed money.”
I would hope that when the top management of tra- ditional companies makes the decision to start the lean journey, they would at least know where they are going.
To establish a world-class lean company can be achieved only by the CEO and the board making that indomitable decision as a long-term strategy. And yet, up to now, I have not heard of any CEO and board that have come to declare such a decision on the long-term basis.
The Formula to Succeed in Embracing the Lean Strategy
The following is the list of conditions to assure a successful implementation of the lean strategy:
- The CEO and the board make the decision to initiate the long-term lean strategy.
- The introduction of the lean strategy must be a top- down and bottom-up approach.
- It should be a companywide strategy, starting with the assessment of the company’s current lean status in the gemba and reviewing the entire supply chain management both within and without the company.
- Appoint one senior manager in charge of the project to keep the record of monthly assessment of the company’s FSL activities to report to the CEO.
- The FSL assessment should be carried out on a monthly basis.