The Principal Elements of a Lean Management System

The lean management system only consists of a few principal elements with each element in the system being interdependent of the other. For the system to work, each element must be present and cannot be too complex or complicated. The principal elements of the Lean Management System are as follows: Leader Standard Work, Visual Controls, Daily Accountability Process, and Leadership Discipline.

Leader Standard Work
Leader standard work provides structure and routine that helps leaders shift from a sole focus on results to a dual focus on process plus results. Standard work provides a foundation for continuity, capturing basic practices across changes in incumbents, which decreases the variability that might destabilize the production process. When the leader follows their standard work effectively, the rest of the lean management system has a good chance of operating effectively.

Visual Controls
Visual controls translate performance of every process into expected versus actual, throughout the production and management systems. Lots of people can whip up a bunch of visual tracking charts in Excel, but they must be used effectively. They must be displayed in highly visual, widely accessible, and readily reviewed formats. The visuals indicating true performance convert the driving force of leader standard work into traction. These visuals give leaders the ability to quickly spot and move to action where actual performance has not met what was expected.

Daily Accountability Process
Through daily accountability the leader can steer and set direction for improvement activity in the area. In the daily accountability process, leaders assess the meaning in the visuals, assign appropriate responses, and hold people accountable for completing their assigned tasks. This follow-up process occurs largely in the structure of daily tiered meetings.

Leadership Discipline
Leadership discipline is the fourth element in the Lean Management System and is the fuel that powers the entire system. Establishing leader standard work, visual controls, and a daily accountability session will not amount to anything without the discipline to execute those elements as designed and intended. If the lean management system is left unattended, the system will quickly deteriorate. Lean management that is well and consistently implemented helps bring the foundation of stability to lean production conversions, a foundation on which ongoing improvements can be built.

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The Missing Link in Lean: The Management System

https://i0.wp.com/www.ocapt.com/images/Creating_a_Lean_Culture.jpgThe core idea behind lean is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers; however, most prescriptions to lean production are missing a critical ingredient: a lean management system to sustain it.

Lean management practices are like many other aspects of lean: easy to grasp, but difficult to execute consistently. To create a lean management system, you should focus on targets you see such as leaders’ behaviors, specific expectations, tools, and routine practices. An organization may implement a lean project and install new layouts to establish flow, begin pull signaling, and develop ways to pace production, but this may only get you a 20 percent improvement. To identify sustainable implementations of lean you must focus on the remaining 80 percent. This remaining portion of required time and effort is made up of tasks that are less obvious and much more demanding.

A lean management system focuses on processes and consists of the discipline, daily practices, and tools you need to establish and maintain a persistent, intensive focus on process. It is the process focus that sustains and extends lean implementations. It is also important to remember that in lean systems results do matter; however, the approach to achieving them differs sharply from conventional management methods. The premise is this: Start by designing a process to produce specific results.

In my proceeding blogs, I will discuss different methodologies to establish a lean management system.

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What is Six Sigma?

At its core, Six Sigma seeks to improve the quality of process outputs, identifies and removes the causes of defects, and minimizes the variability in manufacturing and business processes.  Six Sigma was originally developed by Motorola in 1985, but has evolved and has been utilized in different sectors of industry.  In a nutshell, six sigma can be used at three different levels: the management system, as a methodology, and as a metric.

The Management System:

Breakthrough Six Sigma performance can only occur when Six Sigma is aligned with an organization’s overall business strategy.  The more closely an individual project is tied to organizational goals, the better its chances for producing far-reaching and lasting results.

The Methodology:

DMAIC is the five-step approach that makes up the Six Sigma tool kit, and its sole objective is to drive costly variation from manufacturing and business processes.  The five steps in DMAIC are   Define, Measure, Analyze, Improve, and Control.   As the backbone of the Six Sigma methodology, DMAIC delivers sustained defect-free performance and highly competitive quality costs over the long run.

As a Metric:

The third level, 6-sigma as a metric, is the source of the name 6- sigma. 6-sigma refers to 3.4 defects per one million opportunities (DPMO). 6-sigma started as a defect reduction effort (as in zero defects) in manufacturing and was then applied to other processes for the same purpose–quality improvement. A 6-sigma project will use management, methods and metrics at the same time.

There are few if any processes that cannot be improved. 6-sigma is one approach which has been shown to work, but which is not without its critics. A Fortune article stated that, “of 58 large companies that have announced 6-sigma programs, 91 percent have trailed the S&P 500 since.” The reason for this is perhaps that 6-sigma is effective at what it is intended to do, but that it is “narrowly designed to fix an existing process” and does not help in “coming up with new products or disruptive technologies.”

The Six Sigma System drives clarity around the business strategy and the metrics that most reflect success with that strategy. It provides the framework to prioritize resources for projects that will improve the metrics, and it leverages leaders who will manage the efforts for rapid, sustainable, and improved business results.

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Why I Chose Supply Chain Management

According to Dr. Robert Hanfield, Supply Chain Management (SCM) is based on two core ideas. The first is that practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain. The second idea is that while supply chains have existed for a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains. Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

I’ll be completely honest, I never once paid attention to how or where a product I was interested came from, I just cared that I received the product at what I felt was a competitive rate. I’m sure most consumers would agree with me. So how did I decide to become a supply chain professional?

My dream job was to become a fighter pilot in the United States Air Force and I pursued this dream.  I commissioned as an Air Force Officer and was selected for a pilot slot to attend Undergraduate Pilot Training. When I thought I was well on my way to achieve this goal, life threw a disqualifying curve ball at me and forced me to reassess my career plans. I vividly remember having a conversation with my commander discussing career paths. He said, “Logistics (Supply Chain), that would be a great career field. There are huge opportunities out there for talented people.” It’s important to note that he was an air mobility pilot so he understood the significance of streamlined operations.

After conducting my own research in the career field, I discovered it was undoubtedly growing.  While I’m still learning the industry, it has already provided plenty of growth opportunity, professional challenges, and has been everything I wanted it to be.

What do you think? Please share your thoughts in the comment section below.

Black Friday and Cyber Monday

Since I’ve entered the supply chain industry, focusing in e-commerce fulfillment, I’ve dreaded Black Friday. Actually, I did everything in my power to avoid belligerent crowds, disheveled stores, and discourteous employees. There are many origins of the history, but I most agree with “Black Friday” indicating the point at which retailers begin to turn a profit, or become “in the black.” It is the day after Thanksgiving and has been described as the busiest shopping day of the year. My entire life I never paid attention to the hoopla surrounding the culture of Black Friday, but as much as I dislike Black Friday, there is something worse…Cyber Monday.

Cyber Monday is the first Monday after the long Thanksgiving Weekend and people are feeling fat and happy. They’ve kicked off their holiday season with their families, but now have to be back at work. So what’s the best thing to do when you’re at work and still recovering from the weekend’s food coma? Shirk…and shop all the online deals at your cubicle. In 2010, comScore reported that consumers spent $1.028 Billion online on Cyber Monday (excluding travel, 2009: $887M), leading to the highest spending day of 2010. The combination of Black Friday and Cyber Monday kickoff the holiday shopping season; however, this time has a whole new meaning to me. This is game time.

At Urban’s Reno Fulfillment Center, we call this “Peak Season” and last year, in literally over a few hours, we saw an incredible increase in demand. The orders poured in and it never stopped. We experienced the high class problem of not being able to keep up with ongoing demand; normal 40-hour weeks became non-existent, and overtime the norm. As a new facility, and with new technology, our processes and equipment hadn’t been proven to operate with high volume. We struggled to meet service level agreements due to unforeseen processing errors and inadequate support on our technologies. Heck, it seemed the building was feeling our pain as improperly installed skylights leaked during torrential rains. Bottom line, I felt unprepared and the teams operated by the seat of their pants. Thankfully, we were able to overcome our woes through simple hard work, determination, and unfaltering effort from everyone within the building.

This year will be different. I strongly feel I am a subject matter expert with our Warehouse Control System as well the Warehouse Management System. I have already leveraged this knowledge to improve our current processes, but I also know we are nowhere near an optimized operating plan. Individually, associates on the floor have incredible production, but it is my responsibility to ensure the team as a whole operates efficiently and effectively. I very much still dread Black Friday, Cyber Monday, and Peak Season, but in 2013, we’ll undoubtedly showcase our talent through our performance.

What do you think? Please share your thoughts about Black Friday and Cyber Monday in the comment section below.

 

“The $20 Buck F*** Up”

Anthropologie’s Spring 2013 Tag Sale kicked off with a bang.  The sale that was supposed to be routine, turned into a business nightmare with significant impact on the customer base, support professionals, and the brand’s reputation.  The sale highlighted a 20% discount on their housewares products, but instead, each item in that product line was marked down to $20.  Now this may not sound noteworthy to those who are unfamiliar with the brand, but a quick Google search of “Anthropologie Sofas” will highlight the expense of their premium housewares.  On Effortless Anthropologie’s blog, customer expressions ranged from being overjoyed to showing immediate concern.  Some were optimistic about receiving their discounted goods and others were apprehensive if they would be charged the true price of the purchased items.  Customers dubbed the mistake, “The $20 buck F*** Up.”  While the customers became disappointed, the business clamored to save the brand’s reputation.

Many consumers only see the face of e-commerce when they shop online.  What they overlook is the architecture behind the scenes to deliver a streamlined “ordered-to-delivered” process.  The brand’s integrity is at stake when they are marketing housewares priced at $20.  An input error made behind the scenes, reflecting the $20 price on their website, is not a simple error to resolve.  Within hours, hundreds of customer orders were placed reducing the amount of inventory available.  The time (and labor) needed to alleviate the situation was intensive and required a holistic approach by all support functions within Anthropologie.  The Customer Call Center was contacting numerous customers regarding the error made and IT teams were scrambling to make sure wrong orders were stopped while still being able to process correct orders.  The biggest lesson learned about this mistake was how it directly affected me.

Urban’s Reno Fulfillment center satisfies customer orders placed online and I am responsible for making sure orders are properly fulfilled within a timely period.  I am given tools to analyze customer demand and I must manage the labor required to meet daily production goals.  On this day, and after evaluating customer demand, my analysis concluded the daily demand was light and we were overstaffed.  We had just gone through a hellacious week requiring overtime and members of the team were looking forward to having an early day.  What happened next was unbelievable.  I had just left the production meeting, approved a few people to go home for the day, and started to reassess customer demand.  In a span of less than 30 minutes, more than 3,000 new customer orders showed needing to be processed.  Demand was now heavy and our numbers were decreased.  I later learned all Anthropologie orders were put on hold until the issue was resolved and releasing these orders was what drove demand.  Needless to say, I was tremendously impressed and applaud our outbound teams as they were able to process a significant portion of the demand before the end of shift.  The company had several lessons learned on this costly mistake, but communication between all segments is a must.

What do you think? Please share your thoughts in the comment section below.

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URBN: The Brands

Urban Outfitters has been a successful retailer since its inception in 1972.  It originally started focusing on “funky” fashion and household products, but has developed to include vintage apparel and luxury brands with several designer collaborations. What may be unknown to most consumers is that Urban Outfitters Inc. may be the parent company, but there are very distinctive brands under the parent umbrella. These brands are the most significant reason of success and Urban being sling-shotted to become the fastest growing internet retailer to date.  Each brand is both compelling and distinct and chooses a particular customer segment, and once chosen, sets out to create sustainable points of distinction with that segment.  The brands under Urban Outfitters, Inc. are Urban Outfitters, Anthropologie, Free People, BHLDN, and Terrain.

Urban Outfitters
Urban Outfitters seeks to target the educated, urban-minded individual between the ages of 18-30.  Their product base includes contemporary art, music, and fashion.
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Anthropologie:
Anthropologie is a lifestyle brand that imparts a sense of beauty, optimism and discovery to the customer. For her, Anthropologie is an escape from the everyday; it is a source of inspiration and delight, where innovative merchandising, customer centricity and a curated array of products come together to create an unimagined experience.  The stores do not focus on one category of goods, but on disparate merchandise that’s centered around a theme.  Anthropologie’s buyers travel the globe for interesting, relevant and unusual items for its core customer.

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Free People:
The Free People girl is happy and she loves life.  She is described as independent yet loves being with her friends and family.  She’s the type to travel to festivals such as Coachella with Wanderlust being her favorite.  She is the ultimate mix of sweet, cool, boho and everything in between.

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BHLDN:
Unveiled Valentine’s Day, 2011, BHLDN offers brides, party goers, and party throwers an inspired alternative for life’s most anticipated milestones. Catering to a small coterie of smart, creative women and focused on personalization, BHLDN goes beyond the wedding dress — bringing together inspiration, community, and a compelling, original product assortment

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Terrain:
Founded in 2008, Terrain transforms the local garden center into a celebration of nature. Inspired by the idea of merging house and garden to create an experience for the senses, our garden centers in Glen Mills, Pennsylvania and Westport, Connecticut cater to our customer with a curated assortment of plants for all seasons, as well as inspired items for the home and garden.

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What do you think? Please share your thoughts about Urban Outfitter’s distinctive brands in the comment section below.