First-ever Lean Transformation Summit by ILM a great success
Wednesday, 12 November 2014 00:00
The first-ever Lean Transformation Summit was held at Waters Edge on 4 and 5 November, with over 40 companies attending.
The summit featured the Daily FT as the Media Sponsor and Cinnamon Red as the Lean Hotel Sponsor. It was organised by the Institute of Lean Management Ltd., which was formed in 2009 and celebrated its fifth anniversary on 5 November. It works with 400 companies in Sri Lanka and has taught over 1,000 professionals.
The majority of the companies attending the summit were manufacturing firms with some from the service sector such as local banks, education companies, IT companies and import and export companies. Over 130 persons were present, including invitees from chambers, ministries and institutes. The Chief Guest was Felix Fernando from Omega Line and distinguished invitees included the CEO/Managing Director of Ceylon Tobacco Felicio Ferraz.
Conveying his wishes for the Conference, Minister of Industry and Commerce Rishad Bathiudeen stressed that it was vital for companies to maximise their use of resources, improve quality and efficiency and address the seven wastes by using lean tools. He mentioned that most Sri Lankan companies were yet to do this and risk being uncompetitive in international markets.
Minister of External Affairs Neomal Perera in his message stressed that Sri Lanka needs to develop an export-related economy by using lean tools and to develop its human capital in order to become an economic hub.
Lean vs. Romance Lean and Lean Mismanagement
ILM CEO Thilak Pushpakumara, who had coined the tagline for ILM Ltd. as PQCDSM (Productivity, Quality, Cost, Delivery, Safety and Morale), mentioned in his message that we need to tap the power of the people and inspire them to use their wisdom.
He mentioned that management only sees 5-10 % of the actual waste in the organisation. ILM equips staff to become waste watchers. âWe cannot do todayâs job with yesterdayâs method and be in the business tomorrow. Lean is not a process but a never-ending journey and standardisation is the backbone of lean. A lean organisation should ensure that the majority of the work carried out adds value; a small proportion can be âincidental activitiesâ whilst only a tiny fraction should be âwasteâ.â
The CEO mentioned in his address that companies often practise âRomance Leanâ and not âTrue Leanâ. He further explained the difference between Lean and âLean Mismanagementâ. He summed up stating that organisations need to see their people as the key to transformation.
Sri Lanka competes with all of Asia
In his address Chief Guest Omega Line Director Felix Fernando stressed that Sri Lanka should not just compete with South Asia but in fact with South East Asia and the whole of Asia. Sri Lankan businesses need to raise their benchmark, he asserted.
Toyota Production Systemsâ frugal approach
Yukio Ando, Course Director ILM, from Japan, discussed the Toyota Production System (TPS) and emphasised that the TPS came about due to the urgency the company faced as a result of bankruptcy pressures, and this forced them to devise an intelligent strategy to maximise use of capital and people. They could not afford the management style of mass production systems used in the US but had to produce one piece flow. This meant that quality was critical and that the whole production line would stop if there was waste and defects or faulty machinery.
Dr. Asoka Jinadasa, Consultant, stressed the need for using right brain rather than left brain techniques, enabling people to use creativity and wisdom as well as logical thinking.
âOrganisations need to harness the full potential of their people to deliver results. There are five dimensions for the model of success and leadership â heart, health, mind, focus, and passion. HR needs to be redefined to include these because current research shows that most development programs are not effective.â
The cash bucket leaks and manuservices
Arosha Jayasundera, Consultant, covered the topic âSix Sigma for Servicesâ and stressed that cash is the âlifeblood of business,â adding that most business leak cash like a rusty bucket through the wastes that they have not identified or remedied.
Lean and Six Sigma can contribute significantly on the return on capital employed but it is critical that the CEO and the top management drive this down the organisation with the proper allocation of resources and training. This leads to hard benefits such as reduction of cycle time, reduced rework, increased profits, but also soft benefits such as less downtime, reduced customer complaints, reduced defects, increase in accuracy, etc.
She covered the need to identify properly âthe Problem Statementâ and ran through some very important Six Sigma tools. She also stressed that Lean Six Sigma addressed the cost focus and cost differentiation factors required for successful marketing as proposed by the famous guru, Michael Porter.
She discussed Manuservices, which covers areas such as accounting, administration, HR, engineering, research, etc., which all centre round the manufacturing process. It has been estimated that only 20% of product prices are actually driven by direct manufacturing costs. In manufacturing, only one out of nine stages are actually manufacturing, the rest are services.
Lean culture is critical
Vinod Grover, Kaizen Institute, India, presented the topic of âBuilding a Lean Cultureâ. He mentioned that lean does not develop in an organisation in a series of level steps but often backslides. That is because changes need to be clearly defined and gaps identified and new standards set.
There are four standards that need to be addressed: man, machine, methods and material. Lean improvements then can be made in gradual and small incremental steps. People need to set aside time to think for the future and to engage more in breakthrough activities. People and culture are critical to obtain significant improvements in productivity.
ERP adds significant value
Aitken Spence Printing DGM Chaminda Ratanayake discussed how ERP supports lean implementation and mentioned this computing system can add more value to the customers whilst utilising fewer resources.
However, there is an ERP lean paradox as lean is based on a pull system whereas ERP is based on a push system. ERP supports lean in terms of the value, the value stream, the flow, the pull and the perfection needs. ERP systems can be considered a catalyst for the implementation of a lean enterprise.
Yutthapong Supakorn from TPA, Thailand, covered lean training and development. He mentioned that TQM was the head of a triangle. This triangle was based on the human development factor which underpinned it and with it on either side were TPM and lean.
To encourage productivity, in Thailand there are 5S Awards, Kaizen Awards, Lean Awards, KANO Quality Awards and the Thailand Quality Prize. The Thailand Lean Awards are given as Bronze, Silver, Gold and Diamond. At the recent award ceremony there were many examples of âunpluggedâ Kaizen, which means improvements of machinery using gravitational forces rather than electricity on the production line, as Thailand recently faced an oil crisis and needed to cut energy consumption.
Setting baselines with lean
Noppadom Imaim, Gemba SPC, discussed the subject âHow to conduct a Lean Assessmentâ. He mentioned that direct material is the largest single project cost and also the need to convert waste into work.
Lean assessment sets a baseline â it commences with preparation followed up by a site visit, analysis, scoring and recommendations. The assessment topics include organisational culture, workplace management, work methods, equipment management, Kaizen, mistake proofing, set up reduction, performance metrics, material management and constraints.
Gopinath Prabhu from Kaizen Institute, India, discussed âImplementation of Lean Tools in the Health Care Networkâ. He mentioned that in the Government sector there had been a lot of infection, diseases and unhealthy conditions in the hospital. The lean team had addressed multiple aspects at the same time such as quality, productivity, delivery, safety and morale. They also addressed three core aspects: training and engaging the healthcare staff, workplace hygiene and organisation and process improvements.
Lean was used to assess patient flow, doctors and clinical staff flow, medicine flow, flow of petty items, instruments/equipment flow, information flow and documents/reports/records flow. To ensure standards were being maintained, they conducted a Kaizen and 5S audit once a quarter.
The main benefits arising from the lean transformation were in morale, money and methods. In addition, there was a significant increase in space with the layout in the OPDs improving. âBest teamsâ were formed and competitions were held amongst the regional centres. A reward and recognition scheme was also put into place.
Rose-tinted lean banking
Bimsara Seneviratne, Consultant, presented âLean Bankingâ. He stressed that banks are facing external pressure from regulators, operating expenses and also from risk, customer demands, shareholder demands, etc., hence a number of foreign banks such as ICI, HSBC, Bank of America and BNP Paribas have adopted the lean banking model. Among local banks, Nations Trust Bank was amongst the first to commence adopting these techniques.
There is a lot of waste in the banking sector and value stream mapping is an important tool to highlight these issues. Banks need to conduct reality checks to determine where we think they are, where they really are, where they should be and where they could be. Lean transformation in banking will improve customer satisfaction, productivity, employee engagement and shareholder value.
A loss-based strategy
Wajira De Silva, Manager, Ansell, stressed that Total Productive Maintenance (TPM) is critical in the manufacturing sector. TPM follows a loss-based strategy and emphasises that all machinery requires total preventative maintenance.
Just in Time (JIT) strategies cannot work on a one piece flow concept if there are machine breakdowns. Autonomation (JIDOKA) is required first to ensure that machines are fixed immediately when there is any indication that something is amiss. This is taken so seriously in Toyota that staff are dismissed if they fail to show up to work and if they do not diagnose and fix defects in the manufacturing lines.
The USA was able to invest in highly expensive machinery to monitor and identify defects but Toyota at the time could not afford to do this. Hence they decided that they must train their people to become âsensorsâ and they believe that people are the most intelligent âsensor machinesâ in the universe.
Proper communication for lean IT
Virtusa Consultant Rashmi Gunawardene discussed the application of lean in IT practices. IT can be used in mobile applications, internet, email, multimedia, GPS, social networking, etc.
The key principles of lean software development is to eliminate waste, build quality, create knowledge, defer commitment, deliver fast, respect people, and optimise the whole. However, IT development can also face wastes such as partially done work, excessive features, too many handoffs, delays, defects, etc. It is therefore necessary to ensure proper communication between the client and the software product. The feedback process has to be fast and there should be a working system which enables defects to be identified at an early stage.
When and why lean can fail
ILM CEO Thilak Pushpakumara identified some of the challenges in implementing lean. He mentioned that there are several reasons why it fails. Most importantly, it fails when there is no sense of urgency, when senior management do not buy in to lean transformation, staff remain in comfort zones with the organisation being happy with their profits and the staff being content with their bonuses.
Lean also fails when there arenât enough short-term wins to encourage the management or when staff have too much ego and therefore do not change. The wrong sequence in applying concepts and declaring victory too soon also is an impediment to lean implementation.
Comfort zones, discipline and operational excellence
Arosha Jayasundera, Consultant, summed up the seminar and mentioned that over the two days Japanese management techniques had been studied as the Japanese were the masters of operational excellence techniques. She emphasised that perhaps this was the case because Japan was always under threat of tsunamis and earthquakes and this has instilled a loyalty culture, group bonding and honour towards each other and the country.
Martial arts was also born in Japan and this provided a disciplined and healthy way of living. It was important for affluence not to make people weaker but stronger. Athletes always constantly analysed their performance, videoed themselves and watched their diets, which assisted them to achieve top performance and likewise it was important for corporate staff to do the same. Living in comfort zones does not promote change and improvement. Sri Lankan companies need to compete not only in South East Asia but internationally.
Pix by Upul Abayasekara