Download White Paper: Lean Continuous Improvement, Sustainability and Toyota

More than 40 years ago I started my continuous improvement (CI) journey as a young engineer and I’ve spent the last 15+ years as a Lean and Supply Chain consultant at Supply Velocity. We leverage Lean, Six Sigma, Theory of Constraints and Supply Chain tools and techniques to help clients improve their operations and supply chains. Most of our implementations include Key Performance Measures, which help align and focus the organization on the behaviors and tasks to achieve the best results and sustain improvements.

Sustaining improvements is a long-standing challenge for most of our Clients and Lean practitioners around the world. Generally, we believe the better job we do facilitating teams that include process owners, subject matter experts (SMEs) and operators, involving them at every step and providing education along the way, the more likely they are to “buy in” and sustain improvements. This has worked to promote sustainability, however, in truth, it works at varying degrees.

Toyota Kata

I recently read Mike Rother’s book, Toyota kata. Rother’s book probes into how and why Toyota has been so uniquely successful. As a Lean expert, Rother wanted to better understand and differentiate the Lean techniques and best practices Toyota developed versus the management approach and routines (Kata translates as pattern or routine in Japanese) Toyota used that promoted their CI culture that developed those Lean techniques. This is an important difference – to better understand the management approach and culture that drove CI and sustained improvements, not just the CI techniques themselves.

We can’t expect to be like Toyota, who has been doing this for decades, but we can drive positive change and improve sustainability with some practical takeaways.

Exposing Issues

Lean principles and best practices work great at eliminating waste, but like most things they require practice and continuous use to be proficient. A related and very key point from Rother’s book was that the issues that may arise when applying Lean techniques, actually help to expose other improvement opportunities that need to be addressed. This is a key point I didn’t fully appreciate! Often with the first sign of things not going well, people use that as a basis to complain that the Lean effort was a bad idea and push back that we should return to the way we did it before. No no no! We should plan for this and consider that Lean simply exposes other issues that need to be addressed, like resistance to change or lack of understanding. Therefore, this exposure is actually a good thing.

To further make the above point, consider a reverse case. When helping companies’ layout operations, we encourage work-cells that improve teamwork and communications. This approach also promotes personnel flexibility which most people believe is a good thing. However, what if the people lack the skills? Or people don’t think they have the tools to do their job in a flow (versus batch) process. I still think labor flexing is a solid cell approach to meet production goals, but it can expose problems you have allowed to stay hidden because “fixing” them is probably a lot of work. Just another “hidden factory” example to keep in mind.

True North Goal

Each company or organization needs a long-term “true north” goal that is not short term or easy to achieve. As a long-term goal, it needs to be aspirational and adaptable to outside changing conditions that are not known currently. In Toyota’s case, that goal is not just to be a profitable car manufacturer, but it includes sustainability, market adaptability and personnel job security. If they can make this happen, the result is profitability and leadership in their market. This is much longer term thinking than most of us consider and it is a key driver to Toyota’s CI culture.

Consider the following goals that Toyota holds as of highest importance:

  • Zero defects
  • 100% value added
  • One-piece flow
  • Security for people

To Lean practitioners these should look familiar, but the level of perfection seems unattainable. Toyota uses these to help drive CI, knowing that they may never achieve the “true north” goal of near perfection, but it provides a direction to pursue for Toyota managers and employees to develop shorter term “target conditions.” These are more specific, measurable, and attainable in a short period of time. They lead to the implementation of continuous improvement and advancement toward “true north.”

This all probably feels familiar to Lean Practitioners, but here is a key difference – an improvement may have negative short-term consequences or tradeoffs. Consider the possible impact of promoting more line changeovers to increase on-time delivery to customers but knowing that may also drive up production costs. Or what about promoting synchronized flow with suppliers while knowing it may increase the risk for supply chain disruption, clearly a current issue. Many companies would stop the CI effort if the short term cost-benefit analysis was negative, but Toyota would not. Toyota would use cost-benefit analysis with a continuous improvement mindset to develop counter measures, while still pursuing their CI improvements. For my earlier examples, they might challenge, how they can decrease the time and reduce the scrap related to set-up? Or how can they pursue synchronized flow with suppliers while building in resiliency and not be subject to delays? This approach is different than using cost benefit to determine to NOT follow the goal and implement the improvement!

By setting short-term target conditions and applying CI, they chip away at issues that are obstacles. Rother describes how Toyota continuously sets new CI goals:

  • Grasp the current condition or state – Reminds me of Admiral Stockdale’s quote about surviving as a prisoner-of-war (POW) in captivity by “confronting the brutal facts and current reality”
  • Define the next goal “target condition” – In my career I have always liked the phrase, “describe what good looks like”
  • Implement CI to move toward the target condition using Plan Do Check Act (PDCA) – Don’t let perfection be the enemy of progress

Coaching and Mentoring

Toyota uses coaching and mentoring to train and promote CI and make it a core part of each manager’s responsibility to drive it to the employee level. Toyota promotes a pattern or routine for CI thinking, which is the basis of the term “kata.” Performance at the employee and department level is measured on driving improvements in operations, customer success, employee satisfaction, innovation and sustainability and less about financials. When I first joined DuPont as a young engineer, I was introduced to another engineer who had been around 6 months to serve as a peer guide and to a senior manager who was not my actual supervisor. They were mentors who I could go to when I had difficult questions. It worked very well at my first job and my facility had a history of high performance. How many companies have formal mentoring plans today?

Summary

For improvement initiatives that are sustainable, incorporate these concepts with your Lean / Six Sigma / Theory of Constraints efforts:

  1. Lean, Six Sigma and Theory of Constraints techniques and best practices are excellent foundations, and you should continue to apply them to your processes. The issues that may arise during or soon after implementation are themselves improvement opportunities, not reasons to stop.
  2. Establish a “true north” that is aspirational and adaptable, in spite of future conditions you can’t forecast now.  Hold to your “true north” vision and establish interim target conditions that advance you in the right direction.  Just because something you are striving to achieve may seem impossible, it doesn’t make it wrong.  Use creativity and cost benefit analysis to drive CI efforts that chip away at the obstacles and advance, perhaps slowly, toward “true north”.
  3. Place greater emphasis on developing and mentoring employees to drive CI thinking that supports making CI a fundamental part of the culture.  When using key performance measures, don’t just focus on short term and financial, try to measure progress on improvements in operations, customer success, employee satisfaction, innovation and sustainability that drive target conditions. 

Ray Davis
Supply Velocity
ray@supplyvelocity.com
(919) 345-8789

November 2021

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“Our experience with Supply Velocity was one of the best values we have ever had from a consulting project. Cyril Narishkin brought a structured lean methodology, invaluable experience and engaging facilitation skills to help us streamline a very complex and disjointed sales order process. Just as importantly, our team now has the knowledge and process competencies to address other business improvement opportunities going forward.”
Mike Howard, CEO, Aspeq
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Rachel Andreasson, Executive Vice President – Marketing, Wallis Companies
“Supply Velocity is driving instrumental change in our inventory management processes. This is critical for us to be competitive in a supply chain environment with numerous disruptions. They are making change happen, which can be challenging in a 182 year old organization.”
Jim Carroll, Executive Vice President Operations, Schaeffer Manufacturing
“Myerson engaged Supply Velocity, specifically Ray Davis to visit our plant in Trinidad to conduct a two day assessment of our production procedures and provide us feedback on areas for improvement and where applicable, areas for future analysis.

Put simply, we got everything we paid for and in addition to more in depth analysis, we got specific tasks that were immediately actionable. Our local management team found Ray to be engaging, highly credible and insightful based on his wide experience. In other words the cultural differences and lack of specific industry knowledge weren’t impediments to things we could implement immediately and on our own. In a nutshell it was money well spent and will pay itself back many times over.”

Lee Hartwell CPA, Plant Manager, Myerson Tooth
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Mark Holdinghausen, VP of Operations, DEMA Engineering
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Tom Kuthe, V.P. Construction Operations, C&R Mechanical
“Isolating a problem, finding short, and long term solutions with measurable results is what was promised and results is what was delivered by Supply Velocity. Upon launch of the Lean Six Sigma Selling System, we knew more about our customers, our products, and were able to create a solid plan to increase sales of our most profitable products. Within months of implementation, our booked sales jumped 60% and our most valued customers were getting direct, active, and calculable attention.”
Mark A. Presker, General Manager, Architectural Millwork of St. Louis
“We are pleased that Essex selected Supply Velocity, Inc. as our Lean Implementation Partner. At one facility, we have saved over $350,000 in work-in-process inventory, reduced throughput time from 2 weeks to minutes and increased inventory turns 3 to 8 times per year. All these results are in just 6 months. Our return of investment is very high.”
Terry Etter, Vice President of Operations , Essex Medical Systems

“Supply Velocity gave us the tools to analyze our business and processes based on the facts and numbers versus our perceptions. Our common quote was “Let the numbers lead us”. The key for our organization was how quickly we moved from classroom to actual project initiation. We were able to jump in, start using the tools and see a difference right away.

The get-into-action approach was good for our culture.”

Ned Lane, President, CeeKay Supply
“We engaged with Supply Velocity to help us embed process improvement at all levels of the business. Our team learned from Mitch to let the data drive decisions, to use Lean tools to help us see our processes critically and objectively, and to create a control plan to manage all of the tasks that were the outcome of the data study.

The project turned out to be very significant to the company and most importantly, our customers. We reduced our customer wait times by 40%, and cut in half the labor cost to fulfill customer orders.

Some results are not able to be measured. However, as a result of this project, we have started to build a Lean mindset and culture, which is part of our strategic mission to save our customers money. Supply Velocity has been a valued partner in this mission.”

Dionne Dumitru, COO, Weekends Only
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Haris Tokalic, President, Grand Rock, Inc.
“We used Supply Velocity to rethink our sales process. By analyzing the entire process we found wasted time in our Sales, Admin and Operations departments. Streamlining this process created extra time for each Sales Rep, allowing them to spend more time with Customers and increase the value we add. Gross profit margins are up 40%!

We are now using Supply Velocity to help us rethink our entire Strategic Plan.”

Jeff Reitz, Vice President, Central States Bus

“In a time of volatile supply chain disruption, Supply Velocity is helping us develop Demand and Supply Planning processes to proactively tackle these new challenges. They are genuine partners, working with our team, facilitating and teaching.”

Jane Thrasher, Vice President of Supply Chain, Horizon Hobby
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Gabe Szabo, Vice President, Product Development, Closure Medical – A Division of Johnson & Johnson

“Supply Velocity created visibility within our Assurance Services Group… visibility of performance, Client-service, employee satisfaction and processing time. Using the Supply Velocity System, Audit Report Cycle time is down over 50%. We are using his strategies to create greater Client loyalty.”

Fred Kostecki, Partner-In-Charge, Assurance Services, Rubin Brown
“For several years we have worked with Supply Velocity to support us with their expertise on Lean Operations and Supply Chain Management. Supply Velocity has helped us implement Lean, improve our inventory systems, and educate our people. They are professionals who are always available to help us as needed.”
Lorenza Pasetti, CEO, Volpi Foods
“Mitch Millstein and his team helped guide our shop fabrication division in the re-layout of our custom pipe and steel fabrication facility when we moved into a new building. It is not only the results but how he helped. We were involved in every step. I personally did time studies and was able to see the non-value added steps required to manufacture in our old layout. When we created our new layout, everyone was involved, from the executive team to our direct labor force. With Mitch’s help we increased our throughput by a 3x multiple, while providing more competitive prices to our clients as a result of the efficiency improvements.

This has enabled us to not only make more money but also to expand our commercial reach and serve more, and larger customers. I would recommend Supply Velocity to any company that wants to make improvement in supply chain and operations.”

Geoff Gross, President, Gross Mechanical
“The role of the Erie Insurance Marketing Department has been evolving over the past several years – from a support role to a more critical role of driving growth in our organization. Because of our increased workload and desire to prioritize the most critical projects, we hired Supply Velocity to teach us the skills of Lean Six Sigma.

Participants included the Promotions, Market Research and Agency Licensing sections of the Marketing Department.

We learned valuable tools to help us to prioritize based on the voice of the customer.

I firmly believe these skills made a difference in how we work every day. We are moving new projects forward, eliminating or changing ineffective processes, and we are a much stronger department. We continue to use the tools to help us with our highly-complex and time-consuming projects. Supply Velocity helped us to accomplish our goals.”

Karen Rugare, Director of Marketing, Erie Insurance
“We are using Supply Velocity’s Lean Six Sigma methods to analyze a variety of processes including rationalizing SKUs (stock-keeping-units). By using math to evaluate SKUs we took some of the emotion out of our decisions. We expect significant increases in sales and productivity from reducing poor performing SKUs.”
Mark Kelso, Director of Process Improvement, Save-A-Lot

“Your process encourages this group to work together, better communicate and have fun doing it.”

George Edinger, President, C&R Mechanical
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Rich Lavosky, General Manager, Anheuser-Busch Precision Printing
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Rob Bowers, Vice President of Strategy, Total Hockey
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We have integrated the methods that Supply Velocity taught us into our management and strategic planning. In the process our quality measurement has improved 22% from 2013 to 2015, we have reduced required annual labor by 2200 hours from the garment facility layout project and we’ve seen 50% decrease in error rate. Obviously the numbers speak for themselves, but just as important, Supply Velocity has been fun to work and have become true partners. They have “taught us how to fish” so our internal teams are able to implement change on their own, with the skills we learned from Supply Velocity. This relationship has been invaluable.”

Jeff Lazaroff, Senior Vice President, Clean Uniform
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Their math-based technology, solid down-to-earth facilitation skills, and positive, patient and enthusiastic attitude combined to make our implementation of Lean a very rewarding experience.

We increased our production by 50% in the first month of implementation and continue to see improvements. Improvements have not only been realized in productivity, but also in quality and morale. We have increased profitability by $2M on flat sales of $10M.

Based on Supply Velocity, Inc.’s integrity and our results, I will continue to refer them to others and utilize them in the future as we expand our company through acquisitions.”

Bill Gilbert, President, Fusion Coatings
“Supply Velocity has provided the technical expertise and political capital to move our project forward. They have just the right amount of push and the right amount of support. Supply Velocity has helped us make real changes to improve efficiencies in logistics without jeopardizing our performance. We’re happy and our customers are happy.”
David Walters, President, Hy-C

“I am thrilled to provide this testimonial for Supply Velocity and their outstanding work in implementing Lean Warehouses and processes at Crescent Parts & Equipment through the COVID pandemic. With their data-first focus and Mitch’s exceptional coaching and experience, they transformed our business into a more supply chain-oriented organization, enabling us to grow while prioritizing employee safety and creating a better work environment. Supply Velocity’s expertise in Lean methodologies and their comprehensive evaluation of our customers have been instrumental in optimizing our operations and increasing customer satisfaction. We highly recommend Supply Velocity to any company seeking to implement Lean processes and enhance their supply chain efficiency.”

Josh Cole, Director of Supply Chain, Crescent Parts & Equipment
“In the spring of 2003, the St. Louis Area Chapter of the American Red Cross engaged Supply Velocity, Inc. to perform a study and make recommendations to streamline office processes, maximize cash flow in purchasing and warehousing and restructure and enhance our maintenance department. Supply Velocity, Inc.’s process was methodical, flexible, staff-oriented, inclusive and, above all, trackable.

In the last six months, our Chapter has realized expense savings of over $380,000 annually, and significant improvement in intra-company service levels has been attained. Supply Velocity, Inc. will return to the Chapter periodically throughout the next 18 months to audit our newly implemented processes. We have been pleased with our results and Supply Velocity, Inc.’s professionalism.”

Joe White, CEO, American Red Cross – Saint Louis Chapter