It's only cost reduction, and other Lean myths

A former Dell manufacturing executive shares lessons from years on the change-to-survive front lines. Newly appointed chief operating officer of MFG.com Stephen Cook says now is the time to lead Lean initiatives.

11/09/2009


With consumers still holding back and the U.S. economy showing only glimmers of positive movement forward, now could be exactly the right time to make the Lean manufacturing changes your company needs. But first you have to understand what Lean is and isn't. That is a key message of Steve Cook, a former Dell Computer supply chain executive and newly appointed chief operating officer of MFG.com, an online marketplace for the sourcing of parts and manufacturing services.

"To be successful with Lean," said Cook, "you need a burning platform." Cook spent 7 years as an electrical engineer and pilot in the Navy before joining Dell Computer Corp. for more than a decade of manufacturing operations management and supply chain leadership. His "burning platform" had been Dell's least-utilized desktop computer assembly plant, which clearly had too much capacity at a time when laptop computer sales were surging ahead of desktop sales and plant closings were imminent.

Cook led a successful brownfield Lean conversion of the plant, and said he learned a lot in the process. The result was so successful, in the end his plant was the only one still making desktop units when Dell's corporate plans were complete. What Cook learned was that there are a lot of myths about Lean manufacturing that need to be overcome for manufacturing to be successful now.

Myth #1: Lean = Job Cuts

"If done well, Lean initiatives are less a cost-cutting exercise and more a growth exercise," said Cook. Success if dependent on the entire team, and individuals need to know they're performing Lean activities to help the company grow, not to engineer themselves out of a job. "If there's not a commitment to the team, the team won't be committed to implementation," he said.

Myth #2: Lean = Doing More with Less

Lean is about doing more to get more, knowing that reducing waste is a growth strategy, a way to help the company be more competitive, Cook said.

Myth #3: Lean = a Cost Reduction Strategy

While Lean initiatives clearly involve reducing costs, "it's a myth if it's the reason why you're doing Lean," emphasized Cook. "The underpinning of Lean must be about making the organization more successful." Manufacturers must understand the customer value stream, understand what customers are willing to pay for, he added.

Successful Lean has to be about more than the myths, said Cook. Successful companies "engage the entire team, look at tasks through customers' eyes, and use those insights to grow the business." Looking through the customers' eyes means taking the point of view of both internal and external customers, he said, which often have different needs.

"Lean is about embracing change and realizing that change itself is a competitive advantage. Change is the lifeblood of an organization," said Cook. Lean is "also about the people, [who can be resistant to change]. Let people learn about Lean, and constantly be willing to listen. Focus on the whole team, and the whole organization," he added.

More than 100,000 buyers to in North America, from companies ranging from Kimberly Clark to local start ups, use MFG.com to enable their own Lean initiatives. Cook spoke at a Chicago-area gathering of MFG.com users and prospects. He said he joined the company in May 2009 in part because the Lean efforts at Dell showed him how much waste elimination was possible.

"In most manufacturing environments, 65% utilization is breaking even, if you're lucky. Ninety percent utilization means you're doing well," Cook said. MFG.com connects buyers and suppliers electronically in a collaborative environment that supports optimum utilization for all making the purchasing process more efficient, he added.
That means purchasers can lower costs and ensure availability of product-a crucial that balance that must be struck by every Lean initiative-which goes back to the myth that Lean is only about cost cutting.

"We had a saying at Dell," said Cook. "You'll get beat up for high cost, but you'll get fired for quality/availability issues."

--Renee Robbins, Senior Editor, www.mbtmag.com

See also: As economy falters, importance of supplier risk management rises
The amount of risk involved in global supplier management appears to be increasing, according to recent surveys from AMR, Panjiva, CVM Solutions and MFG.com. Categories of risk are shifting, and overall level of risk is rising.





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