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The catastrophic impact of being too efficient

People & processes need the right conditions to thrive!


Are we losing our robustness and resilience?


Stripping back inventory and people resources for many years now has left us vulnerable to dealing effectively with unplanned events - never mind catastrophic ones, such as things like Brexit and the coronavirus pandemic!


Being too lean, in terms of people, can also hinder continuous improvement as everyone is too busy to take a breath and spend some time to explore, identify and make improvements. Taking one step back is sometimes the only way to take two steps forward. And yes, this may mean taking a short term hit on productivity and the annual profit and shareholder dividends or management bonuses, but sustainable improvements and built in robustness of processes and systems need clear strategic deployment and available resources (people involvement and ownership) to happen!


By taking one step back you will reap the efficiency and productivity benefits for many years to come and increase levels of employee engagement along the way by involving people and giving them the time and respect to make improvements to their workplace.


Better processes and systems will of course also make you more robust , resilient and better prepared for when inevitable challenges do come along, no matter how big or small.


So what can we learn from a plant and a manufacturing methodology about how we have adapted over many years to deal with (or maybe not) our processes and our people?


Learning From a Well Known Plant


The cactus plant is well renowned for its resilience and how they show many 'adaptations' to conserve water during very long dry periods. An adaptation is a trait in a living organism that helps it to survive, populate and thrive over the longer-term. So the cactus plant has evolved to prepare and be ready for the worst case scenario (the unplanned event or situation) and not just focus on what is in front of it or in the short-term - but be prepared and ready for the sustained longer-term. They are resilient!


The cactus plant is a good example how in adversity and the most extreme conditions, it can still survive, change again and again, adapt to the circumstances it is given, and still grow and thrive. Can we as individuals or organisations prepare for ongoing change and be as resilient?


Introduction to Lean


Many businesses strive to be lean, eliminating wasteful activity including WIP (work-in-progress) wherever they can in an effort to be more efficient, save costs and increase profit - and of course (well maybe!) satisfy the customer!


Although structured approaches to process manufacturing go back all the way to the Arsenal in Venice in the 1450s, the first person to truly integrate an entire production process was Henry Ford. At Highland Park, MI, in 1913 he married consistently interchangeable parts with standard work and moving conveyance to create what he called flow production.








Henry Ford (July 30, 1863 – April 7, 1947) was an American and founder of the Ford Motor Company, and chief developer of the assembly line technique of mass production.











The approach by Ford was hugely successful and was revolutionary in its approach, particularly with single specification production lines. However this way of working proved limited, not with the flow - as his system was able to turn inventories of the entire company every few days - but when trying to introduce variety and multi-spec production lines.


Other automotive manufacturers built and expanded on Ford's system to incorporate the flexibility for variation and introduced MRP (Material Requirements Planning) to make it even more advanced, systematic and efficient.


Kiichiro Toyoda, Taiichi Ohno, and others at Toyota explored further advancements in the 1930s, and more intensely just after World War II, when it occurred to them that a series of simple innovations might make it more possible to provide both continuity in process flow and a wide variety in product offerings. They therefore revisited Ford’s original thinking, and invented the Toyota Production System.


This system enabled them to make small volumes of many part numbers, and having each process step notify the previous step of its current needs for materials, it would be possible to obtain low cost, high variety, high quality, and very rapid throughput times to respond to changing customer desires. Also, information management could be made much simpler and more accurate.


And so the term 'LEAN' was introduced . . .


The thought process of lean is described in the book The Machine That Changed the World (1990) by James P. Womack, Daniel Roos, and Daniel T. Jones. In a subsequent volume, Lean Thinking (1996), James P. Womack and Daniel T. Jones distilled these lean principles to five key steps:


5 Core Principles of Lean

  1. Specify the value to the customer

  2. Identify the value stream for each product and associated wastes (non-value adding activity)

  3. Make the product flow continuously through the remaining value-added steps

  4. Introduce pull between all steps where continuous flow is possible

  5. Manage toward perfection so that the number of steps and the amount of time and information needed to meet the customer requirements continually falls


Inventory


As lean thinking continues to spread through industry and to every country in the world, leaders are also adapting the tools and principles beyond manufacturing, to logistics and distribution, retail, construction, maintenance as well as professional services and others.


This is all well and good and lean obviously has its place, at the right time, in the right environment and with the right controls. However, in manufacturing the challenge for many is still the balance between managing flow, customer requirements (including fluctuating demand) - and levels of inventory. Inventory is one of the '7 wastes' identified as one of the non-value adding activities, mentioned in the 5 core principles above and is often seen as an easy way to make a one off saving to the bottom (financial) line.


Inventory control can be taken to extreme levels and the term JIT (just-in-time) is a methodology arisen from lean philosophy, particularly in the 1960's and 1970's with the Toyota production system, and is about eliminating excessive inventory between process steps and across the wider supply chain. There are many efficiency and process benefits with this methodology and it can work very well when thought out, structured and controlled. However, when this approach is cascaded to the whole supply chain it leaves very little room for error or unplanned situations and can disrupt supply at any given process step and ultimately supply to the end customer.


Are We Robust Enough?


The problem with inventory is that it is often misunderstood, and as business leaders strive to be 'lean', they can forget or miss the fact that inventory is often required to maintain process flow, particularly with multi product lines and unbalanced process steps. Not only this but it is needed to give you a buffer for unexpected times . . . to make you ROBUST!


The lean mentality with business leaders has also stretched to resources, including people. "Let us make as much as we can with as little labour as possible" or "Lets make even more with the same resources". . . let's be lean!


The problem with this is organisations often now run so lean with their main and biggest asset - their people - that there is not enough wriggle room to factor in fundamental things like covering for holidays, sickness, training, new product introduction, management development, innovation, improvement activities, employee communication and engagement etc, etc.


So our private sector companies (not just manufacturing) today are often operating too lean and trying to be too efficient with both inventory of raw materials, WIP and people - and we are losing the ability to be robust, (and agile) when we need it more than ever, during modern times of volatility, complexity, uncertainty and unpredictability. But not only is this happening with the private sector - it has also been very evident in past years in the public sector, where we have stretched essential services to the limit and to breaking point in some cases, such as the Police Force, Welfare Service and the NHS.


Impact of Unplanned Events or Situations


The global catastrophe with coronavirus highlighted our lack of robustness in business and society generally in certain areas driven by a need and desire to be too efficient and too lean and trying to make too much savings, or cost cutting!



Take the shortage of certain items caused by the virus, undoubtedly exaggerated by panic buying, such as hand wash, toilet paper, face masks, laptops and even pasta, as well as other essential items that emptied from our supermarket shelves very quickly. We were only keeping enough of certain things in our supply chains to deal with normal or routine situations and demand. Hand wash was unavailable to most people since the very early days of the virus and still remained a supply problem several months in.


Being robust is also about being able to react to these unplanned situations. Where private companies have stripped labour to the minimum in their efforts to be so called 'efficient', it is very difficult to just turn up production volume at short notice. It takes time to find more people and then of course it takes even longer to train those people or at best retrain current employees from other lines or departments. If you then multiply this across each part or company within the wider supply chain the problem and challenges become exponential.


So as we see clear evidence in front of our eyes of the problems caused by very tight JIT type inventory controls - we have also experienced the impact of our lean public services. Already stripped and stretched to absolute capacity our NHS, as is many other health services around the world, has been at breaking point and beyond in some areas.


Similar pressure was also on the Police Service who were having to step up and enforce new guidelines around social gatherings and movement of people - on top of the already under resourced activity as part of their routine role to protect society. Then there is our Welfare system, which again has been privatised in certain areas to be more lean and efficient (apparently), and left so stretched and lean of people resource, that it simply will not be able to cope with the additional level of work it will be expected to deal with in the future.



"Turn our wounds into wisdom" Oprah Winfrey

Turn our wounds into wisdom


Being lean and efficient is obviously important in business and in the public sector, to remain competitive and cost effective - however, we also need to be robust, resilient and be agile and ready for change. To be truly agile and sustainable we need enough of a buffer in our system (both people and inventory) to prepare for the unexpected and have enough time to fully engage our biggest asset and potential of all . . . our people!


For sure the coronavirus, the likes of which hopefully won't be seen again too soon, took everyone by surprise, but can be a stark reminder that constantly striving to be as lean as possible with our people and across our supply chains can have catastrophic consequences both in short-term crisis and longer-term sustained economic performance and global growth.


Inventory, with good forecasting and business systems and processes, can be controlled to balance fluctuations in demand with efficiencies and good workplace organisation.


People and employees have to be given the chance to feel appreciated, be developed, and treated with respect for them to trust in their leaders and the companies they work for. In a society that is seeing rising trends in burn-out and poor stress management and ultimately mental health problems, we need to factor in enough slack to engage, protect and grow our people as it is the untapped potential of the people that will make your business and our economy resilient, robust and thrive.


Article by Trevor Norman

trevor@tribero.co.uk


Trevor is a leadership coach and cognitive behavioural therapist and specialises in organisational behavioural analytics and team dynamics






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