Valuable Information

as you begin the Lean transformation

Our Blog

Getting a Handle on Cost

By Drive, Inc. on Wednesday 15 December 2010.

The poorest performance measure any manager could be judged by is variance to budget. Here’s why: Budgets are collections of guesses. Some simple statistical analysis shows that a budget isn’t worth the paper it’s written on (as a performance measure, anyway). Let’s be conservative and say that there are 20 separate accounts that you budget. And let’s be optimistic and say that you have 95% confidence that the amount you budgeted in each account is correct. The probability that your budget is correct is 100x (.95)20 = 35.85%. Furthermore, you only have that level of accuracy if your revenue forecast is exactly on the money. What happens if demand for your product increases or decreases?

Understanding Value

By Drive, Inc. on Tuesday 16 November 2010.

Last month, we reviewed the common ways of understanding costs that are used in traditional accounting and business planning methods. Breaking down costs by category or by organizational function leaves out the most important consideration…value. And leaving out value almost always means leaving out the voice of the customer.

Cost Cutting "Rights"

By Drive, Inc. on Friday 15 October 2010.

Last month, we reviewed costs in the light of value. Now let’s think about what it looks like to earn the right to cut costs. First, we have to understand waste. Anyone who has read a book about Lean can name the 7 forms of waste:


By Drive, Inc. on Wednesday 15 September 2010.

Where is your organization on your Lean implementation journey? Just launching, sustaining or needing a boost? Wherever you are in your implementation of Lean, there is a key Implementation tool, often overlooked and some are too afraid to address. Let’s be upfront with what might be missing from your tool kit: Allowing operators to ask questions. An operator asking a question is a Lean Tool?


By Drive, Inc. on Saturday 14 August 2010.

You are thinking that you have enough to do without asking operators if they have a problem or a solution to a problem. You know that can be like asking someone to throw you a lit stick of dynamite to go with the rattlesnake, the chainsaw, and the annual budget you are already juggling.

The Eighth Waste

By Drive, Inc. on Thursday 15 July 2010.

In an organization operating or implementing a Continuous Improvement Program, it is imperative that a method be put into place for ensuring the continuation of the improvements. Often the methods that were used to start the Lean process are used again, later, in an effort to recreate the initial levels of success – hire another Lean guy, hold another workshop, hire another consultant, or publish the corporate goals – again. Although all these may work to get, or increase, Continuous Improvement activities, often there is a decline in improvements as the low-hanging fruit is eventually all picked. Once the easy wins are realized, some organizations struggle to maintain the continuous improvement momentum. In some drastic cases, companies will revert to their previous ways.

System Pressure

By Drive, Inc. on Tuesday 15 June 2010.

Most of us have experienced that, before going on a trip, we can get the Inbox emptied, the Outbox filled and the post trip recovery plan implemented before the day ends. Why? Pressure. When the order is due yesterday, and somebody is screaming into our ear on the phone, we get the order shipped today. Why? Pressure. Pressure motivates people, to move, to act, to decide.


By Drive, Inc. on Saturday 15 May 2010.

This is a question that befuddles many an executive. In fact, 70% of companies who have embarked upon a Lean Journey are dissatisfied with the results they’ve achieved (McKenzie & Bain study). Millions of dollars are spent each year by companies hiring consultants, creating Continuous Improvement departments, attending training and seminars, doing Kaizen Events, moving equipment, and implementing Lean tools. Yet most companies who do this are not happy with the return on investment. Why is this?


By Drive, Inc. on Thursday 15 April 2010.

Hoshin what? Many organizations who are years into their Lean Journey have never heard the term, yet it is the heart of the Toyota Production System. Hoshin Kanri helps ensure that an organization works on the right things in order to get the expected results. That sounds attractive until I mention that an organization usually needs to turn their entire approach to managing manufacturing upside down; product development, back-office business processes… indeed, the entire enterprise needs to be managed differently. Can you get results without it? Sure, albeit limited results. As an example, SMED will work as a stand-alone process. A mass manufacturer can use SMED to reduce changeover time and therefore make more parts on the same equipment, amortizing the capital cost of the equipment over more parts, thus reducing cost per piece. However, with Hoshin Kanri, it might become evident that it is more important to use the changeover time reduction to reduce batch size and change over more often, leading to greater flexibility to meet customer demand and lower inventory carrying cost. So the tool without the holistic approach of Hoshin Kanri can get some results, but likely won’t lead to the best result and the greatest return on investment.


By Drive, Inc. on Tuesday 16 March 2010.

As mentioned in last month’s newsletter, we stated the three basic steps to creating a Hoshin Plan. They are: (1) Establish goals, (2) Establish a plan to meet your goals, and (3) Establish a system for progress review that ensures your plan is executed on time with the expected results.

Showing 1 - 10 of 12 Articles
< Previous 12 Next >

Looking for More?