Lean during the Covid phase

September 6, 2021

Petr Svoboda, our senior lean consultant, answered the questions

Today's discussion is on how lean manufacturing tools can help in a crisis. For those who do not know the terms lean manufacturing, lean or kaizen, can you briefly describe what it is?

The principles of lean manufacturing and kaizen began to emerge in Toyota in Japan in the 1950s, and gradually spread to other suppliers and manufacturing companies. However, their effectiveness is far from being limited to the automotive industry or manufacturing companies. Today, they are used by many companies in various industries and in services. It is a set of various methods and measures, the aim of which is primarily the continuous development of corporate culture, the reduction of unnecessary waste and increased performance. These are often simple rules based on common sense, but if they are applied correctly and consistently, they are very effective.

How can lean manufacturing tools contribute in times of crisis?

Probably the first thing that comes to mind in connection with the crisis is the need to reduce costs. And that is one of the main goals of lean manufacturing. Constantly looking for waste and increasing added value. However, Lean approaches this very comprehensively, focusing on long-term effectiveness and prevention. This is fundamentally different from simply cutting costs. However, in times of crisis, it is too late to prevent and we often do not avoid trimming. Lean tools are more of a complementary method at the moment.

So can it be said that lean management is a form of crisis management?

I think so, lean is basically such a daily crisis management. One of the mottos of kaizen methods is continuous improvement everywhere, everyone and all the time. Also when solving problems, it should be analyzed carefully, but implemented quickly. That is exactly what is needed in a crisis. However, the path to perfect mastery of lean methods is long and thorny. There is no time for that in a crisis, but it is never too late to at least start.

There are tools that can be mastered quickly at a certain level and will have a positive effect. Which specifically?

In times of crisis, the most important thing is knowledge of the situation (both the current state, but also possible scenarios for future development). To this is important analysis and related methods of problem solving, finding the root causes. Equally important is communication and information. Shop Floor Management will help there. A system of regular short meetings aimed at the rapid transfer of information from the place where a problem arose (deviation from the normal situation) where it is to decide on the next step. These are methods you can start with immediately.

This can help us to raise awareness, perhaps to find a way to go in the future, but also to the savings, where to look for savings in times of crisis?

In common sense, I would start from the cost structure and focus first on the biggest items. In practice, these will be either material or labor costs, depending on whether it is production or services. It is, of course, possible to negotiate a price reduction with suppliers, but the question is when the negotiated discounts will take effect. If I have large stocks, this may be a measure that will take a long time to show. We know from practice companies that have stocks for many months. Smaller and faster savings can be found using process mapping.

But it's a pretty lengthy process and I need a team of people to do it.

By default, the mapping is done in the form of a team workshop and lasts several days. Subsequent implementation of the measures for weeks and months, that is true. But it's also because it has other goals than looking for waste. It is about team involvement, broadening the horizons of participants… Measures are often extended due to insufficient capacity. But in times of crisis, everything may be different. Simplified mapping can also be done by an individual, there will now be more capacity for implementation, because the company runs in a limited mode, etc. And mainly from experience we know that in addition to larger projects that require time and investment, there are always smaller fish that can be implemented right away and often at minimal cost, called quick wins, or low hanging fruit. The savings may not be that great, but they can be crucial in a crisis situation.

And what about employees, should they receive a lower salary?

It will depend on the situation of the company, because the crisis has affected each of us and each company in a different state and in a different way. I would definitely place employees on the list of savings priorities last, because employees are always the brain of the company, the bearer of know-how, and this is especially true in companies where lean methodologies are neglected (in this case, for example, standardization). Wage reductions will always lead to a reduction in confidence in the employer, a deterioration of the company's culture, and in the long run it will definitely work out if it is not approached with sufficient care. Certainly, wage cuts should not be taken automatically under the pretext of a crisis if it is not really necessary, it should really be a last resort before redundancies.

What do you mean by paying the utmost caution to wage cuts?

If, as an employer, I am in such a deep crisis, when I am deciding on redundancies, I would definitely consider that option. It is certainly better for employees to lose part of their income than to lose their jobs. The current situation affects employers in relation to employees. Like a flick of a wand, the cards rotated 180 degrees. From the situation when unemployment was practically zero, there will now be a shortage of job opportunities, but in the long run I should not abuse it as an employer. I would certainly address this only as a temporary measure and, if possible, with the promise of compensation once the situation has stabilized. If the company's culture is at a high level, employees will understand. But I would certainly not implement this measure across the board. Employees with very low incomes could easily be brought into subsistence. It should start especially with top management, where the reduction can be in the order of tens of percent, for lower positions less and less. And again, it will be about sensitive communication and personal conversations with each employee.

What are my options if, fortunately, the crisis has not hit me so deep?

If I was prepared in advance or I am lucky to be in a field where the impacts will not be so deep that I would have to lay off employees or even close the company, then I should use the situation for development. There are a number of companies that have temporarily reduced or stopped their activities, either because they were forced by legislation or because production was stopped by their customers, such as car manufacturers. At that moment, I have two options. Either I send an employee 60% of the house and it does not create any value for me, or I do not send it home, I focus on, for example, the development of new products, long-term planned repairs, process improvement, training. Although I will pay 40% more, the employees will bring me some value in the future.

How do you think lean tools will develop in the future? And will they survive the crisis at all?

I certainly have no doubt that lean methods will not survive the crisis. On the contrary, their deployment is even more crucial now. Simply put, companies can be divided into two groups. The first group are companies that have been positively affected by the crisis and their orders are growing - mail order services, e-commerce, production of medical supplies, etc. Lean will help them increase production capacity, shorten lead times and manage crash situations. For companies in the second group, whose number of orders is declining, lean can help survive by streamlining processes. And they can be used in any field. For example, the basic principles of 5S can help even in the most affected fields, such as the often mentioned restaurants or hairdressers.

As for the future, lean tools are of course evolving or moving to the digital environment. Whether it is, for example, supporting tools such as shop floor management in electronic form, simulation of production or office processes to automation, where lean also has its place.

Gabriela Kopřivová

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