Lean and Recovery After the Coronavirus Outbreak

lean covid 19

Jeff Liker is a 13 times Shingo Prize winner for Research Excellence, known around the world as a leading Lean expert and the independent authority on The Toyota Way. He is a Professor Emeritus of Industrial and Operations Engineering at the University of Michigan and travels the world sharing his insights and coaching senior professionals in Fortune 500 companies. This post is a transcript of the live Q&A session, where Jeff Liker addressed the business challenges executives are facing during recovery post-pandemic and how Lean methods can facilitate that process.

Jeff: I often have been getting questions through email or through LinkedIn about whether Lean can help deal with COVID-19, which is a very broad question because COVID-19 means so many different things to different countries, to different locales, to different companies, depending on your situation. But, the more general question about whether a company that is Lean, that has Lean systems, is better able to respond to any crisis is: yes, I believe.

Just one example is a company that I've worked with for 15 years in Ann Arbor called Zingerman's Mail Order. They mail high quality artisan foods throughout the United States and so they’re already set up well because they're not a physical store location. They mail food. And their business actually increased, rather than decreased. In fact, doubling during the spring and summer, which caused problems for them because they sell 50% of their product in the month of December. For the rest of the year they have lower levels of staffing, about 80 to 100 people, and then for that busy month they go up to 500 people. So they were not really prepared to deal with the volume of orders that they had outside of December, nor the new safety considerations that came with COVID-19. Things were looking dire until they discovered Lean.

Before investing in Lean, they would spend all night building what they thought was the product for the day, which included cutting bread and cutting cheese, preparing gift baskets and so on. The warehouse would be full of inventory, you could barely walk. They had no concept of customer demand except what they predicted would happen the next day. And it was usually chaos.

Now they build according to the customer demand rate, and they actually build to order. They'll cut cheese and bread to meet a particular customer order in a one piece flow, with the whole operation set up with one piece flow and pull system. They also discovered that, through standardised work, through visual management, through good 5S, they could very quickly train the people coming in when they had this big rush around Christmas. In fact, their goal is to train in 15 minutes and they're able to do that regularly. They also have daily meetings and regularly engage their people in problem-solving.

With those new systems in place they did a remarkable job of adapting to COVID-19. They had to bring in new, additional people and space people six feet apart. They figured out how to do that because of takt time, stability of the process, the 5S and standardized work. Those new trainees came from other parts of Zingerman's that had currently unused staff. For example, restaurants with in-store seating were no longer using the same levels of staffing, so they're able to use that labour to adapt to new demand.

One of the things that impressed me was that everybody has to clean with some regularity, disinfecting workstations and wherever people touched. The guidance from the state was that they should do that every two hours, but they didn't know how to do it. So, the manager actually did perform the jobs herself, and developed initial standardized work, which they realized had to be different for different parts of the operation. For example, somebody bagging bread touched certain places, somebody doing material handling was touching different places, so they had to clean them accordingly. This led to them developing localised standardized work for each type of process. She then worked with supervisors based on a draft which they spent three days refining. And then they deployed it and it worked perfectly. Since I started in March, they haven't had a single case of COVID-19.

Initially they were unable to meet demand. So they were pushing out promises to customers: “You have to wait a week. You'll have to wait two weeks.” and so on. Their business was based on: you order it today, it's shipped by today or tomorrow. As things have progressed step-by-step, systematically, they’ve got closer to that goal of same-day order and delivery, and that's where they're at now. And they're preparing to be set up for a huge rush around November to December, meeting demands in a safe way yet again. So that’s just one example of how Lean can help. But what became clear to me was that all the systems for Lean that stabilize the process, and also that allowed workers to solve problems and adapt flexibly to whatever the environment threw at them made them much more able to deal with COVID-19.

The general model that they used was developed by Mike Rother, one of my students, called Toyota Kata. It starts by defining the challenge clearly, understanding your current condition, and then beginning to iteratively experiment toward that challenge. Zingerman’s challenge was to be set up by the Thanksgiving and Christmas season to ship on time safely. That was a challenge for the rest of the year, and then they moved on to identifying shorter term targets. One was Mother's Day where there's a rush, then Father's Day, then a summer sale, and so on. For each of those challenges they had specific targets to improve their performance.

Now, their challenge is obviously not the same as everyone else’s, but understanding your current condition and what you can do to move toward the challenge is very important.

Q: What are some of the best practices for harnessing employee ideas and process for carrying them through from concept to application?

How you engage employees is going to be different depending on your starting point, and where you’re at. If you're in a more traditional top-down command and control environment, you've perhaps implemented some Lean tools and there's 5S and there's some visual management and you’re starting to straighten out the flow of the process, and your employees are not used to being part of decision making improvement, you might start with a suggestion system, which Toyota did for many years. They don't rely on it as much as they used to, but for many years they would ask employees to make suggestions and then they would review the suggestions through human resources. They would pick the suggestions that had a good rationale and then they would provide small rewards for the employees whose suggestions were used. Just a few dollars, or a few pounds. Doing this led to, in some cases, getting 100,000 suggestions in a year.

Now, what's important about the suggestion system is that employees trust management, because it's somewhat subjective to decide what the reward is and you also don’t want employees doing this only for the reward. The reward is largely symbolic as recognition for their contribution and so the deal has to be we're all in the same boat. The mindset is: “We're all trying to survive and prosper together, and as a collective we need your ideas. We recognise that you're on the frontline and we're going to take your ideas seriously and implement them where possible. What you suggest is not going to be used against you. For example, if your suggestion increases productivity, we're not going to fire people because of that.” The environment has to be positive.

In addition to that, the strongest advocate for employee suggestions from the employees point of view, say, from a production workers point of view, is their direct supervisor. That's the person that they know and deal with every day, so you want your supervisors to be well trained to actually coach the production workers. Ask them for their ideas. Encourage them. Suggest how they could improve their ideas. Prompt them to write some sort of form, even a small card, about their ideas and what they think the benefits will be.

So, that was an early process. But then Toyota developed a workgroup structure, which is what they have had in Japan since they started, where they have one team leader for every 4 to 6 employees, and group leaders above them. They're on the frontline holding daily meetings, they're showing metrics and they’re looking at where the biggest problems were based on andon pulls. This becomes a self-sustaining, small system where each group handles its own business and can carry out most suggestions from start to finish. The group leader has a team of maintenance people, and quality people, and production specialists who the group meets with every day. These are the people that provide the resources needed to put the ideas into practice. So they have a very sophisticated system that is self-generating in identifying problem areas and gaps, looking at their annual plan, and systematically moving toward that as a team. At that point, a formal suggestion program is not really necessary.

So, again, it depends on where you're starting from, but the ideal is to have the self contained teams that, at least for problems localized within their team, can actually solve and see the solution through with support from outside that they pull as they need it.

Q: How to embrace new ways of working while continuously needing to overcome immediate issues of process variability and waste to remain efficient?

Jeff: Well, this is a chicken and egg problem. What do you do first? Solve the immediate problem of the day, which takes you away from longer term improvement? Or work on longer term improvement, with the expectation that, eventually, those daily fire-fighting problems will go away? The answer there, I think, is clear. You've got to deal with the problems of the day.

Toyota says: “You need to contain the problem, and keep production running before you can solve the problem at the root cause, improving the process overall.” This goes back to the use of the andon system. If somebody sees a problem they can easily notify a team leader whose job it is to contain the problem so that, if possible, everything else can continue running efficiently. At the end of every day, the team leaders look at the problems that were reported and pick the biggest one to work on. Toyota’s timeframe is to ideally have the problem solved within four days otherwise it escalates to their group leader. So this is a systematic way of dealing with the nagging problems that occur on a day-to-day basis.

And over time you will stabilise the operation and have fewer of the same problems coming back time and time again that take up most of your time, freeing up more time for true problem solving and improvement. But, it takes time to reach the target level of stabilisation where you have a small number of problems that can be solved as they occur.

Q: Are there any practical examples you know of where Lean has helped supply chain, manufacturing and service operations to successfully respond to uncertainty and become more resilient?

Jeff: Well, the example I gave at the beginning of our talk about a mail order operation, where they take letters and fulfill those orders, is generally considered a sort of manufacturing process, but it's often considered a service process. I have been working on the second edition of The Toyota Way, finishing editing now, and I was writing about the way Toyota deals with their value chain partners, and their policy for their team members, is to challenge, respect, and develop them. So respect for Toyota means investing in you so that you can go beyond what you're currently capable of. This applies a little pressure and then I provide the support for you to meet those targets, and they take that same approach, the entire value chain, from suppliers of parts to dealers who sell the vehicles, and even to the community where they do business. I was explaining in this chapter about how they dealt with a water crisis, where a developer had to build a huge mega-development and they were going to pull water away from the water turn needed for their proving grounds. Instead of fighting with them and creating conflict, they taught them and co-operated, finding a win-win solution.

So this is very common in Toyota, I also wrote about a dealership in Sweden that's become a model. Their original process was that you call in, you talk to somebody, you get an appointment, and you come in, and you re-explain the issue you already told to the first person to a different person, and then they discover they don’t have the parts and you have to come back tomorrow. From this, they turned the experience around and you now need only a one-hour, one-stop visit. You come in, you deal directly with the technician who's going to repair the car, you can explain the problem, they can fix the problem. Generally, within just an hour of waiting in a comfortable waiting room, the technician will explain what they did and you can pay them there and then. Their profits and their customer satisfaction ratings are now some of the best in Sweden, after starting at about the worst. So, these sorts of things are prime examples.

I also explained about a food bank in New York where people were waiting hours to get served even in cold weather and rain. They got that down to 15 minutes, doubling and then tripling the amount of people served. So, this is happening in every type of sector, manufacturing and service, and again, Toyota's policy is that they don't only do it themselves but they teach it to others.

Q: Aside from asking team members in the work from home environment how they are coping, what are other ways leaders can exhibit the respect for people principle?

Well, I mentioned the idea of challenging people. The reality is that few people are very good at improving themselves on their own. What we tend to do, including myself, is we tend to develop habits and routines and we feel comfortable just doing it the same way over and over again without having to think all that much. We're naturally lazy thinkers. Occasionally something happens that pulls us out of our comfort zone and causes us to learn, and that's happening quite a bit as a result of COVID-19, where business cannot simply be as usual and organizations are stepping up to fight a common enemy. This is actually helping to get organisations unstuck and for people to be challenged and come together as a team and learn. Toyota wants that to happen all the time, not just when there's a crisis. So if I, as a manager or supervisor, am pretty hands off and then I say: “I respect you. Here's the targets, I know you can do it. I'm going to come back every day and see how you're doing and ask you how you’re doing and encourage you.” Then I'm basically taking a cheerleader role. This is really not very helpful, and in fact, cheerleading when you don't help me can be annoying.

What's better is if I act like a coach. There's something I can teach you and I'm going to take the time to develop you. I'm not going to make the decisions. I'm not going to do it for you, this is for you to learn. So that's the coaching role that Toyota focuses on training in all their leaders, from the team leader to the plant manager. And the idea is that you actually go to the Gemba, you understand the actual condition and you have some skills. For example, you know how to develop standard work and understand takt, you understand the Toyota production system, you understand how to make it work, and you understand the technical problems in a particular area, so you can understand the problems of the production worker and coach them, and also offer useful assistance. With these changes, your respect shows in your supporting behavior, rather than just cheerleading.

For more information on how to drive Lean transformation, see Jeff Liker's Masterclass 'Leading the Toyota Way'. 

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