Lean Through And Through

A few weeks ago, I attended a seminar on the Principles of Lean Manufacturing. The daylong event included a number of sessions that simulated operations on the factory floor, with role-playing assignments for each attendee. At the beginning of the day, when we went around the room introducing ourselves, I was a bit disappointed that the rest of the group was not entirely comprised of manufacturing people. One of my main reasons for taking part was to see the “shop floor” reaction to the concepts and simulations. But of the 20 people in that day’s enrollment, about half were consultants, textbook authors, educators or bureaucrats.

It turned out to be a good mix. The non-manufacturing people contributed some of the highest energy and most original thinking as we worked together to apply various lean concepts to turn our little assembly line around. In fact, the value of having non-shopfloor employees participate in lean training came out in one of the discussion periods. For example, it was highly recommended that members of a company’s accounting team get hands-on experience with the principles of lean manufacturing. Some of the most wasteful practices ingrained in traditional (non-lean) approaches to manufacturing stem from misguided concepts of cost control and efficiency based on a strictly bookkeeping point of view. (A perfect example is running large batches to minimize setup time while work-in-process piles up and leadtimes lengthen.) Unless the accounting department reforms its viewpoint, efforts to implement lean manufacturing will meet resistance, even firm opposition, in the accounting department. Seeing for themselves how lean manufacturing calls for rooting out wasteful behavior would do much to win them over.

Jamie Flinchbaugh, one of the founders of the Lean Learning Center in Novi, Michigan, recently offered some additional and compelling thoughts about involving a company’s financial staff in the lean transformation. Along with many other training resources, his center conducts introductory courses on the principles of lean manufacturing. These include factory simulations along the lines of the one I took part in at TechSolve here in Cincinnati. Mr. Flinchbaugh has had financial people in his courses and can attest to the eye-opening experience these courses have been for them.

Mr. Flinchbaugh points out that some of the most talented employees in a manufacturing company can be found within its financial department. These skilled resources need to be marshaled in the transformation to lean manufacturing. The role of the controller is especially critical, he says. This role must change and expand for the full potential of lean manufacturing to be exploited.

Mr. Flinchbaugh sees three new roles that the controller must adopt. The first new role is fundamental: The controller must identify, then change or remove, measures and controls that are not driving the right behavior. For example, judging a plant manager’s performance on the basis of labor cost and overhead may impel the manager to invest in automation. As Mr. Flinchbaugh explains, automation is not bad, but it may have negative consequences that work against a lean approach. “It’s not flexible; it can’t solve problems; and it can carry massive capitol costs,” he says. Unless the controller changes the focus on how and which costs are measured, a plant manager may make the wrong decisions about automation, hurting profitability instead of enhancing it.

The second new role for the controller is to be a coach to plant managers, operations managers and shopfloor supervisors. The controller must develop and support the use of good operational measurement systems that focus on driving out waste, Mr. Flinchbaugh says. This second role means abandoning that of “chief cost cop” preoccupied with “keeping a lid on spending.”

The controller’s new measurement systems should look beyond cost so that decisions are based on the proper regard for safety, quality and delivery. These measurement systems should help predict problems and lead to resolutions before the problems occur. As coach, the controller must lead training with enthusiasm and conviction.

The third role that Mr. Flinchbaugh advocates for the controller is that of chief implementer of lean principles and practices within his or her own financial operations. “Whatever principles and practices apply to changing shopfloor activities should also apply to transforming the transactional operations of the financial group,” Mr. Flinchbaugh says. The controller must examine how financial information flows and seek to eliminate waste (such as gathering and stockpiling information that isn’t needed) to minimize waiting and to eliminate errors. Time saved with these efficiencies should be directed to “value-added work,” such as providing management throughout the company with information and measurements that can be used to make performance-driven decisions.

Lean manufacturing implies that everyone in a manufacturing enterprise must change and never stop changing. That’s one of the main lessons from the day I spent in a simulated factory. That the controller and others in an accounting department must also redefine their roles shows how thoroughly this lesson must be learned.