Applying Lean Principles – The Kaizen Method

In Jeff Miller’s CSIA 2010 presentation, he proposed using the same lean manufacturing principles to their own processes as a system integration company. The second method that he described was the Kaizen Method.

Kaizen – Japanese for Improvement

The Kaisen philosophy or practices focus upon continuous improvement of processes in manufacturing, engineering, supporting business processes, and management. When used in the business, kaizen refers to activities that continually improve all functions, and involves all employees from the CEO to the assembly line workers. Kaizen was first implemented in several Japanese businesses after the Second World War, influenced in part by American business and quality management teachers who visited the country. It has since spread throughout the world.

Applying Kaizen to Your Business

As Jeff Miller described their Kaizen efforts, I could see how it could (and perhaps should) be applied by many of our Alliance Partners. As opposed to the Value Mapping, Kaizen is optimal for quick, incremental improvements for the better. You could argue that all employees should just naturally do this, but (for some reason), it just doesn’t happen.

So, it is worth going through a formal process. Start by picking an area of your business that you sense inefficiencies. Create a review team to map out the steps and brainstorm improvements. Involve in the day to day process as well as your Lean Core Team.

Start by creating a flow chart to make process visible. Establish a baseline and measures such as time( elapsed, lead), cost (# of steps, cycle time, paperwork), and quality (first pass yield, error rate, rework).

Then, identify waste (non-value adding steps) and decide how to eliminate them. See the white board example provided by Miller. I really liked the use of Post It Notes to make it easy to redesign the process. And, I’m sure it was gratifying to see the number of them that ended up in the ‘elimination circle.’

The sessions will typically 4 hours or less where you are looking for small improvements that you can implement quickly. By the end of the session, you have defined action items for process improvement. Once complete then look for the next thing to Kaizen.

Applying Lean Principles – Value Stream Mapping

In Jeff Miller’s CSIA 2010 presentation, he proposed using the same lean manufacturing principles to their own processes as a system integration company. The first method that he described was Value Stream Mapping.

Adding Value

In Value Stream Mapping, you must first define what is ‘value adding’. Value Adding Activity is an activity that transforms or shapes raw material or information to meet client requirements …. What is the client willing to pay for? And, Non-Value Adding Activities are those activities that take time, resources, or space but do not add value to the product itself. These wasteful activities can be summarized as:

• Defects
• Overproduction
• Waiting
• Non-utilized people
• Transportation
• Inventory
• Motion
• Extra processing

You can use a flow chart tool to help you visualize the process. It shows each step of the process as well as process times and wait times. Then, determine value add percentage. Keep in mind that you are looking for major improvements … not just trimming minutes. Note that this is not a quick process – plan 1 to 3 days. Be sure to include people that do the work as well as those from outside. And, realize that implementation of corrective actions will take time (months / not weeks). So, make action plans, specific assignments, and follow up to verify completion.

Just to Illustrate the Point

Jeff Miller went on to describe how they had applied value mapping to identify inefficiencies in their accounting process. They found places where the amount of paperwork and check points wasting a lot of time and energy. Just to illustrate the point, they taped the steps on the floor to show how much effort it required to process an order. A bit embarrassing, but it went a long way to emphasizing to their employees that they were serious about improving their processes.

He gave several examples where they were able to cut the number of process steps in half. In some case, they were able to reduce process time by 80-90%.

Applying Lean Manufacturing Principles to Your Company

One of the most interesting presentations at the CSIA 2010 conference was given by Jeff Miller of Interstates Control Systems, Inc. He proposed using the same lean manufacturing principles that they use with their clients to improve manufacturing process to their own processes as a system integration company. And his company is in the process of doing just that.

Eating Your Own Dog Food

Perhaps, a strange expression, but it apply describes how you should use what you are selling for your own good. For instance, should NI use our own products to build systems that test our own products? Similarly, Jeff described how ICS is methodically reviewing all aspects of their business from project management, to financial management, to sales and marketing, …. They analyze each area, identify inefficiencies, and make action plans to improve the processes.

There are numerous reasons for undertaking such an effort:

• Quicker response times expected – notification to start time
• Shorter project schedules
• Cancelations and constant revisions
• Economy is unpredictable at best
• Price pressure from clients
• Ensures you are poised for growth when economy turns
• around
• Engages employees to greater extent
• Utilizes the creative talents of your people

Method to the Madness

Jeff went on to describe 3 methods for applying lean principles:

• Value Stream Mapping
• Kaizen
• 5S

In the coming weeks, I’ll do my best to relay what these methods are and how ICS applied them to improve their business operations.

Back from CSIA 2010

I’m back in the office after attending the Control Systems Integrators Association (CSIA) conference. I always enjoy attending the conference to connect  people who are dedicated to the betterment of system integration by sharing best practices and promoting the recognition and importance of excellence.

Familiar Faces

Despite the fact that most of the constituents focus exclusively on industrial automation, the challenges of managing a system integration business are much the same. Several NI Alliance Partners there including:

• VI Engineering
• Viewpoint Systems
• Bloomy Controls
• Optimation
• Data Science Automation
• DMC

It was rewarding to see them there. In many cases, I likely introduced them to CSIA. But, it is a testament to their commitment to run a quality system integration business that they they invest the time and energy to participate in the conference.

Direct from the Horses Mouth

As always, I enjoy (and get the most out of) the presentations given by managers of an SI company. Speaking from their own experiences, they offer the best insight and practical advice on how to be successful as well as how to avoid failure. So, the best 3 sessions in my opinion were:

1. Applying Lean Manufacturing Principles to the System Integrator’s World
   Jeff Miller, Director of Automation Services, Interstates Control Systems, Inc., Sioux Center, IA
   During tough economic times clients expect to see price cuts. So how does a systems integrator survive and remain poised for tremendous growth? One way is to apply lean manufacturing principals to our everyday work.

2. Are You Selecting Your Customers or Are They Selecting You?
   Dean Streck, CEO, VI Engineering, Farmington Hills, MI
   Not all customers are equal. This talk examines the importance of selecting your customers wisely and the far reaching impacts on your future. Dean will review various customer selection techniques and measurement methods including project margin, account margin, total lifetime value and the impact on your culture. Actual examples include the impacts of both wise and poor choices in changing industries.

3. The Top Ten Concrete Business Tips Learned Over 25 Years as a Systems Integrator
   Rick Pierro, President, Superior Controls, Seabrook, NH
   Rick will share valuable, easy to implement, and proven ideas which will produce more profit and add more value to your business. From marketing, hiring, contracts, structure and additional services, this talk will leave you with practical ideas to improve both your customer satisfaction and your bottom line.

Over the next few weeks, I’ll try to pass along some of the ideas from these presentations. But, if you really want to get the most value consider joining CSIA and attending the conference for yourself.