10 Reasons Why Lean Initiatives Fail
Despite the longevity of Lean, its enormous popularity and the documented gains in productivity and waste reduction that many companies have experienced, the track record for successful implementations is spotty. Keep reading to learn about why Lean initiatives fail.
In 1936, with the assistance of Shigeo Shingo and Taiichi Ohno, Koichiro Toyoda developed “Kaizen” improvement teams. These dealt with the manufacturing issues. Ohno then brought this and other concepts together. It has become the Toyota Production System (TPS). It is from the TPS that Lean production was developed.
In his 1988 article, “Triumph of the Lean Production System” John Krafcik coined the term “Lean”. The article states that:
- Lean manufacturing plants have higher levels of productivity/quality than non-lean ones.
- The level of plant technology seems to have little effect on operating performance”
- The risks with implementing Lean can be reduced by developing:
- A well-trained, flexible workforce
- Product designs that are easy to build with high quality
- A supportive, high-performance supplier network.
Lukas Richter claims lean initiatives failure rates well above 50%. James P. Ignizio cites 70%, 90%, or even 95% failure rates.
The basic reason why Lean initiatives fail comes down to the following issues:
- No company strategy – To have success in any business undertaking, the company needs to have a proper strategy. The strategy assigns clear responsibilities and what resources are to be committed. Metrics and timelines are clearly defined. The strategy should expect potential problems and recovery plans. Companies usually fail by attempting too much or conversely too little. Without making this a priority and committing to its success the initiative is moved to “backburner” status.
- No Leadership Involvement. Lean requires top-to-bottom leadership. It must be firm, inspiring, relentless and resilient. The leaders need to be committed to making this happen. If they are not, how can you get everyone else in the company to be so? It is and must be a part of the company culture and have staying power. No quitting at the first sign of a problem. Nothing worthwhile ever goes smoothly. Be ready for problems and deal with them when they occur.
- Relying solely on a Lean champion. Expertise in Lean is necessary. But, there must also be a sufficient amount of knowledge among those working with Lean for it to work. The expertise must live with both the line people and the staff. Reliance on an internal or outside expert who has no line authority to implement Lean is not realistic.
- Trying to copy others. Rarely do companies succeed by imitating and copying the practices of others. While the Lean concepts are specific, the practice of them is somewhat unique to each organization. It must fit their culture. Trying to be someone else and do exactly what they do, is a sure recipe for failure.
- Treating Lean as a tool and not a process. Lean is not a tool. It is a fundamental change in the company’s value delivery system. Lean is not a one time deal. It is an ongoing, forever practice. To treat it otherwise is to misuse it and see no value or improvement.
- None or a lack of customer focus. Companies exist because they have customers. Improvements are made with a focus on them. This includes improving your products, costs and services for them. By doing so, you can also attract more customers. If the Lean program is not geared towards this, the reason for doing Lean is either lost or becomes meaningless.
- Not properly engaging employees. Lean works when the company’s employees are engaged. Employee participation is the main principle affecting innovation, productivity, and work satisfaction. When they are not engaged, there is no buy-in and things do not happen.
- Not educating employees in Lean. This is part of the engagement process. When people are not trained or educated, there is a definite lack of understanding of what to do and how to do it. Even the smartest and most productive employees need to be trained. Otherwise, mistakes will be made and unhappiness will ensue.
- Lack of management understanding of Lean. When management doesn’t understand Lean, how can they expect the employees to? The short answer is they shouldn’t, even though some do. There has to be an understanding of Lean at all levels of the organization. Otherwise, even the most subtle of things will derail a company’s Lean efforts.
- Conflicting company metrics. Lean requires metrics that focus on the processes of value creation and the associated costs. If there is a conflict among departments and the company’s metrics, a serious situation is created. When people are unclear about which metric is important or not, each will choose the one they like or can easily achieve, even if it isn’t the most important.
As a consultant, I saw various companies that exhibited one or more of these poor practices which caused them to fail at implementing Lean practices and programs.
One example was a client who wanted to develop inventory control. Most of the inventory that they controlled was not their own, but the client’s owned inventory that they were to process and then return. In that regard, they were to process the material within 3 days of receipt and then ship.
Yet, when analysis of the inventory was conducted, my colleague and I found that there were 3 buildings, an overflow warehouse and 80 tractor trailers full of materials on premise that contained materials to be processed. It would probably take six to nine months to process these materials, some of which were more than one year old.
The main aspect of Lean is to minimize (ideally have zero) inventory on site.
The client had no intention to make this happen and were violating their own three-day processing policy.
Furthermore, the materials stored at the processing buildings were in many cases not scheduled to be run in the three-day timeframe. Needless to say, their project to establish inventory control and Lean their operation was a great failure.
A second client initially bought into the Lean concept. They worked to get rid of obsolete materials and to order their warehouse and storage areas within the manufacturing areas.
But, over time the bad practices resumed and the areas overflowed with improperly stored and/or obsolete materials that should have been disposed of.
The management treated Lean as a tool, not an ongoing process. Once you have cleaned and organized your facility, you are expected to maintain it. When you get into a cycle of clean, allow mess, and then clean again when it becomes unbearable, you are not practicing Lean. But using it as a tool.
Eventually, as with this client, people get tired of cleaning up the mess and just leave it be. So Lean had a momentary effect and then the improvement was gone, never to be seen again.
In order for Lean to succeed in your organization, management has to become students of Lean.
About the Author:
Peter H. Christian was a founding partner and president of espi, a business consulting firm in Northeastern PA. Previously he was an Executive at Crayola Corporation.
He has worked with 300+ clients in business development, profit improvement, operations, IS selection and implementation, and project management. He has 40+ years of experience in strategic and facility planning, CI, lean, and supply chain. He has helped companies to realize millions of dollars in cost reductions and profit improvements adding and retaining thousands of jobs.