Lean in a Lean Economy


Be careful taking on a lean transformation during a recession

By Peter Anthony

The use of lean manufacturing methodology is a best practice in automotive manufacturing circles and crucial to success at UGN. Focus on scaling efficient, effective processes during an upturn means you are armed with a lean and disciplined organization when tough times come along. In 2002, we went lean and as a result, were well-positioned for the recession. In fact, in 2010, revenues grew by $100 million in a year.

It Pays to Plan Ahead

In an effort to prepare for a recession, and weather its effects, manufacturing organizations—or any high-yield business—need to adapt and build for sustainability and competitiveness. In today’s economy, company leaders who don’t plan every day for a downturn are extremely naive.

Which means that timing is important. Starting a lean journey is tough enough. Starting it during an economic downturn is a monumental shift in thinking during a tumultuous period. When a company reassesses its production models using lean management, it implicitly rejects the very policies and procedures that provided existing team members a sense of stability, direction, and familiarity.

Transitioning to Lean: How it Affects Team Members

Shifting to lean has significant implications, not only for a business as a whole, but for team members. Just as a simple change in software can create ripples of dissatisfaction as it is natural for people to cling to what they know best. Uncertainty brings with it the fear that some individuals will inherit new and likely unfamiliar responsibilities—ones that may be disagreeable.

Instead of minimizing potentially negative consequences of the looming change, it is often better to state flat out that some individuals will face more adversity than others. Much of this has to start at the top. The unknown intimidates, frustrates, and creates emotional insecurity. If leadership communicates and exhibits its vision, change becomes the catalyst for improvement.

Lean May Mean Layoffs

It is important for the leadership team to be cognizant of the fact that some team members are not open to working in a lean culture. They may not agree with lean philosophies, nor are they always keen to better understand the principles behind them.

If you retain these individuals as company culture evolves around them, no one benefits. Keep in mind these team members are not unsuited for employment; they are simply not suited for their present employment.

Teach Lean Thinking

Transitioning to lean is not synonymous with layoffs. Before any announcement of plans to implement lean management, plan healthy transitions for managers unwilling to work in a lean culture. Team members accustomed to traditional workplace cultures will not readily evaluate their own actions and suggest process improvements, as is required for successful lean manufacturing implementation. This type of self-evaluation may be completely foreign to them. 

Initially, many team members will find the concept of increased responsibility daunting rather than empowering. To teach lean thinking, it is important to make lean ambassadors out of the organization’s influential drivers. You needn’t convert all individuals immediately—look to the ones who are fully invested and willing to learn lean.

  • Focus on those who can deliver change and who will become not only the informal leader on the floor, but also the industrial athlete of the cell.
  • Once you provide training, these ambassadors will naturally influence and encourage others.
  • When individuals point out unnecessary movement, or wasteful inventory, praise them publicly.

Lean Manufacturing: Start at the Top

UGN began lean implementation at the leadership level in early 2000, with excellent results. During implementation training, each leadership team had designated areas of responsibility for improvement. One team member was convinced they had isolated their quality problem, but the Sensei insisted they prove what the true issue was.

Frustrated with this approach, the team member in question videotaped the failure mode they had predetermined based on their history and experience at the company.

The result? Their assumption was completely incorrect. The lean practice to test and verify assumptions unearthed the real problem.

The lesson isn’t one based on how things worked in the past, or on years of experience. The lesson is always to keep learning. Do not rely on historical knowledge alone. When people convince themselves they know the answer, they stop learning and won’t continue to look for the real cause of the quality issue. That’s what lean manufacturing is all about, regardless of the economic climate.

Lean Lessons: In Good Times and Bad

Implementing lean manufacturing to weather a recession works. But it is important to realize that organizations shouldn’t abandon their lean practices once the storm has passed. The key is to remember how difficult things were during the recession. Remember the lessons learned, and be sure to maintain the lean measures that helped you reinvent and survive in the first place. One doesn’t need an economic crisis to understand the value of labor efficiencies, equipment uptime, and the ability to gauge and use those metrics for your business.

Downturns can destroy businesses. They can affect monumental shifts in thinking and business practices. Ask yourself these questions to continue to grow during a down economy:

  • Are we in a position to better absorb the down business cycles?
  • Have we learned anything that will help us weather the next storm, real or figuratively?

Lean manufacturing processes shouldn’t be based on economic climate alone. Lean is about creating a system of quality and sustainable management. It’s about creating a culture of continuous improvement.

Peter Anthony is president and CEO of UGN, which he joined in 1992 as sales and marketing manager. Upon taking the helm of chief executive in 2002, Anthony ultimately reinvented UGN—expanding it from a niche supplier to a broad-based corporation with a diversified product line. His drive to embrace the Toyota Production System as the foundation of the UGN business model resulted in maximum productivity and efficiency throughout his manufacturing and business management structure. Today, Anthony spearheads the company’s more than $400 million in revenue across four manufacturing facilities in the United States and one in Mexico. Learn more at ugn.com

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