Kaizen approach talks about lean management and at the same time not cutting down people. Could you explain the concept?
Lean is about identifying and reducing ‘waste’ (activities that don’t add value) from processes. The biggest wastes, cost-wise, are inventories! Inventories that carry costs, use up space, cause wasteful handling and transportation activities, cause quality defects and result in delays in delivery to the customer. It is the customer – whose quality, cost and delivery requirements the processes must meet, or exceed. Recognizing and practicing the above truths is the „tools & techniques‟ way to Lean implementation. This is where most so-called „lean‟ companies are.
However, „true Lean‟ is also about „respect for people.‟ Why people? The people who work those processes are first expected to be „involved‟ in improving it; and later on, in sustaining the improvements (and keep repeating this cycle of „continual improvement‟) indefinitely.
Will anybody ever like to be involved in improving his process causing elimination of his own job (or that of his colleague)? What happens to the employee morale if that happens? What will poor morale cause to a company‟s performance in the medium term? The improvement journey itself will come to a full stop!! Tools and techniques are not the key to Lean. The real power behind „true Lean‟ (or Kaizen) is management‟s commitment to continuously invest in its‟ people and promote a culture of continual improvement. If it is not done, the so-called lean production lines will degrade over time, rather than improve further. Often, they degrade to where they began, or even worse. There are a number of companies who are now in their second of third wave of implementing lean. They are slowly convincing themselves that „lean does not work here.‟ Yes, practice of „true Lean‟ will improve employee productivity very significantly. The people capacity that is released is usable in many innovative ways. In a growing economy like India‟s it can be absorbed by increased demand/ expansion; it can be used to „in-source‟ some important outsourced activity; or it can be used to help improve processes at the premises of „supplier-partners‟ to help bring down their costs and improve quality – thereby helping ourselves. Kaizen/ Lean is not just a toolkit made up of cells, kanbans, Five S etc. It is a complete system of production in which all of it‟s‟ parts contribute to a whole. The whole, at its‟ roots, focuses on supporting and improving people skills to kaizen the processes they work on. There are far too many lean implementations going on out there, where the centrality of people is missed. To re-emphasize: Lean production is not about eliminating people.
How relevant is it in the current scenario?
The principle described above is universal. Therefore, it remains true under any scenario. In the current scenario, when a significant part of Indian manufacturing industry is faced with a slow-down, there have been job losses. The biggest brunt of job losses has been borne by a very vulnerable section of society: the unorganized labor. At this stage, it may be important to look at A Management Paradox:
If one looks at the hierarchy of costs in a typical manufacturing organization, the biggest cost element is always the materials cost. Manpower costs are generally 4th or 5th down in the hierarchy. Many times energy costs, interest costs, maintenance costs etc. are all found to be higher than manpower costs.
Next, you are invited to look at the management time devoted to the various cost elements. It is pretty common to find the highest management time devoted to trimming down the lowly element of manpower costs!
Now, consider this: If the same time and energy were to be devoted to controlling the topmost element – material cost, the return to the organization would be much higher. This is the „Management Paradox‟. Especially in the current scenario, the biggest potential for managing costs still lies in the area of Materials Management.
You describe IQ as Implementation and Qualification. Share some relevant experiences.
Kaizen Institute takes on assignments to assist client organization implement the practices of Kaizen/ Lean. Implementation is different from „advice‟. Kaizen Institute does not play an advisory role. Hence, I stands for „Implementation‟. The word describes one of our areas of core competence.
Most organizations have organization structures designed to carry out routine work. The structures are mostly functional, composed of departments like Production, QA, Accounts, and Purchasing etc. However, when our client organizations embark on the transformational journey towards implementation of Kaizen/ Lean, we generally recommend that they set up an internal department focused on „Managing Change‟. Such a department is called by different names in different organizations e.g. Lean Implementation Department, Kaizen Promotion Office, Operations Renewal Cell etc. This is our contribution towards building internal capability for implementing Kaizen/ Lean.
When it comes to manning this department, one looks for suitable people. „Improvement Management‟ is a specialization which very few business schools provide. Not too many people are available with requisite experience. Hence, over the years, we found that such departments were inadequately manned. In order to help our clients fill these gaps, Kaizen Institute globally launched „Kaizen College‟. Kaizen College provides three levels of certification to client employees:
Certified Kaizen Practitioner
Certified Kaizen Coach
Certified Kaizen Manager
These employees are equipped to handle different levels of expertise needed to implement Kaizen/ Lean inside an organization.Providing this Qualification service is our second core competence. Q stands for „Qualification‟! Hence IQ stands for Implementation and Qualification.
Could you tell us about Kaizen Institute in India? What is your business model?
Kaizen Institute (India) Pvt Ltd. was established in the year 2000. It is a business unit (JV) of Kaizen Institute Consulting Group headquartered in Switzerland. The founder is sensei Masaaki Imai, who is known as the father of Kaizen worldwide. Kaizen Institute (India) has five offices in India – New Delhi, Pune, Bangalore, Ahmedabad and Chandigarh. It has a team of 25 consultants, based in different parts of the country. They all undergo extensive training, mostly in real life implementation situations, and are expected to provide implementation support in every sector of industry. Over these 9 years, Kaizen Institute (India) has worked with over 300 clients in India. The list is extremely distinguished – it covers „who is who‟ of Indian industry. The success has been gratifying. The recent slowdown has seen a substantial increase in enquiries, which is an indication of quest for competitiveness, and the „coming of age‟ of the Indian manufacturing sector.
Have you had instances of rationalizing of institutes or staff in any geography?
We have been growing steadily, and continue to be in expansion mode. This is true not only for India, but for all of our 24 business units across the globe. Globally speaking, we are still a small consulting company – with over 330 consultants worldwide. Our Chairman is fond of saying – we are probably the smallest multinational company!!
How do you recruit consultants. What is the other job opportunities available to them should they decide to move ahead?
We regularly receive applications from people who have a passion for „getting their hands dirty‟ – i.e. „Implementation‟. Many of us are in this profession not because it is a means of making a living, but because this is our life‟s mission. It is our means of making a contribution to competitiveness of the tiny portion of the Indian industry that we touch. Willingness to „Get our hands dirty‟ is a qualification we take very seriously. We are not armchair consultants. We select people who are comfortable on the grime of the shop-floor, as well as in a boardroom – convincing the management. Still, we have some very senior IITians in our gang (nearly 20% of our strength), including myself. We use adverts on websites, we take fresh MBAs from select schools. We don‟t expect people to leave our profession (only retire from it!). Very few do (family pressures on frequency of traveling). Those who have left, remain in touch as friends and our representatives in Industry. They generally are factory heads – using their learning in one company.
What kind of response would you advocate for the current economic crisis; both at a macro and micro level?
There is never a wrong time to begin the Lean/ Kaizen journey. The current economic crisis, which seems to affect some part of the economy, is a chance/ an interval provided to become leaner, to shed fat and become fit. When the revival comes, perhaps it is around the corner, those who have become fit will reap the benefit, will enjoy the bonanza. Now or later, competitive pressures will force all to embrace one kind of improvement initiative or the other. They may or may not come to us, but Lean is the future. Some will adopt early, some will adopt later. Those who don‟t, will perish.
Give instances of how companies benefit by adopting Kaizen Principles.
From traditional companies to Lean ones – a journey of 3 to 5 years and beyond (but never ending):
Costs of conversion are reduced up to 30% (Raw material prices will be the same for competitors)
Quality problems are abolished
Delivery performance becomes reliable. Customer service improves.
Employee productivity can go up 50% to 100% (!!)
Space requirement reduces (30% to 50%) for the same output
Manufacturing management system becomes flexible and agile – enabling it to respond to changes in the market swiftly
The Toyota story is often associated with Kaizen. Any specific stories in the Indian context?
Today, there are quite a few Indian success stories of adopting Lean. (Not all of them our clients). Examples:
Toyota Kirloskar Motors (obviously – being a Toyota company)
Several TVS group companies
Besides, there are many on their journey. It takes time!
What solution would you have for the Public Distribution System in India because wastage is a lot in the cycle.
Lean logistics is a proven methodology. Some Indian MNCs like Hindustan Unilever, Nestle, TKC already practice these techniques to reach deep into rural areas of every part of this country, at extremely low costs!!