Lean thinking, why do many warehouses fail with the implementation of lean?

I am surprised not more warehouses implements lean in their organizations. It has been proven many times how effective it is. If you not are familiar but want to know more about lean, I recommend you to read, ”Lean Thinking: Banish Waste and Create Wealth in Your Corporation” James P. Womack and Daniel T. Jones. It is one of the first books about lean and describes the positive effects. First edition came out in 1996, but is available in revised and updated edition.

When I have been out and visit other companies and industry colleagues I often hear that they have tried to implement lean but it failed after some time. They have done some quick progress, but after a while, it has stagnated and the lean way of thinking disappears while everything returns to old established routines like batch and queue methods. This is a big problem and gives lean a bad reputation.

What is it that goes wrong? Often it is a leader on the mid-level with an interest that has been on a lecture about lean or perhaps a day’s training. The leader have renewed energy and starts to train the staff in the department. In the end, the whole department have renewed energy and they start to use the newly acquired knowledge. They start to get rid of waste (muda). Changing its operations in order to get a continuous flow, maybe also implements 5S. Then it begins to get difficult to make progress, you discover that you are dependent on other departments, before and after your own department in the flow of goods. Often you get a temporary positive effect in these cases but because you are stuck and become dependent on other departments, you lose energy and your lean implementation running out of steam. You also need inspiration to refill energy such as lectures or visits to colleagues in the industry. Often senior management do not understand this and rejects the budget for such activities.

I have great respect for the leaders that I describe above who takes initiative, gain insight into lean and understand the potential of the philosophy. The problem is that senior management and the board of directors is not on the lean train. In most companies, it is watertight compartments between departments such as purchase, warehouse and production or sales. Every manager looks after his or her department. Their salaries and bonuses are based on what their department performs, not the company as a whole. I have visited companies where three departments, for example, purchasing, warehouse and production worked with lean independently. It is completely wrong. There is a great risk that three departments sub-optimize without regard to the company as a whole. If you implement lean these watertight compartments have to disappear. Only senior management can do that.

It does not have to be wrong that only one department implements lean, but you need to be aware of the limitations. It can be a good way to convince senior management of the benefits of lean to start with one department. You get so much greater effect if you implement lean throughout the whole value chain, read “Lean Thinking” and you will understand what I mean.

The big question is how to get senior management and boards of directors to understand this? Certainly, it is odd that companies often are willing to invest hundreds of millions in complex automation technologies with little or no flexibility, everything based on questionable ROI calculations rather than begin with an investment in lean that cost a fraction to implement. So many companies have demonstrated the incredible effects lean have. It is difficult to calculate the exact savings in a lean implementation, but if you look at case studies, you hardly need to be worried that it is a bad investment.

Senior management and boards of directors need to be more curious and inclined to develop their knowledge in new areas such as lean. I can experience a rigidity and an excessive caution, the higher up you go in the hierarchy of many companies. It inhibits the development. They trust blindly in new technology. It is little understanding and knowledge about soft values like leadership and lean. Personally, I think that it is enough to look at Toyota and Scania to understand how successful lean is. If you start looking, you find many more success stories in lean.

What you should remember if you implement lean is that it is crucial what kind of leadership you have in the organization. Lean works best in relatively flat organizations with an unpretentious and responsive leadership. I think this is where many organizations fail when they implement lean. Organizations with leaders who have poor self-esteem who feel unsecure in the process of change and react in an aggressive manner that directly inhibits development unfortunately.

I am confident that lean is the best alternative and the only option for many companies’ future. Particularly in the Western world who compete on other terms of higher labor costs and facility costs etc. How fast implementations rate will be in companies depends on how open to change they will be in the future.

I recommend everyone to learn more about lean. Lean is not a passing trend; it is here to stay. It is possible to implement in all types of businesses.

The winners are those who dare to jump on the train and become a lean and mean machine.

Roberth Karlsson

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