Why doesn’t lean production work in your company?

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　　Many large Chinese manufacturing enterprises began adopting lean production concepts and practices many years ago; for example, they provided training on lean production theory, sent key production staff to mature companies for learning experiences, introduced the basic tools and systems of lean production at the production sites, established lean schools within the companies, and hired domestic and international lean experts to serve as senior managers in the production departments. Companies expect to enhance their production management capabilities in this way. 　　However, experience and observations show that many companies operating in the Chinese market (not only domestic firms but also many foreign-funded enterprises) have so far failed to achieve the desired results in implementing lean production. The process of promoting lean production in these companies is full of obstacles and setbacks; the efforts made yield little real result. As a result, some company managers have even begun to doubt whether lean production is suitable for China. 　　The common setbacks we observe include:
● An accurate understanding of lean principles and the proper use of related tools, which yield quick results in the short term but cannot be sustained over the long haul.
● Actions are visible, but the impact of improvements cannot be measured, making it impossible to determine the cost-benefit ratio.
● The creation of new large organizations and teams to implement lean production actually leads to a decrease in overall efficiency, resulting in negative outcomes.
● An attempt to apply lean practices mechanically, without conducting targeted design and improvements.
● The production department lacks cooperation from other departments, with the surrounding environment hindering the implementation of lean methods.
● Middle managers are preoccupied with daily tasks and handle lean production perfunctorily.
● Frontline workers do not see any benefits from improvements and continue to rely on traditional methods.
Companies encounter these various problems when trying to implement lean production; this is certainly due to the current stage of development of China’s manufacturing industry as well as the specific production conditions of each company. But the more fundamental reason why the implementation of lean production fails to achieve the desired results is that companies do not understand and apply lean production from a systematic and practical perspective. 　　Lean production is an organizational capability. The essence of lean production lies not in rigid, one-size-fits-all tools, methods, and formulas, but rather in the process of continuous innovation and improvement within a company’s production system. This process requires the participation of all levels and every individual; therefore, lean production is essentially an organizational capability. Only when the principles and methods of lean are internalized as organizational capabilities can enterprises calmly handle ever-emerging problems and achieve self-improvement. 　　To better understand lean production, let’s first look at the questions that lean production helps manufacturing companies’ top production managers answer: ● Is our operational performance in line with customer requirements? 　　●Is our factory continuously and effectively driving improvements in cost, quality, and delivery? 　　●With the rising costs of raw materials and other factors, how can gross profit margins be maintained and improved? 　　●What can we do to improve product quality? 　　●How to ensure production safety in factories? 　　●How to improve inventory management for components, work-in-progress, and finished products? 　　●Have we effectively achieved cross-departmental synergies? 　　●How to unleash the initiative of middle managers? 　　●How to reduce turnover among front-line workers and boost morale? 　　The issues mentioned above are all important matters that production managers in enterprises pay attention to on a daily basis. Companies need to establish management frameworks and mechanisms for lean production around these issues. According to the theory of production transformation, lean production encompasses three dimensions. 　　Lean production principles By drawing on extensive historical experience, lean production has developed some generally applicable basic principles, such as eliminating waste, flexibility, zero defects, and standardization. These principles can be further divided into three categories: general principles, operational-level principles, and sustainability principles. Although these principles have a certain degree of universality, companies need to make targeted designs and adjustments to aspects such as the interpretation of their meaning, priority order, and combination, in line with their own development strategies and specific production environments. For example, production flexibility is very important in the automotive manufacturing industry, but in the mass-produced and standardized electronics manufacturing sector, its importance is much reduced; instead, rigid, dedicated production lines are more conducive to improving quality and efficiency. For example, employee empowerment is very effective for companies with experienced workers and a stable workforce. However, in companies with a high employee turnover rate, the concept of employee empowerment needs to be significantly adjusted. For the latter type of companies, it may be better to ensure that employees strictly follow operational instructions, rather than relying on frontline staff who lack experience and are not highly committed to improving operations and processes. 　　Production principles are the supreme guideline for a company’s production management. Once established, production principles have a significant impact on daily production management decisions. For example, a company with high inventory of work-in-progress, once it decides to adopt a \"process-oriented\" approach as its production principle, its production department should focus on optimizing the overall output of the factory, rather than focusing on the individual output of a specific workshop or production line. This requires the company to continuously identify and improve the bottleneck processes throughout the production process, minimize inventory of work-in-progress at intermediate stages, and adjust the evaluation criteria for workshops and employees. 　　Production principles also imply necessary trade-offs. Many companies have chosen to destroy their products due to quality issues. Such an approach reflects the company’s willingness to sacrifice delivery times and costs in pursuit of quality during a phase focused on quality. Similarly, many companies, in their pursuit of faster delivery and reduced costs, sacrifice quality as a result. If a company focuses solely on delivery, quality, and cost, it often leads to high workloads for workers and low salaries, which in turn causes staffing issues. To achieve a balanced development in terms of safety, quality, cost, delivery, and personnel, companies do not need to excel in every area. This requires production managers and business leaders to possess the judgment and courage of professional managers and entrepreneurs. They must determine the priorities of production principles based on specific stages of development and particular problems, clarify the direction of lean efforts, and avoid wavering between different objectives. 　　Production principles have a significant impact, and thorough discussion and communication are necessary among all levels of the company during the process of formulating them. Production principles need to be agreed upon within the company and strictly followed, as this is essential for the efficient operation of the production department. When businesses face dilemmas related to major production issues, they must refer to these principles when making decisions and choices, thereby **reducing communication costs**. Production principles enable businesses to consider production decisions from the perspective of value creation throughout the entire value chain, providing a basis for optimizing overall corporate decisions. 　　The eight elements of lean management The lean elements comprise the eight key components commonly found in lean production theory, including: visual management, standard work, material handling, equipment management, standard organization, quality management, product engineering, and safety, health, and environmental protection. The lean elements roughly outline the main aspects of production management as well as the common methods and tools used in various areas. These are general methodological guidelines. To enable these tools and methods to function in a specific enterprise, they must be designed specifically based on the enterprise’s production activities and production environment, in order to establish the enterprise’s own management system. Taking the quality gate tool in quality management as an example, its fundamental purpose is to detect defects as early as possible and prevent them from spreading across different processing stages. In workshop management, quality gates involve many specific issues, such as: ● Who is responsible for setting up the quality gates (production or quality)? 　　●Where is the quality gate located? 　　●What is checked at each quality gate? 　　●What should be done when the quality gate detects a problem? Under what circumstances is it necessary to stop the line? Who has the authority to shut down the line? 　　●How are Quality Gate data collected and fed back? 　　●How can quality issues be traced? 　　●How should recurring quality issues be resolved, and who is responsible for addressing them? 　　●What is the role of quality gates in the overall enterprise quality management cycle? How can Quality Gate be integrated with other tools? 　　If a company fails to address the aforementioned issues in quality gate management, is unable to provide a logical explanation for quality control, and cannot ensure strict implementation in practice, merely claiming that \"we are using quality gate tools,\" the result is often that these quality gates fail to fulfill their intended role, and quality problems continue to arise across different workstations and even within different workshops. 　　Therefore, lean elements require detailed processes and customized management mechanisms as a guarantee. Enterprises need to specify in each process which personnel are involved at each step, what the responsibilities of each person are, what the deliverables are at each stage of the process, what the required time for each process step is, what the mechanism for making decisions at higher levels is, how each person’s performance is evaluated within that process, and what capabilities are required of the personnel, among other things. Only when lean tools and methods are transformed into internal corporate systems through processes and mechanisms, and are accepted and mastered by the relevant personnel, can the full impact of these elements be realized. The elements of lean manufacturing exhibit an effect similar to the barrel theory; in other words, the weakness of any one of these elements can have a significant negative impact on the overall system. Enterprises must pay attention to the aspects among these elements where problems are more prevalent, and continuously make improvements and enhancements, ultimately driving the continuous progress of production management levels. Management elements include soft factors such as a company’s management culture, organizational structure design, performance evaluation metrics, and the development of personnel management skills. 　　The management culture needs to incorporate the company’s lean production principles as well as specific management mechanisms derived from those lean elements. It is necessary to identify the behaviors that the company expects from its employees, and compare these behaviors with the various default behaviors existing within the current corporate culture, so as to determine which behaviors should be prohibited, which ones should be encouraged, and which behaviors need to be strengthened. Changes in specific behaviors require the company’s management to set an example and be deeply involved. Enterprise management should also gradually foster a shift toward the desired behaviors by providing timely incentives for everyday minor actions. This process is usually quite lengthy and requires a lot of patience. Many companies tend to give up due to repeated setbacks in this process, ultimately leading to the failure of management culture transformation. 　　The design of organizations and responsibilities must start from the fundamental goal of supporting front-line workers in completing production tasks efficiently and with high quality. Therefore, we first recommend adopting a bottom-up approach to organizational design: first define the hierarchical structure and responsibilities of work stations, then teams and production lines, and finally workshop organizations. Secondly, in the design of production organization, enterprises need to manage properly the relationship between various support and auxiliary functions and the core production functions. All functions are designed to serve the development of the enterprise, and their service-oriented mindset should be emphasized. It is crucial to avoid creating unnecessary organizations merely to supervise and monitor certain tasks, or to develop a bureaucracy focused on oversight; this can end up suppressing enthusiasm for production tasks, while support for auxiliary functions fails to generate any real value. Third, it is necessary to prevent problems such as an excessive management span and too many hierarchical levels. 　　The design of performance indicators must first be integrated with the organization and role design, using these indicators to facilitate the full implementation of such organization and role designs. In this process, it is necessary to avoid including indicators that far exceed the responsibilities of the person being evaluated. Secondly, assessment criteria should combine outcomes with behaviors; it is necessary to consider not only the results but also the ways in which those results were achieved. This is because the results have a certain degree of randomness in the short term; only the correct results achieved through proper actions are replicable. Third, the number of assessment indicators should not be too large. Experience shows that when the number of individual performance metrics exceeds 10, the motivational effect on those being evaluated declines significantly. Generally speaking, the number of assessment indicators for middle-level employees should ideally be kept below 7. 　　High turnover among front-line workers and a shortage of middle-level personnel are common problems facing China’s manufacturing sector. In terms of managing front-line workers, companies first need to address the periodic changes in staffing needs that arise due to peak and off-peak production periods. By planning staffing levels and recruiting new employees, they can cope with these fluctuations in demand, thereby achieving a good balance between meeting production requirements and improving employee utilization. Secondly, in a market environment with high staff turnover, it may not be realistic to simply expect a reduction in the turnover rate; the key is to stabilize the core team. It is crucial for businesses to cultivate and maintain a core production team. Such a team plays a key role in ensuring stable production quality. In terms of managing middle-level personnel in the production team, companies first need to address the design of career development paths for these employees as well as effective communication with them. Due to the shortage of middle-level personnel in the market, the pace of promotion is much faster than in mature markets; therefore, managing the career prospects for these middle-level employees within the company has become an important factor in enhancing their stability. Furthermore, companies need to develop targeted training methods based on the actual needs of middle-level employees and the results of their evaluations. More importantly, companies need to include the training and development of middle-level employees in the performance evaluations of those who supervise them, thereby institutionalizing the process of mentoring subordinates by superiors. Enterprises need to internalize the production principles and lean elements from the first two dimensions through the design of management elements, so that managers at all levels have the motivation and capability to implement these lean principles and elements. This enables lean improvements to be solidified and sustained, thereby achieving a transformation in production management at both cultural and behavioral levels. This is an important task that companies most easily overlook when implementing lean production. This work is key to organically integrating production principles, lean elements, as well as the company’s management mechanisms and staff capabilities. If this task is missing or not carried out properly, it often leads to the failure of a company’s efforts to implement lean production. 　　The transformation and upgrading of China’s manufacturing sector have reached a very critical stage. Chinese enterprises need to apply lean principles flexibly based on their own characteristics, and promote the organic integration of lean elements with management mechanisms, so as to find a practical path for transforming production management. We believe that Made in China will become a synonym for high quality in the future.