Lean is Not Lean

Another day, another company whacking a bunch of people.  Knowledge, creativity, experience, and potential ideas being thrown out the window.

Kraft Foods Inc. might eliminate "several thousand jobs" as Chief Executive Irene Rosenfeld spends cost savings on new products, according to Alexia Howard, an analyst at Sanford C. Bernstein & Co. in New York.  Rosenfeld, who took charge in 2006, is accelerating efforts begun in 2004 to spur sales growth that trails cerealmakers Kellogg Co. and General Mills Inc.

Yep, new products and increased sales growth... with less people around to figure out how to accomplish it. But the bad news is that it is being done in the name of "lean"... sort of.

Eliminating jobs and reassigning workers supports Kraft's "goal of creating a lean operating structure to provide funds for growth," Gibbons said. "We have the chance to create a more effective and efficient structure."

Presumably "lean" in this case is not "lean manufacturing."  Instead it is synonymous with "thin" and "light" and supposedly "efficient."  The fact that it's the same as the word used with the lean manufacturing derived from the Toyota Production System is unfortunate.  A fact that many of us in the lean community often lament.

Lean manufacturing has nothing to do with the quantity of people, and efficiency and effectiveness are secondary attributes.  Lean manufacturing is about creating value.  Value for the customer, which creates value for the shareholders, which creates value for the employees and community.  The other pillar of lean manufacturing is "respect for people," and it's hard to be respectful when you're throwing them out the door.

Obviously companies need to be sized appropriately to the business at hand.  Although some of our presidential candidates seem to have forgotten the lessons of history, socialism and communism simply don't work.  Tough decisions sometimes need to be made.  As a last resort.

In this case, as with most others, the business is in pretty good shape.  Sure margins could be better and new products are needed, but eliminating the cost of a pair of hands while forgetting the value of the brains is not a good strategy.  Instead those brains should be trained and turned loose on identifying waste and creating customer value.  Value by reducing cycle times, reducing inventory, improving equipment uptime, creating stable and robust processes, and developing new processing technologies.  Value by creating new products which then require increased production... which requires additional people.  In Kraft's case they'll be hiring new people and investing significant sums in training, presumably just a year or two after they eliminated trained people. 

I guess Kraft's strategy looks good on the P&L and balance sheet.  For whatever that's worth in the real world.      

Comments

[Karthik Chandramouli]

I had an email exchange with Mark Graban on this a while back, precisely about this issue.

My take is that we have sat by and passively accepted the term "Lean manufacturing", which was coined by academia and managed to stick as a buzzword.

People will continue to use "lean" interchangeably with "Lean". We can't easily prevent this, short of registering "Lean" as a trademark, or agreeing to use "TPS" (Toyota Production System) exclusively.

My suggestion is for the Lean community to re-brand itself and draw sharper distinctions in our rhetoric with conventional management practices (e.g., downsizing, "leaning out", reengineering, etc.) that usually result in front-line workers and middle management getting whacked for executive incompetence.

It also helps if we can cast a negative light on conventional management practices and establish Lean as a more enlightened, progressive alternative. The term "conventional" is pejorative, while the term "progressive" has a positive connotation.

Last, but not least, it's imperative that our Lean rhetoric to capture knowledge and service-based applications, not just manufacturing or distribution.

I would be interested in hearing suggestions on the best terminology to replace "Lean".