AberdeenGroup The Lean Strategies Benchmark Report Manufacturing Excellence Moves to the Value Chain June 2004 Sponsored byThe Lean Strategies Benchmark Report
Executive Summary ean has become the mantra for making manufacturing competitive in many indus- trial and consumer-oriented markets from aerospace to automotive to consumer L durables. All of these markets are under intense global competitive pressure with customers demanding more price and service concessions than ever. Aberdeen’s Lean Strategies Benchmark Report finds that the top five market factors for adopting Lean strategies all point to manufacturers using Lean programs to help boost profit in the face of price concession and increased customer service demands. Those manufacturers that fully embrace Lean programs and stick to the journey reap the rewards; the number of best-in-class performers triples when Lean programs extend beyond two years. How- ever, a Lean program is about change and the associated risk. Despite Lean’s publicized successes, many manufacturers are still finding themselves adopting it slowly because they have not been able to quantify and track the business value delivered via Lean initia- tives. Key Business Value Findings Achieving superior business performance with a Lean strategy is linked to three ele- ments: pervasiveness, commitment, and extension across the value chain. When manu- facturers applied a Lean strategy across the organization, had top management ...
Executive Summary L tedr aiunarlahbaalnsedsb.ecAcolonlsmouefmtthehree-someriaemnntatrreakdfetosmraamrrkeaekutisnndgfreormimanntauefenarsocetsupgraliocnebgatlcoocmaoumpteopteimttiiotvtieivveienptrmoeascnsouynriesnudwmuitseh-rcustomers demanding more price and service concessions than ever. Aberdeens Lean Strategies Benchmark Report finds that the top five market factors for adopting Lean strategies all point to manufacturers using Lean programs to help boost profit in the face of price concession and increased customer service demands. Those manufacturers that fully embrace Lean programs and stick to the journey reap the rewards; the number of best-in-class performers triples when Lean programs extend beyond two years. How-ever, a Lean program is about change and the associated risk. Despite Leans publicized successes, many manufacturers are still finding themselves adopting it slowly because they have not been able to quantify and track the business value delivered via Lean initia-tives. Key Business Value Findings Achieving superior business performance with a Lean strategy is linked to three ele-ments: pervasiveness, commitment, and extension across the value chain. When manu-facturers applied a Lean strategy across the organization, had top management actively engaged, and integrated the sell and supply sides of the value chain, they were as much as three times as likely to be an industry best-in-class performer. These companies were anywhere from two and one-half to six times less likely to be as severely impacted by pricing and service demands of their customers and their related squeeze on profits. Implications and Analysis Most manufacturers are in catch-up mode with their vision of Lean operations and must rethink tactics and tools to accelerate adoption and improve effectiveness, as evidenced by the following findings: • Sixty-seven percent of the respondents use Lean techniques sporadically. • Eighty-seven percent of the respondents have Lean knowledge in the hands of a few individuals. • Ninety-three percent of the respondents still rely on spreadsheet- and paper-based solutions to perform high-value functions, such as line design and load leveling production. The survey results indicate that to become more successful, these organizations need to invest in training and Lean-enabling IT solutions to make the use of Lean strategies more pervasive and less reliant on the skills of a few individuals.
Recommendations for Action • Increase the frequency of continuous improvement events, increase the number of or-ganizations involved, and engage top management to promote the events and their success • Acquire methods and IT solutions that can help define and validate the business value of redesigned processes and track their business impact • Focus Lean techniques and IT solutions in manufacturing on achieving greater speed, reliability, and flexibility • Extend Lean programs beyond manufacturing and into the supplier, delivery, and selling processes
ExecutivSeumma.r..y.................................................................i. ......................... KeyBusinesalsuVeFinndgi.s.....................................................i. ................... Implicatioa n sdAnalsy..s.i........................................................i ..................... Recommendatfi o rnAscotni......................................................ii. ................... Chapter O n Is e s : ues aHtan.d.........................................................1. .................... WhyLea.n..?.......................................................................1 .......................... WorththJeourne.y................................................................1. ....................... LeanAdoptCiohnalleng.e..s......................................................2. ................... ChapterwoT:KeyBusinesalsuVeFinndgis..........................................4. .............. LeanEconosm..i.c.................................................................4. ....................... Kaizen,orWkingCapitealduRction,Le a lnueVChai..n.......................5. ....... WinnersakTeLeanBroadandeeDp.............................................6. ............... Chapter Th r I ee m : plicatioa n sdAnaylsis............................................8 ............... WhereDoYeosurOrganizatiSotnand..?........................................8. .............. VisionversusDoyepmlentGap..............................................9. ....................... HeavyRelianceon“GiullruLismitWLeaanlaSbcilyi.t.......................1..0. ..... LoadLevelingProductionIstheMosStolCurtiitoicnalRIeTquireme1n1 t....... StreamliningVtalhu e Chain...................................................1..2 .................. LeanITSolutionsapRidlyMraitnug.............................................1..3. ............. Chapter F : o u R r ecommendaftioornAscotni........................................1..5. ........... StayingGroundedLewaitnhPra c etis..........................................1..5 ............ MakeLeanPaesri v .e............................................................1..6 ................... GettingtheMosotfoMuatnuftaucrin..g.........................................1..6 ............ FromLeanManufactuLreinagnatlVoueChai.n...............................1...7 ........ TheAPCEFramewfoorrkaLeanraStteg..y...................................1..8. .......... FeaturedpoSnso.r.s..................................................................2..0 ....................... SponsorDcitroer.y....................................................................2..4 ....................... AuthoroPfrile..........................................................................2..5 ......................... Appendix R A e : searchtMheodolo.g..y..............................................2..6 ...............