Issue 15 – Sept 2013


Issue 15 • Sept 2013

Lean Training – Learn how to effectively collect Customer Demand Data

One of the questions frequently received is how to effectively collect customer demand data.  While I had previously viewed this concept as obvious, I have learned that capturing demand data can be somewhat elusive if you don’t have a lot of experience gathering this number.

Let's begin with a brief review as to why this data is essential.  Demand data makes up the denominator of the Takt Time calculation.  Recall that Takt Time is equal to the available time divided by the demand (also known as volume).  In our continuous process improvement world, Takt Time drives most of our analytical calculations.  Takt Time determines our staffing compliment, our space requirements, our Standard Work in process amounts, and our Just in Time Kanban calculations, along with setting the rate of products or services.

One of the important requirements in calculating demand data is that the data must align with the units used in capturing the available time.  So if we choose to use one work week, or 40 available hours, as our available time, then we are in need of the customer demand data over that one week period.  Likewise if we are looking at a year as our available time, then we require the demand data over the same one year time period.

Demand is based on actual customer need.  I often hear, we can produce 100 units a day, or we can complete 30 tests a day, or we can schedule 16 appointments per day. This is not demand, this is capacity.  Similarly, I hear we purchased 1000 units last year.  This would be an example of purchases and not demand.  What was consumed or what was sold is the demand.   We cannot properly calculate Takt Time based on capacity.

Another common action I see is improvement teams will use the backlog of items (or units) and use that number for demand.  For example, we have a 12 week backlog and we would like to burn down the backlog in 3 months, so our demand is 1/3 of the backlog per month.  This is also not demand.  This assumes there are no further requests for services or units over the next 12 weeks.

When we ask for demand data, we are looking for the steady state customer need.   Let's assume in our 12 week backlog example the customer demand is 16 units per week.  To get to a 12 week backlog, we would need to have 168 units already in the queue.  Being able to process exactly 16 units per week, would simply prevent the backlog from growing.   We would need to run more than 16 units per week to burn backlog.  Thus the steady state customer demand is 16 units.  Normally when you desire to burn backlog, you need to get to steady state first, then make a plan to burn the backlog.

Now to actually get demand data, we may need to employ a variety of data collection techniques.  Common approaches include mining electronically captured data, direct observation, and manual check sheets. If you cannot immediately capture demand data, the electronic approach will likely not be successful and you will need to quickly move to manual data collection approaches.

In summary, capacity does not equal demand.  For Takt Time calculation, we need the steady state customer demand. Once the steady state demand is understood and we are capable of producing to that rate, we then can evaluate accelerating the run rate to burn down a backlog (if it exists) to meet our customer required service levels. RB

Internal or External Lean Consultants?

One of the jobs of the lean leader is to ensure that the right capability exists in your organization to deliver results, build internal capacity, and create a culture of improvement. There are two primary ways to acquire internal expertise; hire it or use an external third party to provide it. Regardless of your choice, the role of the "lean" expert is to do three things:

  1. Transfer improvement knowledge to the organization.  Everyone in a lean organization should be striving to become and expert.  Lean is a process of the people not a process of the expert. Your expert should ensure that everyone is continuously building lean improvement capacity and knowledge is being transferred.
  2. Provide leadership coaching and mentoring to the organization.  In my opinion, lean expertise should never be acquired simply for an expertise in lean tools.  Tools can be taught and learned.  There is a much narrower pool of lean leaders that have the capability to develop and train the organizations leaders. This skill is essential if you want to create a culture of improvement.  Your expert should have a history of delivering lean management coaching and leadership.
  3. Mitigate transformation risk.  If done well, lean transformation can take your organization on a journey of double digit improvement in the areas of staff engagement, quality, delivery, cost and growth. Tremendous rewards await those willing to get their hands dirty.  The flip side is you can spend tremendous amounts of expense on lean improvement without any real results if you don't know what you are doing.  An expert with both lean management and leadership expertise along with expertise in the lean tools can greatly reduce organizational risk of failure.

Experts with all three skills are available for hire both inside your organization and as external resources to your organization.  The main benefit of having the position inside your organization is the reduced expense for gaining capability, assuming you can hire someone with skills in all three categories described above.

Most people that are looking for internal expertise want all of the benefits of transfer of knowledge, leadership mentoring, and risk mitigation. The common mistake organizations make is they end up hiring someone with either lean tools without lean leadership skills, or lean leadership skills without tool expertise.  Both will lead to dramatically reduced results.

A great benefit of hiring an external lean expert comes from the fact that the third party is not part of the organization.  This allows the outside expert to be much more candid about the real performance of the organization.  The outside resource can be more critical of leadership without the political repercussions of the candidness. Again this candidness only occurs if you hire the right lean consultant.

Both choices can take you to the same place.  Just be sure you hire or outsource someone with the right skill set to be successful.

Training toward Lean Certification

For those of you wishing to pursue lean certification, Breakthrough Horizons is pleased to offer another workshop in support of Lean Bronze Certification.

The four largest and most recognized lean and quality improvement organizations standardize their curriculum and certification standards to create a universal standard for Lean Excellence.

These organizations include The Shingo Prize, the Association of Manufacturing Excellence (AME), the Society of Manufacturing Engineers (SME), and the American Society for Quality (ASQ). Each of these organizations offer conferences and workshops on a wide variety of quality improvement topics and are worthy of attendance.

There are three levels of certification; Bronze, Silver and Gold. The Bronze is the initial certification and most pursued. Certification requires passing an exam, 80 hours of application and training, and the submission of a portfolio demonstrating mastery of the concepts. It is the premium certification because it requires application and demonstrated proficiency.

Attending a class and passing a test, or sitting through computer based training does not make you an expert. Expertise is earned through repeated application of the scientific method.

The Breakthrough Horizons public workshop is a 3-day facilitated training session that goes over all of the lean concepts needed to become bronze certified. The workshop uses a combination of didactic and praxis approaches to hardwire the concepts into the students thinking allowing for real-time application later.

We are pleased to announce the next public workshop will be in January of 2014. Mount Sinai Hospital in Toronto is hosting the training session on January 8, 9, and 10. The class will be capped at about 30 participants to allow for optimal classroom interaction.

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