Case study Business Performance & 16 Habits of Lean Leaders

Client & Industry

Large precision tube manufacturer in Europe, dedicated to the production of electro-welded carbon steel tubes for a variety of applications both domestic and industrial. 19 plants world-wide.

Size of Plant in case study

220 production and warehouse, 290 Employees in total. 320ths m2 manufacturing and warehouse facility, capable of generating 220,000 ton per annum production of steel tubes only.

Challenge Project nr 1

Reduction in number of Steel tube batches put on hold due to quality concerns.

Size of Problem

5,700 tons of blocked finished goods of steel tubes which relates to 3,5 m Euro of market sales value, which relates to 48% of one months of production just in steel tubes.

Consequences of Problem

15% of warehouse space unnecessarily used. Cash-frozen of around 1,5 m Euro not effectively rotating with the stock. Loss of value of stock over time. Overtime employee costs in sorting the back log of steel tubes on hold. Employees frustrated. Clients not receiving full orders on time.

Lean Leadership Methodology Employed to Manage Challenge

4 Key Habits engaged in this assignment
Habit 8: The Habit of knowing the numbers.

Using a fact based visual management approach to building a team which would be able to identify and measure accurately exactly what was happening on each line on each shift.
Using the A3 problem solving methodology as a project, from Operators to middle management were involved in learning how to tackle the problem as a team.
Team members understood that running a business is about Respect and Trust. This means practicing the Habit of knowing the numbers, in other words, knowing the facts.
Habit 7: The Habit of focusing on Facts and Foxes.

Here middle and senior management in particular learnt that they are not entitled to their own opinions when it comes to making business decisions.
Management must know why they made certain decisions and be accountable for them. Having mastered the detailed analysis of facts using Pareto analysis, they were able to cultivate a culture at work of talking facts and chasing the Fox (the main root cause problem).
Habit 5: The Habit of identifying non-value activities.

All teams involved understood clearly the 8 wastes from a process, behavioural perspective and financial management perspective. Changing their Habits made them far more aware just how much they were wasting their own time in gossip, unspecified causes to problems and not going to genba.
Habit 9: The Habit of Managing through Visualisation

Team Leaders, Shift Leaders, Specialists, Line Leaders and Management learnt the secrets of successfully managing a shift and production meetings using the principles of visual management. Leaders understood what is almost always overlooked in all Visual management initiatives. This is not only to look at:
What we realised during the shift with respect to the plan?
What we need to realise for the next shift?
What problems and ideas do we have and what is their status in terms of root cause and elimination ? but...
The main purpose of visual management is to improve communication, build the team spirit and increase engagement through coaching, respect and trust. Results come from the engagement, self-reliance and problem solving skills of the team.

The Project Outcomes

The “16 Habits of Lean Leaders Program for Continuous Improvement” covered several projects at the Plant over a 2,5 year period. This specific Challenge was assigned an A3 Project methodology and took 12 months to realise its goals.
The original problem was: 5,700 tons of blocked finished goods of steel tubes which relates to 3,5 m Euro of market sales value, which relates to 48% of one months of production just in steel tubes.
The outcome was 1,300 tons of blocked finished goods of steel tubes, relating to 800 ths Euro of finished goods not working for the business in time.
Over the next 6 months, as a self-reliant team, the blocked finished steel tubes were resolved within 5 working days of production, thereby blocked steel tubes at any one time would be around 5 working days or 15 shifts work of blocked steel tubes, amounting to up to 1,3% of tonnage produced.
It is worth mentioning here that the reduction of blocked tonnage had over 30 identified causes, grouped into 5 main categories. At least four additional A3 Projects were opened soon after we started this project. These were; Safety at work A3 project. SMED on the most disruptive lines A3 Project. 5S A3 Project to reduce time wasted waiting or looking for tools. Quality first time A3 project.

Overall Reflections

Senior management has many competing expectations and challenges. Simply focusing on process improvement, cost cutting or soft skills of leaders is highly ineffective and more often than not creates its own wasted processes and frustrations for operators, team and group leaders as well as management.

What is important is to choose those Habits which are necessary in order to reach as quickly and safely as possible the business goals. What Toyota focuses on in “Developing People through Problem Solving”.

I hope this case study has shown how this system works and why it works.

If you would like to know more, please contact me, Mark Forkun on: