A Primary Purpose Of A Cash Flow Budget Is Why 5S Fails to Produce Desired Results

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Why 5S Fails to Produce Desired Results

Over the past 20 years I have visited numerous manufacturing plants in the United States, Canada, Mexico, Venezuela, Peru, Spain and China to assess performance issues and workplace organization. I had the opportunity to observe their operations closely and see both the positive and negative aspects of those operations.

While each plant had its own strengths and weaknesses, one fact was clear: many plants had some form of workplace organization, some had implemented 5S. No one gets the results they want while trying. Some practiced it only when top management was scheduled to visit, others made half-hearted efforts to implement 5S, and some pursued it seriously and permanently.

They were actually doing moves like writing it into their mission statements, management loudly proclaiming its virtues but taking little interest in the day-to-day mechanics, and claiming to have created a visual workspace when in reality they did little. More than creating signs. Clutter and unnecessary items were still evident to a large extent, and the need for employees to be free of unnecessary items was less clearly understood.

The fact is that we know what we have to do. 5S is a lean manufacturing approach to manufacturing based on the Toyota Manufacturing System. The function of management in lean manufacturing is to identify and eliminate all types of waste, including:

  • Overproduction – Production in excess of consumer demand
  • Inventory – Keeping or buying excess material
  • Transport – unnecessary handling
  • Wait – Time delay or idle time
  • Speed ​​– People’s actions that do not add value
  • Over-processing – Unnecessary processing steps
  • Rework – Producing scrap or parts that require rework
  • Non-utilization of human resources – Non-implementation of employee ideas/suggestions.
  • There are several obstacles in the implementation of lean manufacturing and in particular in the proper use of 5S principles and practices:
  • Incorrect plant performance measures
  • Wrong focus – too much attention on results, not enough on process improvement
  • Lack of confidence in workers’ ability to identify and resolve problems;
  • Unwillingness to invest time and resources to properly implement 5S
  • Failure of all stakeholders to recognize their responsibility to survive and change is key to survival.

Incorrect plant performance measures

Performance is influenced by many factors, especially when focused on the short term. Most of these factors are beyond management’s immediate control. Cash flow (the life blood of any company) affects interest rates and can have a dramatic impact on your plant’s profitability. Government policies and more regulation affect profitability in many ways. In addition, the sales volume or product cost affects the profit level of the plant. When these factors have a positive effect on profitability, the operation is considered successful and is generously rewarded even if the management practices are ineffective and wasteful. When they have a negative impact on profits, even the best managers are often judged to be abject failures and removed from their positions.

Worse, profitability measurements are easily manipulated by “cooking the books.” In most facilities I visited, it was very common and obvious that management was manipulating inventory levels in one form or another. A plant manager told me that he wanted to reduce inventory, keep his efficiency rating high, but had to overproduce during slack periods. This led to high inventory levels which, if reduced to an appropriate level, would negatively impact its profitability measurement. Too much focus on profitability as a performance measure typically leads to short-term thinking. What is the incentive for a profit-driven company to invest in a 5S project that costs more in the short term than has the potential for significant savings in the long term?

Wrong focus

People tend to do what gets them rewarded. If they focus on equipment utilization rather than customer demand, the equipment will run at full capacity despite actual demand. The result is overproduction, which is the basis of virtually all manufacturing waste. Focusing on accountability for machine use has the unintended consequence of increasing waste.

To effectively and continuously improve performance and eliminate waste, the analysis of all processes must be understood and then controlled. Measuring process effectiveness will focus on long-term improvements such as 5S and allow companies to reward managers for actual performance. On the other hand measurement results only encourage manipulation and short-term thinking.

Lack of confidence in the ability of workers

When management is unwilling to develop its employees and give them the freedom to manage their own processes, they will miss the opportunity to capture the full potential of the organization. I firmly believe that the solution to every problem a company or plant faces right now lies within the four walls of that facility.

Unwillingness to invest time and resources to properly implement 5S

Management is driven by two things:

  • Budget
  • Schedule

Anything that interferes with either is seen as an enemy of management, resulting in many managers half-heartedly supporting new ideas and projects with which they are unfamiliar. This is compounded by the fact that most people who propose a lean initiative like s 5S don’t take the time to encode the language of the business. They speak of mediocrity and the success of other institutions. They fail to make a legitimate business case for change. Managers have legitimate questions such as:

  • How will this affect the budget? Is this a legitimate investment opportunity or just another flavor of the month?
  • How can we minimize the impact on the schedule and still get people to plan and implement 5S? Where do the extra people come from? etc.

Many managers simply do not believe in the effectiveness of Lean Manufacturing and 5S in particular. Many of the managers I spoke with defended the poor production practices they routinely used to keep their productivity numbers high and their bonuses on track.

All stakeholders fail to recognize their responsibility to survive

Many managers feel that change is unnecessary. The company made money before the recession, and the good times will return when it’s over. The focus is on job security rather than job security, the problem is that the global economy is changing and companies are facing global competition like never before. Many managers fail to see the change that has taken place and the threat it poses to their existence. They prefer to stick their heads in the sand rather than pay attention to their survival needs – after all, the government will bail them out! The fact is that jobs (including managers) are changing and managers tend to focus on their job security and allow job changes as needed.

One of the core elements of a manager’s job was control, which has been modified to include empowerment. To survive and operate, managers must relinquish some of their control to employees by letting them control their workspace and work flow. 5S is a prime example of how to effectively empower employees while maintaining the necessary control over budget and schedule.

Creating the desired result

If the plant is operating effectively (and you’ve properly linked operational metrics to financial goals), profits will follow. The key to making 5S produce the desired results is linking it to the company’s goals and strategic objectives. The primary goal of most companies is to make money by creating a product or service that meets customer needs. This fact is often lost in management’s vision statements and lofty purpose statements. You should have a vision of what your company is going to do to meet the goal of making money. A mission statement is how you accomplish that. Specific purpose statements uttered by various levels of management that do not reflect the vision and mission statement only confuse and distract the people who are meant to carry out the mission. The solution to this problem is to use strategic thinking to define the needs of the business in line with the stated vision and mission.

The next factor to ensure success is refocusing employees on a new set of metrics and processes focused on increasing throughput, reducing inventory, and reducing operating costs. This means abandoning traditional measures like efficiency altogether and looking more at effectiveness instead. This requires analyzing your processes for the value they add to your products or services. In the short term, this can lead to increased non-productive time. Smart managers will take advantage of this slack time to make better use of non-productive time such as training, overall productive maintenance, team building and continuous improvement activities. Proper training and management allows workers to spend their downtime improving the processes they work on as well as their workplaces. By eliminating unnecessary, value-added activities such as overproduction and empowering and training your workforce, your company can improve its competitiveness and ensure its survival.

Your employees and their support staff will need all the tools and techniques of Lean Manufacturing and 5S practices to maintain, self-audit and continuously improve the workplace and their jobs. They will require a well thought out and planned program supported by management at all levels. Remember that the most commonly missing element is management commitment. If you invest everyone’s time and commitment in 5S and some individuals fail to maintain the standard, the program will collapse. Management must support the policies and procedures implemented by the program.

Regular monitoring is also required to ensure that processes are working as intended or changed in a controlled manner as needed. Management should not only commit resources, but also commit their time to participate. They must lead from the front and have high visibility in the workplace.

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