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TABLE OF CONTENTS
Executive Overview A Perspective on Workforce Management Defining the Lean Workforce Seven Principles of The Lean Workforce A Word about Incentives Business Transformation The Lean Enterprise Benefits of The Lean Workforce Summary
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Executive Overview
Ever since the industrial revolution supplanted individual craftsmen as the means to get products to consumers, there has been a continual quest to drive time and cost out of the production and delivery process, what we now call the supply chain. This quest is often expressed colloquially as better, cheaper, faster. The path to better, cheaper, faster has always been paved with improvements in technology, process, or a combination of the two. Steam-powered machines launched the industrial revolution; Henry Fords assembly line process enabled mass production; and the computer made information and workflow an integral part of supply chain improvement initiatives, to name just a few examples. But better, cheaper, faster is associated with the traditional push model for supply chain improvement. Today, the consumer is king. The Internet has become the ultimate vehicle for immediate gratification, helping to replace the push model with a consumer-driven pull model more aptly expressed as perfect, free, now. While this consumer wish list may not be truly attainable, clearly those companies that can come closest to this ideal will be the winners in the highly competitive global marketplace. The question is how do we transform supply chain operations to capitalize on the pull model? There are currently two process improvement philosophies in vogue to exploit the consumerdriven supply chain pull model: Demand Driven Supply Networks (DDSN) and Lean Manufacturing (Lean). Both concepts focus on mapping information flow from the consumer down through the supply chain and then adjusting production to respond to this demand. Where the two differ is that DDSN concentrates on using the inbound information flow to trigger appropriate production, while Lean concentrates on driving non-value add elements, principally waste and time, out of the outbound production flow. You might think of them as opposite sides of the same coin. While both concepts concentrate on inventory, production and distribution, they pay scant attention to one important and costly element the workforce needed to execute these plans. RedPrairie previously addressed the integration of workforce issues into DDSN strategy in the white paper The Demand-Drive Workforce . This white paper will show how workforce management should employ Lean principles to reduce workforce waste and time, creating The Lean Workforce .
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Just as DDSN and Lean are complementary supply chain improvement philosophies, The DemandDriven Workforce and The Lean Workforce are complementary strategies for improving workforce planning, scheduling, utilization and productivity. Both white papers are available on the RedPrairie web site at RedPrairie.com.
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Frederick W. Taylor, The Principles of Scientific Management, 1911, Fordham University, Modern History Sourcebook, 2006 Ibid
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Judy Sweeney, Colin Masson, Bill Swanton, Lean Manufacturing, Part 2: Value Stream Mapping, AMR Research, April 6, 2006 Judy Sweeney, Lean: Its Not Just for Manufacturing Anymore, AMR Research, June 7, 2006
1. Best Practices
The first and biggest hurdle to creating a Lean workforce is the status quo. Attitudes such as weve always done it that way and if it aint broke, dont fix it imply that current methods are not only acceptable, but preferable. The problem is, real world experience shows just the opposite. Existing distribution work methods for most companies produce results that average only 67 percent of potential productivity defined as a fair days work for a fair days pay. This does not imply the average worker is lazy or incompetent, just that the methods used are inefficient. This is normally caused by the lack of defined optimal methods, or best practices, for performing routine tasks, or failure to properly train workers on such methods if they exist. This explains why many labor management system implementations fail to achieve the expected increases in performance. Traditionally, labor management systems track and report on performance against historical goals such as units per hour. But those goals were set using methods that on average produced only 67 percent of potential productivity. Therefore, simply tracking and reporting on progress against those goals will never foster achievement of optimum performance because the bar is set too low and the true potential, and the methods for achieving it, are never defined. Thus, the development of best practices and training on their use is the foundation for effective workforce management programs and The Lean Workforce.
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Frederick W. Taylor, The Principles of Scientific Management, 1911, Fordham University, Modern History Sourcebook, 2006 Diane Morello and Betsy Burton, Future Worker 2015: Extreme Individualization, Gartner, March 27, 2006
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Business Transformation
Going from traditional supply chain practices to a Lean supply chain is a significant business transformation. AMR Research notes, One reason for the gap between a lean supply chain vision and reality is often the sheer magnitude of the cultural shift. Similarly, going from a traditional workforce management culture to a Lean Workforce is no small undertaking. It involves the transformation of the way workers, supervisors and management think about the roles of workers and supervisors. Under traditional workforce management practices, workers will do only as much as they have to in order to avoid discipline. This often leads to cherry-picking of the easier jobs by the more experienced workers. Supervisors are there to drive production by closely watching over the workers. Essentially, this is the big stick approach. Under The Lean Workforce approach, workers are accountable for their own production. They know how to do their jobs and how long each job should take. They monitor their performance through the feedback provided. There is no cherry-picking or other inequities in performance because they are measured against the true job content, not historical averages. Supervisors are not there to drive production, but rather, to train and coach workers, and to remove any barriers to their success. This is neither a big stick nor a carrot approach because workers are self-motivated through self-accountability. If desired, a carrot can be added to drive even greater performance through an incentive program once workers have achieved 100 percent of standard.
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Steve Banker, Incentive Pay in the Warehouse, ARC Advisory Group, April 2006 Stephen Hochman, The Lean Supply Chain, AMR Research, June 8, 2006
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Business Transformation
Obviously, there is a big difference between a traditional workforce culture and a Lean culture. Anytime there is a large gulf between current state and future state such as this, there will be resistance to change. Gartner states this resistance is natural and cannot be eliminated, only mitigated. Based on the resistance pyramid developed by professors Nieder and Zimmerman of the University of Bremen in Germany, Gartner defines three levels of resistance to change:
Not able proper training gives workers and supervisors confidence they can do their jobs under the new practices. The knowledge that supervisors are available to coach them should they have problems further reassures workers. Not willing Regardless what other new practices are put in place, this will continue to be a problem if single-variable performance measurements, such as units per hour, are left in place, for this will reward old behaviors. Only the use of engineered standards that measure performance against true job content can shift the culture from avoiding work to self-accountability.
Thus, to transform your business from a traditional workforce management culture to a Lean Workforce culture requires a well thought-out and executed change management program that accounts for workers and supervisors natural resistance to change. It must include proper training, consistent involvement and appropriate reward structures.
Not knowing when workers know something is happening, but dont know what it is or how it impacts them. Not able when workers fear they may not have the skills or knowledge to succeed in the new environment. Not willing when workers are still rewarded, either financially or psychologically, for doing things the old way even after change has been put in place.
These levels of resistance can be successfully dealt with through a change management program that includes:
Not knowing get workers and supervisors involved early on. Give them training on the reasons for employing best practices and standards, and involve the workers and supervisors in establishing them. This creates both understanding and buy-in.
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Diane Morello, Achieving Agility: Plan for Workforce Reconfiguration, Expect Resistance, Gartner, April 10, 2006
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Summary
Combining the perfect, free, now mentality of todays pull economy with the complexities of global supply chains requires a new look at how to drive cost and time out of supply chain operations. Using Lean principles offers a viable method for addressing this challenge. Lean principles can also be applied to workforce management. The Lean Workforce is based on the research of Frederick Taylor conducted a century ago, the 1940s production principles of Toyotas Taiichi Ohno, and the labor management methodologies of Gene Gagnon first developed in the 1960s, all applied within the recent framework of the Lean supply chain. It is a new concept founded on very established principles. A Lean Workforce is one with the right number of workers, with the right skill sets for the job at hand, working safely and productively without errors. It requires the development of best practices and training on how to perform each job, and standards incorporating efficiency, quality and safety to measure results. It utilizes performance monitoring software to uncover training issues and other barriers to success, as well as to identify and reduce non-productive and indirect time. And it deploys dashboards and analysis tools to help management evaluate workforce performance and trends across the enterprise. Employing a Lean Workforce creates a Win-WinWin situation where workers are self-motivated and self-accountable, supervisors become coaches, and management has a more productive workforce with higher morale and retention. However, this requires a significant business transformation which will encounter natural resistance. It can be accomplished through a change management program using training, involvement and rewards to overcome the three levels of resistance. The result of deploying a Lean Workforce program with proper change management will be a significantly more productive organization with improved quality, consistency and customer service.
About RedPrairie
RedPrairie delivers productivity solutions to help companies around the world in three categoriesinventory, transportation and workforce. RedPrairie provides these solutions to manufacturers, distributors and retailers looking to reduce cost, increase sales and create competitive advantage. With 20 global offices providing services to over 40,000 sites in 50 countries, companies trust RedPrairie inventory, workforce and transportation solutions to deliver an immediate increase in productivitywith the flexibility to adapt as business needs change. At RedPrairie, we understand todays operational demands and were committed to delivering solutions that work. Were committed to delivering solutions for the real world.
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