To make progress toward perfection—perfectly specified value flowing along a perfect value stream channeled by a perfect enterprise—it’s useful to dream a bit in order to form a vision of what might be possible. We’ll therefore conclude this investigation of lean thinking by taking a moment to dream about a range of activities already encountered in this book and how they might be conducted in a far better way. By rethinking long-distance travel, the “routine cures” aspect of medical care, food production and distribution, construction, and short-range personal mobility in light of lean principles, we can begin to discover better ways to perform these humdrum but essential daily activities which account for the great bulk of all consumer spending and economic activity in advanced economies.
Long-Distance Travel
What does the long-distance traveler really want? How should value be defined? While some people seek the travel experience as an end in itself (including those who take a scenic train, a bus tour, or a cruise), most of us simply want to get from A to B with the minimum of time, cost, and hassle, almost always by air. In trying to do this, most travelers deal with the long list of independent firms listed in Chapter 1 , and their travel nightmares generally sound like our own. Each organization has its own departmentalized structure and its own optimized tools. Each typically ignores the role of the other parties and is oblivious to the total “service” the traveler receives. And the specific activities involved are conducted with inefficient batch-and-queue methods. So how can lean thinking be employed to do better?
First, the traveler must be placed in the foreground. The time, comfort, safety, and cost of the total trip must become the key performance measure of the “system” rather than optimization of specific assets like airports and airplanes. Then the organizations carrying the traveler along need to jointly think through the total trip to identify the value stream and eliminate all of the unnecessary waiting, confusion, and wasted steps in order to create continuous flow upon request. At every step they need to ask, Why is this necessary? and to think of a better way to get the job done.
Who can do this? Who can lead the lean enterprise? One candidate is the travel agent who could put all of the pieces together, giving the traveler an optimized itinerary, a unified travel document (which might not exist physically at all), and single-point billing. Alternatively, the airline could integrate the system in cooperation with all of the other parties. However, the chronic stagnation and losses currently found in the industry are currently pushing travel agents and airlines in North America in the opposite direction. They are engaged in a zero-sum fight over how to cut costs by pushing them off onto each other, with the opening shot in the campaign being the decision of most airlines to substantially reduce the commissions they pay travel agents for handling ticketing. From the traveler’s standpoint the winner is irrelevant because the total costs don’t change, only who garners the revenues.
And one can imagine other integrators such as the rental car firms, hotel chains, and credit card companies who currently cooperate with the airlines by offering frequent flyer mileage in proportion to car and room billings and with travel agents through their computerized reservations systems. More realistically, the integrator will be some new entrant—let’s call this organization a service provider—willing to introduce a new lean logic to the whole system.
A new entrant might start with small to mid-sized cities currently only feeding hubs and think of ways for travelers to fly direct in small jet aircraft to other small to mid-sized cities, largely bypassing the current system. To do this, both the terminal and the airplane would need to be rethought to create a situation where one could drive (or take a taxi or limo) very near to the gate and then walk quickly to the plane (rolling one’s luggage). Reservations could be made by phone or computer (including the taxi, rental car, and hotel reservation) without the need for a traditional ticket. Instead, a credit card could be passed through a reader in the taxi, at the entrance to the plane, and at the hotel to take care of billing and as the room key. En route, this would also signal the rental car company and the hotel that the traveler is on the way.
Baggage handling could be eliminated as well if the passengers simply rolled their bags (perhaps of special design) the few feet to the plane and the role of the gate agent could be eliminated with electronic ticketing and an “andon board” to inform passengers of the status of their flight. Because the taxiing time to takeoff and after landing could be very brief in small and medium-sized airports (compared with about twenty minutes taxiing out and ten minutes taxiing in at large hub airports today), and because the jet plane could proceed direct to the desired destination, the current meal and entertainment services could be largely eliminated. These are designed to keep captive passengers occupied and sometimes to garner a bit of extra revenue for the airline.
Most of the ground staff could be eliminated (no gate agents, no baggage handlers, no tow truck drivers) along with the Taj Mahal terminal complex and the check-in/check-out crew at the hotel. (Since your credit card is your room key, you could go straight to your room.) And aircraft could be designed to “turn around” for the next destination within perhaps five minutes. Revenues per employee and per aircraft per day could therefore be very high, reducing costs despite a reduction in the “scale” of aircraft and terminals.
Thinking this way, one begins to wonder why door-to-door travel times can’t be cut in half by eliminating all queues and intermediate stops while the cost of travel is substantially reduced and most of the hassle is eliminated. But… is any of this practical? Smaller aircraft, even smaller than the new generation of fifty-passenger mini-jets, would be needed and their design would need to be rethought to permit low maintenance, quick turnarounds with no ground crew, and quicker access for both passengers and luggage. Airport terminals would need to be redesigned and security arrangements reevaluated. And everyone jointly involved in providing the service would need to work together to look at the whole.
But what’s the alternative? The prospects for faster flying speeds (“point velocities” in our terminology) are nonexistent over land and doubtful over the oceans. And in any case, queue and wait time accounts for more than half of total time on shorter trips, so speeding up the plane wouldn’t help very much. The present hub-and-spoke systems might be refined slightly, but they have reached their economic limits. Indeed, most of the reductions in the cost of air travel in recent years been due to cutting the wages of airline personnel and using older airplanes. This is another instance of simply shifting cost burdens rather than reducing the amount of effort needed to get the job done.
One American airline, Southwest, has taken the first few steps along the lean path by flying direct, simplifying the boarding process, and turning its airplanes in fifteen minutes rather than the industry standard of thirty. As a result, it has been by far the most profitable airline in North America. Why not carry lean thinking much further, all the way to its logical conclusion?
A final benefit of rethinking long-range passenger travel bears note. The same hub-and-spoke concept used for passengers in the daytime delivers freight at night, except with dedicated aircraft feeding dedicated freight sortation centers in different cities from the passenger hubs. Why can’t a new entrant fly packages direct at night with the same smaller planes and use redesigned passenger terminals for package distribution centers? As one starts to think about the possibilities of using lean principles, opportunities start to appear in many places.
Medical Care
When you visit your doctor you enter a world of queues and disjointed processes. Why? Because your doctor and health care planner think about health care from the standpoint of organization charts, functional expertise, and “efficiency.” Each of the centers of expertise in the health care system—the specialist physician, the single-purpose diagnostic tool, the centralized laboratory—is extremely expensive. Therefore, efficiency demands that it be completely utilized. Obvious, isn’t it?
To get full utilization, it’s necessary to route you around from specialist to machine to laboratory and to overschedule the specialists, machines, and labs to make sure they are always fully occupied. (And, as medical costs spiral, the pressure for full utilization steadily increases. Lines lengthen, often as rationing in disguise.) Elaborate computerized information systems are needed to make sure you find your place in the right line and to get your records from central storage to the point of diagnosis or treatment.
How would things work if the medical system embraced lean thinking? First, the patient would be placed in the foreground, with time and comfort included as key performance measures of the system. These can only be addressed by flowing the patient through the system. (By contrast, conventional thinking places the organization in the foreground, to be efficiently “managed,” while the patient is left in the background to wander through an organizational forest too full of trees.)
Next, the medical system would rethink its departmental structure and reorganize much of its expertise into multiskilled teams. The idea would be very simple: When the patient enters the system, via a multiskilled, co-located team (or “cell” in the language of physical production), she or he receives steady attention and treatment until the problem is solved.
To do this, the skills of nurses and doctors would need to be broadened (in contrast to the narrow deepening of skills encouraged by the current system) so that a smaller team of more broadly skilled people can solve most patient problems. At the same time, the tools of medicine—machines, labs, and record-keeping units—would need to be rethought and “right-sized” so that they are smaller, more flexible, and faster, with a full complement of tools dedicated to every treatment team. (As their size and cost shrink, the problem of full utilization shrinks as well.)
Finally, the “patient” would need to be actively involved in the process and up-skilled—made a member of the team—so that many problems can be solved through prevention or addressed from home without need to physically visit the medical team, and so that visits can be better predicted. (We are always amazed that as members of “health maintenance organizations” in the U.S. and the U.K., we have received zero training in simple diagnosis, prevention, and scheduling of visits. The system has been set up so that we overuse it, through ignorance, but wait in long lines whenever we do use it.) Over time, it will surely be possible to transfer some of the equipment to the home as well, through teleconferencing, remote sensing, and even a home laboratory, the same way most of us now have a complete complement of office equipment in our home offices.
What would happen if lean thinking was introduced as a fundamental principle of health care? The time and steps needed to solve a problem should fall dramatically. The quality of care should improve because less information would be lost in handoffs to the next specialist, fewer mistakes would be made, less elaborate information tracking and scheduling systems (the MRPs of medicine) would be needed, and less backtracking and rework would be required. The cost of each “cure” and of the total system could fall substantially.
The problem of cures beyond our current knowledge would remain and the proposed lean transformation in health care is not directly helpful here. However, the lean transition could free up substantial resources which could be used for fundamental research to find new cures. Instead, what’s happening today is that the inefficiencies of the existing system are eating up all available resources, so spending on finding new cures is being curtailed to pay for present services. And most of today’s health care debate in the political arena is simply a cost shifting or service elimination contest as the various parties along the value stream try to defend their own interests at the expense of others.
Food Production and Distribution
What does the food shopper want? What’s the value derived from the food production and distribution system? As with travel, some people actually enjoy shopping. They want a fancy store with a nice ambience, and someone should provide this service. However, most of us find that time is our scarcest resource, so we want to obtain precisely the items we need at the lowest possible cost with the least possible hassle. The present system clearly doesn’t offer this. How could lean thinking change things?
We’ve already seen in Chapter 2 how the grocer—the obvious leader of lean enterprises for food—can examine the multitude of value streams emptying into the supermarket aisle. It should be possible, for most food items, to reduce the amount of time needed to get raw materials into the arms of the consumer by more than 90 percent, to substantially reduce the cost and effort involved, and to largely eliminate “stock-outs” where the desired product is not available. This can be done using the flow and pull techniques we’ve described in detail.
A dramatic improvement in the responsiveness of the production and distribution system would mean that the grocer could convert to a simple replenishment system, in which today’s purchases trigger tonight’s restocking deliveries and tomorrow’s production of replacement items. It could also reduce costs dramatically and eliminate the need for grocers to periodically reduce overstocks with low-price special offers.
But this is not the end. If the grocer can get deliveries in small lots daily from his suppliers and eliminate warehousing and lines all the way back up the value stream, why not take the last step and get rid of the final ware-house, the grocery store itself? Why not use information technologies to take customer orders, based on weekly adjustments to a standing order, and ship direct to the customer from the distribution centers, using milk-run vehicles with a separate container for each customer.
Total costs could fall while the most precious resource of many shoppers—their time—would be saved. What’s more, additional services could easily be added; for example, menu planning, shipment of the exact items needed for that week’s home-cooking menus, and even completely precooked meals. Finally, the grocer could gather data on the shopping habits of his stable customer base that would be useful in introducing new products with a higher success rate and in eliminating the traditional promotion mentality in the grocery business in which large sums are spent on promotional selling just to wrest a point or two of market share from competitors for brief periods.
This would be a tremendous leap if taken to its logical conclusion. But it will require readjustment in everyone’s thinking along the value stream. For example, ask yourself how comfortable you and your grocer will feel in moving to a completely lean and transparent system in which you can see the status of your order but never see a store and the grocer knows everything about your eating habits. Nevertheless, lean food production and supply is completely feasible with the technologies and management techniques available today, and the current system is ripe for change. The important question is who will make the leap.
Construction
What do you want when you construct an office or factory or buy a new home? How is value defined? While a few buyers probably enjoy the complexities of today’s construction industry, including the opportunity to change their minds about the details of their building during the six months to a year of typical contract-to-close cycles, most buyers would like to get exactly the building they need as quickly as possible at the lowest price. And if the issue is remodeling, where your home or office must be used while it is being renovated, the current system is truly a nightmare. Substantially all customers want to get the job done as quickly as possible.
Not only does the current system require an extended interval from start to finish, but when the work is officially finished there is typically a considerable to-do list which strains relations between the user and the builder. What’s more, more than 80 percent of this time and up to half the total cost goes to carrying charges, contractors hurrying up to wait for previous contractors, and ripping out and redoing work that does not meet the formal specification or suit the customer.
We saw the beginnings of lean thinking in the homebuilding portion of the construction industry in Chapter 1 whe
n we met Doyle Wilson, but he has just begun to scratch the surface. The actual amount of time needed to progress from contract to completion for the typical home, if all of the relevant skills and materials were marshaled in the proper sequence, could be reduced from six months to fifteen days using current construction techniques. And the great bulk of errors and rework incurred in home building are completely avoidable if the customer, the contractor, and the subcontractors learn to talk to each other. Finally, the cost of the whole process could be dramatically slashed if rework is eliminated, even before taking the next logical step of transferring the construction of the major components to a factory setting where conditions can be controlled and where lean techniques can be fully implemented. 1
Imagine the next leap in a lean system in which the buyer can visit the homebuilder, modify the structure on the screen, pick the desired options, perform a credit check, arrange insurance, and sign the contract in one sitting. Then imagine assembling the finished house in less than a week from the moment of the order until time to move in, by use of factory-made components. Imagine further that none of the components needed for this home—windows, doors, hardware, appliances—are made until a day or two before they are needed in lean component factories. This would slash costs further and in the process create a revolution in a massive business with stagnant productivity.
The same concepts could be applied to construction in general. That it’s possible is not in question. The real question is who will rationalize the value stream and when .
Short-Range Personal Mobility 2
We’ve spent many years associated with the auto industry, so it’s satisfying to finish this dream exercise in the place where we started. The first question to ask, as always, is how is value defined? For some people it’s a vehicle with special performance features or simply the car you want to be seen in—perhaps the new Porsche!—at an appropriate price. However, many current buyers of what is now a very mature product probably don’t want to buy a product at all. What they want is personal mobility, obtained at the lowest cost with the least hassle. A physical product, such as a car, truck, van, or sport-utility vehicle, is simply part of the means to this end.
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