Manufacturing or any type of operations is made up of several types of assets; equipment, buildings, intellectual property, etc and employees. Unfortunately most companies pay a lot of attention to all of their assets except the employee, instead they treat the employee as a cost. For most organizations, the main driver for looking at the employee as a cost, is due to the fact that labour is normally the largest or second largest line item on the cost of goods sold. Each month the management team sits in the boardroom and reviews the P&L (Profit & Loss), and normally looks at the unfavourable line items and ask the questions how do we get back to budget or plan, or what can we reduce to hit our profit line? Since material and labour are the biggest line items they usually get the most scrutiny, hence, how can we reduce costs? This is one of the biggest reasons the employee base is almost always looked at as a cost instead of a major asset.
Before I carry on, let’s first look at a simple definition of Lean Manufacturing: “The removal of waste from the manufacturing or operational system”. We all know from our Lean Manufacturing teaching there are eight opportunities in which we can remove waste.
In a Lean Manufacturing organization the employee is always looked at as an asset. As an asset we have several expectations of the employee, 1: the employee will add value to the organization, 2: the employee will use their intellect to improve their work environment. 3: the employee will participate in the running of the business. The only thing the customer is willing to pay for is value added to their product or service. We as management must ensure that as much of the employees activities, as possible, is towards the value add which the customer is willing to pay for, therefore the goal is to eliminate or decrease those activities (Waste), the customer will not pay for. The best way to eliminate all types of waste from the system is to use the voice of the employee. Lean Manufacturing teaches us that the employee is the subject matter expert in the job in which they perform on a daily basis, so who better to ask what is right or wrong with the current state, then the employee doing the job. In many organizations the voice of the employee is non-existent because normally the employee will not speak up because of intimidation from management, or they just think management will never listen to them. In a Lean Manufacturing environment the employee is encouraged to speak up and look for ways to improve the process on a daily basis. What we do today should be better than yesterday and tomorrow should be better than today. This very simple methodology is the basics of Lean Manufacturing and continuous improvement.
We must learn to be transparent with our employees, empower our employees and encourage them to continually look for better ways to improve the process. Good Lean Manufacturing companies do all of these things as part of their culture, getting there is hard work, but the rewards are game changing.
Lean Manufacturing tells us to “invest in our employees and they will invest in us”.