The Lean Machines

Best Lean Companies

DELL

“While on a tour of a large customer, Michael Dell saw technicians customizing new Dell computers with their company’s ‘standard’ hardware and software. “Do you think you guys could do this for me?” his host asked. Without missing a beat, Dell replied, “Absolutely, we’d love to do that.” Within a couple of weeks, Dell was shipping computers with factory-installed, customer specific hardware and software. What took the customer an hour could be done in the factory in minutes, and furthermore, computers could be shipped directly to end-users rather than making a stop in the corporate IT department”.

This innovative ‘direct sell’ concept provides a superior customer experience which gives them a competitive edge over competitors by providing computer systems custom-built to customer specifications, along with service and support programs that have been tailored to meet their customer needs. In doing so, Dell clearly has captured the essence of lean by effectively eliminating the root causes of non-valued activities. They are lean in the sense that they build their PC's, laptops, and servers on a build-to-order basis thus avoiding overproduction of inventory and minimal WIP, creating inventory based for the most part on consumer demand. They have effectively eliminated the need to have a vast network of wholesale and retail dealers which allows Dell to avoid mark-ups and higher inventory costs.

At Dell’s core is Kiazen - the idea of continuous improvement – which has enabled Dell to consistently undercut its rivals in both cost and delivery to customers. Their factory process is great example of how shortening of the value chain and reducing waste has enabled them to use the most up-to-date components at the same time holding no more than two days of stock.

In customer service cross-training employees has helped reduce the number of transfers it may take for a customer to resolve a problem. This is classic TPS, investing in their employees by helping them grow, at the same time getting it right for the customer.

One area that I thought even went beyond Toyota Production System was Dells adoption of the ‘single person build’ applying total ownership to their products which has improved the quality, cost and productivity throughout the supply chain.

Dell is also ‘green’ organization, ensuring that all products are energy efficient and earth friendly. Why is green lean? Well at Dell they are not only reducing waste by eliminating excess inventory but by producing energy efficient products and creating recyclable materials they are decreasing carbon emissions. So in my view Dell has captured the basic principles that we think about when talking about Lean – eliminating waste, optimizing across the organization, cross training people to add value, and improving the flow value from build to order (pull) demand.

EBay

“One area that is perhaps unheralded and not known by many people are the eBay Values:

1. We believe people are basically good.

2. We recognize and respect everyone as a unique individual.

3. We believe everyone has something to contribute.

4. We encourage people to treat others the way we want to be treated.

5. We believe that an honest, open environment can bring out the best in people”.

When we talk about lean eBay is a company that has to be mentioned. Their focus is the customer and they employ ‘continuous improvement’ to eliminate all unnecessary steps required to move goods into the hands of the customer. Their customer oriented philosophy dates back to the 90’s. Most people do not understand how engrained Lean and Six Sigma are within the eBay culture. It envelops all areas of eBay from order fulfillment to its operations.

In fact, eBay is a company which pretty much invented lean trading by removing and eliminating all the unnecessary steps throughout the trading value chain. Through the use of Value Steam Mapping, steps that are deemed wasteful are removed resulting in continuous flow at the pull of the customer. As a result, eBay has seen lead times, costs, and defects/returns decline, while responsiveness to the customers demand has increased. An example is the integration and partnership with UPS in the supply chain - resulting in lower shipping charges that are passed onto both buyers and sellers.

One thing that Lean teaches is value is defined by the customer and to focus on customer needs. This is where you can see the biggest parallel between Toyota and eBay - they both have respect for people. EBay has set the bar in this area by combining Six Sigma and Lean principles to recognize and eliminate defects as defined by its customers. This has allowed eBay to provide superior customer satisfaction thus ensuring repeat business and customer loyalty and warding off competitors. In my view, the eBay’s customer focus and long-term thinking epitomize the lean concepts of the Toyota Production System by their focus on customer needs and value.

Southwest Airlines

The mission statement of Southwest, posted on their Web page, includes a postscript to employees: "The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer."

Clearly Southwest has defined its core value’s which is the fundamental starting point for lean thinking. In the past two years, as the airline has continued to expand faster than most of its competitors.

At the heart of this lean thinking is Southwest’s leaner approach to scheduling, logistics, and the size of the aircraft. Southwest uses smaller, more efficient aircraft that fly more frequent schedules directly between points of origin and final destination. This in turn incurs less expensive to the customer and also means less time in the air. This has removed the bottleneck other airlines have getting customers from point A to point B in a quick, simple, and hassle-free manner.

And according to a recent article, Southwest made a decision to temporarily remove 38 aircraft from scheduled service while conducting its own internal review of its maintenance programs, policies, and procedures. This is an example that they are committed to being a safe company and living up to their reputation as being lean. Southwest’s decision to shut down flights to ensure safety is a good example of applying error-proofing or Poka-Yoke principles to prevent an error in the air. Poka-Yoke basically says the only way to achieve error prevention is to prevent them from happening in the first place. By being a lean organization Southwest has removed unnecessary operational expense that has resulted in both employee and customer satisfaction. In the past two years the airline has continued to expand faster than most of its competitors.

References for Dell

http://www.dell.com/content/topics/global.aspx/vectors/en/2007_go_green_with_dell?c=us&l=en&s=corp

http://www.poppendieck.com/papers/LeanThinking.pdf

http://news.cnet.com/8301-10784_3-9786123-7.html

References for EBAY

http://www.poppendieck.com/papers/LeanThinking.pdf

http://outsideinnovation.blogs.com/pseybold/2007/07/ebay-refocuses-.html#more

http://www.army.mil/ArmyBTKC/focus/cpi/tools3.htm

References for Southwest

http://www.southwest.com/about_swa/mission.html

www.leanblog.org/2008/02/southwest-airlines-and-flying-big-three.html

http://0-proquest.umi.com.libcat.ferris.edu/pqdweb?index=0&did=1410412911&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1214429284&clientId=52840

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