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CHAPTER 1

Distinguishing Lean from Everything Else

Benjamin Franklin says: Time is money.

Lean Maintenance is mistaken for a whole host of other efforts. In this section we will distinguish Lean Maintenance from some of the other programs that are occasionally called Lean. We will also show how some efforts in the past were really predecessors to Lean Maintenance.

But first we will discuss a program that is Lean. Kaizen is part of Lean. Kaizen is a Japanese word denoting a philosophy of continual improvement. There are two types of Kaizen that apply to Lean Maintenance; Flow Kaizen-value stream improvement, Point Kaizen-Waste elimination. Kaizen events are short term Lean efforts, where teams blitz a shop and make many improvements at the same time. The event is generally organized around a subject. A good source of information on Kaizen is the Lean Manufacturing Pocket Handbook mentioned in the bibliography.

Beware of phantom savings

What would be a good waste reduction project? If we want to be lean, we want to reduce the waste, what would constitute a good project? A good project reduces waste that is obvious. The project should save money directly. Now, there’s a huge problem here, with projects that save time (labor). If we are saving (just) labor hours, we grapple with something called phantom savings.

Phantom savings drives accountants nuts; in fact it drives everyone who thinks deeply about it nuts, because phantom savings is not traceable to the companies’ financial books. For instance, let’s say we save 10 minutes in a meeting by better meeting etiquette or by more discipline during the meeting, and there are five people in the meeting, we pick up 50 minutes a day. Where does that savings show up on the books?

The only place that such a savings could conceivably show up is if somebody is fired. So that labor savings becomes a phantom savings, unless the time that’s saved can be used on something else that will reduce costs of operation. So you have to just be careful when you’re doing these kinds of things. A lot of people might say “Oh, we saved so many hours.” And then an accountant might say, “Great, by the way, who is leaving?” They saved half a maintenance welder. So which half of him is going to go? Remember, we already promised that no one goes as a result of the efficiencies from Lean Maintenance projects.

When we’re deciding on which projects to do first, we should pick projects with bookable savings. Either we want to have our output (production) go up or our input (materials, energy, labor or overhead) go down, in a measurable way.

If you use contractors for labor you have a great opportunity. Saving contractor hours is a bookable savings (because you can send them home without severance pay). If the plant went from six contractors to five contractors, that’s savings that is somewhere on the books.

There are real cost savings and there are phantom savings. Real cost savings flow to the accounting system and appear on the books. Phantom savings appear on reports and can never be tracked to the accounting books.

Some examples of Real savings (Note that not all real savings appear on the maintenance budget. Some are below the so-called water line and accrue to other departments)

Reductions in payroll (personnel)

Non-replacement of personnel lost through attrition because we don’t need them anymore

Reduction of overtime

Reduction of billing from contractors

Reductions of material used

Reductions of inventory on shelf

Reduced expenditures for tools and equipment

Reduced equipment rental bills

Reduced demurrage (rental of tanks, rail cars, ships)

Reduction of regulatory fines

Closing a satellite operation with consequent reduction of overhead

Reduction of energy usage (large enough to be recognized)

Reduced raw material usage

Reduced number of production machines due to increased uptime

Reduced operator personnel resulting from fewer machines

Phantom savings

Reductions in labor without realizing any savings

Small reductions in energy usage (unmeasured and unproven)

Small reduction in production machine usage

Reduced hours of compressor usage due to leaks being fixed (unless you can prove electricity savings)

Increased uptime or availability when the product is not sold out

For example let’s consider a PM that takes 3 hours a month and does not use materials. We decide the PM is too frequent and we reduce the frequency from monthly to quarterly. And let’s agree there was no increase in breakdowns or adverse events. Calculations show we “saved” 24 hours a year. Where did the savings go? We say that the time is now available for other valuable maintenance activity. This time is phantom savings.

If we sent home a contractor 3 days a year as a result of this PM frequency improvement, the phantom savings would be realized (translated into real savings). If we could decrease overtime the savings would also be realized. Or if the PM used a $25 belt each month and we dropped the usage from 12 to 4 a year, we could show real savings of $200.

Getting phantom savings are good, but we act as if the real and phantom savings are the same. They are not the same, and should be presented separately. Hard numbers people (accountants) are extremely suspicious of phantom savings. In the real world they never realize those savings. Consider the way your audience listens to talk about savings. There will be significant skepticism. By stressing (a smaller amount of) real, as opposed to (a large amount of) phantom, savings you will be answering the biggest question (which is sometimes not even asked explicitly). Phantom savings are nice to have but not as nice as money in the bank.

People argue that saving time will enable the team member to concentrate on something else during the time saved. This argument may be true. But they also might turn it into a happiness moment, an idea put forward by the Gilbreths (discussed later in this chapter) at the beginning of the 20th century. Lillian and Frank Gilbreth said that, by teaching everyone the one best way to do the job they could get their work done and have time for a happiness moment. It didn’t take long for happiness moments to go the way of the dodo bird (to extinction).

Sometimes Lean can look Fat

On a bigger scale, if you read trade magazines you will find articles about savings from adoption of this or that productivity improvement program (new software, a new gadget, or a new way to look at maintenance). The savings are always impressive. Like all phantom savings, rarely if ever are those savings distinguishable when we take a before and after snapshot of the organization’s books. If the savings are not visible, the vendors are touting phantom savings.

This statement is not to say that phantom savings are not important, they are. Phantom savings can really be used for important work. It’s just that the Return on Investment will show up as a result of only the impacts on the costs, either above or below the water line, and not from the theoretical savings activity. Phantom savings can also accumulate, and when there is enough they can be converted or will naturally convert themselves into real savings. Phantom savings can also be a guide or a pointer to real savings.

The situation of phantom savings could very well be worse than just no impact on the books. Consider the impact of a major effort toward planning and scheduling the maintenance effort. Conservative estimates show productivity could improve by 25%.

Most places don’t implement Planning and scheduling and then lay off 25% of their people. Most places have excessive identified work (in their backlog), and use the gain in productivity to accelerate the speed with which they work their way through the back-logged jobs. This strategy results in backlog reduction and timelier customer service. Without a lay-off or reduction in overtime there are no savings in maintenance costs. Eventually, the firm might be able to reduce overtime, contractors, or even headcount through attrition (converting phantom savings to real savings).

Each job takes a shorter time (on the time clock) when materials, tools, permissions, and drawings are available when the job starts. More jobs run smoothly. Then something strange happens. Those additional jobs will consume materials. The up-tick in material usage will be real (not phantom) because more jobs will be run per week. The improving productivity might adversely impact the maintenance materials budget (by using it up faster).

In addition to running through the backlogged jobs, usually there are additional jobs that didn’t make it to backlog originally, because no one had confidence that the job would ever get done (this position seems particularly true for infrastructure jobs). Some of these jobs get captured and added to backlog. Eventually, when the backlog is reduced to a manageable level, the whole plant will run better. Fewer corrective jobs will break down waiting for maintenance to get there. Years later there might be an opportunity to allow the maintenance crew to drop in size naturally as people retire and leave.

Is Lean a Religious Issue?

On a flight to the west coast from Philadelphia, I had the great opportunity to sit next to a Minister of a large church. We got to talking and I realized that he knew quite a bit about maintenance. As a head of a church, with a building and a school he had faced many maintenance problems over the years. He surprised me when he said that fundamental issues of maintenance and religion were related.

He said that when children are born, or people pass away, or couples get married, there is no problem getting people into church to pray. The problem he said is the decades between these events. It is hard to get people to come into church when nothing of importance is going on. But that time is important, it is time spent building up the spiritual muscle to withstand whatever life has in store for you.

The minister went on to say that, when they had a leaking roof and minor floods after a string of spring storms, he had no problem getting money and congregational attention to fix the roof. But he had no luck getting (less) money in the previous 2 years to fix the roof so it wouldn’t leak in the first place.

Many of our companies are just like that. They wait until after a crisis to consider maintenance seriously. One of the battles of the maintenance war is with human nature. We put off paying for maintenance because we either don’t believe there will be a problem or we don’t really even want to think about the inevitable decline of the assets we are using. We consider this approach Lean. It isn’t in the long run.

Competition determines success

Lean maintenance exists by itself in a particular plant. Once you go through the exercises and “Lean up” the process you can look around and declare yourself on the way to a Lean Maintenance operation. But there is a major aspect to Lean that is not self referential. Ultimately the success of the organization might hinge on whether your plant is Leaner than those of your competitors. When there is a major shift in technology or taste, sometimes even a lean plant will be shuttered (such as when there is no longer any demand for the product at any price).

Toyota’s Leanness gave them a competitive advantage against first, other Japanese car companies, and then against global competitors. When the cyclic automobile market turned down, Toyota could lower prices to build market share without incurring losses. Leanness made this strategy possible for Toyota. In the US, manufacturers use valuable incentives to sell cars during downturns, and are prepared to lose money to maintain market share. Problems arise when a company is weakened by successive downturns and cutbacks in development.

Walmart distributes products at a lower cost than its competitors. Its Leanness enables it to maintain low prices and still make a profit. In both examples, if history is a good guide, someone will eventually come along with a Leaner strategy, possibly enabled by a new technology. When that happens, the Toyotas or the Walmarts of the world will have to rethink their processes, start new Leanness initiatives, and adopt new technologies.

Efficiency and lean

Is Lean the same as efficiency? Certainly the origins of efficiency and efficiency experts would be in complete accord with what we understand as Lean. The efficiency experts had their heyday after World War II and on into the early 1970s.

These efficiency experts had their roots in the scientific management movement of the turn of the 1900s. Fredrick Taylor is generally credited as the father of the scientific management movement. His approach was to look at the work content of a job, and time everything done with a stop watch, to determine the “one best way,” and create a (sometimes) significant productivity improvement. Predecessors to Taylor were the couple of Frank and Lillian Gilbreth.

The Gilbreths studied bricklayers among other trades and activities. Not surprisingly, they found a wide variation in performance and quality. Their studies showed that when the slowest brick layers were taught the techniques of the fastest bricklayers they could almost duplicate the speed and quality of the fast ones. The variation narrowed dramatically. To the Gilbreths, and later to Taylor, this approach showed that there was “one best way” to do any job. The efficiency expert’s job was to study the work and determine the one best way.

It was found that variations in the speed of doing maintenance jobs was far more likely to be related to how the job was done than to how fast the mechanic was working. Scientific management techniques, as taught to Industrial Engineers, are still performed today and are enormously useful. The techniques are particularly useful where the same activity is done over and over again. Scientific management task analysis is time consuming and requires significant training to master.

Traditionally, maintenance activity has not lent itself to the how approach because the work is not repetitive and because conditions are frequently so different (rusted bolts, bent housings, etc.). The US government did try to study maintenance activity and produced a series of documents called Engineered Performance Standards or EPS. EPS encompassed all activities that would be needed to maintain a Navy Base (having been sponsored by the Navy). EPS documents are still available.

One company is famous for their attention to the way work is done. UPS has a group of industrial engineers who study maintenance (among all the tasks at UPS) and determine the best way to perform any task. The company then teaches that technique and achieves excellent results, gaining competitive advantages over competitors trying to enter their core business.

Observing work, and training people in the “one best way,” is useful (although people are not always open to learning new ways to perform jobs). The focus of Lean is to eliminate the larger pool of non-productive and marginally-productive time that surrounds the productive bit. There is significantly less focus on the “how” of the work, although some study, training, and attention would not necessarily be wasted. In production, frequently, the Lean effort required material bins and tools to be moved, to find the best way to do an operation.

But Lean might not look like what we think, or even what we are led to believe by experts. Lean approaches are built into the cultural traditions of the US. The pilgrims who landed at Plymouth Rock were well known for their thrift and “leanness.”

Growing up, one of the parents in my neighborhood owned a factory that made steel shelving. He never spent a cent that he didn’t need to. He made trade-offs to run the operation with the least number of inputs and maximum outputs. For example, in whole sections of the plant the lights were turned out if they weren’t being used. The owner bought only old machines and had the gift of repairing them with objects at hand. Junk parts filled sections of the warehouse, and occasionally yielded critical spares (with some machining or welding).

Despite his small volume, my friend managed to make a profit (enough to send 3 kids to college and provide for a luxurious retirement) for over 30 years. The point is that there is lean by the book and lean in practice. Lean in practice might not look like the shiny, ordered factory we all look up to. It would have taken years (if ever) to provide a return on investment (that could have been millions of dollars) from cleaning up that place and bringing the equipment to like-new condition. And there still would be a question whether all that effort would result in a cheaper and higher-quality product (his product was extremely durable and was the shelving of choice for local companies).

Lean is long term and immediate at the same time. The projects are designed to provide immediate gratification. Generally Lean projects are not multi-year efforts but rather immediate ones. Lean is long term in that the consequences are continued lower costs, increased quality, and improved morale with employee development. How do we know Lean is working? Look at the bottom line. With an effective Lean program in place, costs of maintenance (other things being equal) will gradually drop. You’ll see the effect immediately and it will be ongoing for 1 year, 2 years, 5 years, even 10 years.