Made-Up Lean Enterprise Statistics

The tall tales of lean

Published: Monday, December 7, 2009 - 07:00

For a group of people who claim to practice management by fact, questioning the as-given condition, we in the lean community have a troubling habit of citing and accepting made-up lean enterprise statistics. In fact, I would say that at least 50 percent of statistics cited about lean have been made up by someone and passed on to others. I can say this because I personally know some of the people who have made them up. The following are a few favorites.

Only 1 percent of all manufacturers have adopted a lean strategy

In a Manufacturing News interview with former Danaher finance executive and now lean consultant, Mark Deluzio, we learn that only 1 percent of all manufacturers have adopted a lean strategy for growth.

“Q: Do you believe that only 1 percent of all manufacturers have adopted a lean strategy to grow their businesses?”

“DeLuzio: I agree on the numbers, because lean exposes problems and is a pain in the butt to do. You have to be prepared to deal with big problems. Not a lot of companies even think in the right frame of mind to be able to go and deal with the problems in a fact-based manner. Many people like to hide behind problems and hide behind inventory.”

I bow at the feet of the pollster possessing such powers over time and space, allowing them to identify and survey “all manufacturers.”

Visual controls are just wall paper

When discussing visual management, many have the misconception that any chart that conveys information is a form of visual management. In fact, a made-up lean enterprise statistic tells us that 75 percent of visual controls are just wall paper. This doesn’t mean that three quarters of proponents of visual management are laying down wall paper, but that most visual controls are useless. They do not, in fact, contribute to the immediate understanding of normal vs. abnormal, or communicate a standard. This statistic is made up, but grossly true.

You can do it with half the resources

A lean company can do the same work as a nonlean company with 50 percent less space, inventory, equipment, and people. Many lean consultants like to shock a prospective client with impressive statistics, saying that lean will allow them to get the same work done with half the space, half of the machines, etc. This is correct more often than not, but leaves a lot unsaid; and few who make the claim can substantiate this claim with a sample size of 3,000.

Little value in lead time

A commonly heard made-up lean enterprise statistic during value-stream mapping training is that less than 5 percent of lead time is value added. This is a fairly safe statement to make, but given the lack of defined starting and ending points for the lead time, can be simply untrue. It’s another shock tactic to raise awareness of how little value-added time there is within most traditional end-to-end processes.   

Dedicate 1 percent of work force to kaizen full time

Many who hold kaizen promotion office (KPO) positions or the equivalent can thank the made-up lean enterprise statistic stating that 1 percent of the work force should be dedicated to kaizen full time for the job they are in. This is often expressed as 1 full-time lean person (KPO) per 100 full-time employees. This makes planning resources easy and results in the hiring of lean managers for companies with 100 employees or less. It is not a very effective way to bring about a culture change. Who knows whether the 1-percent number is correct or not? If it’s correct, why not dedicate 1 percent of everyone’s time to kaizen? In a 100-person company, that would be 1 percent of 200,000 hours per year or 2,000 hours split across 100 people. That’s 20 hours per person per year doing kaizen, or 100 minutes per month per person, or 25 minutes per week. By everyone. That. Just. Might. Work.

There’s an uncommited 60 percent

Some have said that 20 percent of a group will actively support a change, 20 percent of a group will actively resist a change, and 60 percent can be swayed to support or resist. On the one hand this sounds convincing, especially when words such as change management, keys to success, and critical success factors are thrown into the sentence around it. However, I have heard the same people cite this as one third, one third, and one third, so the numbers seem arbitrary and unduly precise. Also, these numbers skew heavily in one direction or another depending on, say, whether one is in Brazil or in Sweden, and what level of leadership is leading the change, and whether the group that is being addressed has more to gain or more to lose from the change.

The exponential cost of poor quality

The cost of poor quality increases by 1,000 percent each time it is passed downstream. This is sometimes stated as the 10-time rule and used to argue for in-process checks, early detection, and stop-and-call methods such as andon lamps, jidoka, and other aspects of built-in quality. However, this made-up lean statistic does not hold up when applied indiscriminately. The cost of detecting bad raw material when it is still ore may be thousands of time less than when the finished gear begins to break down within a gearbox within an aircraft. On the other hand, an error in a line of software code detected at first quality assurance step may not be significantly higher than if found in the fifth step. The essential thought is that each process is capable of checking incoming and outgoing quality, and that all defects are caught before escaping to the final customer.

What other made-up lean enterprise statistics have you heard?

About The Author

Jon Miller

Jon Miller is co-founder of Gemba Research LLC where he leads development efforts including consulting solutions, training materials, and establishing internal consulting standards. Miller was born in Japan and lived there for 18 years. In 1993 Miller was fortunate to start his career working with consultants who were students of Taiichi Ohno. Since 1998 he has led dozens of lean transformation projects in a wide range of industries. Miller has taught kaizen in 15 countries for more than 15 years. He is a frequent contributor of articles to a variety of publications and written more than 800 articles on lean manufacturing, kaizen, and the Toyota Production System on Gemba’s blog.