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# Lean Transformation Equation

## Lean Transformation Equation

Many times we have been asked about how secure we feel about the capacity to change a company traditional culture to a lean culture. This is most an easy question to answer. First of all culture takes a long time and second the culture change result depends on many input variables, not just one. So in order to give a more adequate response to this tricky question, let's try to put it in mathematical equation, relying on the fact that numbers are straight forward and objective. This way we will try to keep aside emotions and subjectivity.

We all know about the basic math equation: y is a function of x which we write y = f(x)

In statistics we say that x is the predictor or the independent variable and y is the response or the dependent variable, and if such, there must exist an equation that giving x we can predict y, if obviously there exist a correlation between the two variables. Nature is not different and thus lean culture change is not different. By trying to answer the question, we are trying to define what are the input independent variables that if they go into the transformation system will result into a lean favorable culture change. This is the background question that will allow the upfront answer to the original tricky question.

So mathematically speaking we have: y= f(x1,x2, x3, x4) and we are looking for the predictors knowing that y = lean culture.

Let's define x1 as transformation time. Why? Because one of the first thing we must do in lean is a current state value stream map, in which by looking for ways to have a continuous one piece flow, we will define the future state as well as the kaizen events that must take place to close the gap between current and future state. Theoretically speaking the future state will arrive in time according to the number of defined Kaizen on the map, taking into account that to prevent further introduction of variability in the process, one should not do more than one kaizen on a same process every 90 days, time for the change to mature and give decent results. Therefore no more than 4 kaizen a year on a same process. So the transformation to the future state will occur at time N/4 where n is the number of kaizen. Therefore

x1= (N1+N2+....+Nn/4) where n is the number of products families in the business, as each family will yield to its own VSM.

transformation completion time = (total number of defined kaizen in all VSM / 4

Let's define x2 as culture volatility. This is an important factor as well. As you are developing a new culture if you have a high people turn over rate (leaving the company), you may be loosing part of the acquired culture change with this rotation. This is the part of volatility associated with culture emigration. In fact if the hiring rate is higher than the culturization rate you may also be loosing relative ground as the expansion is faster than the change. This is the volatility referred to as culture immigration, and unfortunately not your culture. At this stage you need to find a combine equation that set an equilibrium between these 3 factors: culture rate, turns over rate, hiring rate. The basic condition to prevent culture volatility is:

Culture rate > (hiring rate + turn over rate)

x2 is Culture volatility management and implies the above condition must hold true.

Defining x3 is easy but implementing x3 is a major challenge. Let x3 be the supply chain ideality. We all know or have heard about the theory of constraint which in this blog basically would mean that "you will be as lean as as the least lean part of the process". This is your constraint. The previous two factors deal with internal stuff. But if we do not work lean as well on the outside, that is the supply chain, then all internal efforts eventually will not be sustainable and will worth nothing. There is a tool to define the ideal suppliers and it is the SIPOC. Not the traditional SIPOC that everyone tends to do but the ideal SIPOC starting backward and identifying the ideal outputs capable of satisfying all the customers expectations. Going backward with the ideal condition in mind will lead to define the ideal inputs and suppliers. See blog sobre Ideal SIPOC. Current ideal outputs in place divided by total ideal outputs identified is equal to an index that can be called supply chain ideality index.

Supply chain ideality = No of current ideal outputs / Total No of ideal outputs identified.

SCI = CIO/ Total IO

There may be many other variables in the prediction of lean culture transformation success. However I am certain that they will be either part of the kaizen events toward transformation or part of a culture developing actions plan, or again part of the supply chain lean project. So basically we have three independent variables predictors so that our equation can be expressed as:

Lean culture = f(VSM transformation completion time, culture volatility, supply chain ideality).

Therefore the right answer to the question of how secure we are as to culture change in the processes, can easily be answered by the lean transformation equation.

If as managers we can deal and control all three independent variables or predictors in the multiple regression equation, then we can have a pretty good idea of the rate and time of success. It's all about garbage in - garbage out.

We all know about the basic math equation: y is a function of x which we write y = f(x)

In statistics we say that x is the predictor or the independent variable and y is the response or the dependent variable, and if such, there must exist an equation that giving x we can predict y, if obviously there exist a correlation between the two variables. Nature is not different and thus lean culture change is not different. By trying to answer the question, we are trying to define what are the input independent variables that if they go into the transformation system will result into a lean favorable culture change. This is the background question that will allow the upfront answer to the original tricky question.

So mathematically speaking we have: y= f(x1,x2, x3, x4) and we are looking for the predictors knowing that y = lean culture.

Let's define x1 as transformation time. Why? Because one of the first thing we must do in lean is a current state value stream map, in which by looking for ways to have a continuous one piece flow, we will define the future state as well as the kaizen events that must take place to close the gap between current and future state. Theoretically speaking the future state will arrive in time according to the number of defined Kaizen on the map, taking into account that to prevent further introduction of variability in the process, one should not do more than one kaizen on a same process every 90 days, time for the change to mature and give decent results. Therefore no more than 4 kaizen a year on a same process. So the transformation to the future state will occur at time N/4 where n is the number of kaizen. Therefore

x1= (N1+N2+....+Nn/4) where n is the number of products families in the business, as each family will yield to its own VSM.

transformation completion time = (total number of defined kaizen in all VSM / 4

Let's define x2 as culture volatility. This is an important factor as well. As you are developing a new culture if you have a high people turn over rate (leaving the company), you may be loosing part of the acquired culture change with this rotation. This is the part of volatility associated with culture emigration. In fact if the hiring rate is higher than the culturization rate you may also be loosing relative ground as the expansion is faster than the change. This is the volatility referred to as culture immigration, and unfortunately not your culture. At this stage you need to find a combine equation that set an equilibrium between these 3 factors: culture rate, turns over rate, hiring rate. The basic condition to prevent culture volatility is:

Culture rate > (hiring rate + turn over rate)

x2 is Culture volatility management and implies the above condition must hold true.

Defining x3 is easy but implementing x3 is a major challenge. Let x3 be the supply chain ideality. We all know or have heard about the theory of constraint which in this blog basically would mean that "you will be as lean as as the least lean part of the process". This is your constraint. The previous two factors deal with internal stuff. But if we do not work lean as well on the outside, that is the supply chain, then all internal efforts eventually will not be sustainable and will worth nothing. There is a tool to define the ideal suppliers and it is the SIPOC. Not the traditional SIPOC that everyone tends to do but the ideal SIPOC starting backward and identifying the ideal outputs capable of satisfying all the customers expectations. Going backward with the ideal condition in mind will lead to define the ideal inputs and suppliers. See blog sobre Ideal SIPOC. Current ideal outputs in place divided by total ideal outputs identified is equal to an index that can be called supply chain ideality index.

Supply chain ideality = No of current ideal outputs / Total No of ideal outputs identified.

SCI = CIO/ Total IO

There may be many other variables in the prediction of lean culture transformation success. However I am certain that they will be either part of the kaizen events toward transformation or part of a culture developing actions plan, or again part of the supply chain lean project. So basically we have three independent variables predictors so that our equation can be expressed as:

Lean culture = f(VSM transformation completion time, culture volatility, supply chain ideality).

Therefore the right answer to the question of how secure we are as to culture change in the processes, can easily be answered by the lean transformation equation.

If as managers we can deal and control all three independent variables or predictors in the multiple regression equation, then we can have a pretty good idea of the rate and time of success. It's all about garbage in - garbage out.

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