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Wednesday, October 17, 2007

Get more from less / McKinsey Quarterly

In McKinsey Quarterly 2007 Number 3, Stephen Corbett, a principal at McKinsey's Toronto office, discusses the challenges of adopting the lean production approach in nonindustrial environments and shows four examples of how managers met these challenges in a variety of operating contexts.

  1. Applying lean production to the public sector: Governments at all levels must deliver more for less. The principles of lean manufacturing offer surprisingly apt solutions.
  2. Applying lean to application development and maintenance: To make application development and maintenance more productive, IT managers are getting lean.
  3. Better manufacturing in China: An interview with two of PLP's top executives: Bill Haag and Wu Yu explain the lessons of a lean transformation at the Chinese factory of a manufacturer based in Cleveland.
  4. Toward a leaner finance department: Borrowing key principles from lean manufacturing can help the finance function to eliminate waste.

Key points from example 2: Applying lean to application development and maintenance
  • The McKinsey study shows that applying the principles of lean manufacturing to ADM (Application development and maintenance) can increase its productivity by 20 to 40 percent.
  • Transforming ADM begins with a diagnostic phase to find waste.
  • A large financial institution going through the diagnostics discovered two main causes of waste:
    1. The process for defining project requirements was chaotic and inefficient. IT had no standard way to get a comprehensive description of the requirements for maintenance requests, so developers had to keep asking questions to clarify them, which led to delays and rework.
    2. There was also no clear way to prioritize projects. As businesses requested exceptions and rush jobs, developers shifted focus from one application to another, and some projects were never finished.
  • After the diagnostic phase, IT managers launched a pilot program focused on three lean principles:
    1. Improving the work flow. To make the work flow smoother, the managers scheduled bimonthly software releases, with clearly defined steps and a capacity based on the available resources (designers, coders, and testers). this predictable schedule allowed the business to plan for current and future releases and diminished the tendency to rush late requests into the process.
    2. Balancing workloads. To even out the workload, the managers defined work groups more flexibly. Developers and testers were cross-trained to work on projects throughout the organization. Managers could now deploy people more efficiently; when one group was busy, it could borrow developers or testers from another.
    3. Managing performance. A "dashboard" was created so that problems could be recognized early. In one case, managers saw that a task was taking longer than estimated and therefore redistributed the developer's workload to minimize the disruption. The decision to track the performance of individuals encouraged developers to take on additional tasks, since their efforts were now more visible
  • The pilot surpassed expectations, boosting productivity in the targeted application maintenance areas by 40 percent in less than two months. IT's business counterparts were more satisfied with the process, and employee morale reportedly rose.
  • As a result of this success, the company rolled out the effort to the rest of the application maintenance organization to other parts of IT.

Full article:
MKQ: 2007 Number 3: Beyond Manufacturing: The evolution of lean production

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