Lean by example
Lundbeck began implementing Lean in 2005 and is using a four-phase methodology. As implementing a Lean practice into a company
is an ongoing process, results from Lundbeck exemplify developments up until 2010.
Figure 2: First Kaizen event; 40% reduction of packaging line change over time.
Phase 1: Build consensus in the management group (pre-2006)
Management buy-in is crucial. As leaders to teams, they are best placed to gain the support of their employees as well as
understand how Lean management can impact their company goals and which areas they need particular focus on.
Senior management at Lundbeck had wished for a change in the way they had operated for several years. In 2005, the 'best supply
chain' target was agreed and many believed that Lean was the best way to achieve this.
Phase 2: Build the pilot — prove that it works (2006)
Showcasing figures is a great way of inspiring an organisation; but to truly have the support of the senior management team,
a pilot study of lean methodology was carried out in just one of the pharmaceutical production plants at Lundbeck in order
to convince and align all management persons. The study involved approximately 20 Lean events and provided a solid basis for
starting the transformation process across the supply chain. The first Lean event in this pilot secured an annual saving of
approximately half a million US dollars.
Key achievements of Lean programme
Phase 3: Run a large number of Lean events and build a culture around these events (2006–ongoing)
Creating regular events to encourage and continue inspiring the team meant more improvements were made at an unprecedented
pace. The number of Lean events carried out annually was set at the number of people in the organisation divided by ten. This
number was required to secure involvement of all employees, to create results fast, and to teach everyone in the organisation
to work with the Lean tools.
Figure 3: Result example — packaging line.
The Lean Kaizen engine, as it was known, was rolled out throughout the organisation. During the first year of this phase,
the company conducted 40 Lean events with the assistance of external experts and, since then, a further 70–80 Lean events
have been held each year, involving all 800 personnel in the supply chain.
Each event corresponds to 300–500 hours workload. Overall, between 2006 and 2009, a total of 250 Lean events were held, each
involving an average of 10 people. Typically, these begin by thinking about how to reduce waste and enhance the value-added
parts of the supply chain. People visualise the complex processes as a whole using basic materials such as pens and post-its.
This is especially valuable because it offers everyone the opportunity to see the process as a whole and how each part fits
together or impacts the other.
Figure 4: Result example — Lead time quality approval.
New processes derived from the Lean event are implemented immediately; beginning the Monday after the formal event is completed.
Starting with a focus on the smaller changes that need to be made and then continuing to build out from thereon is important
in organising the implementation of Lean. Eventually the Lean event team can make radical changes with just one week's hard
work. Lean events thus become a powerful tool for creating cross-functional improvements based upon employee involvement.
In principle all the tools used in Lean events are simple and will enable the team to make significant improvements during
the following week. However, Lean events and sustaining the pace of the number of events is challenging and complex. In six
months, the organisation will need to use 10% of its resources on making improvements.
The author says…
Phase 4: After two successful years, increase focus upon Leaders (2008–ongoing)
The fourth phase sees the introduction of a new Lean element. The Lean Leadership development programme was followed by personnel
at every leadership level within the company. This involved all 115 managers in the supply chain, all of whom received 12
days training in total during 2008. This programme concentrated on integrating traditional leadership development methods
into the Lean practice methods.
Figure 5: Cost of sales as % of revenue (2007–2008).
Four modules were created:
- Lean Leadership Foundation: concentrates on getting the basics accurate, introducing the manager to the Lean Leadership principles,
setting expectations for their role as leaders in a Lean environment, and creating an individual development plan.
- Lean People Leadership: focuses upon the qualities and needs of the individual manager's team, ensuring that he/she has the
necessary tools/skills to get all their employees engaged in Lean and motivated to support the transformation. Additionally
each leader had to devise a specific Lean project. This project would later be evaluated as part of a graduation process in
the final module.
- Lundbeck Lean Acceleration: the existing situation in the company is analysed, with consideration of what had and had not
worked with the objective of speeding up the transformation further. Every leader also receives input on their own leadership
practice from a 360° review enabling them to adjust their leadership style further. The need to move forward was further reinforced
by looking at the potential gains from creating fluidity across the supply chain.
- Sustaining Lean: sustaining momentum is discussed in this module and each participant presents the result of their Lean project
and receives feedback from the senior management team of the supply chain. The examination is part of graduating as a Lean
Leader. The module also functions as a sharing of best practice amongst the leaders.
Each module ran for three days with a 10–12 week application period between each one. This programme continues, with new modules
being added every year and is now called the Lundbeck Business System, which is a new phase of the company's shift from Lean
being a project organisation to being an integrated part of the organisation.
The Business System approach is much more than just about waste elimination; Lean has become a complete business paradigm.
Employees that were earlier engaged in Lean teams are now partnered with the top managers, driving Lean culture in their area