A Lean Guy Reads FORTUNE

As I was catching up on my back issues of FORTUNE, I had a few Lean thoughts as I read.

In the June 9 edition, the article “Wal-Mart puts the squeeze on food costs” caught my eye. It says:

Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain.

Read that again. It says “take costs out.” This is different than the stereotype of Wal-Mart “squeezing” suppliers for a lower price. Demanding a supplier accept a lower price is NOT the same as real cost cutting that can be shared. I’m happy if Wal-Mart is really learning how to collaborate on real cost reduction. The article continues:

Ever wonder why that cereal box is only two-thirds full? Foodmakers love big boxes because they serve as billboards on store shelves. Wal-Mart has been working to change that by promising suppliers that their shelf space won’t shrink even if their boxes do. As a result, some of its vendors have reengineered their packaging. General Mills’ (GIS, Fortune 500) Hamburger Helper is now made with denser pasta shapes, allowing the same amount of food to fit into a 20% smaller box at the same price. The change has saved 890,000 pounds of paper fiber and eliminated 500 trucks from the road, giving General Mills a cushion to absorb some of the rising costs.

I’ve certainly wondered why some boxes (from Target) are unnecessarily big. The above sounds like a nice example of win-win collaboration and something that General Mills can do other than whining that their costs have gone up. The article also discusses how Wal-Mart is attempting to reduce transportation costs by purchasing more produce from local farmers. It might be a higher unit cost, but it’s the total cost that matters, right?

I’m surprising myself that I had nice things to say about Wal-Mart.

In the July 7 edition, a quote from Barack Obama in this article caught my eye (for purely non-political reasons). FORTUNE asked:

How would your management style differ from that of the current occupant of the Oval Office?

and Sen. Obama responded:

And so I think the biggest difference in my management style and George Bush’s is that I want a robust discussion around the table with a lot of different viewpoints and a firm footing in the facts. I always want bad news first. Good news takes care of itself.

This is a very Toyota approach. Toyota leaders always ask about the problems first (the “bad” news… although Lean thinkers wouldn’t think of problems as “bad”… “No problems is a problem” as they say). I’ve also heard that Toyota leaders like to ask “what are your top three problems?” before they’ll move on to talking about anything positive.”

Fact-based discussion. Listening to different viewpoints from people. Putting politics aside, if this is possible in mentioning Sen. Obama, that’s the essence of Lean thinking right there.

“Data is of course important in manufacturing, but I place the greatest emphasis on facts.” –Taiichi Ohno

Thanks to Craig Woll for re-printing that quote. I was taught that what Ohno meant is that data (numbers in a report) are helpful, but you find real facts by visiting the “gemba,” the shopfloor or the place where work actually happens (a hospital emergency department can also be a “gemba.”)

I’m not saying “Ohno-bama” is the “Lean candidate” but he has an interesting take on leadership.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

1 Comment on "A Lean Guy Reads FORTUNE"

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  1. Dan Markovitz says:

    Ever wonder why deodorant no longer comes in cardboard boxes? (Not so many years ago, the plastic bottle was packaged inside a small box.) WalMart.

    WalMart found that the box cost about five cents and wasn’t adding any value to the customer. So it insisted that its suppliers deliver products without the boxes — saving consumers money and saving millions of trees.

    You can read more about this in Charles Fishman’s excellent book, “The WalMart Effect.”

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