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Lean Blog: Companies Use Lean to Offset Cost Increases

I posted last year about an Industry Week article about a company called Esselte.

It sounded like a nice success story, a case where they were offsetting lower market prices (that their customers were willing to pay) with lower internal costs. It sounded like they were doing it through lean methods.

But now, a year later, I got a comment from a disgruntled sounding observer:

“Esselte does not raise price's because they get rid of long term employee's and hire Manpower workers instead. The long term worker's that are left had their pay cut drastic. A lot of Manpower worker's are making more than they are! Management's attitude is they couldn't care less about all the year's you have spent working for the company.”

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OUCH. That's not lean at all.

Esselte said, last year, something different. They didn't credit lower employee wages:

“With Esselte's previous lean work, combined with Brooks' plan, he says pricing hasn't been an issue so far, noting that he hopes to be able to mitigate more of the material costs with increased efficiencies.

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We've organized ourselves, we're building things through a one-piece flow, we're using pull systems within our factory to our suppliers. We've freed up capacity in people and space, we've reduced our inventory in the factory and from our suppliers so WIP is down and the raw material is down, so we're freeing up a lot so space and freeing up capacity.”

So it makes you wonder. Which is true? Both? Neither?

It *is* quite possible that the company is eliminating waste (through 5S and one-piece flow) while ALSO not respecting employees (getting rid of them for cheaper temps). The two pillars of TPS: 1) elimination of waste and 2) respect for people. It's sometimes hard for companies to copy both. Sometimes, they just copy “elimination of waste.” That's not the best long-term lean approach, doing that.

You have to value and respect people, because that's where kaizen and continuous improvement ideas come from.

What do you see out there in the lean world? Are companies struggling with “respect for people?”

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Mark Graban is an internationally-recognized consultant, author, and speaker who has worked in healthcare, manufacturing, and startups. 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 book is an anthology 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.

3 Comments
  1. Anonymous says

    disgruntled sounding observer: I an also so an employee! Ever since J. W. Childs bought Esselte we have lost every thing we have worked all these year’s for. The company has lost a lot of honest hard working and devoted employees. We cared about our work and the product that was produced.
    Speaking for myself i lost $5.00 an hour. To me that is a lot of money from my paycheck. Then their paying new people that has been their less than a year more than me. This is at Esselte in Union, mo. I wish they did RESPECT their long term employee’s. Because we had respect for our job’s being well done! Esselte is working on eliminating waste along with our benfit’s and pay!! Thank – You

  2. Anonymous says

    Perhaps they reduced your wage because of poor grammar and spelling. Companies are in business to make a profit. If in order to make a profit, the stakeholders need to take it on the chin for a period of time, then that is what must be done. It is better to take one on the chin than get knocked out of the ring. If your skills are worth the original rate you were being paid, take your skills to a competitor. Employees that personalize everything are not the ones who will help the company benefit from the introduction or implementation of the LEAN philosophy.

  3. Anonymous says

    Why don’t you get out of the office and do a honest day’s work.

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