A Conversation with...Jorge L. Larco

President, J. L. Larco & Associates Inc.

As president of a consulting firm that helps global manufacturing companies implement lean enterprise techniques and turn around troubled operations, Jorge Larco has recently turned his expertise to a little-explored area of lean: complex and variable jobs—jobs where automation seems impossible.

Born in Argentina, Larco has successfully led conversions to Lean all over the world. He is the co-author of Lean Transformation, How to Transform Your Business into a Lean Enterprise (Oakley Press, 1999), currently in its eighth printing. Most recently, he has coauthored a new book, Lean Manufacturing in Build to Order, Complex and Variable Environments (Oakley Press, 2007), outlining a proven approach to using lean techniques in BTO environments.

What inspired you to write this book?

J.L. There’s a lot of literature about lean enterprise applied to repetitive environments, but there’s little experience of lean applied to nontraditional environments—engineered to order, or lots of very small quantity of products ordered all very different. But if you look at our portfolio of clients, 70% is of this kind.

Can you name a mistake that companies often make in complex situations such as BTO manufacturing?

J.L. Most of the companies we deal with rely on the knowledge of individual people to make things happen. There is not a method. Often, for instance, a business doesn’t have all the parts they need when they need them—suppliers don’t properly match lead times, so they continue to work with what they have rather than what they need to make things happen in an efficient manner. So we give them a method. We take a family of products and get a detailed feeling for what it takes to build them. We then follow the process and we map and measure to see where there are certain things we can standardize. We eliminate all of the no-value-added parts of the process and then balance the process in terms of how many stations, how many people, what time it takes to do things. This can be complicated.

In most cases, when you apply lean, people do not work harder, they work more intelligently, but they produce more things or widgets or parts than they were doing before. The result of that is that it’s very important to design a good work station taking into consideration not only time but ergonomics as well. You have to think: How do I provide them the material they need without interrupting their work, and how do I move the product that they are value adding to from one station to another? If that is not all possible, you have to rebalance.

Is there any solution that you’ve found common to many different operations?

J.L. One of the basic elements to lean is workers getting material, or support, that is provided by someone else. Workers should not go and get their materials—this is a very common issue. When you go get your part you are responsible for the exact item code of the item you pick. If someone else brings it to you, they are responsible. This is a fundamental change. Traditionally , the material handler is the lowest paid person. But the material handler should be the most experienced person you have so that he can be responsible for parts and also replace any position of someone not working or on a break.

How do you measure success in this type of environment?
J.L. You have to be able to monitor progress daily. Otherwise five days will end, and you will not be able to be where you want to be. There are a number of indicators that make sense: on-time delivery, the amount of rework required, profitability. You also measure the amount of labor hours required prior to transformation and after transformation. On average, we’re looking at a reduction of 60–70% of the total amount of hours it took before, especially for very complicated products.