Education,top Stories

This is where we teach how to eliminate waste

They call it lean production. And it guarantees major increases in productivity. That’s why McKinsey and Confindustria have created in Pordenone the first factory/school. And this is how it works …

This is where we teach how to eliminate waste

This is Italy Team

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"Lean production" class. Or, as Maurizio Cini, President of the Union of Industrialists in Pordenone (Unindustria), calls it, the university "that teaches how to eliminate waste". But careful. McKinsey and Confindustria in this corner of the Northeast have not created just another school (albeit an excellent one), in which to learn concepts to be applied in the work environment. No. In Pordenone the combination of McKinsey's know-how and the businessmen's association has given rise to a real factory/school in which the workers actually produce. And students, whether businessmen or shop foremen, grapple with the problems of a real live factory. The Lean Experience Factory, where they learn lean (waste-fighting) production techniques in a real production environment, logistics and all. And there are plans to broaden the project to the "lean office experience" - a hands-on opportunity to learn that lean techniques also provide incredible results in an office environment, including in public administration. Cini reports that "the Pordenone provincial government will be spending an entire day with us learning about lean production." "There's nothing strange about this," adds Guido Meardi, a McKinsy partner. "In Germany, a number of banks and companies send their managers off-site to get experience in our lean factories. It is an excellent approach."

 

So, something more than just a modern factory showroom. If anything, a module-based school/worksite created for people who don't have time to waste. As Meardi explains, "It starts from a factory that is not very productive, but which, at first glance, seems to have acceptable efficiency levels. Then, step-by-step, the productivity ladder is climbed." And this explains why certain experiences just can't be had at home. A company cannot allow itself to lower productivity levels in a department for a week to explain how they can be improved. That takes a specific factory, where equipment is mounted on wheels to search out the highest possible equipment efficiency. "There's no mystery," comments Ervino Riccobon, McKinsey director, "that Italy has a productivity problem. But this issue risks sinking into the background in the debate over the need for the country to grow, despite the fact that the gap with Europe - 4,200 dollars of GDP per capita - is due 90% to lower productivity." In short, lean management is a valuable resource that is virtually untapped, especially by SMEs. "On the basis of our experience," Riccobon continues, "it is possible to improve product quality by 50-60%, reduce costs by at least 25% and increase productivity by a good 20%, things that can all make a difference - and even guarantee a company's survival."

 

The question does arise why, thirty years after the explosion of the Toyota system, lean production techniques are still a mystery. Seventy percent of companies are not familiar with them, according to McKinsey research. And only 25% of those who are familiar actually use them correctly. "Italy, the Northeast in particular, has been the home of entrepreneurism," answers Cini. "More than not, improvements in the factory have been the fruit of being self-taught." A model which has worked for years and which, following the latest major crisis, seems to be working once again, given that the Northeast is growing twice as fast as the rest of Italy. "In terms of Italy, yes," replies Cini, "but Europe is something else. And we shouldn't fool ourselves. The recovery in turnover is taking place to the detriment of margins which have dropped significantly. The strategy which worked for so long, the one based on incremental improvements within the company, the fruit of experience, today no longer pays off. A qualitative leap is needed."

 

And so the search for a model. Not the Japanese one. Better Germany, traditionally a successful model for companies in Friuli and Veneto. There, three years ago, McKinsey created the first factory to teach lean production in the field. It was so successful that not only was it cloned, but three industrial heavyweights created similar in-house training facilities. In the meantime, McKinsey also opened its doors in Lyon, France. Now it's Italy's turn, because the lean factory in Pordenone (a joint venture with an investment of 600,000 euros by each partner) aims at serving the entire country. Naturally, however, it has started with Pordenone and the surrounding area, the land of widespread entrepreneurism, but where less than 10% of companies apply lean production. And, by no accident, it involves companies (often suppliers to the German automotive sector or wood carpentry, part of the Ikea production cycle) that have succeeded in growing even during times of crisis.

 

Now it's the turn of others, the other 90%. For them, a factory is now ready that produces real components (wood and compressors) with a workforce that, for the moment, works one shift only. "But it would be wonderful to add a second shift and Saturdays," says Cini who is not afraid of trade union reaction ("we have actually involved worker representatives"). Behind the metaphorical school desks (it is open for classes 160-170 days per year with a maximum of 15-20 students) will be sitting businessmen and top managers for quick courses. Also shop foremen who need all-round training, including in detail (one week minimum). "What counts," Riccobon stresses, "is that international best practices are guaranteed. Our commitment is to keep the bar high, very high. Guaranteeing the high level of our instructors." Virtually missionaries, given that their (ambitious) objective is "to open a new factory to allow thousands to grow." No exaggeration, McKinsey assures, because the expansion of lean production is the best impulse for growth. It is no accident that, among the businessmen who apply these techniques, nearly eight out of ten think they can expand their market share and change their competitive capability. In short, a good antidote to the poison of decline.

Ugo Bertone

 

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