Monday, February 18, 2013

Toyota’s lean lessons for Wipro -- Lean Methodology in IT industry

When speaking of Lean Production, it usually refers to manufacturing industry such as auto-mobile. However, with its great success, it has been adopted across industries including health care and IT outsourcing. Wipro did a great job of translating “Lean Principle” to IT outsourcing.

When the chief global delivery officer at Wipro wanted to deal with rising wage inflation and growing complexity in large outsourcing contracts, McKinsey suggested the Lean Principle. With further investigation at options that included the Malcolm Baldridge National Quality Award criteria, TRIZ (short for Theory of Inventive Problem Solving in Russian), and Toyota's Lean, Wipro decided to apply the Lean exercises.[i] What Wipro tried to do is more than just reduce their cost, but differentiate itself from its peer competitors based on quality and delivery of its software products as well.[ii]

To kick off the project, they define the value of outsourcing which is to provide solutions to the challenges the outsourcing buyers needed to solve.[iii] They also adopt the tenets according to their needs. They focus on three aspects:

1)        Continuous Improvement
Go see yourself to understand thoroughly
Make decisions slowly by consensus, thoroughly considering all options, implement rapidly
Continuous organization learning through kaizen

2)        Approach to People: Respect, Challenge, and Grow
Grow leaders who live the philosophy
Respect, develop and challenge your people and teams
Respect, challenge and help your suppliers

3)        Process Flow and Eliminate Waste
Create process flow to surface problems
Use pull systems to avoid overproduction
Level out the workload
Stop when there is a quality problem
Standardize tasks for continuous improvement
Use visual controls so no problems are hidden
Use only reliable, thoroughly tested technology

With the above tenets, Wipro established a four-step process to adopt TPS. Firstly, it identifies the tasks in great details so that people know exactly how to accomplish the work. Secondly, Wipro streamline communication by establishing direct communication pathways between people to eliminate miscommunication or delay so that waste is reduced. Then Wipro simplify the process architecture. Thus, people can understand the interconnections. A side effect may be the standardized process for continuous improvement. Finally, it adopts hypothesis-driven problem solving. The team is hold together to discuss possible improvement on the work and test hypotheses by comparing with real-world results. With this final step, quality control is achieved.

With the factory model drew upon the principles of TPS, Wipro can standardized process and reuse codes. Given a lot of similar small projects, reusing components not only increase the productivity of project, but also improve quality of product. Since components are reused across projects in a large scale, more feedbacks will be taken into account for further development. Potential problems of existing components will become more and more transparent after being used by more users.

To make this process more successful, Wipro pay a lot attention on communication as well. It makes decisions as late as possible but delivers it as fast as possible. By giving the outsourcing buyers some intermediate delivery, it can get feedback from them and then eliminate the unwanted or unnecessary features of the product which in turn eliminate waste. Moreover, this fast delivery cycle also gives the buyers flexibility of changes. With this service oriented process rather than focusing on pure technology, Wipro would deliver products with high customer satisfaction rate.

With all the efforts put into lean practices, according to Staats, for every $1, Wipro makes savings of 20 cents on an average. "For one of the customers, the gains stretched to over 70% after we used Lean for minimising efforts (read engineers) while delivering the project," recalls Staats. [i] 
Wipro did successfully apply the lean principle into IT outsourcing. Before adoption of TPS, Wipro had implemented Six Sigma quality control system as well. The questions remained is whether Wipro will be able to differentiate itself from its competitors given its peers may replicate this lean production system. Or another question might be is what are the industries that Lean Principle may be suitable for.


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