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In 2002, a newly assigned US Army depot commander realized his organization needed to improve cost, schedule and quality promptly and very visibly. With Base Realignment and Closure Commission (BRAC) scrutiny planned in the near future and the probability that at least one Army depot would close, things needed quick, dramatic improvement. Colonel William Guinn decided the road to securing the future for Letterkenny Army Depot (the depot) was through lean production methods. He needed to publicize resulting lean successes promptly, before base closure decisions occurred. By design, however, enterprise-wide accounting regulations account for productivity gains only over a multi-year period. With support from his superior officer, the commander catalyzed lean efforts and introduced an imaginative accounting practice that “short cut” the multi-year accounting delay. The consensus was that adoption of lean methods and the depot’s innovative approach to reinvesting savings managed to preserve its existence. In the end, the depot even grew by several hundred jobs as world affairs increased the demand for its services.
The multi-year accounting practice threatened to mask savings and impede utilization of the vital first fruits of the depot’s lean practices. Without capturing savings, publicizing successes and ensuring all stakeholders benefited with real dollars, the lean transformative efforts likely would not be sustainable. Yet the innovative approach and specifically its operation over time raise questions with respect to accounting for operational improvements resulting through transformative lean management.
Drawing upon two case studies that detail the depot’s “forced march” to lean practices, this paper examines the intersections of contrasting purposes promoted within the Department of Defense (DoD) enterprise and explores through a systems view and simulation potential unintended and undesired consequences of the lean effort. This research opens systems discussions of intended and unintended consequences of government accounting practices that aim for rate stabilization and of the “less employees are needed” phenomenon that lean promotion may trigger whenever demand for outputs may be stable or declining. It thereby expands theoretical knowledge relating to lean-induced labor savings, workforce acceptance of transformational change within such an enterprise. These dynamics have relevance for governmental and quasi-governmental institutions that consider lean practices or, more broadly, enterprise transformation. The military, postal service and state and local governments, and lean practitioners, may take note in these fiscally challenged times. This research also presents a framework for examining the dynamics of military depots’ competitiveness in seeking commercial contracts.