Building lean into our strategy
CASE STUDY – Brazil-based construction company Andrade Gutierrez has been able to sustain its transformation by consistently developing internal capabilities and making Lean Thinking its strategy.
Words: Deisa Conegundes, Flavio Augusto Picchi and Renato Mariz
This article was originally published on the Lean Institute Brasil website. Find it here.
Over recent years, Andrade Gutierrez (AG) – an innovative company known for its state-of-the-art engineering – has experienced solid growth. While positive, this has come with its challenges.
Bringing knowledge to new business areas and to the people involved in the expansion is no easy task. Given the nature of today’s market, the organization needs to change the culture of the front line, engaging them in the company’s lean transformation in pursuit of excellence. Today, AG has a structure that allows it to drive its growth and bring lean to the whole organization – including new business areas.
The journey of Andrade Gutierrez Engenharia towards operational excellence and a lean enterprise began in 2010 with the Arena da Amazônia project, with project leaders realizing the need to improve some specific processes to obtain a better performance. With the help of external coaches, they pursued the objective of reducing waste with an approach oriented towards achieving the desired results on the job.
What the company has achieved in just over 10 years goes far beyond operational benefits. The developing of internal skills was, indeed, an important result in this process of transformation. Today, AG can be considered a lean company, with lean culture and standards fully incorporated into the way the work is done. Through its transformation, Andrade Gutierrez has achieved several results, including:
- In just one year since the beginning of their effort to bring lean to all areas of the business, productivity gains of 20% on average were observed, together with reductions in lead-times and costs and increases in quality. These results encouraged the company to continue with its improvement efforts.
- Using a Value Capture Plan, AG has established that millions of reais have been saved over the years as a direct result of the application of Lean Thinking.
- The motivation, quality of working life and satisfaction of employees all improved thanks to the company’s lean efforts.
- The management techniques deployed ensure that improvement keeps happening and that processes keep evolving, while sustaining the results achieved thus far.
AG’s lean success is a direct result of the company recognizing there is more to lean than just tools. The organization fully understood the importance of achieving a cultural shift and incorporating Lean Thinking into every aspect of company life. It’s not about “doing lean”; it’s about “being lean”.
THE IMPORTANCE OF LEAN
The cultural change AG achieved made lean second nature in the company, something that is deeply rooted in the work and well-respected across the business. Lean is also seen as an enabler of innovation in the organization, together with its continued investment.
The contribution of lean was even more evident during the Covid-19 pandemic: despite the difficulties all companies have faced, AG has been able to maintain its results. This allowed it to continue seeking improvements in its processes even in times of crisis, because thinking lean made the organization more flexible and better able to adapt in the face of uncertainty.
With more than a decade of experience applying lean construction principles and techniques, today Andrade Gutierrez can proudly say that what it has achieved is the result of the discipline and great effort of its people. Their transformation has not been driven by external coaches, even though their help has been an important element. The company recognizes that its accomplishments are of its own making, which wouldn’t be the case if AG didn’t see lean as its culture.
HOW IT ALL HAPPENED
Following the success of Andrade Gutierrez’s first lean experiment in 2010, other initiatives ensued – all achieving equally impressive results. As its took its first steps towards Lean Thinking, front-line staff received specific training on relevant lean tools.
Over time, as it became clear that more and more projects would be run in a lean way, AG felt the need to internalize the lean philosophy. At that point, there was already a certain degree of awareness that localized applications of lean typically fail to create lasting results. The good practices developed in individual projects were not incorporated into company-wide standards, which meant that each new project had to start from scratch.
It became clear that, for lean to become the reference of all company activities, it would be necessary to develop people’s skills and create a permanent internal structure for the spread of the philosophy.
With trained people and the creation of a dedicated improvement team, the rollout to other areas of the business would be smoother and faster. Only this way could learning become an every-day occurrence in the business and knowledge be transferred effectively across it.
With this in mind, in 2014 AG reached out to Lean Institute Brasil (LIB) to development the core team of individuals who would facilitate the create of this learning system for the dissemination of Lean Thinking, the creation of a critical mass of change agents and the development of an independent, autonomous workforce.
TRAINING THE FIRST GROUP OF FACILITATORS
To support Andrade Gutierrez, LIB created a 10-month program based on cycles of learning and practical applications, that followed a number of fundamental principles:
- Lean can only be learned by doing and generating results. Therefore, in addition to training, each facilitator-in-training had to apply lean to an open project, with a minimum return commitment.
- Learning cycles. The program was conceived in four training modules of one week each, interspersed with three on-site real-life projects with a duration of three months each. The projects were gradually more complex, from improvements in a specific service to more systemic interventions with an impact on the overall process.
- Gemba training. The training modules saw the practical application of lean tools in the field, to prepare the facilitators for the activities they’d be carrying out in their daily lives at work.
- Solid understanding of lean concepts and tools. The training was complete, including information on the origins of Lean Thinking, its purpose, basic manufacturing concepts and their application in construction. Among the topics discussed were: A3 thinking and problem solving, planning in flow and takt time, Last Planner System, visual management, value stream mapping, waste analysis, basic stability, standardized work, pull system, supply logistics, kaizen, lean engineering, leadership, and lean strategy.
- Applications beyond production. Implementation were not limited to operations. Lean office ideas applied to construction management processes were applied with great results in terms of indirect cost reduction. Support functions like engineering, procurement, logistics, and maintenance were also involved.
- Connection to business needs. The projects were selected together with the contract directors of each job, targeting specific objectives, needs and priorities to maximize the impact of the improvement work.
- Development of the facilitator role. In additional to technical skills, facilitators were taught behavioral skills that would help them influence and guide the teams more effectively.
- Support through coaching. Each facilitator-in-training received support from a LIB coach who guided them throughout the projects.
- Continuous assessment and feedback. An ongoing process of evaluation was established, with mentors regularly assessing the facilitators’ technical and behavioral skills and the results they attained, with feedback provided for each module.
The practical applications happened within important projects underway at the time, in six Brazilian states and across Latin America, covering different types of work – from mining to energy, stadiums to highways, subways to city streets.
The approach deployed led to great results, such as an increase in productivity of 30 to 50%, a reduction of months in the duration of projects, and financial gains totaling millions of reais. There were also organizational gains, like the implementation of management routines that led to the stability of the company’s processes and the sustainment of results. Eleven specialists were trained to become key players in the company who played a pivotal role in the spread of lean culture across Andrade Gutierrez.
SUSTAINING AND EXPANDING
A lot has happened since the first lean training AG people received. The continuous improvement department was established, and the trained facilitators took over internal dissemination. Using the LIB training program as a base, new modules for training corporate and construction facilitators were introduced – relying entirely on internal capabilities.
Over the years, and thanks to a recruitment process that follows clear selection criteria, four generations of coaches were developed – with the original group acting as mentors to the new ones and ensuring the practical application of lean concepts remains aligned with business needs. With the support of LIB, the training program was enriched with internal AG examples and a greater emphasis on soft skills and specific technical capabilities.
No matter the circumstances, Lean Thinking has remained a priority for the company. Today, no construction job starts without lean principles and techniques being applied from the planning phase. Additionally, lean has reached all business areas. The ensuing increases in productivity and lead-times have resulted in greater competitiveness and, subsequently, in the company winning more tenders in recent years.
Driven by leadership, Lean Thinking was formally incorporated into the company’s culture and strategy. Several other initiatives were also tied more closely to the lean transformation, creating great synergies (examples include the systematization of the SAGE-AG Excellence System, the Vector AG Open Innovation Program, and the implementation of BIM projects).
The deep understanding of Lean Thinking and the development of internal capabilities were important elements in the sustainment of the great results the company has achieved so far, starting from its increased competitiveness. They represent powerful drivers of stability and continuous evolution for the business.