lean intro

© Operational Excellence Consulting. All rights reserved.

Lean Thinking 101

Eliminate Waste, Create Value


Introduction to Lean Thinking

1

© Operational Excellence Consulting. All rights reserved. 3

What is Lean?

•  Value streams or processes •  Focused on improving process performance •  Clear view of end state

• Wide range of Lean techniques & tools are available

•  Learn-by-doing approach •  Culture of continuous improvement

•  Lean is a management philosophy based on the Toyota Production System (TPS)

•  Eliminate everything that does not add value (waste) in the customer’s eyes

Objective

Focus and scope

Approach and tools


What Lean IS NOT •  Laying off employees by the bus load

• Offshoring or outsourcing

• Delivering less or working harder

• Being mean to people

• Automation or implementing an IT system

• Narrow focus on unit cost management

• Another “extracurricular activities”


Lean vs. Traditional Thinking Traditional Thinking §  Large batches

§  Low unit costs

§ Work at full capacity

§  Tight schedules

§ High inventories

§  High level of specialization

§  Long cycle times

Lean Thinking §  Small batches

§  Total system cost

§ Work at necessary capacity

§  Flexible schedules

§  Low inventories

§ Cross-training

§  Short cycle times


Lean Enterprise Framework (a.k.a. Toyota Production System)

Stability

Standardization

Just-In-Time

Jidoka

Involvement

1

2

3

4

5

Stability

Heijunka Standardized Work Kaizen

Just-In-Time

•  Continuous flow

•  Takt time

•  Pull system

•  Flexible workforce

Jidoka

•  Separate man &

machine work

•  Abnormality Identification

•  Poka yoke

Goals: highest quality,

lowest cost, shortest lead times

Involvement

1

2

3 4

5


Lean Enterprise System •  Lean is built on two main pillars:

§  Just-In-Time (Pull System): Delivering only what is needed, when it is needed, and in the amount needed.

§  Jidoka (Quality): The ability to stop the process in the event of problems, e.g. missing information or quality issues. Jidoka helps prevent the passing of defects, helps identify and correct problem areas.


What does Lean in manufacturing and process industries look like?

Automotive • Production • Inventory

management

Aerospace • Engine overhaul • Spare parts

Application Common Issues Typical Solutions

• Throughput • Equipment downtime • Rework and re-

inspection • Inventory costs

• Turnaround time • Obsolescence costs

• One-piece Flow/Pull systems

• Equipment reliability • Elimination of defects • Inventory optimization

• Process streamlining • Standardized operating

procedures • Spare parts

management

Process •  Materials

management •  Asset management

• Material wastages • Equipment availability

• Elimination of defects • Reduction of unplanned

downtime

Source: Operational Excellence Consulting Research


What does Lean in a service environment look like?

Banks • Mergers and

acquisitions • Loans application

IT • Outsourced

managed services


• Differences in business practices

• Loans approval process

• Complicated tasks • Unbalanced capacity • Manpower utilization

• Process integration and streamlining

• Fast track processing for low-risk loans

• Segmenting complexity • Pooling resources for

economies of scale • Flexible manpower

systems

Telco •  Procurement •  Call centre

operations

• Cost-based and capex management

• Customer service

• Inventory management • Network sharing • Channels efficiency



What does Lean in a service environment look like?

Hospitals • Emergency,

operating room • Resource

management


• “Unpredictable” nature • On-demand service • Highly skilled

surgeons, varied backgrounds

• Historical pattern planning

• Visual management of resources

Airlines •  Airport operations •  Call centers for

priority travellers

• Unpredictable weather • Network effect • Unique customer

segments

• Weather response SOPs • Customer resolution

based on severity and frequency

Public Services •  Social services •  Legal services •  Funds administration

• Variability in demand by volume and types of services

• Capability building to provide consistent services

• Resource management



Benefits of Lean Thinking •  Improved customer satisfaction (internal and

external) •  Improved quality of products/services •  Improved productivity • Reduced paperwork • Reduced staff stress (e.g. searching for

information) • Engaged employees


Key Concepts of Lean Thinking

2


Methods to Increase Productivity

How to Increase Productivity?

Quantitative Approach

More Staff

More Machines

Work Longer

Qualitative Approach

Work Harder

Eliminate Waste & Simplify

Focus of Lean

Let’s work smarter!


What is Value? • Value Added §  Any activity that increases the form or function of the

product or service

§  Something the client or customer is willing to pay for

• Non-Value Added (Waste) §  Any activity that does not add form or function or is not

necessary

§ No benefit to the client or customer

§  Things not necessary to run the department


“There is nothing so useless as

doing efAiciently that which should not be done at

all.” -‐ Peter Drucker


Eight Types of Waste Over-production

Producing more than what the customer needs

Inventory Building and storing extra

services/products the customer has not ordered

Transportation Moving product

from one place to another

Rework Reprocessing, or correcting work

Over-processing Adding excess value when the customer does not require it

Motion Extra physical/mental

motion that doesn’t add value

Intellect Not using employees full intellectual contribution

Waiting Employees waiting for another process or a

machine/tool

Waste


Types of Waste

•  Creating reports that no one needs or making extra copies

•  Exceeding customer needs or requirements (“gold-plating”)

•  Exceeding scope of agreement

•  Purchasing items before they are needed (e.g. items on sale)

•  Providing more information than the customer needs

Over-Production


Types of Waste

•  E-mails waiting to be read

•  Files waiting to be worked on

•  Too many office supplies

•  Unused records in the database

•  Low use to equipment ratios (e.g. photocopiers, printers, etc.)

•  Building/storing extra products/ services the customer has not asked for

Excess Inventory


Types of Waste

•  Waiting to be served

•  Waiting for instructions, approvals, information or decisions

•  Seeking clarifications (due to unclear communications)

•  Equipment/System downtime

•  Waiting between assignments or projects

•  Out-of-stock

Waiting


Types of Waste

•  Poor plant/office layouts and workplace organization (5S)

•  Insufficient use of tele-/video-conferencing

•  Double or triple handling

•  Sub-optimal dispatch and routing

•  Retrieving or storing files/materials

•  Taking files to another person, or going to get signatures

Transportation


Types of Waste •  Reaching, bending or unnecessary

motion due to poor ergonomics and office layout

•  Unnecessary walking to utility room

•  Searching for information in internet, intranet or shared folders

•  Searching for tools, files and supplies

•  Lack of or sub-optimal SOP

•  Handling paperwork

Unnecessary Motion


Types of Waste •  Repeated manual entry of data

•  Multiple formats for the same information

•  Excessive documentation

•  Redundant approvals (checkers checking on other checkers)

•  Excessive reporting

•  Providing higher quality than is necessary (e.g. color printing)

•  Unnecessary part/system replacement

Over-Processing


Types of Waste Defects •  Data entry errors, mistakes or rework

•  Missing information, missed specifications, or lost records

•  Poor process controls •  Managing subcontractors to correct

mistakes •  Incorrect schedules and information •  Inadequate trials before full

implementation •  Lost or damaged goods


Types of Waste Intellect

•  Not engaging or listening to employees in finding solutions

•  Lack of information or best practice sharing across the organization

•  Mismatched work functions with skill sets


“We must always keep in mind that the greatest waste is the waste we don’t see.”

-‐ Shigeo Shingo, a Japanese industrial engineer and expert on the Toyota Production

System


Lean Thinking Philosophy

Identify and eliminate all activities that are waste. Focus on optimal flow throughout the process.

Focus on creating value for customers.

Current State

Future State

Identify Waste “True North”

Value Added Time = Lead Time

Full of Waste, Variation, and

Rigidity Eliminate

Waste


Lean Principles

1.  Specify value from the customer’s perspective

2.  Identify the value stream for each service family

3.  Make the product/service flow

4.  Deliver when the customer pulls from your operations (just in time delivery)

5.  Manage towards perfection

Source: Lean Thinking by James P. Womack and Daniel T. Jones


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