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January 2010
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The secrets of Lean

‘Lean’ means fat-free or thin or containing little waste, doesn’t it? (Appropriate for just after Christmas…)

The answer is yes, and it’s one of the most recent trends in quality and management that started on the factory floor with Lean Manufacturing and has spread to other areas such as Lean Six Sigma and Lean Software Development. In fact, Lean can be applied to all business activities – the Lean Enterprise.

Companies that have successfully implemented Lean claim huge improvements in productivity and costs – often several tens of percent – so I thought it was worth talking a little about.

The Lean concept comes from the famous Toyota Production System (TPS) in the late 1980s. It works on the principle that any activity which does not add value to the product (or service) that goes to the end customer is wasteful and should be eliminated.

Lean takes the customer perspective. The objective is to create more customer value, i.e. things the customer is willing to pay for, using fewer resources. It aims to reduce waste throughout the entire ‘value stream’ (all the business processes and operations used to deliver value to the customer, including the supply chain from raw materials to finished goods) – whether this is waste in materials, energy, time or effort – so is a very ‘Green’ initiative.

To be successful, Lean needs a long-term change in the way a company operates – ‘Lean Transformation’ – and is a process of continuous improvement; Lean is a journey not a destination. It needs to involve everyone from top management to the factory (or office) floor, with a special emphasis on the latter as that’s where the responsibility and authority is delegated to and where the real benefits come from.

Within Lean Manufacturing, seven different types of waste have been defined:

  1. Over-production (production greater than demand)
  2. Over-processing (activities necessary only because of poor design or tooling)
  3. Transportation (moving products that are not actually required for the next process or production step)
  4. Motion (people or equipment moving more than the minimum required to perform the processes)
  5. Waiting (delay before the next process step)
  6. Inventory (components and Work In Progress)
  7. Defects (time, effort and material used in identifying and fixing faults).

The aim of Lean is to eliminate these wastes and, in fact, to eliminate all non-value-adding work by changing the company’s processes, procedures and systems.

Non-manufacturing processes have their own types of waste that are different to manufacturing but to which many of the same principles apply, which is why you now see Lean thinking applied to Six Sigma, Product Development, Logistics, Healthcare, the Enterprise, and so on.

For instance, take the office process of Customer Sales Order processing: Where do customer orders get delayed and how can these delays be eliminated? How much time is wasted correcting errors in the orders and how can errors be prevented? Is any paperwork (or e-forms or emails) unnecessary? Are there any unnecessary stages of approval to go through (but all the necessary ones)? Does information flow erratically (e.g. the same form is handled several times by the same person) and how can this be made smoother? …and so on.

Wasted time can be difficult to identify, so many companies specifically focus on reducing time as a key driver of Lean Implementation; agility and Lean go hand in hand. There is a also lot of work done on the planning of processes to avoid overloads or unreasonable demands, on eliminating work via improved design, and on improving the ‘smoothness’ of flow of information, processes and materials.

Being customer-focused, the emphasis is on agile ‘pull’ processes that provide goods and services only when the customer needs them, not when the supplier would like to provide them.

Lean isn’t a quick fix. I would love to be able to write a 500 word ‘just do this’ blog and see you turn your company into a Lean one overnight, but I can’t; it’s a big subject and there’s no simple workbook solution.

This is not to say that individual tools and techniques, including quick fix ones, can’t be used within Lean. There is a key role for many different tools and techniques such as Six Sigma, Kaizen, Kanban, 5S, 5 Whys, Poka-Yoke, Just-In-Time (JIT), Statistical Process Control (SPC), Zero Defects (Right First Time), and so on. However, their use does not automatically result in a Lean organisation, they are merely tools to be used where appropriate.

Lean is a way of thinking. It involves cultural change and that can be difficult and time-consuming. But Lean Transformation, with its emphasis on reducing waste and improving efficiency from the customer’s perspective, can bring huge commercial benefit to organisations that implement it well and, at the same time, offers Green credentials that benefit society as a whole.

That’s worthy of further investigation, don’t you think?

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5 comments to The secrets of Lean

  • Love the post (linked to it from our twitter page) – Lean is often linked to manufacturing – love to know your thoughts on how it could be applied to some diverse industries – we all know that Lean is taking off in healthcare but what about applying it to service industries, telecoms, financial institutions? Love to hear your thoughts.

  • Tom,

    Your final point is so true of Lean, but also true of Six Sigma or any other method chosen for continuous imorovement adoption. It is a culture change. Many attempt to gain from the tool level of implementation without really unlocking the real potential of the transformational mindset change that can occur with vigorous excited adoption by all levels. That’s how Toyota did it, and why others can’t.

    Valuestreamguru,

    Given your nomedeguerre, I wouldn’t expect that question from you. All work is a process, regardless of the “product” being produced. Every process has a customer and value is defined by the customer. So for a given transactional process, lets use training as a service process, The customer perspective of value is the right training, that imparts the right skills, at the right time. Lean wastes abound in the process of developing training content and all interfere with the just-in-time delivery of relevant training content.

  • Tom G

    Jim

    Agreed, arbitrary use of tools or techniques – especially the ‘big ones’ like Six Sigma or TQM or Lean – without the correct cultural context and a broad perspective of change management is likely to fail, or at least disappoint.

    That’s why it is impossible to write a 500 word article and make people know how to do Lean! I think we have all seen examples where big quality initiatives of all kinds have failed through too limited an application. There’s a huge amount to consider and this blog was just a tiny drop on the tip of the iceberg not a definitive ‘how to’ guide!

    That’s why I am so against ‘off the shelf’ ISO 9001 systems and approaches that promise business transformation of any sort in just a few days; to succeed the approaches needs tailoring to the specific organisation’s culture, business, values and unique situation, and then culture change takes time if it is to stick and succeed.

    Thanks for the comment.

    Tom
    ________________________________

    Valuestreamguru

    Thanks for the kind comment. As Jim points out, all business activities have a customer, even if these ‘customers’ are internal. Many (or all?) business processes have the potential to be made simpler, smoother, and more efficient.

    While some of the Lean Manufacturing definitions of waste (my points 1 to 7 above) don’t map easily onto, say, Lean Healthcare or Lean Banking, there is an analogy and I have seen a number of articles that DO describe such a mapping. In any case, it’s the same principles that are applied, i.e. customer driven, reduction of waste, time and effort (eliminate activities that don’t add value to the customer, i.e. eliminate things the customer wouldn’t be willing to expressly pay for), pull processes (just-in-time), etc; other industries can define their own types of waste.

    So Lean thinking really can benefit a very wide range of organisations IF DONE PROPERLY, but it is a big deal – it takes a lot of effort to do it well and the shake-up can be profound as it undoes many traditional and well-established practices so should not be undertaken lightly or flippantly.

    It becomes a matter of maturity of the organisation and its Lean advisors or experts. I know of many organisations, especially start-ups and young SMEs, that are not culturally ready for Lean and for whom it would fail; equally I know of others for whom it has the potential to bring great benefits. (See comments above regarding culture change).

    Many thanks for the comments.

    Tom

  • Tom – definitely agree with your comments – I’ve seen lots of “off the shelf” use of improvement techniques without any attempt to understand the business or its readiness to accept change. I guess my point was that while the concepts are in general universal – its’ how to ensure that the tools are applied appropriately given the context of the business AND most importantly the management of change – its so important to get off to the right start and i think at the heart of that is an understanding of the sort of business your in, its language, terminology etc and showing how lean applies/can apply to them in that context.

  • Tom G

    Valuestreamguru

    I understand your point. If improvement techniques are applied in too vague or generic a way, or with inexperience or insufficient attention to culture as Jim warns us about, there is a risk of the initiative being ineffective or even counter-productive.

    That DOESN’T mean that you can’t cross-pollinate with expertise and ideas from outside of any given industry to bring a fresh viewpoint and insight; indeed, an outside view can often bring benefit.

    But every company is unique unique and needs working practices that reflect its own business culture and market sector. I guess that’s why we see quite a lot of written material that maps Lean Manufacturing’s waste definitions onto different industry sectors in some detail, it’s trying to give the industry-specific context to Lean that you asked about.

    By showing what Lean really means for any specific business or industry, and by applying the approach rigorously and with experience of what works and what doesn’t work, and by taking careful account of the culture of the organisation (as it is now and as it has to become) it IS possible to make great improvements; that’s what Toyota did (as did many others, of course) and what the best Lean gurus get paid a lot to do well!

    Thanks for the thoughts; it’s always interesting to have a dialogue like this.

    Tom

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