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Lean Management

What is Lean?

Lean management is as an approach to running an organisation that supports the concept of continuous improvement. In other words, it is an ongoing effort to improve products, services, or processes, which require “incremental” improvement over time in order to increase efficiency and quality.

The main purpose of lean management is to reduce factors that waste time, effort or money. This can be accomplished only by analysing a business process and then revising it or cutting out any steps that do not create value for customers.

Lean Principles

Lean management principles include:

  1. Defining value from the standpoint of the end customer.
  2. Identifying each step in a business process and eliminating those steps that do not create value.
  3. Making the value-creating steps occur in tight sequence.
  4. Repeating the first three steps on a continuous basis until all waste has been eliminated.

These lean principles ensure that the processes involved with bringing a product to market remain cost-effective.

Lean production or lean manufacturing is a systematic method for the elimination of wastes within a manufacturing process. For instance, wastes can be caused by unevenness in workloads, overburden and any work that does not add value. From the perspective of the customer, “value” is any process or action that a client would be willing to pay for. Basically, lean is focus on making obvious what brings value by decreasing everything else.

History of Lean Production

Obviously, the avoidance of waste has a long history within the manufacturing industry. In fact, lean key concepts have been discovered and rediscovered over the years by others in their search to reduce waste. Lean manufacturing, as a management philosophy, came mostly from the Toyota Production System (TPS). It was John Krafcik who introduced the term “lean” in the article “Triumph of the Lean Production System” in 1988.  The article was based on his master’s thesis at the MIT Sloan School of Management. Before his studies, Krafcik had worked as a quality engineer in the Toyota-GM NUMMI.

The other important figure was Kiichiro Toyoda. He was the founder of Toyota Motor Corporation who directed the engine casting work and discovered many problems in their manufacturing process. He developed the “Kaizen” improvement teams when his processes faced new problems in 1936. Toyota states that the main method of lean is not the tools, but the reduction of three types of waste:

  1. muda (“non-value-adding work”)
  2. muri (“overburden”)
  3. mura (“unevenness”)

This aids in exposing problems systematically and makes it easier to use the right tools where the ideal cannot be achieved. Taiichi Ohno (the Japanese industrial engineer and businessman, the father of the Toyota Production System) offered to focus on reduction of the original Toyota seven wastes to improve overall customer value.

The Lean Management Tools

Many elements within the concept of the lean manufacturing stand out and each of these presents a particular method:

  • 5S
  • Kanban (pull systems)
  • Value Stream Mapping
  • SMED
  • Poka-yoke (error-proofing)
  • Elimination of Time Batching
  • Total Productive Maintenance
  • Mixed Model Processing
  • Single Point Scheduling
  • Rank Order Clustering
  • Multi-process Handling
  • Redesigning Working Cells
  • Control Charts (for checking mura)

Some of these methods have grown into independent manufacturing concepts (such as kaizen and kanban).

Kaizen 5S

One way to cope with wastes and effectively increase profitability is 5s. The letter “S” stands for 5 words: straighten, sort, standardize, shine, and sustain. Actually, it is a translation from original Japanese words: seiton, seiri, seiketsu, seiso, and shitsuke. These words describe ways of workspace organisation for achieving the most efficiency. For instance, identifying and storing the used items, maintaining the items and area, and sustaining the new order.

5S has become a fundamental business measure and a key driver for Kaizen. The 5 Steps are as follows:

  • Sort: Sort out and separate what is needed and not needed within the area.
  • Straighten: Arrange items that are needed so that they are ready and easy to use. Clearly identify locations for all items so that anyone can find them and return them once the task is completed.
  • Shine: Clean the workplace and equipment on a regular basis in order to maintain standards and identify defects.
  • Standardise: Revisit the first three of the 5S on a frequent basis and confirm the condition of the Gemba using standard procedures.
  • Sustain: Keep to the rules in order to maintain the standard and continuously improve every day.

kaizen-5s-framework-for-standard-business-processes

Kanban

Needless to say, one of the best ways to waste reduction is kanban. In 1952, Taiichi Ohno invented a kanban system at Toyota, as a system to improve and maintain a high level of production.

Subsequently, Kanban became an effective tool to support running a production system as a whole. In addition, it is an excellent way to promote improvement. One of the main benefits of the kanban system is the opportunity to establish an upper limit to the work in progress inventory, avoiding overloading of the manufacturing system. Kanban concept of “to do” – “doing” – “done” became the cornerstone of many online tools used for managing projects and control workflows. Kanbanchi is one of such tools that support Kanban methodology, if you are interested, you may try it now.

kanbanchi-basic

Taiichi Ohno stated that kanban must follow strict rules of use in order to be effective. Toyota, for example, has six simple rules. Close monitoring of these rules is a never-ending task. This ensures that the kanban system does what is required:

  • A Later process picks up the number of items indicated by the kanban at the earlier process.
  • The Earlier process produces items in the quantity and sequence indicated by the kanban.
  • No items are made or transported without a kanban.
  • Always attach a kanban to the goods.
  • Defective products are not sent on to the subsequent process. The result is 100% defect-free goods.
  • Reducing the number of kanban increases the sensitivity.
Value Stream Mapping

Value stream mapping is a method of lean management which is applicable for almost any value chain. It is used for analysing the current stage and designing of its further stages for the series of events that take a service or product from the beginning through to the client. This method is also applicable to:

  • Logistics
  • Supply Chain
  • Service-Related Industries
  • Healthcare
  • Software Development
  • Product Development
  • Administrative or Office Processes

value-stream

Value stream mapping usually employs standard symbols to represent items and processes. The best way to create a VSM is by using a pencil and drawing by hand on a sheet of A3 paper. The reason is that you will need to make frequent corrections and changes. Even in the late 1990s, these techniques were largely unknown outside of Toyota.

Perhaps VSM is a relatively recent addition to the TPS toolbox. John Shook and Mike Rother co-authored the book “Learning to See”, published by the Lean Enterprise Institute. This is what made the material and information flow widely accessible for application outside of Toyota.

Certainly, value stream mapping is a flexible tool that lets us put all of the information into one place in a manner that is not possible with process mapping or other tools. Read this article to learn about creating a value stream map.

Six Sigma

Definitely, sigma is a mathematical term that measures a process deviation from perfection. Like Kaizen, Six Sigma is a management philosophy focused on making and bringing continuous improvements into various processes. Bill Smith first introduced the term in 1986 at Motorola.

Unlike Kaizen, which primary goal is increasing the efficiency of all aspects of processes, Six Sigma focuses on improving the quality of the final product by finding and eliminating causes of defects. Six Sigma uses statistical analyses and aims to reduce defects to zero. A sigma rating describes the maturity of a manufacturing process by indicating its percentage or yield of defect-free products it creates. Organizations need to determine an appropriate sigma level for each of their most important processes and strive to achieve these.

The core tool used to drive Six Sigma projects is the DMAIC improvement cycle. DMAIC is an abbreviation of the five improvement steps it comprises: Define, Measure, Analyze, Improve and Control. All of the DMAIC process steps are required and always proceed in the given order.

DMAIC refers to a data-driven improvement cycle used for improving, optimizing and stabilizing business processes and designs. DMAIC is not exclusive to Six Sigma and can serve as the framework for other improvement applications.

SixSigma

 

 

The Six Sigma concept asserts:
  • Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.
  • Manufacturing and business processes have characteristics that can be measured, analyzed, controlled and improved.
  • Continuous efforts to achieve stable and predictable process results (i.e., reduce process variation) are of vital importance to business success.

Apart from previous features, Six Sigma sets the following quality improvement initiatives:

  • A clear commitment to making decisions on the basis of verifiable data and statistical methods, rather than assumptions and guesswork.
  • An increased emphasis on strong and passionate management leadership and support.
  • A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project.

At the end of the 1990s over 60% of organisations with a Fortune 500 status started to apply Six Sigma. Therefore, Motorola has declared about $17 billion in savings since 2006 as a direct result of implementing Six Sigma.

In recent years by efforts of some practitioners, the methodology which combines Six Sigma ideas with lean manufacturing became popular. The Lean Six Sigma methodology includes Six Sigma, with its focus on variation and design, and lean manufacturing, which addresses process flow and waste issues as complementary disciplines aimed at promoting business and operational effectiveness.

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5 CommentsAdd new comment
Eric Raio
January 1, 2017 7:03 am

Great article on outlining the different terminology in lean manufacturing and six sigma. I enjoyed the read. 🙂

    Olga Bakulina
    January 9, 2017 7:17 am

    Thank you, Eric!
    Glad to hear this.

yuli riviyanti
January 20, 2017 4:47 am

good article. its make very simple to understand…. thanks for share

Jeremie
December 12, 2017 5:42 pm

Thank you very much, now I get the meaning!

Carmela A.
March 7, 2018 2:19 am

Good reference

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