What is Lean?
Lean management is an approach to running an organisation that supports the concept of continuous improvement. It is an ongoing effort to improve products, services, or processes, which require “incremental” improvement over time in order to increase efficiency and quality.
Lean management uses methods for eliminating factors that waste time, effort or money. This is accomplished by analysing a business process and then revising it or cutting out any steps that do not create value for customers.
Lean management principles are derived from the Japanese manufacturing industry and include:
- Defining value from the standpoint of the end customer.
- Identifying each step in a business process and eliminating those steps that do not create value.
- Making the value-creating steps occur in tight sequence.
- 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 from beginning to end.
Lean production or lean manufacturing is a systematic method for the elimination of wastes within a manufacturing process. This may include wastes created through unevenness in work loads, overburden and any work that does not add value. From the point of view of the customer who consumes a service or product, “value” is any process or action that a client would be willing to pay for. In essence, lean is focus on making obvious what appends value by decreasing everything else.
History of Lean Management
The avoidance of waste has a long history within the manufacturing industry. In fact, many of the concepts now seen as key to lean have been discovered and rediscovered over the years by others in their search to reduce waste. Lean manufacturing, as management philosophy, came mostly from the Toyota Production System (TPS). The term “lean” was first introduced in article “Triumph of the Lean Production System” written by John Krafcik in 1988. 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.
Kiichiro Toyoda, founder of Toyota Motor Corporation, directed the engine casting work and discovered many problems in their manufacturing process. In 1936 his processes hit new problems and he developed the “Kaizen” improvement teams. Toyota’s view is that the main method of lean is not the tools, but the reduction of three types of waste:
- muda (“non-value-adding work”)
- muri (“overburden”)
- 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 is the Japanese industrial engineer and businessman, considered to be the father of the Toyota Production System, who 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:
- Kanban (pull systems)
- Value Stream Mapping
- 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)
One way to cope with wastes and effectively increase profitability is a 5s. The name of this method uses a list of five words, which all start with the letter “S”: straighten, sort, standardize, shine, and sustain. It is translation from original Japanese words: seiton, seiri, seiketsu, seiso, and shitsuke. These words describe ways of workspace organisation for achieving the most effectiveness and efficiency. It include identifying and storing of the used items, maintaining the items and area, and sustaining the new order.
5S has become a fundamental business measure and 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.
The other way to waste reduction was a kanban. In 1952, Taiichi Ohno invented a kanban system at Toyota, as a system to improve and maintain a high level of production.
Kanban became an effective tool to support running a production system as a whole, and an excellent way to promote improvement. One of the main benefits of kanban system is to establish an upper limit to the work in progress inventory, avoiding overloading of the manufacturing system. The 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 supports kanban methodology, if you are interested, you can try to use it now.
Taiichi Ohno stated that, to be effective, kanban must follow strict rules of use. Toyota, for example, has six simple rules and 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 can be used also in:
- Supply Chain
- Service Related Industries
- Software Development
- Product Development
- Administrative or Office Processes
Value stream mapping usually employs standard symbols to represent items and processes. A VSM is best created by using a pencil and drawing by hand on a sheet of A3 paper, as 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.
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.
Sigma is a mathematical term that measures a process deviation from perfection. Like Kaizen, Six Sigma is a management philosophy focused on making continuous improvements and bringing improvements into various processes. It was first introduced in 1986 by Bill Smith at Motorola.
Unlike Kaizen, which has the primary goal of increasing efficiency of all aspects of processes, Six Sigma focuses on improving quality of the final product by finding and eliminating causes of defects. Six Sigma uses more statistical analyses than Kaizen and aims for as close to zero defects as possible. 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 be used as the framework for other improvement applications.
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. 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 there was created the methodology which combines Six Sigma ideas with lean manufacturing. 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.