The Benefits of Lean Methodology

“Know what your customer want most & what your company does best. Focus on where these two meet.”

-Kevin Stirtz

 

The objective of writing this post is to provide basic concepts of Lean Methodology and its benefits to the students of management, who can apply these concepts for the efficient and cost affective processes to contribute towards overall growth of the organization.

Lean Methodology

The key to Lean Methodology is the optimization of available resources to achieve well defined goals of the organization.

Lean Methodology is aimed at creating efficient workflow through elimination of process wastes and provides the basis for continuous process improvement and value addition to customers. It ensures: reduced cycle time, reduced cost of product or service, improved quality and on time delivery to customers.

Value Addition To Customers

Value addition to customers is accomplished through identifying and eliminating wasteful steps in the process (Non value added activities). Another form of non value added activity is _ enabling value added activity; though this type of activity do not add value to product or service, but it is essential for the completion of process tasks. For example, the inspection for the quality of product or service. In other words, only value added activities to product or service is acceptable to customer and he will willingly pay for such product or service.

Let’s look at the eight types of Lean waste, which are wasteful activities within a process.

 

 8 Types of Lean Waste

1.     Defects – When a product or service do not comply with the quality assurance standards; we term this product or service as defective, that needs rework to remove the defects. This rework activity is a waste in lean manufacturing.

2.     Overproduction – It’s excess quantity of product or service, which is not needed. This excess quantity is waste of productive resources; such as time, people, materials, tools, and equipment.

3.     Waiting – This type of waste occurs, when communication is weak and the required resources like: People, materials, tools, and equipment are not readily available for the completion of tasks in allocated time. Due to delayed activities, the efficient workflow in a process is affected.

4.     Non-utilization of Talent – When employees are not empowered and their creativity and skills are not properly utilized, their potential is not fully exposed. It may cause demotivation of employees. Resultantly, the desired level of organizational productivity is not achieved.

5.     Transportation – This type of waste occurs, when there’s unnecessary movement of information, people, materials, products, and equipment. These excessive activities involve extra time and efforts, and may damage products; and as a result, there’s no value addition to product or service.

6.     Inventory – Excess inventory ties up working capital. Additional resources: time, people, materials, and equipment are used. Storage problems arise due to unwanted build up of stocks. All such activities involve additional cost and are non value addition to customer.

7.     Motion – Unnecessary movement o information, people, material, products, and equipment involves extra time and energy. These excess activities may create fatigue and health issue of workers. Resultantly, absenteeism increases and efficient workflow is affected.

8.     Excess Processing – It’s a non value addition activity as the extra work on Product or Service is done which is beyond customer’s specifications. The excess use of productive resources not only incurs additional cost, but also affects smooth functioning of the process.

 Lean Principles

According to Womack and James, there’re five key principles: Value, value stream, flow, Pull, and perfection.

Let’s elaborate these principles:

1.     Identifying customer’s need and define value – First of all, we need to identify our customers and understand their expectations from our products or services. The customer’s perception of value is the value added product or service.

2.     Map and understand the value stream – The important feature of Value Stream Mapping (VSM) is visual diagram, which examines workflow process steps. It provides vital information of all eight types of waste and helps in eliminating these non value added activities.

Value Stream Mapping ensures reduced cycle time and improved quality of product or service. It also provides improvement opportunities in process bottlenecks.

3.     Create an improved flow to customers – After understanding the value from customer’s perception and value Stream; we create a flow to the customer. This task is accomplished through continually removing wasteful activities and ensuring a continuous workflow in the process. Resultantly, we attain competitive edge in the market for our products or services.

4.     Adopt Pull System – A Pull System is demand – driven, which is based on JIT (Just in Time) i.e; required quantity is made available on time, to meet customer’s demand. Pull system reduces unnecessary use of Productive resources and ensures improved workflow efficiency.

5.     Ensure Perfection on Continuous Basis – We can accomplish this task through seeking opportunities to improve the process; and incorporating changing needs of customers on continuous basis. Thus ensuring reduced cycle time, reduced wastes, cutting down cost of each step in the process, and sustained quality of product or service.

        Other Important Lean Tools – Lean tools are widely used in all industries and service sectors, depending upon their nature of business activities.

Now let’s describe some other important Lean tools:

1.     Kanban –Taiichi Ohno (1912-1990), a Japanese Industrial Engineer at Toyota, developed a system of cards to control the flow of production through a factory.

Kanban System is used in all the functional areas of service and industrial sector. A Kanban card is a visual card that records and shows all the information of work flow tasks. A Kanban card is displayed on Kanban board that manages and controls inventory levels. Kanban system is a reflection of Total quality management (TQM).

2.     Kaizan – It’s a Japanese Philosophy of continuous improvement. Kaizan involves employees at all levels, that help in eliminating wastes and improving processes for enhanced productivity and sustained quality of product or service. The ultimate accomplishment is customer’s satisfaction, and overall growth of the organization.

3.     5S – It’s a housekeeping practice, that keeps workplace: uncluttered, set in order, clean, standardized and disciplined. 5S is an acronym of Japanese words: Seiri (sort), Seiton (set in order), Seiro (shine), Seiketsu (standardize), and Shitsuke (sustain).

Now Let’s describe these 5S:

Step 1. Sort – It’s the first step of 5S. A workplace has many things such as materials, tools, equipment, and furniture. We have to determine which things are necessary and which things are not in use. In other words, we should remove unnecessary things or items from the workplace.

Step 2. Set in order – Once we have sorted things, we have to put them in order and on its place. This practice will lead to smooth workflow.

Step 3. Shine – This step requires keeping workplace clean. At the end of each process, the workplace and equipment should be kept clean and things must be returned to their proper place. This practice needs to be carried out daily.

Step 4. Standardize – In the presence of standard operating procedures and checklists, the maintenance of equipment is carried out on due dates by designated persons. The checklists provide detailed schedule about maintenance of equipment, its place, date and responsible persons.

Step 5. Sustain – This step requires involvement and commitment of employees at each level to ensure strict adherence to the practice exercised in first four steps.

4.     Gemba – It’s a Japanese term used for “go and see” in Toyota Production System (TPS) this tool is practiced in its true spirit. The TPS experts, instead of relying on reports or charts, go to the workplace floor and see process wastes and interruptions in the flow. They also observe, whether standard operating procedures are being followed. They also witness that the people on the floor are actively involved in daily problem solving and are doing value added tasks.

5.     Jidoka – It’s an automatically stopping system on production line, when defect occurs. Jidoka helps in process improvement and eliminating root causes of defects.

6.     Poke Yoka – It’s a mistake avoiding technique that draws attention to human errors as they occur.

7.     Heijunka – It’s a production line balancing of load, in terms of volume and product mix.

8.     SMED (Single Minute Exchange of Dies) – This technique reduces the equipment change over time, SMED not only improves process cycle time, but helps in reducing cost within a process.

 

Summary

Lean is about optimizing resources and maximizing productivity without compromising quality of product or service.

Main focus of Lean Methodology is on elimination of process wastes, continuous process improvement, and value addition to customer.

By applying Lean tools and principles, organizations attain competitive edge in the market and enhance their productivity and profitability.

Bibliography

Jeffery K. Liker, Michael Hoseus, The center for quality people and organizations.  “Toyota Culture: The heart and soul of the Toyota way,” 

New Delhi: Tata Mcgraw-Hill publishing company limited, Edition 2008.

William J. Stevenson: Rochester Institute of Technology, “Operations Management,” 10^th Edition (2008).

Lee J. Krajewski, Larry P. Ritzman, Manoj K. Malhotra, Samir K. Srivastava. “Operations Management: Processes and Supply chains”

New Delhi; 9^th Edition