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Going Lean

 

A Guide To Implementation

 

A number of searching questions about the application of Lean Thinking are often asked.  Among the most frequently asked are:

  • Where do I start?
  • Is there a road map that I can follow?
  • What does Lean Thinking involve?
  • Who will I have to involve?
  • Is it only applicable to the shop floor?
  • Is it only for manufacturing firms?

     

    To help answer these questions we have developed this simple step-by-step introductory guide to 'going lean'.  It is designed to give you and your colleagues enough information to:
  • see if going lean is for you
  • develop an outline plan and
  • point you in the direction of further sources of help.

The Five Lean Principles

 

  1. Specify what does and does not create value from the customer's perspective and not from the perspective of individual firms, functions and departments.

     
  2. Identify all the steps necessary to design, order and produce the product across the whole value stream to highlight non-value adding waste.

     
  3. Make those actions that create value flow without interruption, detours, backflows, waiting or scrap.

     
  4. Only make what is pulled by the customer.

     
  5. Strive for perfection by continually removing successive layers of waste, as they are uncovered.

     

    These principles are fundamental to the elimination of waste.  They are easy to remember (although not always easy to achieve!) and should be the guide for everyone in the organization who becomes involved in the lean transformation.

     

Lean Thinking

 

In order to go lean, you need to understand customers and what they value.  To get your company focused on these needs you must define the value stream inside your company (all the activities which are needed to provide a particular product or service) and, later, the value streams in your wider supply chain as well.  To satisfy customers you need to eliminate or at least reduce the wasteful activities in your value streams that your customers would not wish to pay for.

 

Next you have to find a way of setting the direction, fixing targets and seeing whether or not change is actually occurring.  You need an internal (and external) framework to deliver value for your customers as well as a toolkit to make the change.

 

If you can do this effectively you won't need to benchmark competitors to set some arbitrary and often incomparable target; perfection or the complete elimination of waste should be your goal.

 

How to go lean

 

 

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Objective

Understand customers and what they valueDefine the internal value stream

Eliminate waste, make information & products flow, pulled by customer needs

 

Extend the definition of value outside your own companyContinually aim for perfection
 

 

 

Method

Setting the direction, targets and checking resultsAn internal framework for delivering valueAppropriate methods to make necessary changeExternalize the value focus to whole value streamStrive for perfection in the product and in processes and systems
 

 

Lean thinking

 

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2

 

3

 

4

 

 5

 

 6

 

Understanding

waste

 

 

 

 

 

Setting the

direction

 

 

 

Understanding

the big picture

 

 

Detailed

mapping

 

 

Getting suppliers

& customers

involved

 

 

Checking the plan fits the direction & ensuring buy-in

 

Types of waste

 

 

 

 

 

 

 

The three types

of activity

 

 

 

 

 

 

 

 

Developing critical success factors

 

Reviewing or defining appropriate business measures

 

Targeting improvement for each business measure

 

Defining key business processes

 

Deciding which needs to deliver against each target area

 

Understanding which processes need detailed mapping

 

 

Customer requirements

 

Information flows

 

Physical flows

 

Linking physical and information flows

 

Complete map

 

 

 

The detailed value stream mapping toolkit

 

Process activity mapping

 

Supply chain response matrix

 

Production variety funnel

 

Quality filter mapping

 

Demand amplification mapping

 

Value adding time profile

 

 

Using the detailed mapping tools

 

 

Assessing the project

 

Catch-balling the change program

 


Understanding Waste

 

The rationale behind going lean centers on waste removal both inside and between companies.  This is fundamental to a lean value stream.  Improved productivity leads to learner operations, which in turn help to expose further waste and quality problems in the system.  The systematic attack on waste is also a systematic assault on the factors underlying poor quality and fundamental management problems.

 

The seven wastes

 

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Over-

production

DefectsUnnecessary inventoryInappropriate processing

Excessive

transportation

Waiting

Unnecessary

motion

 

 

Types of waste

 

Seven wastes were identified by Shigeo Shingo as part of the Toyota Production System.  You can use the following chart to make a note of many of these wastes that are present in your business.

 

WasteDescriptionExamples in your organization
1  OverproductionProducing too much or too soon, resulting in poor flow of information or goods and excess inventory.  
2  DefectsFrequent errors in paperwork, product quality problems, or poor delivery performance. 

3  Unnecessary

    inventory

Excessive storage and delay of information or products, resulting in excessive cost and poor customer service. 

4  Inappropriate

    processing

Going about work processes using the wrong set of tools, procedures or systems, often when a simpler approach may be more effective. 

5   Excessive

     transportation

Excessive movement of people, information or goods resulting in wasted time, effort and cost. 
6   WaitingLong periods of inactivity for people, information or goods, resulting in poor flow and long lead times. 

7   Unnecessary

     motion

Poor workplace organization, resulting in poor ergonomics, eg excessive bending or stretching and frequently lost time. 

 

The three types of activity

 

When thinking about waste, it is useful to define the three different types of activity within your organization:

 

  1. Value adding activity: those activities that, in the eyes of the final customer, make a product or service more valuable.  Examples would include converting iron ore (with other things) into cars, or mending a broken down car on a motorway.  A value adding activity is simple to define, just ask yourself if you as a customer would be happy to pay for it!

     
  2. Non value adding activity: those activities that, in the eyes of the final customer, do not make a product or service more valuable and are not necessary even under present circumstances.  These activities are clearly 'waste' and should therefore be the target of immediate or short term removal.  An example of non value adding activity would be transferring a product from one sized container to another so you can move it around your factory.

     
  3. Necessary non value adding activity: those activities that, in the eyes of the final customer, do not make a product or service more valuable but are necessary unless the existing supply process is radically changed.  Such waste is more difficult to remove in the short term and should be a target for longer term or radical change.  An example would be: inspecting every product at the end of a process because the process uses an old machine, which is known to be unreliable.

     

Here is a rough guide as to the proportions of these three types of activity that we might expect to find in a company before any lean improvements:

 

In a physical product environment (manufacturing or logistics flow), the ratio between the three for the total value stream time of a common (but not world class) company is around:

 

  • 5% value adding activity
  • 60% non value adding
  • 35% necessary but non value adding.

     

    This does not sound too good until the same figures are seen in an information environment (eg office, distribution or retail) where a common ratio of total value stream time is:

     
  • 1% value adding
  • 49% non value adding
  • 50% necessary but non value adding.

     

These figures suggest that in most companies there is considerable scope for reducing waste.

 

Waste removal tip

 

Alert staff to the Seven Wastes by running a short seminar to explain these wastes.  Choose groups of staff from the main areas of the business eg purchasing, production, and distribution.  Ask staff to note down their views of the specific wastes that occur in their section of the operation and to rank these wastes in terms of their relative importance.  Ask for simple suggestions as to what could be done to reduce waste.  Then task the staff, either individually or as a group, to change one thing each week that will reduce waste.

 

We talk about fitting people with 'muda glasses'-once they are aware of the waste they become increasingly able to see it.  The trick then is to create a culture that encourages them to eliminate waste once it has been identified.

 

Service sector tip

 

If we take the Toyota Production System's definition of waste, many activities carried out within a service provider such as a bank, insurance firm or retailer add no value.  However, as many of these activities are useful, they might be referred to as service value adding even if strictly speaking they are reducing the (potential) cost to the customer rather than adding value.  They could, therefore, be included within the necessary non value adding category.  The reason why they should not be including as value adding activity is that this will direct attention away from their long term improvement or development.