Managing Outcomes in a Lean Enterprise
October 23, 2008
Competitive pressures compounded by increased customer expectations with respect to quality, service and price, has prompted many businesses to seek creative solutions. These manufacturers are experiencing pressure to provide the lowest total cost product with rapid order fulfillment in a highly competitive market. Many companies are launching Lean Value Stream Management (LVSM) initiatives to drive operational excellence and improve profitability. LVSM is based on the concepts of the Toyota Production System (TPS). So, what are these initiatives exactly?
LVSM and lean enterprise encompass the delivery of goods and services using less of everything compared to traditional methods, including less waste, less human effort, less manufacturing space, less investment in tools, less inventory, less motion and less engineering time to develop a new product.
Lean manufacturing is a generic, process management philosophy derived from several sources, including the War Manpower Commission, which led to the TPS. It is widely known for its focus on reduction of the original Toyota seven deadly wastes, and sometimes eight deadly wastes, in order to improve overall customer value. Lean is often linked with Six Sigma because of that methodology’s emphasis on reduction of process variation-or its converse smoothness-and Toyota’s combined usage with the TPS.
For many, lean is the set of TPS tools that assist in the identification and steady elimination of waste, or muda, improvement of quality, improvement in production time and cost reduction. The Japanese terms from Toyota are quite strongly represented in lean.
To solve the problem of waste, lean has several techniques at its disposal. These include continuous process improvement, or kaizen, “6S” and mistake-proofing, or poka-yoke. In this way it can be seen as taking a similar approach to other improvement methodologies.
The second, and complementary, approach to lean, which also is promoted by the TPS, is the focus on improving the flow or smoothness of work through the system and not on waste reduction per se-thereby steadily eliminating mura or unevenness. Techniques to improve flow include production leveling, pull production by means of kanban and the Heijunka box.
Lean implementation and the TPS are focused on getting the right things, to the right place, at the right time, in the right quantity to achieve perfect workflow while minimizing waste and being flexible and able to change. More importantly, all of these concepts have to be understood, appreciated and embraced by the actual employees who build the products and, therefore, own the processes that deliver the value. The cultural and managerial aspects of a lean enterprise are just as, and possibly more, important than the actual tools or methodologies of production itself.
Eliminating WasteIt is not enough to believe, “if I eliminate the non-valued waste, we will be lean.” This is only one aspect of a lean enterprise and only one aspect of the TPS. While the elimination of waste may seem like a simple and clear subject, it is noticeable that waste often is identified very conservatively. Elimination of waste is the goal of LVSM, and TPS defines three types of waste: muda or non-value added work; muri or overburden; and mura or unevenness.
More often than not, most organizations incorrectly only focus on muda, or the non-value added waste, and fail to understand this is a reactive approach and will only partially position the enterprise for success-if at all. Manufacturers must address all three waste types.
Muri, the overburden, can be avoided through standard work disciplines. To achieve this, a standard condition or output must be defined. Then every process and function must be reduced to its simplest elements for examination and later recombination. This is done by taking simple work elements and combining them, one-by-one, into standard work sequences.
Unevenness, or mura, is avoided through just-in-time systems, which are based on little or no inventory by supplying the production process with the right part, at the right time, in the right amount, and first-in, first-out component flow. Such systems create a pull system in which each subprocess withdraws its needs from the preceding subprocesses, and ultimately from an outside supplier. When a preceding process does not receive a request or withdrawal, it does not make more parts.
To properly manage outcomes in a lean enterprise, all three types of waste must be managed and controlled. Demand, and capacity of that demand, must be fully understood. The current state must be understood in order to move to future state pull production and non-value added waste elimination. Standard work must be institutionalized, which alleviates over-burdening associates as they perform activities. These activities will create the model for cultural transformation from a batch and queue operation to an operation with synchronous flow, team-based activities and a true focus on the customer mindset. Q