Lean Overview

August 29, 2003
By David McBride

The definition of lean is multifaceted. It generally relates to those best processes and practices, which optimize resources and yield the best products in the fastest manner and at the lowest cost. It is an umbrella for total quality management, continuous improvement, zero defects, and all the other terms we’ve used and heard to describe doing things right the first time, and doing it right every time. It is not an instant transition nor is it an extension of traditional thinking or techniques. In fact, it is a revolutionary thought process that requires abandonment of some old paradigms. To think lean is to switch from internally focused thinking to externally focused thinking.

Lean Manufacturing, often called Just In Time (JIT) or Agile Manufacturing, is an operating strategy that seeks to maximize operational effectiveness by creating value in the eyes of the end customer. The focus is not on a department, area or process, but on the optimization of the entire value stream -- the series of processes between receipt of customer order and delivery of finished product.

Lean manufacturing improves operating performance by focusing on the quick and uninterrupted flow of products and materials through the value stream. To achieve this, the various forms of manufacturing waste must be identified and eliminated. Waste can include any activity, step or process that does not add value for the customer.

The 5 Principles of Lean

Under such a system, the plant is highly customer-focused, providing the highest quality, lowest cost products in the least amount of time. In the latest edition of their book Lean Thinking, authors James P. Womack and Daniel Jones state that lean thinking can be summarized in five principles:

1. Precisely specify value by specific product.

2. Identify the value stream for each product.

3. Make the value flow without interruptions.

4. Let the customer pull value from the producer.

5. Pursue perfection.

Womack and Jones suggest that, if managers apply these concepts collectively, they can reap full benefit of lean techniques and significantly improve their product’s competitive edge. Each principle is discussed below.

VALUE: Value is defined by the customer and is only meaningful when expressed in terms of a specific product, which meets the customers’ needs at a specific price and at a specific time. The error many producers have made is internally defining value: if customers don’t respond, they add more bells and whistles or adjust the price. Then, if that doesn’t work, they try a different marketing strategy to market a product that customers really don’t want. They are internally focused and value is lost! What they should be doing is rethinking value from the perspective of the customer. Lean thinking must ignore existing assets and technologies and rethink the business on a product-line basis with strong, dedicated product teams.

VALUE STREAM: The value stream is all the steps and processes required to bring a specific product from raw materials to finished product in the hands of the customer. Analyzing the entire flow of a product will almost always reveal enormous amounts of waste and non value-added sequences. This is frequently referred to as process reengineering. Value stream analysis will almost always show that three types of actions are occurring along the value stream: steps that create value; steps that create no value but are unavoidable due to current technologies or production methods or assets; and steps which create no value and are avoidable—the immediate target of opportunity, often referred to as low hanging fruit. To become truly lean, the entire enterprise must analyze and improve the value stream as a whole.

FLOW: Once value has been precisely specified, the value stream for a specific product fully mapped by the enterprise, and wasteful steps eliminated, it’s time to make the remaining steps flow. This entails probably the greatest departure from traditional thinking. We relate to a world of functions and departments, a conviction that activities ought to be grouped by type so they can be performed more efficiently and managed more easily. Also, it is common sense to perform like activities in batches where products flow through different sequences and operations in batches. This creates wait times (bottlenecks) while the product waits for the next operation or sequence, or departments change over to the type of activity the product needs next. Traditional firms believe that, since this keeps everyone busy, it’s efficient. Things work better when you focus on the product and its needs, rather than the organization or the equipment, so that all the activities needed to design, order, and produce a product occur in continuous flow.

Womack and Jones’ research shows that plants in North America and Europe where production activities were rearranged from departments and batches to continuous flow (process flow), productivity doubled and dramatic reductions were realized in errors and scrap. The reengineering movement in the United States has recognized that departmentalized thinking is not best and has tried to shift the focus from organizational categories (departments) to value-added processes. The problem is that the engineers haven’t gone far enough. Conceptually, they are still dealing with disconnected and collective processes rather than looking at the whole value stream for major breakthroughs and managing the entire flow of value-added activities for specific products. Also, the reengineering frequently results in a collapse of employee morale and a regression of the organization to the norm as soon as the “reengineers” are gone. The lean alternative is to redefine the work of functions, departments and firms so they can make a positive contribution to value creation; and address the real needs of employees at every point along the stream so it is actually in their interest to make value flow.

PULL: The results of converting from departments and batches to product teams and flow is that the times required to go from concept to launch, sale to delivery, and raw material to the customer fall dramatically. When flow is introduced, products requiring years to design are done in months; orders taking days to process are completed in hours; and the weeks or months of throughput time for conventional physical production are reduced to minutes or days. Truly lean systems can make any product currently in production in any combination such that shifting demand can be easily accommodated immediately. You can let the customer pull the product from you as needed rather than pushing them the product, often unwanted. Customer demand becomes much more stable when customers know they can get what they want when they need it and when producers stop periodic price discounting campaigns designed to sell goods already made that no one wants.

PERFECTION: As the organization begins to accurately specify value, identify the entire value stream, make the value-added steps for specific products to flow continuously, and let customers pull value from the enterprise, something remarkable surfaces. People begin to realize there is no end to the process of reducing effort, time, space, cost, and mistakes while offering a product. Perfection, the fifth and final principle of lean thinking, seems achievable. The other principles interact with each other; getting value to flow faster always exposes hidden waste in the value stream. The harder you pull, the more the obstacles to flow are revealed so they can be removed. Dedicated product teams in direct dialogue with customers always find ways to specify value more accurately and often learn of ways to enhance flow and pull as well. In a truly lean system, everyone—subcontractors, first-tier suppliers, systems integrators or assemblers, distributors, customers, employees can see everything so it’s easy to discover better ways to create value. Also, there is instant and positive feedback for employees making improvements, a key feature of lean work and a powerful element to continuous improvement.

Plant personnel are a vital element in successful implementation of Lean Manufacturing. Plant-wide participation in continuous improvement and kaizen events is a critical difference between high-performance plants and the rest. Employee involvement in and accountability process improvement helps improve both product reliability and employee morale.

Some organizations have begun the movement toward lean from the bottom: the lower level managers became lean thinkers and had to convince the executive level that it was the right thing for the organization. This is truly a challenge for these organizations, but when the business begins to show an increased customer satisfaction and greater profits, the executive managers realize that the message is true: lean thinking drives the competitive edge for any business.

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