Lean Working: The Aggressive Elimination of Waste
A Primer on How to Enhance Today’s Popular Business Improvement Methodologies
Muda. Andon lights. Kanban. Kaikaku. Terms such as these, part of the unique language of “Lean,” can be confusing and a bit intimidating to the uninitiated—especially those not fluent in Japanese. Deeply rooted in Japanese manufacturing practices, Lean systems focus on the elimination of waste by streamlining processes, deeply reducing inventories and other business disciplines. These principles have proven highly effective over a period of more than 50 years.
While the language may be oriented to assembly and fabrication processes, the concepts and methodology of Lean manufacturing are applicable in a wide variety of operations.
Defining “Lean” and What It Achieves
Designed originally for manufacturing, a lean system meets high service demands with little inventory. The concept was developed by Ohno Taiichi, a Toyota executive whose beliefs were shaped by his study of Ford's continuous-flow assembly process, as well as his fascination with American supermarkets.
After World War II, when the Japanese domestic market was small and investment capital was limited, Taiichi realized that traditional mass production approaches would not be suitable for Toyota. The time had come to develop the ideal system he had been visualizing over the years. As a result, he and his team developed the Toyota Production System, which is now universally known as “Lean manufacturing.”
A key element of lean manufacturing is the continuous and relentless effort to identify and eliminate waste—or “muda,” as it is known. This encompasses waste from all aspects of manufacturing, from the time a customer places an order to the time payment is received. Ohno identified seven main types of waste:
The process of identifying and rooting out this waste inevitably leads the organization to refine all of its existing processes and focus on several important issues. For example, a lean operation is one in which there is no re-doing or re-building. Rather, every component is built right the first time. This means eliminating all the tasks that are adding waste into the system, which inherently means higher quality, greater flexibility, a culture of continuous improvement and, ultimately, a lower operating cost.
Manufacturing and Beyond
Although rooted in the automotive industry, Lean methodology has now been successfully implemented in a wide variety of settings—from manufacturing to service organizations.
For example, one company faced the challenge of reducing the “quote to cash” or “time to money” interval—that is, the time between when a customer signs an order for a new product and when that customer is finally up and running and paying the invoice. The “quote to cash” interval was about 120 days, which contributed to cash flow and other issues. To reduce this, the client and its consulting partner examined the value stream—one item at a time—to define the time involved and identify the non-value added components. To help reduce the cycle time, all aspects of the process were examined: supplier lead time; receiving; fabrication; customer ordering; how long it took to develop a quote; and how long to process an order, engineer the system and install the hardware and software.
Lean principles can be applied beyond manufacturing operations to the supply chain, and even customer service and sales operations. Photo courtesy of Proudfoot Consulting.
Another example—from the healthcare industry—is of an organization that set itself apart competitively by reducing the time for appointments from weeks to a matter of days. By focusing on what was causing the long lead times and applying Lean principles such as value stream, work balancing, standard work, set-up reduction and production leveling and smoothing, executives were able to conduct root cause analysis and implement a plan that decreased their backlog of work and improved customer satisfaction.
Application of Lean
With 8 Concepts
To get started with Lean Thinking in your organization, adoption of eight simple concepts and an understanding of various methods and tools are required. Following is a “primer” on what they mean for an organization that desires a Lean culture:
1. Value. A product or service provided to a customer at the right time, at an appropriate price, as defined by the customer.
2. Value Stream. All activities, both value added and non-value added, required to bring a product group or service from order to the hands of the customer, and a design from concept to launch to production to delivery.
3. Waste (Muda). Anything that does not add value to the final product or service, in the eyes of the customer—an activity customers wouldn't want to pay for if they knew it was happening.
4. Equipment Reliability. Preven-ting downtime through equipment maintenance means reliable operation.
5. Continuous Flow. Each process makes only the one piece that the next process needs, and the batch size is one-single-piece flow or one-piece flow—opposite of batch-and-queue.
6. Pull Production. To produce or process an item only when needed and requested.
7. Continuous Improvement. A culture of ongoing, constant improvement to processes and work streams, with recognition that nothing is perfect and everything can always be improved.
8. People Involvement. Major im-provements require that everyone in the organization becomes aware of the need for change and then understands what role each will play in the realization of that change. The awareness of the change must come from the top and with a sense of urgency.
The methods and tools used in Lean should also be understood. For a sampling of them, read the sidebar, “Leanology: Tools and Methodology,” to the left.
Challenges for Reaching a Lean Organization
Although Lean is highly effective and applicable to a wide variety of businesses, it does pose some unique challenges when companies attempt to adopt its tenets.
For example, a company cannot become truly lean if the Lean process is treated like a special program. Lean requires a fundamental, philosophical and cultural change in how the organization does business. It requires senior management and front-line leaders to insist that Lean principles permeate every activity, every decision and every movement.
Another challenge is the difficulty of sustaining lean activities because of a lack of knowledge, experience or discipline. Implementation requires commitment and support by management, as well as participation from all the personnel within an organization, to be successful.
Because implementing corporate culture change is often a slow and difficult process, especially when initiated from within the organization, many companies find outside expertise and objectivity help guide such an undertaking because it can be difficult to see past the task at hand and focus on creative problem-solving.
Conceptually, Lean manufacturing entails eliminating steps that create no value but cause waste. The first step in implementing this process is to understand the current one in place. After that, Lean requires process re-engineering and, ultimately, stabilization of the new process. Finally, it addresses the issue of continuous improvement.
However, there are cautions regarding the use of Lean principles in their strictest sense. Pure Lean is very rigid in terms of the pieces it requires you to install. They’re good pieces, but flexibility increases the chances of success.
In addition, Lean is implemented through a six-phase approach, which focuses on removing waste and increasing efficiencies. A concerted effort to focus on organizational change and effective management and leadership behaviors must be done in parallel to promote an environment of continuous improvement.
Without organizational buy-in driven by solid top-down commitment, Lean will be viewed as just another buzzword instead of a true enhancement to productivity.
How to Succeed
While the implementation of Lean manufacturing isn’t an easy task, you can take some critical steps to help achieve the results you seek.
Communication. Customized communication programs take employees well beyond their day-to-day perspectives and move them to understand, own and commit to associated initiatives. An effective communication plan should be built to create and maintain involvement and buy-in from people at all levels.
Engagement and Alignment. Everyone in the organization needs to understand that, ultimately, he or she is there to deliver projects on time, correctly and within budget. The organization needs to be well aligned and focused to do that. A concurrent alignment program should be developed to demystify the overall objectives of the organization by helping people see the “big idea” behind the business. Ask them to ask themselves, “Why are we here and how do I contribute to overall success?” Alignment activities engage people and help them embrace the processes and improvements necessary to move into the future.
Education and Training. Mana-gement must work with and educate people to align their thinking and behaviors with the redesigned processes, systems and management approaches to achieve positive change. This includes a diagnosis of current thinking and behaviors, training and knowledge transfer to develop and enhance skills across all levels as well as effectively managing in a changing environment.
Coaching. The best systems and processes will not yield results unless the users understand and utilize them correctly. Education and training provides the foundation, and day-to-day coaching assists with real world application.
Sustainability. A continuous improvement program should be developed to help identify areas where slippage in behaviors may occur and determine what actions must occur to ensure lasting change. This may include further training and education, stronger communication through various media channels, “train the trainer” programs or development of materials and publications targeted for specific internal audiences.