Lean applies to any organizational type and can be applied to all areas within the business. Essentially, Lean is a three-pronged approach incorporating a Quality Belief, Waste Elimination and Employee Involvement supported by Structured Management. Basically, companies have taken simple processes and complicated them resulting in longer lead-times, reduced flexibility, increased inventories and the inability to meet customer demands.
The lean objective is a continuous rapid flow of "Value-Adding Activities." The first principle of Lean is to satisfy the needs of the customer by performing only those activities that add value as defined by the customer. Put yourself in your customer's shoes, peer into your organization and look around. You will find many activities occurring which add no value and often times prevent you from meeting customer demands. Identifying both value added and non-value added activities provides a visual map of your processes.
The second principle is to define the "Value Stream". The goal is to identify material and information flows currently required to deliver a product or service. As defined by John Krafcik, in his book, The "Machine that Changed the World" Lean production is "lean" because it uses less of everything compared with mass production:
Value Stream Mapping your processes will highlight bottlenecks, hand-offs, lead-time and where inventory is waiting in queue to be processed or waiting in stock with no immediate requirement.
The result is a pictorial of your current processes from start to finish and all areas in-between.
Some of the Pitfalls When Implementing Lean
Not involving the people whom will actually do the work
This activity will highlight bottlenecks, handoffs, lead-time and where inventory. The result is a pictorial of your current processes from start to finish and all parts in-between.
Typically, there is 65% -95% non-value added activities. The key is to focus on these and either eliminate or greatly reduce them from occurring. The third principle of lean is to eliminate waste. Waste in the value stream is any activity, which the customer is not willing to pay for since it adds no value to the product or service and often times, is consuming valuable resources and generating unnecessary costs. Waste exists in all parts of the business – from the front office to the factory floor.
This effort results in redefining the current value stream to one of value adding activities and what we call "Sustaining" (SNVA) activities. Sustaining steps are defined as, non value-added activities performed for one of two reasons, required to by law or regulation or because it contributes to business effectiveness. This provides an outward focus and responsiveness to ever-changing customer needs as opposed to traditional redesigns which are inward focused and not related to customer needs.
Lean transformation is directed by guiding tenets such as:
Positive Clear Communications
Typically, we see benefits to the business like space saving of 50-80%, inventory reductions of up to 90%, reduction of lead-time by 50-75% and quality improvements of up to 300%.
In order to be successful a rigid-disciplined process must be followed. Depending on "low-hanging fruit" opportunities, savings can be realized in several months and have an immediate impact to the bottom line. However, one must be committed for the long term as some change efforts can take as long as 2 years, especially those centered around changing corporate culture. Value Stream Mapping from the book “Learning to See”, by James Womak states that the transformation starts with:
While there is no fail-safe method for a successful transformation, following a regimented approach is the best advice. When programs do fail, many of the reasons can be traced to a few common themes.
Lean is intolerant of failure, failure of suppliers, processes, people to perform, machines to operate and most important, uninspired leadership. As you streamline the value chain, disruptions to your process may occur and halt your ability to meet customer demands. While this is not desirous, it does allow you to immediately focus in on the issues and solve them. The goal is to develop a sustained and uninterrupted flow of value to the customer by effectively converting raw materials or knowledge to finished goods or services across the entire value chain.
Remember, techniques get you there, principles keep you there.