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LeanManagementCertification- Introductionto Lean Page 1 of 2 A. What is Lean Enterprise or Lean Manufacturing?

Introduction The word Lean was coined in the early 1990s by Massachusetts Institute of Technology (MIT) researchers. According to them, Lean production is aimed at the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible. Henry Ford introduced the concept of mass production. Lean Manufacturing dates back to the post-World War II era. Its concepts were developed by Taiichi Ohno, a production executive with Toyota. The Japanese market was facing a lot of problems as far as fulfilling their demands was concerned. The mass production methods developed by Henry Ford were not very efficient to economically produce long runs of identical products. Fords mass production system did not incorporate the notion of pull (The concept of pull has been described in the later chapters of this course.) and this led to

over-production. The limitations in Fords mass production system as well as the casual attitude towards the mass production system are the reasons that Taiichi Ohno and not Henry Ford is credited with introducing the concepts of Lean in their industries. Lean manufacturing, in the modern times, implies a business system which arranges and administers product development, processes, suppliers and customer relations by applying lean principles, practices and tools to minimize waste and create value for the customers. The Lean Manufacturing takes less space, less investment, and lesser time than the traditional system of mass production. Definitions 1. A business performance improvement tool that focuses on enhancing quality, cost, delivery and people. Exposes waste and makes continuous improvement possible. 2. A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating nonvalue-adding activities in design, production, supply chain management, and dealing with the customers. The basic idea contained in the definitions is the

elimination of waste. Waste is generally referred to as muda, muri or friction in Lean Manufacturing. (The concepts have been discussed in detail in the later chapters). According to the advocates of Lean, a perfect lean enterprise is one from which friction or waste is absent. However, we cannot ignore the fact that friction is never completely absent, so there are only degrees of leanness. Lean Manufacturing and Lean enterprise are two different concepts. Scientific Management or Lean Manufacturing is an arrangement of synergistic and mutually sustaining methods that help in running a business or a manufacturing unit and Lean Enterprise constitutes the entire supply chain or value stream. The main purpose, however, of both Lean Manufacturing and Lean Enterprise is the elimination of waste and nonvalue added activities. If an organization strives to become a Lean Enterprise it needs equal participation from all the departments and from all the levels including the upper management, accounts department and the like. Lean needs to be incorporated as a way of life, as a routine in the organization to make it successful. Everyone in the value chain, including the suppliers and vendors, need to understand Lean in order to rename an organization as a Lean enterprise. Features of a Lean Enterprise 1. No waiting time

2. No stocks 3. Reduction in the processing time 4. Line balancing 5. Use of pull system instead of the usual push Since the past many years, organizations have been manufacturing products much in advance, thinking that there would be a market for them. The production was earlier based on sales forecasts and therefore the goods were stocked in case they were needed in the future. A major difference between mass production and Lean Manufacturing is that the former is based on sales forecasts and the latter on real customer demand. The production is based on customer demand in shorter time leads and not merely on anticipation. The differences between Lean Manufacturing and the traditional system of manufacturing or mass production are highlighted in the table given below. AREAS AFFECTED Business strategy MASS LEAN PRODUCTION ENTERPRISE Product-out Customer focused strategy focused on strategy focused exploiting on identifying and economies of scale exploiting shifting of stable product competitive designs and nonadvantage unique

technologies. Hierarchical Flat structures structures that that encourage encourage initiative and following orders encourage the and discourage the flow of vital flow of vital information that Organizational information that highlights defects, structure highlights defects, operator errors, operator errors, equipment equipment abnormalities, and abnormalities, and organizational organizational deficiencies. deficiencies. Smart tools that Dumb tools that assume assume an extreme standardized division of labor, work, strength in Operational the following of problem capability orders, and no identification, problem solving hypothesis skills. generation, and experimentation. Source: Dr. Thomas Jackson, Beyond the Pilot Project: an essay on becoming Lean. Presented at the 4th Annual Best of North America conference, in St. Louis, Missouri, October 1999. The principles of Lean are now being applied to various sectors including nonprofit organizations, healthcare and government departments besides the manufacturing sector. The goods and

services produced with the help of Lean make optimum use of resources and are of very good quality. Lean Applications in Product Development There is stiff competition in the market these days and, therefore, it is very important for organizations to manufacture their products quickly and cheaply. The product development of an organization is its greatest support because it helps to develop products which are better, cheaper and reach the customers when they want it. The entire focus of Lean applications has been on the manufacturing domain and not on product development. The companies who have applied the concepts of Lean (like cycle time reduction) in the arena of product development have achieved significant results. Paul Adlers research on the product development process in 1998 proves that conventional product improvement goals such as reduction in the variation, decreasing process bottlenecks and reducing rework, can reduce the development time by 30% to 50%. If Lean principles are applied to the process, the development time can be reduced more significantly. The University of Michigan acknowledged seven basic principles which account for Toyotas optimized product development process. 1. A holistic, systems approach

The fundamentals of the product development system like people and processes should be coordinated and allied to each other. The personnel working on a product should be highly skilled, astute and controlled for them to utilize the resources optimally. Their skill should be matched with the process complexity. The equipment must be right and everybody must be clear about the solution to augment the performance of the personnel and the process. The right blend of all the elements leads to a synergistic system. 2. Customer first approach The first step in a product development process is the understanding of the definition of the term value from the customers perspective. An organization should cater to both customer needs as well as the long term objectives of the organization. The product should be developed in a way that the customers are always satisfied and the resources are also used optimally. The principles of Lean help in achieving these objectives. 3. A front-loaded process The engineering process that is applied should be firm and the problem solving techniques along with cross-departmental

participation maximize the effectiveness of the product development process. The processes should be coordinated in order to achieve both speed and quality. 4. A continuous improvement process Learning and consistent measures for improvement should be a part of all the processes in any organization if it intends to grow. The performance goals that need to be set for an organization should be precise and should be accomplished in real-time. Moreover, lessons should be learnt from the goals accomplished and the employees should always upgrade their knowledge base. In fact, the errors should be chronicled so that they are not repeated in the future. A problem solving session can also be held to extract multiple solutions and focus should be on root cause countermeasures which will prevent recurrence. 5. A synchronized process For concurrent engineering to be effective, it is important that each ensuing function should maximize the utility of the established information from the preceding function as and when it becomes available. The development teams should, therefore, work with the part of the design data that is unlikely to change and try to check wastage and save time. Each functions processes

should be designed in a manner which move forward and simultaneously build established data around as and when it becomes available. This practice is referred to as simultaneous execution. 6. Standardization for flexibility Although the two terms are contradictory, yet they are true as far as tools like renew ability, common structure and standard processes is concerned. Standardization is important as it helps to eliminate waste out of the product development process. If the expertise, processes and the design standards are standardized, there is scope for fixing individual responsibility and flexible product development capacities. The standards created are also important as far as downstream lean manufacturing capabilities are concerned. 7. Going back to the source engineering In todays time of high tech engineering, the engineers spend their time in their cubicles and the board rooms. However, the set-up should be such that the engineer remains close to the physical product. Kelly Johnson, the famous head of Lockheed's legendary Skunk Works once quoted, An engineer should never be more than a stones throw away from the physical product. The engineers should spend time at

manufacturing plants and dealerships and sometimes, by personally fitting parts on prototypes. These principles form the core of a product development process and can be easily applied in a Lean set-up to minimize wastage and to improve customer satisfaction.

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LeanManagementCertification- Introductionto Lean


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A. What is Lean Enterprise or Lean Manufacturing? Introduction


The word Lean was coined in the early 1990s by Massachusetts Institute of Technology (MIT) researchers. According to them, Lean production is aimed at the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible. Henry Ford introduced the concept of mass production. Lean Manufacturing dates back to the post-World War II era. Its concepts were developed by Taiichi Ohno, a production executive with Toyota. The Japanese market was facing a lot of problems as far as fulfilling their demands was concerned. The mass production methods developed by Henry Ford were not very efficient to economically produce long runs of identical products. Fords mass production system did not incorporate the notion of pull (The concept of p ull has been described in the later chapters of this course.) and this led to over-production. The limitations in Fords mass production system as well as the casual attitude towards the mass production system are the reasons that Taiichi Ohno and not Henry Ford is credited with introducing the concepts of Lean in their industries. Lean manufacturing, in the modern times, implies a business system which arranges and administers product development, processes, suppliers and customer relations by applying lean principles, practices and tools to minimize waste and create value for the customers. The Lean Manufacturing takes less space, less investment, and lesser time than the traditional system of mass production.

Definitions
1. A business performance improvement tool that focuses on enhancing quality, cost,

2.

delivery and people. Exposes waste and makes continuous improvement possible . A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with the customers.

The basic idea contained in the definitions is the elimination of waste. Waste is generally referred to as muda, muri or friction in Lean Manufacturing. (The concepts have been discussed in detail in the later chapters). According to the advocates of Lean, a perfect lean enterprise is one from which friction or waste is absent. However, we cannot ignore the fact that friction is never completely absent, so there are only degrees of leanness. Lean Manufacturing and Lean enterprise are two different concepts. Scientific Management or Lean Manufacturing is an arrangement of synergistic and mutually sustaining methods that help in running a business or a manufacturing unit and Lean Enterprise constitutes the entire supply chain or value stream. The main purpose, however, of both Lean Manufacturing and Lean Enterprise is the elimination of waste and non-value added activities. If an organization strives to become a Lean Enterprise it needs equal participation from all the departments and from all the levels including the upper management, accounts department and the like. Lean needs to be incorporated as a way of life, as a routine in the organization to make it successful. Everyone in the value chain, including the suppliers and vendors, need to understand Lean in order to rename an organization as a Lean enterprise.

Features of a Lean Enterprise


1. 2. 3. 4. 5. No waiting time No stocks Reduction in the processing time Line balancing Use of pull system instead of the usual push

Since the past many years, organizations have been manufacturing products much in advance, thinking that there would be a market for them. The production was earlier based on sales forecasts and therefore the goods were stocked in case they were needed in the future. A major difference between mass production and Lean Manufacturing is that the former is based on sales forecasts and the latter on real customer demand. The production is based on customer demand in shorter time leads and not merely on anticipation. The differences between Lean Manufacturing and the traditional system of manufacturing or mass production are highlighted in the table given below.

AREAS AFFECTED

MASS PRODUCTION

LEAN ENTERPRISE

Business strategy

Product-out strategy focused Customer focused strategy on exploiting economies of focused on identifying and scale of stable product designs exploiting shifting competitive and non-unique technologies. advantage Hierarchical structures that encourage following orders and discourage the flow of vital information that Flat structures that encourage initiative and encourage the flow of vital information that highlights defects, operator

Organizational structure

highlights defects, operator errors, equipment abnormalities, and organizational deficiencies.


Operational capability

errors, equipment abnormalities, and organizational deficiencies.

Smart tools that assume Dumb tools that assume an standardized work, strength in extreme division of labor, the problem identification, following of orders, and no hypothesis generation, and problem solving skills. experimentation.

Source: Dr. Thomas Jackson, Beyond the Pilot Project: an essay on becoming Lean. Presented at the 4th Annual Best of North America conference, in St. Louis, Missouri, October 1999. The principles of Lean are now being applied to various sectors including nonprofit organizations, healthcare and government departments besides the manufacturing sector. The goods and services produced with the help of Lean make optimum use of resources and are of very good quality.

Lean Applications in Product Development


There is stiff competition in the market these days and, therefore, it is very important for organizations to manufacture their products quickly and cheaply. The product development of an organization is its greatest support because it helps to develop products which are better, cheaper and reach the customers when they want it. The entire focus of Lean applications has been on the manufacturing domain and not on product development. The companies who have applied the concepts of Lean (like cycle time reduction) in the arena of product development have achieved significant results. Paul Adlers research on the product development process in 1998 proves that conventional product improvement goals such as reduction in the variation, decreasing process bottlenecks and reducing rework, can reduce the development time by 30% to 50%. If Lean principles are applied to the process, the development time can be reduced more significantly. The University of Michigan acknowledged seven basic principles which account for Toyotas optimized product development process.

1. A holistic, systems approach


The fundamentals of the product development system like people and processes should be coordinated and allied to each other. The personnel working on a product should be highly skilled, astute and controlled for them to utilize the resources optimally. Their skill should be matched with the process complexity. The equipment must be right and everybody must be clear about the solution to augment the performance of the personnel and the process. The right blend of all the elements leads to a synergistic system.

2. Customer first approach

The first step in a product development process is the understanding of the definition of the term value from the customers perspective. An organization should cater to both customer needs as well as the long term objectives of the organization. The product should be developed in a way that the customers are always satisfied and the resources are also used optimally. The principles of Lean help in achieving these objectives.

3. A front-loaded process

The engineering process that is applied should be firm and the problem solving techniques along with cross-departmental participation maximize the effectiveness of the product development process. The processes should be coordinated in order to achieve both speed and quality.

4. A continuous improvement process


Learning and consistent measures for improvement should be a part of all the processes in any organization if it intends to grow. The performance goals that need to be set for an organization should be precise and should be accomplished in realtime. Moreover, lessons should be learnt from the goals accomplished and the employees should always upgrade their knowledge base. In fact, the errors should be chronicled so that they are not repeated in the future. A problem solving session can also be held to extract multiple solutions and focus should be on root cause countermeasures which will prevent recurrence.

5. A synchronized process
For concurrent engineering to be effective, it is important that each ensuing function should maximize the utility of the established information from the preceding function as and when it becomes available. The development teams should, therefore, work with the part of the design data that is unlikely to change and try to check wastage and save time. Each functions processes should be designed in a manner which move forward and simultaneously build established data around as and when it becomes available. This practice is referred to as simultaneous execution.

6. Standardization for flexibility


Although the two terms are contradictory, yet they are true as far as tools like renew ability, common structure and standard processes is concerned. Standardization is important as it helps to eliminate waste out of the product development process. If the expertise, processes and the design standards are standardized, there is scope for fixing individual responsibility and flexible product development capacities. The standards created are also important as far as downstream lean manufacturing capabilities are concerned.

7. Going back to the source engineering


In todays time of high tech engineering, the engineers spend their time in their cubicles and the board rooms. However, the set-up should be such that the engineer remains close to the physical product. Kelly Johnson, the famous head of Lockheed's legendary Skunk Works once quoted, An engineer should never be more than a stones throw away from the physical product. The engineers should spend time at manufacturing plants and dealerships and sometimes, by personally fitting parts on prototypes. These principles form the core of a product development process and can be easily applied in a Lean set-up to minimize wastage and to improve customer satisfaction.

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Member Home>Lean Management Certification >Lean Concepts

LeanManagementCertification- LeanConcepts
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Definition
The basic idea of Lean manufacturing and Lean enterprise or simply Lean are basically the same, (See Chapter1 Introduction to Lean Enterprise) that is, to identify and eliminate nonvalue adding activities from the business enterprise. In todays competitive global business scenario, Lean enterprise has helped companies to stay competitive and profitable. Implementation of Lean techniques helps in minimizing all forms of waste; like reducing scrap costs, reducing cycle time, and reduction of costs associated with removing errors in products. It results in improved cash flow, and a greater return on business assets through shorter production lead times and improved product delivery, and improved customer satisfaction. The business enterprise needs to go through a complete organizational and cultural transformation to embrace the Lean method. A truly Lean manufacturing plant focuses on two organizational features: it transfers the maximum number of tasks and responsibilities to those workers who actually add value to the product, and it incorporates a system for quickly detecting defects. In the same manner, in a Lean enterprise, the focus is on people who add value to the organization. The traditional organization moves away from its mass production and traditional hierarchy mindset to new team and goal oriented setups which focus on flow of value. The basic goals of a Lean initiative can be summed up in three points: 1. 2. 3. To improve quality of products and services, in other words, to make products or service attributes conform to expectations and requirements. To eliminate waste, that is any activity that does not add value in the production process. To reduce lead time , which is the total time taken to complete an array of tasks in a process.

What are Muda or Non-Value Added Activities?


Lean is about making products or services more efficient. Therefore, Lean methods have become a common industry practice to enhance the efficiency and improve customer satisfaction. The process starts with identifying waste, which is called muda, and identifying strain, called muri in Japanese. The Lean method helps to reduce waste and strain, in an orderly manner in the value stream. The objective of Lean is that every step must add value in any business. Henry Ford conceptualized the idea that nothing should be wasted and a use must be found for everything. Physical waste like idle raw material, defects, or inventory, and intangible waste that includes waste of time is totally unacceptable in any production process or service. Identification of muda is a challenging task. Lean focuses on value adding, which is the opposite of muda. Muda includes all kinds of defective work, and not just defective products. a. To understand waste, take an example of a screwdriver. The screwdriver must take a number of turns to fit the screw into place. This requires a lot of time, even with a power tool. This is waste because in a manual assembly process, the cost of driving

b.

a screw can be 6 to 10 times the cost of the screw. In certain analysis like cost of quality, it would be categorized as a value adding step. But actually it is a waste. Another example of waste is a left-handed operator having to use a machine that was meant to be operated by right-handed men.

A non-value added activity is one which neither adds value to the external customer nor provides any competitive advantage to the organization. Non-value added activities, like rework and inspection, fail to meet the criteria for valueadding, they add no value to the final output. They are activities which the customer does not want to pay for. It is important to note that some non-value added activities are important and unavoidable. Such activities should either be made a part of value added activities or eradicated in order to save costs and get a better ROI.

Taiichi Ohno identified the following kinds of muda or non-value added activities:
1. Overproduction This is one of the most misleading wastes. Overproduction simply means that a product is made earlier and faster than its requirement. It leads to collection of unwanted stock. Overproduction happens when an organization wants to produce products cheaply in bulk, wants to cover up quality deficiencies, breakdown of machinery, unbalanced workload or a long process set-up. However, overproduction also leads to the unnecessary production of products which are not needed and so there is wastage of time, money, resources and personnel. Performance measurements like equipment utilization and cost-per-piece leads to overproduction. Push style production control also gives rise to overproduction. A Lean analysis helps to spot and eradicate the production of units which are no longer in use or the ones which are obsolete in technology. 2. Inventory If the supply of a raw material or a finished good or a workinprocess is in excess of a one-piece flow production process, it is considered a waste. If the inventory is held for a year it costs approximately 25% of the money spent on producing it. Lean Manufacturing helps to prevent wastage in terms of unnecessary performance of work-in-progress or the production and storage of unwanted products. 3. Defects Defect is a key waste which includes wastage in terms of men, machines, materials, sorting or rework. Any product which requires scrapping, replacement or repair is also included in the category of defective products. The reason why products develop defects can be many. The main ones include unskilled workers, ineffectual control over the process, lack of maintenance and imperfect engineering specifications. Lean analysis helps to recognize defects in the manufacturing process and helps eradicate the production of faulty units which cannot be sold or used. 4. Processing Processing is a waste which adds zero value to the product or service from the customers perspective. It comprises of spare copies of paperwork and other surplus processing for unforeseen problems which might occur in the future. Waste also occurs in the form of acceleration of process to meet targets. For example, fitting or

straightening parts after heat treatment is a waste because it needs 100% rework. Lean methodology is useful in spotting unwanted steps or work elements which add no value to the product. 5. Transportation Although transportation is an important aspect of the manufacturing process, yet it is a non-value added activity as it adds to costs but not to value. In fact, it involves the use of expensive equipment for the movement of men and material inside and outside the organization. Costs like space, shelving and the manpower and systems needed to track the material include the additional money spent on transportation. By incorporating Lean manufacturing in the organization, the transportation system can be reformed. Multiple handling of materials, holdup in material handling and needless handling can be avoided. 6. Waiting Waiting means idle time. It comprises waiting for parts from up-stream operations, waiting for tools; arrangements and directions form higher authority. The time wasted in measuring and procuring information also makes up for idle time and is considered a waste. Differences in processing times gives rise to a hurry-up-andwait effect that causes inventory to accumulate even in systems that supposedly have extra capacity. Idle time is the one when no value is added. In fact, waiting for manpower/labor is a matter of greater concern than the usage of machinery. 7. Motion Any movement in terms of people or machinery that adds zero value to the product is wastage in terms of motion. The examples of motion waste include time wasted in hunting for tools, extra product handling, and arrangement of products, walking and loading. The reasons for motion wastage include poor infrastructure, incompetent labor, weak processing and constant changes in agenda setting. Adopting Lean methodology helps as it exposes fruitless efforts and motions executed by the employees. 8. People Wastage of manpower is a matter of concern. This kind of wastage depends on the recruitment process, styles of management, attrition rate, low motivation by the higher authority and not using the employees ability to the fullest potential. Therefore, they contribute to waste in the form of people. Peoples abilities should be utilized fully in terms of mental and creative level, their skills and experience. The main goal of Lean Manufacturing is elimination of waste. Waste can be eliminated by identifying it and eradicating all non-value-added activities. Non-value adding activities eat up time, money and resources. However, it should also be noted that activities like accounting, government laws and regulations are important and cannot be avoided.

A. Lean Concepts 1. Theory of Constraints (TOC)


The theory of constraints is a management concept developed by Dr. Eliyahu M. Goldratt. It is a concept that focuses on identifying and easing the constraint that restricts an organizations ability to attain a certain targeted level. The philosophy of this theory aids the organization system to achieve more of its goal by addressing the systems few current constraints. According to this theory, the capacity of any manufacturing process is limited by its capacity constraint resource. That is every process or system has a constraint that acts as an impediment to attaining more of its goal. A constraint is the bottleneck- the slowest process step.The workings of a system could be very complex or it could work on a smaller number of variables; but it will have at least one constraint. These unknown constraints hinder the organization from achieving exceptionally high levels of performance. Time lost at the constraint is lost forever. If the performance is hampered, it means that the generation of profits for the organization would also be hampered. In order to manage the flow of the system, these constraints have to be identified and dealt with. Therefore constraint management focuses efforts at the constraint, since increasing throughput elsewhere will not increase the overall throughput. The focus of the theory of constraints is to bring an improvement in the system. Several business processes lead to a business system. A business system is comprised of people working in several coordinated and co-dependent processes. When a process is implemented and the inputs put in place, a business system is developed. All these processes strive to achieve a common goal. A constraint in the process is a weak link which hinders the growth of the entire process, thus making the process weak. The job of a TOC in a production process is to identify the factors which hamper the speed of the product.

The TOC approach can be implemented in five steps: 1. Identifying the Constraint A system is like a chain and one weak link in the chain obstructs the performance. The chain which delivers the worst performance is believed to possess the constraint. A study of the unwanted symptoms that a system or process is suffering from can lead to the identification of the constraint or constraints. 2. Exploiting the Constraint Once the constraint is identified, the next step is to take measures to improve upon it. The result of the constraint is the limiting factor of the entire process; therefore it should be ensured that the constraint is performing that function that it uniquely does to its maximum capacity. A strategy or correcting method should be developed to exploit the constraint. 3. Subordinating other Activities to the Constraint All the other activities should be made subordinate to the constraint. The individual workings of the other processes in the system should be aligned in such a way that they do not affect the outcome of the constraint. This is for the benefit of the system. The speed of the other processes is matched to the speed of the constraint. But the flip side of subordination is that the system should not be pushed to do more than the capacity of the constraint. This would lead to excess work-in-process, extended lead times, or even affect delivery times. 4. Elevating the Constraint If the personnel in authority think that the output being delivered is still not enough, they should acquire more constraint capability by increasing the investment in equipment and manpower, or by offloading to other resources. To put it in simple words, they should buy more of the constraint. At times, the desire for increased throughput raises the demand for more constraint. 5. Repetition If as a result of these steps, a change occurs, go back to step one. Example: The figure below is a manufacturing process that goes through three workstations , Y, Z. The product requires that it goes through:

Workstation for 2 minutes Workstation Y for 4 minutes Workstation Z for 3 minutes This means that workstation X can produce 30 pieces per hour, workstation Y can produce only 15 pieces per hour, and workstation Z can produce only 20 pieces per hour. This means the process can manufacture only 15 pieces per hour, which implies station B is the constraint. Even if station is made to run at its fullest capacity, to achieve complete machine utilization, inventory will be piled up in front

of station Y. Station Z can process 20 units per hour but Station Y can send only 15 pieces, so Z can process only 15 pieces per hour. Therefore only 75% of the capacity of Z will be used.

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LeanManagementCertification- Lean Concepts


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The Benefits of TOC


1. It increases the ability of the organization to accomplish its goals. It also increases the net profits and the returns on investments (ROI) for an organization by applying cost reduction techniques like elimination of unnecessary work or non-value added activities. It lessens the confusion in the organization. It reduces the production lead time. Lead time is the gap between an order placement and its delivery. It reduces cycle time of the product. Cycle time is the time gap between the start of the work and its completion. It reduces the stock-list. It especially lessens the work-in-process in a manufacturing process and/or the finished goods in a distribution network. It reduces labor-time per piece. It gives capacity to the staff to analyze and resolve routine conflicts.

2. 3. 4. 5. 6. 7.

Shortcomings of TOC
The absence of constraints could help an organization earn unlimited profits. According to TOC, the conventional methods of cost accounting, such as efficiency and utilization are faulty. This would mean that the organization which has applied/ or would apply the TOC would replace the traditional methods with throughput, inventory and operating expense. It is easy to calculate the metrics of these methods. However, it becomes difficult when reality logic trees, undesirable effects, evaporating clouds and future reality trees need to be calculated during the problem solving stage. This becomes increasingly difficult for laymen like the front-line managers and supervisors to calculate.

2. Lean Thinking (Five Principles)


Lean thinking is another way to improve processes. Lean thinking helps organizations to become continually efficient by increasing value and minimizing waste. Although, Lean

Thinking is generally applied to the production process to improve efficiency, it can be applied to all the facets in the organization. It can be applied in service organizations as well. Lean converts to smooth process flow, eliminating waste along the way. The advantages of applying the Lean methodology are that it leads to shorter cycle times, cost savings and better quality. Lean thinking embodies five basic principles:

1. Specifies Value
The first step towards Lean is identifying things that create value. Value is determined by the customers. It is about customer demands and what the customers are able and willing to pay for. Lean uses methods like focus groups, surveys and other methods to find out the preferences of the customers regarding the existing products and services. The voice of the customer (VOC) is very important to determine the value of a product. The opposite of value is waste or muda. When Lean organizations redefine value, they often find that they have discovered the method to pulling more customers to their product or service and thus more sales very quickly. The rise in demand is often more than the rate at which the resources are to be transformed from muda to value creation. Consider a company, ABC, which manufactures mobile handsets. According to the sales manager, the sales are getting affected due to the high price of the handset. However, according to the customer feedback the customers are shifting to other manufacturers due to absence of facilities like radio and MMS in the handsets of ABC Company. So, ABC Company should be able to determine the value of the product according to customer feedback and install radio and other facilities in the handsets which the customers are looking for. The product will have value only if it fulfills customer demands. Value plays a major role in helping to focus on the organizations goals and in the designing of the products. It helps in fixing the cost of a particular product and service. An organizations job should be to minimize wastage and save costs from various business processes so that the cost demanded by the customers lead to maximum profits for the organization.

2. Identifies Value Stream


Value stream is the stream or flow of all the processes which include steps from the development of the design to the launch and order to the delivery of a specific product or service. It is the sequence of steps that a company performs to satisfy their customers needs. A value stream consists of product and service flows and information flows. It includes both value added and non-value added activities. Waste is a non-value added activity because it consumes resources but creates no additional value for customers. Although it is not possible to achieve 100% value-added processes, considerable improvement in processes can be achieved through the application of Lean methodologies. According to the Lean Thinking, there should be a partnership between the buyer and the seller and the supply chain management to reduce wastage. The supplier or the seller can be categorized according to the need. He can be classified as a non-significant or a significant supplier or a potential partner. The classification can help to solidify and improve relations between the supplier and the customers or supplier and the organization. (Read more about supply chain in Chapter 5-Supply Chain Management) For example, take the value chain of a purchase order-to-delivery cycle. The activities in sequence are receiving the order, processing (or manufacturing) the order, and delivering the order. The non-value added activities are order entry, bureaucratic shuffling, excess work-in-

process, shipping delays etc. Value Stream Mapping Value Stream Mapping is drawing the value stream of the product or process; it is similar to process mapping. It is a tool to look at how value flows into and through a process to the customer, and how information flows facilitate the work flow . Apart from capturing this value flow, it is also used to capture process data on work-in-progress, processing time, processing unit, idle time, setup time, etc. It is also known as information and material flow mapping. Value Stream Mapping helps to locate the wastes in the value chain. After the waste is identified, it is removed. A current state map can be created when the waste is identified. This leads to the creation of a future state map with a plan to eliminate the waste. The next logical step is to implement the plan. This means the value stream is restructured. This is a basic step towards Lean conversion. It is an effective method to develop an environment with a reduction in waste. It helps to streamline the work flow by reducing lead times and lessening excessive operating costs. After the key suppliers are categorized and the role they play for the organization is determined, the next thing is to take steps to eliminate wastage. Tools such as process activity mapping and quality filter mapping are used to identify and reduce waste within the organization and also between the customer and the supplier. There are two ways to observe the flow of work-logical and physical. To map a value stream physically or in-plant, one has to actually follow the product through the production floor, through all its manufacturing process steps and create a drawing of its material and information flows. Then the point where the waste is occurring can be identified and removed. Value Stream Mapping has improved systems by affecting cost, quality, lead times, and cycle times in a positive manner. Businesses thrive when they add value. Value Stream Mapping can be applied to all kinds of work processes. Service companies provide services of value to customers. Manufacturing companies add value to raw material for customers. For example, value stream maps can be traced in processes like:

a patient flowing through a hospital a medical insurance form traveling from the biller to the clearing houses for approval flow of work through a technical support process the placement of an order to the delivery of the order

Example The following example is a value stream map of a leather bag making process. It shows how cycle time can be reduced. A value added flow chart is used to improve on the cycle times and eventually productivity, by visually sorting out value-adding steps from non-value-adding steps in the process.

Role of Value Stream Mapping in Lean Thinking 1. 2. It defines value from the customers view point. It plots the present state of the value stream.

3. 4. 5. 6. 7.

It applies the Lean methodology to spot muda in a process. It helps predict the condition of the process in the future. It develops a conversion plan. It executes the plan. It legalizes the new process.

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3. Makes Value-Creating Steps Flow


Flow is the step-by-step flow of tasks which move along the value streams with no wastage or defects. Flow is a key factor in eliminating waste. The idea of flow is fundamental to Lean production. Waste is a hindrance which stops the value chain from moving forward. A perfect value-stream should be one which does not hamper the manufacturing process. All the steps from the design to the launch of the product should be coordinated. This synchronization would help to reduce wastage and improve efficiency. Customer satisfaction is the main consideration to make the value flow. It is important to consider the customer demands and the time of the demands. This theory is known as the Takt Time. The formula to compute Takt Time isTakt Time = Available work time / Customer required volume Work time does not include lunch or tea breaks or any other process downtime. Takt Time is used to create short-time work schedules. Example: Work time/ shift = 27, 600 seconds Demand/shift = 600 units Takt time = 27, 600 / 600 = 46 seconds This means the customer demands only one unit every 46 seconds. Spaghetti Charts The current state of the physical work flow is plotted on spaghetti charts. A spaghetti chart is a map of the path that a particular product takes while it travels down the value stream. The products path can be matched to that of a spaghetti and hence the name. There is a great difference between the distance in the current set-up and the Lean set-up. The difference in the two

distances is known as muda.

4. Pulls Customers towards Products or Services from the Value Stream


Lean thinking allows customers to pull products and services . A fundamental principle of Lean is that flow should be pulled from customer demand. Unless a downstream process requires it, no work is done: this is the idea of a pull system. The product is not pushed from the production end like traditional systems. Traditional systems were push systems. The conventional manufacturers believed in mass production. Mass production means that a product is produced cheaply in bulk. The product is then stored and the manufacturers hope that the produced products would find a market. The Lean Thinking advocates the pull system. The manufacturers who adopt this principle do not produce a product unless it is demanded by the customer. Production is delayed till there is demand to point out what the customer wants. This system helps to break away from the batch-and-queue approach which means more inventory, and longer cycle times due to waiting. According to this principle, the value stream pulls the customer towards products or services. Therefore, the manufacturer would manufacture nothing unless a need is expressed by the customer. The production gets underway according to the forecasts or according to a pre-determined schedule. In short, nothing is manufactured unless ordered for by the customer. If a company is applying a Lean methodology and the principle of pull, it means that it would require quickness of action and a lot of flexibility. As a result, the cycle time required to plan, design, manufacture and deliver the products and services also becomes very short. The communication network for the value chain should also be very strong in the value chain so that there is no wastage and only those goods are produced which are required by the customers. The biggest advantage of the pull system is that non-value added tasks such as research, selection, designing and experimentation can be minimized.

5. Perfection
Perfection is one of the most important principles of Lean Thinking. This is because continuous improvement is required to sustain a process. The reason behind sustaining a process is to eliminate the root causes of poor quality from the manufacturing process. There are various methods to improve perfection and Lean Masters work towards improving it. Lean Masters Lean masters are individuals from various disciplines with a common goal. They are individual contributors who focus on the process to improve quality and performance. Their work is to achieve efficient results. The results either may be for their own organization or for their suppliers. The best way to achieve perfection with the suppliers is through collaborative value engineering, supplier councils, supplier associations, and value stream mapping between customers and suppliers. It is significant that the above mentioned principles be followed diligently in order to reduce wastage and deliver quality products and services to the customers. The customers and the suppliers must work in collaboration to achieve good results. The effort of Lean Thinking should be to minimize wastage from the value stream and improve efficiency. The Lean Thinking can be applied with the help of committed leadership, a persuasive change agent and wellinformed employees and suppliers.

3. Synchronous Flow Manufacturing (SFM)


Synchronous Flow Manufacturing is a tactic used in production for total self- improvement. This approach calls for a total changeover in all the parts of the production system. The manufacturing system is aligned to support the continuous flow process. This change effort has proven to besuccessful in many companies. Dr. Eliyahu Goldratt defines SFM as any systematic way that attempts to move material quickly and smoothly through various resources of the plant in concert with market demand. Synchronous flow manufacturing shows that not all activities in the flow of work add value. SFM plans inventory around these capacity constraint resources (CCRs) (See Theory of Constraints). It also designs inventory around operation systems or problems that affect the entire systems output in a significant manner. Capacity Constraint Resources disagree with traditional thinking operations on the production line. Traditional production systems believe in accumulating inventory, whereas SFM concentrates buffers on only at operations that can affect the overall throughput to the system. There are no large inventory buffers when work is synchronous. Synchronized flow means coordination of timing and activities. It means that all parts of the system must be continuous and in harmony with each other to avoid clashing (inventory pileups) and stoppages because of lack of work. When flow is synchronous, all parts move at an even pace. All parts travel into the process at the right time at the right place (e.g., in an assembly line) and the work is completed just ahead of the time when they are needed for assembly. This kind of synchronization is made possible by the support of the invisible transfer of information flow that runs parallel to the physical process. This is called an information rope. This method of working is essentially different from batch and queue operations. In SFM, the constraint operation affects the overall throughput of the process, it beats the drum to control the process speed. This means it sets the pace of the process. The only information exchange is between the capacity-constraining resource and production starts. Work is pulled into the factory in the form of production starts by the CCR through an information rope. It is advantageous to keep a buffer of work upstream for CCR because time lost due to shortage of CCR cannot be regained. SFM improves the manufacturing system by way of better throughput, reduced cycle times and inventories, and decreased operation costs. In other words, it makes the system Lean. The goal of this system is to balance the production line with minimum waste, and on-time and defect free production. Lengthy setups or changeovers, badly designed systems, long-winded paperwork, material movement are all obstacles to these goals that disrupt the flow of work without adding value to the work. The adoption of SFM helps removes all this. The work of a manager in a synchronous flow factory is to ensure that the flow is not broken, all parts move in harmony. There will be hiccups like human errors, quality problems, or technical snags. The job of the manager is to get rid these obstructions and sustain the steady flow.

In an era of increased competition, customer is the king. The company which adopts this system of synchronous flow manufacturing (SFM) manufactures only those products for which the customers express their need. The problem solving team is managed by a leadership team, which comprises of sub teams. These teams are responsible for identifying and implementing process flow requirements and they also evaluate the ongoing process. The entire organization acts as a change agent and helps in the improvement of the process. The efforts of the team lead the organization to adopt a synchronous flow manufacturing environment.

Advantages
1. 2. 3. 4. 5. 6. 7. 8. Increased customer satisfaction. Decreased attrition rate. Better quality and minimal wastage. Better scheduling, reduced flow time and cost savings. Better control over inventory and reduction in-process inventory. Better utilization of resources. Eradication of non value- added tasks. Improved safety practices.

4. Cycle Time Reduction


Lean manufacturing offers another benefit in cycle time reduction. Cycle time is the total time gap between the start of the task and its completion. Time is money in business and therefore cycle time is an important criterion while judging a manufacturing process. Cycle time reduction is one of the most crucial elements of a successful manufacturing process today.

Cycle time reduction means more efficient processes


Cycle time reduction means recognizing more efficient and effective ways to carry out processes. Cycle time reduction forms an important facet of the manufacturing process. It means eradicating or minimizing the non-value added activities which are a source of wastage. The cycle time can be reduced during activities like the set up of machines, inspection and during experimentation. Cycle time reduction increases the production throughput drastically. Also, it decreases the amount of working capital required and the operating expenses. It is evident that long cycle times cause inventories to pile up, cause higher costs, and bring down customer service. Cycle time is defined by Smith (1998) as: [Inventory (units)] / [Demand (units/time)] This does not imply that cycle time will decrease by removing the inventory. Inventory is, in fact, a result of other things like batch-and-queue operations that lead to overproduction, waiting, variation in processing times, and other problems. Attempts at trying to remove the inventory without removing the basic problems may just reduce demand or throughput. This means the factory will dole out fewer units but their cycle times will be higher. However, removing the underlying problems will cause the inventory to self correct itself.

Cycle time reduction means shorter lead times and higher customer satisfaction
Lead time is the time between the customer placing the order and its delivery. This process is made up of many sub-processes which include taking down the order, assembling, packaging, and finally shipping the product. When a factory produces parts on demand, lead time should be cycle time added with processing time. In electronic processes, processing time is very less. Modern day customers desire that their orders be filled in at the shortest time possible. Shorter lead times make this possible; in

other words shorter lead times lead to increase in customer satisfaction because it improves responsiveness to customer demands. This, at the same time is important for the organization because it saves time, money, and resources. Instead of manufacturing as per market forecast, the planning for production can be done according to the orders received. This has led many producers to reform their supply operations. Customer feedback, short cycle time and on-time delivery have become critical factors in retaining old customers and attracting new customers. It is not just the manufacturing process which contributes to long cycle times. The causes of its longevity are both internal and external. The push manufacturing model has given way to the pull system or demand flow manufacturing which has contributed to shortening of cycle times.

The following measures are being taken by the top management to reduce the cycle time.
1. Management of Demand The manufacturers can use enhanced sales forecasting processes. At the same time, it is important to keep the customer feedback in mind so that the production takes place as and when the customer needs it. 2. Coordination and Communication It is important to have cross-departmental coordination and communication to eliminate wastage. The customers want that the cycle time should be reduced to the minimum. So, it is imperative that all the processes and departments work together to achieve better results. 3. Lean Manufacturing Lean manufacturing is a very important tool to eliminate wastage. It helps to save cost, time and resources. Also, there is great cycle time reduction and near perfect delivery performance. 4. Management of the Supply Chain It is important to manage the supply chain to reduce the cycle time. The supply chain should be planned and implemented and there should be coordination in the supply system. The customers these days are very aware and they want the delivery to be on time. Moreover, reduced cycle time is good for the organization as it leads to cost savings and optimization of resources. (See Chapter 5- Supply Chain Management) Concurrent engineering, quality function deployment, and integrated product deployment are also valuable tools for cycle time reduction.

Reducing Cycle Time through Kaizen


Kaizen is a philosophy which strives for continuous improvement. The term originated in Japan and is applied to all aspects of life there. However, it has become very popular and is applied both in manufacturing and service industries. Kaizen is a tool applied in all Lean systems. The Kaizen approach believes in making minor improvements in ongoing processes and does not concern itself in making major changes. The underlying idea of Kaizen is to optimize existing processes. It is a tool through which the most can be made out of the skills that an organization and individuals possess, to get immediate results.The aim of Kaizen is to persuade organizations to achieve quick, transparent, and sustainable processes. The term is generally used for business processes in America. Applying Kaizen to business processes can help reduce cycle times and make processes more efficient. (For more on Kaizen, see Chapter 3- Lean Tools) For example, in a manufacturing plant, Kaizen can be used to free up lost capacity. The strategy would be to display the cycle time metrics like current cycle, the last completed cycle, the average cycle time, small stops, reduced speed cycles etc. The solution can be found out by displaying the above metrics to pinpoint performance loss and recover the lost capacity.

5. Single Unit Processing (One-Piece Flow)


Single unit processing is a close approximation to continuous flow manufacturing. In a continuous flow factory, all parts move at an even pace, all parts travel and fit into the process at the right time and at the right place, without stops (e.g., in an assembly line or a conveyor belt) . The flow is continuous like water flowing through a pipe. For example, in a chemical processing factory, raw material and final product travel in a continuous stream. All processes in a continuous flow factory like heat treatment, welding, chemical processing is done in one flow. In this kind of a factory, process control is a very simple procedure; equipment can be automatically adjusted to the process conditions to get the best quality of product. It is a common belief that it becomes relatively easy to control a process when it starts acting like a continuous process. This implies that single unit processing scores over lot manufacturing or batch and queue manufacturing. In a single unit manufacturing process, machinery and tools operate one piece at a time, and they are better than those that handle batches of parts. Single unit manufacturing or one-piece flow thus approach a continuous flow. One piece flow can be seen in a chemical processing plant, semi-conductor factory, in mechanical subassemblies, etc.

Advantages
Lean manufacturing views continuous, one-piece flow or single unit processing as ideal. Single unit processing or small lot processing eliminates the waste of batch-and-queue operations. It can lead to significant improvements in quality, cost, on-time delivery and process. It is an important concept in the manufacturing industry. It lowers manufacturing costs and makes material handling efficient. It lowers material handling, machine and storage equipments, buffer space requirements and manpower requirements. Single unit manufacturing is a major cause of inventory reduction. This also reduces the need for inventory. One-piece flow also significantly shortens lead times and cycle times. Henry Fords assembly line used one-piece flow. Process control in single piece flow becomes easier as conditions move toward continuous flow. It is opposed to batch manufacturing as the batch-and-queue system increases cycle times and complexes the statistical process control. A continuous flow operation should have computer controlled handling of materials. Material handling is done quickly and recurrently, timing is critical, and there is zero inventory. Human handling of material can lead to disruptions and pile-ups and shortages which hike up costs.

6. Level Loading
Level loading is a process that generates a schedule that is level, consistent, even, and responsive to the market. The objective of level loading is to produce the same quantity of a product or item everyday. Level loading is driven by Takt time. A level loaded schedule is obtained as follows: (Thomas Pyzdek, 1976) 1. 2. 3. Calculate daily work time/ daily quantity needed Takt Time For each part, list part name, part number, daily quantity needed, Takt Time Sort the list by quantity needed and Takt time. This is the level loaded schedule

7. Flexible Process
Flexible processes are lightweight and moveable tools, fixtures, and devices placed and positioned to improve workplace design, safety, quality and productivity. It is a production system where a set of identical or complementary devices are controlled and connected through an automated system. They are opposed to big, heavy, immovable equipment used in traditional mass production organizations. A flexible process, as the name suggests, is flexible and responsive to changing customer needs. Such a process can be reconfigured to give different output for different customer demands, and it can be done quickly and the output produced in such a manner is efficient, economical and satisfying to the customer. This process is designed to meet uncertainty. Flexible processes are associated with level loading and pull systems. A complete flexible factory would allow the factory to be

reconfigured immediately to manufacture an item as soon the order gets there.

8. Lot Size Reduction


Lot size means the quantity of an item that is ordered from the factory or supplier. It also means the standard amount that is ordered to the production process. The ideal lot size for flow is one. If the lot size is large, it gives rise to bigger quality problems. This is because of inventory pile-up which becomes obsolete with time and feedback holdups. Large lot size may also lead to benefits like lesser setups, quantity discounts, and reduced transformation costs, etc. A proper benefit-cost analysis should be done to achieve a balance between the two and obtain the optimum level.

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Introduction
It is important that all the processes be coordinated in order to achieve a perfect flow. A process in any organization begins with the order being placed by the customer and ends with the product being delivered to him. Quality Function Deployment or QFD is an important tool to improve efficiency and satisfy the customers. Lean Manufacturing also offers different tools to improve the flow. Lean is, in fact, most of the times, considered just a set of tools. Kanban, Kaizen and Poka-Yoke are the most popular tools of Lean. The need for Lean tools grew out of the problem of inefficiency and standardizing the process. The Lean tools allow a perfect flow for the organization. Lean manufacturing begins with the identification of waste and tools like value-added analysis and value stream mapping are used along with the seven quality tools and an improvement process known as kaizen. The Lean tools have been described in detail below.

1. 5S or Cando
One of the main characteristics of Lean is its simplicity. Lean makes use of simple tools and techniques to achieve the goal effectively and efficiently. 5S or Cando is one such simple yet effective tool used in Lean manufacturing. It is a starting point in Lean Manufacturing. It is a tool which helps to systematize and standardize the organization. The 5S have been derived from the Japanese words Seiri, Seiton, Seison, Seiketsu, and Shitsuke. They were a part of the Toyota Lean Manufacturing System. These 5S make way for prompt spotting of problems and quick solutions. CANDO refers to Cleanup, Arranging, Neatness, Discipline and Ongoing Improvement but is fundamentally the same. The 5S help to reduce wastage and optimize manufacturing efforts by systemizing the work environment. The execution of this tool helps to clean-up the organization and makes it a better place to work. The English version of the 5S is described below:

1. Sort/ Cleanup

It means to clear the work area. The items which are required or important for a particular area in the workplace should only have things which are required. The things which are not required should be sorted out. It means removing broken equipment or unnecessary tools from the work area where they are not required. Applying 5S to an office environment means clearance of unnecessary files and papers which have no use or would be of no use in the near future. This helps in saving time and removing the unnecessary hindrances in the work. Tagging is a common method which helps to decide which items need to be thrown away. The area that needs cleaning is marked and the items that need to be removed are tagged with a red tag and date. If the item or the commodity has not been in use for a certain period of time, it is disposed of. Tagging can be described with the help of an example. The items or the files which are not in use at the moment or would not be in use in the near future can be stored offline or discarded.

2. Set in Order
The items which are required should be put in a proper place so that they can be easily accessed when the need arises. Ergonomics are taken into account and the items are placed within access. This helps in avoiding unnecessary bending, stretching and walking. Wheels can be put on the items that need to be moved and tools can be nicely put in a toolbox or storage chests so that they are within easy reach. This arrangement can be compared to a kitchen in the house where things are kept in place for easy reach and also because they are easier to locate. Many toolboxes, for example, socket wrench sets can be organized this way.

3. Shine
Shine implies keeping the workplace clean and clear. Cleanliness includes housekeeping efforts and keeping the dirt away from the workplace. Cleanliness not only ensures improvement in the appearance but at the same time safety while working. The cleaning should be included in the routine and done by the operators rather than the cleaners. The operators should clean their own work place and keep the equipment in good order and in their respective place. Shine or neatness will leave no room for leaks or malfunctioning of the equipment.

4. Standardize
The clean-up and the storage methods should be standardized. The best practices should be followed by everybody in the organization to set an example and to standardize the efforts. Although, it is difficult to inculcate these habits in everybody, yet the routine should be maintained in order to standardize the new set-up. The employees should be motivated to keep their work place clean and rewards in the form of praise should be bestowed on them to set standards for others to follow. A computerized planner can help to hold inspections on a regular basis to determine whether or not the standards are being maintained. The scheduled preventive maintenance supports ISO 9000s process control requirement.

5. Sustain
The effort to keep the workplace should be sustained. 5S involves a change in the old

practices of the organization. The culture change should be imbibed in every employee of the organization. The stress should be on raising the bar and efforts should be towards continuous improvements. This step entails not just cleaning up but finding the underlying causes behind the issues. The issues should be chronicled in order to know the time and frequency of their occurrence. The issues can be identified using the Pareto analysis. The need to hunt for tools, fixtures, and parts is extremely wasteful. Rough handling and negligence make tools harder to use and increases the set-up time. If the work place is clean, the problems would not be able to hide.

Advantages
1. 2. 3. 4. 5. It improves the processes. It reduces set-up times. It reduces cycle time. It decreases accident rates. Machines become more reliable.

This Lean tool motivates the employees to develop their work environment and ultimately helps in reducing wastage, time and in-process inventory. There is optimum utilization of space and easy accessibility of tools and materials used during work. The 5S are also a base for other lean tools like TPM and just-in-time production. Frustration of the operators is removed due to easy accessibility and this leads to higher efficiency and deliverance of better quality of goods and services.

2. Visual Factory
Visual factory is a term to describe the way data and information is communicated in a Lean environment. It is an environment where the information is displayed using charts, signs and Andons. The use of visual methods results in easy accessibility for those who need it. The current status of all the ongoing processes becomes clear. Visual Factory is a tool which allows easy access to information for everybody to see and understand. This information can be used for continuous improvements. When information about tools, parts, production systems and metrics are clearly stated, everybody would understand the position, the current status of the system at a glance. The presence of information simplifies things and manageability. Visual factory is like a visual aid which helps to know the what, when, where, who and how and why of any work place. Visual factory is executed in two stages-first, the establishment of the information that needs to be conveyed and second, the way this is done. To establish the information that needs to be communicated, the current state of affairs are compared to the goals set for the future. The steps that are required to move from one stage to the other must be communicated. The way the information needs to be communicated depends on the end result that is required. The location and method of the information conveyed also depends on its significance. Typically this data includes.

Process metrics

Work instructions General plant information

The process metrics are usually displayed on the machine or cell. The information is most useful if it is delivered on time. Instant feedback helps in instant improvement. When light is used to indicate information, it is referred to as an andon. Generally, the main focus of the visual factory is the andons because they communicate incredibly real-time process information. Work instructions are usually displayed in the production areas. The manufacturing errors can be reduced with the aid of visuals and photographs. Communication can become more effective if it is conveyed through visuals. General information about the plant or factory is usually posted in a central location for everyone to see. In a visual factory environment, the information is delivered in order to notify, create awareness and stimulate. This helps in easy communication and world class performance.

Advantages
1. 2. 3. 4. 5. It decreases errors. It motivates the employees and boosts up their morale. It improves the run rates of the machines. It decreases WIP or work-in-progress. It improves machine uptime.

3. Kanban
Kanban is a word taken from the Japanese language and implies card-signal. Kan means visual and ban stands for card or board. Kanban/Pull systems help in the optimization of resources in an organization. They depend on customer demands rather than on sales forecasts. There are no stocks which lie in the store room waiting for the customer demands. Kanban is a signal card which indicates that the system is ready to receive the input. It helps to manage the flow of the material in the manufacturing system. According to Taiichi Ohno, Kanban is the means through which JIT is managed. The concept of Kanban can be explained with the help of a simple example. In the kitchen of a pizza outlet, there is a shelf on which the ingredients of the pizza lie and another shelf on which the freshly made pizzas arrive. These shelves act as Kanbans. The second shelf on which the prepared pizzas arrive are a pointer towards the customer needs. When it is empty, it means that the chef must prepare another pizza. When the chef starts preparing the pizza, he takes the raw material from the first shelf and thus signals the supplier or the chef who stores the raw materials, that he has the need for more. The concept of Kanban is many years old. The two bin system was used in the UK much before the Japanese production tools became popular in the 1970s. The Kanban system is very easy to understand and deploy in an organization. It is very popular in industries where there is a stable demand and flow. In the manufacturing industry, usually the demand is less and supplies are more. So, Kanban cannot be applied to the entire manufacturing process. However, there may be sub-processes to which it can be applied. Kanban is also referred to as the pull system as everything is pulled in response to the demands made in the past. The conventional push methodology was based on the sales forecasts for manufacturing. However, according to the pull methodology, the production is

based on the customer demands. The various kinds of Kanban include: 1. Supplier Kanban It indicates the orders that are given to outside parts suppliers when parts are needed for assembly lines. 2. In-Factory Kanban It is used between the processes in a plant. 3. Production Kanban It indicates the operating instructions for processes which are within a line. It is a system where the supply of raw materials and other components is ongoing. The workers have a never ending supply of what, when and where they need something. Kanban helps in reducing overproduction. The Kanban system has the following benefits: 1. 2. 3. 4. 5. It decreases the stock and prevents the products from becoming obsolete. It minimizes wastage and scrap. It allows flexibility in the manufacturing process. It increases output. It saves costs.

4. Poka-Yoke
Poka-Yoke is a Japanese term which stands for mistake proofing. It is another tool that supports ISO 9000 and QS-9000. The term was invented by Shigeo Shingo. The word Poka means inadvertent errors and Yokero means to avoid. This tool can easily recognize flaws in a product and thwart the manufacturing of incorrect parts. It is a signal to specify a trait in a product or a process. It is the first step in proofing a system. Poka Yoke is a mechanism that prevents a mistake from being made. It is done by eliminating or hugely reducing the opportunity for an error, or to make the error so obvious at the first glance, that the defect reaching the customer is almost impossible. Poka Yoke creates the actions that have the ability to eliminate mistakes, errors, and defects in everyday processes and activities. In other words, it is used to prevent causes that give rise to defects. Mistakes are not converted to defects if the errors are discovered and eradicated beforehand. Poka-Yoke is a mandatory exercise as it saves time and money for the organization. Defects like scrap rework and other defects can be prevented in the first place with the help of PokaYoke. Poka-Yoke puts limits on the errors and helps in the accurate completion of the project.

Example
Gilbreths (1911) advice to color-code objects to facilitate proper orientation is an example of

error-proofing. He was of the view that colors have a stimulating effect on the workers as their motions can be made simpler. Colors can be seen quicker than shapes. Therefore, distinguishing things by making use of different colors is better than distinguishing them with the help of the print on them. The various kinds of pipes in a pipe gallery, for instance, can be distinguished by coloring them in different colors. This kind of distinction also proves very helpful for the workers who are mostly illiterate. An analysis of the cause-and-effect relationship of a defect is the first step towards the mechanism of Poka Yoke. Then a remedy that wipes out the occurrence of the mistakes that lead to that defect is applied. Poka Yoke solutions can consist of any way that helps to ensure the mistake will be eliminated for good. It can be the creation of a check list, an altered sequence of operation, a computer data entry form, a message that reminds the user to complete a task etc. Poka Yoke has wide applicability, especially in engineering, manufacturing, and transactional processes. Poka Yoke can be done in two ways: The Type-1 corrective action, usually believed to be the most effective form of process control, is a type of control which when applied to a process eliminates the possibility of an error condition from occurring. The second most effective type of control is the Type -2 corrective action, also known as the detection application method. This is a control that discovers when an error occurs and stops the process flow or shuts down the equipment so that the defect cannot move forward. An error-proofing process looks like the following where both the prevention and detection of the defects are done:

There are three error-proofing categories.

Warnings: This prevents the occurrence of the error or defects at the first place. The first place means the defects at the source before a value is added to the product. Shutdown : This type of proofing inhibits the errors from progressing further as it closes the system as soon as the error occurs.

Auto Correction: This category of proofing allows correction or self-correction of the problem that has gone out of hand.

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5. Single Minute Exchange of Dies (SMED)


Single Minute Exchange of Dies (SMED) is a method adopted for quick changeovers. This method was developed in Japan by Shigeo Shingo to reduce output and quality losses, and it has proven to be very effective. The SMED tool is applicable for all kinds of industry, be it a small retail shop or a car manufacturing company. SMED is also known as "Quick Die Change" or change-over and it is the time period between the completion of the last task till the beginning of the next task. The time required in getting the tools, raw materials and completing the paperwork includes SMED. When the last product of a run has been manufactured, the machinery is shut down and locked out, the line is cleaned, and the tools are removed or adjusted. This is a description of a typical changeover process. It takes time for the new process to start because the collectors need to be refilled and the other performance adjustments need to be made. This changeover in the process can be reduced using the SMED. The variety of products is rapidly increasing and companies prefer to deliver smaller batch sizes. Single-Minute exchange of die allows conversion of batch-and-queue operations to single-piece or small-lot operations and can also reduce lead times. The setup time reduction is a key factor as far as increasing profits is concerned. With the help of SMED, the changeover time can be reduced from hours to minutes. For instance, the bottling industries spend a lot of time (more than 20% of the pre-planned manufacturing process) during changeovers. The application of the SMED system can reduce the changeover time significantly. In some cases, it can be reduced to less than ten minutes; so the change over time is expressed by a single digit and thus it is called Single Minute Exchange of Dies.

Example
There is a bolt that secures a die to a press. If the nut has fifteen threads, the worker needs to turn it fifteen times. However, value would be added only with one turn which tightens the bolt. The other fourteen are simply waste. The change which makes the setup require only one turn converts the bolt into a functional clamp. Robinson (1990) has proven how it is possible to loosen a bolt or screw with a single turn. Pear-shaped holes in flanges allow the flange to be placed over the bolts which hold it down. The bolt heads pass through the large openings of the pear-shaped holes. A small turn puts the narrower parts of the pear-shaped openings under the bolt heads, and single turns clamp the flange into place. It is very simple to remove the flange, as a single turn on each bolt is

enough to loosen it. The SMED tool is an important part of the Lean Manufacturing as it helps to save costs. Decreasing setup time at capacity constraining resources is very significant because the throughput of the entire organization is at stake at these nodes. The SMED process reduces setup time and increases utilization, improves competence and quantity. Switchover required for machinery and rooms when switching from one room to another can be done in a short span of time and it serves as an important agent of change. The SMED tool applies to almost every aspect of production-machining, shaping, painting, assembly and bottling.

External and Internal Setup


The main idea behind the concept of exchange of die is to perform as much set up work as possible while the machine is working on another job. This is known as the external setup or the set up which is done outside the machine. This kind of a set-up can be performed while a worker is working on the machinery or using a particular tool. Internal setup, on the other hand, is the one which requires the machinery to shut down and the tools to stop. There is no loss of processing time in the external set up as in the internal setup.

Benefits
1. 2. 3. 4. 5. 6. 7. 8. 9. It brings about a decrease in the raw material stock and tools. It decreases the flow time. It helps in eradication of waste and decrease in non-value added activities. It increases quantity. It increases elasticity. It decreases costs in terms of raw material and waste It increases the cash flow It increases competition It improves customer satisfaction

6. Standard Work
Standard Work means the basic or standard process. It is important to standardize the work before the Lean tools are applied to a manufacturing process. The elements of standard work include the speed of work matched to the customer demand, the process ladder to complete a task and material required by a worker to finish the task. Standard work helps improve stability, quality, production and safety in the organization. Each step in every process should be clear and must be repetitive. Variations in the process cause quality problems and require rework which hikes up the costs. In the earlier times, the workers used to work according to their judgment. Whenever the workers made some modifications or improvements to their jobs, they would not share it with their co-workers. Therefore, there was no knowledge retention. When the workers died or retired, the knowledge about the change would go with them because it was not a common practice to record the changes. There was no knowledge sharing or best practice deployment. However, with the advent of the standardization of work, these things have changed.

Standard work is an important tool in the area of employee empowerment as well as continuous improvement. In conventional work environments, the rules or changes were laid down by the industrial engineers or the higher authority. However, in the current day the change agents are the employees themselves. They are the ones who practically work and know the changes which are required in the organization. Thus they solve problems and assume responsibility for the same. They can be held accountable for the standards they create for themselves.

Example
Retention and dissemination of information help in the standardization of work. Juran and Gryna (1988) have stated two examples. 1. An investigation of crankshaft damage showed that only one workers product was involved. The workplace was designed for right-handed workmen and he was lefthanded. So, sometimes he bumped the crankshaft into a nearby conveyer. This was a human factors and workplace design issue. There was only one worker in the aircraft assembly plant who met his production quota consistently. His secret was that he had taken the powered screwdriver home and rebuilt its motor. When this was done with to other screwdrivers the productivity of the company shot up.

2.

Juran and Gryna were in favor of incorporation of skills which were beneficial for the process. Given below is a diagram which shows that if the work is non- standardized and unorganized, then there would be a lot of rework and scrap. However, if the work is standardized and everything is organized and systematic, then rework and defects would be reduced by a significant amount. The standard work shown below also qualifies for the 5S tool (standardize).

The important thing to observe while creating a standardized work environment is the elimination of non-value added activities like waiting, unnecessary motion and piling up

inventory. Also, the activities that may appear to be necessary but are no longer important need to be eliminated. Once the non-value added activities get eliminated, then emphasis should be laid on improving the value-added activities. Once all this is accomplished, the next step should be to create a standard way of working. The norms that are established to standardize the work should be clearly documented. The documentation ensures that the rules are being followed and the work is being carried out in a consistent manner to ensure efficiency and eradicate waste. The documents should be regularly modified for continuous improvement as it brings to fore the areas that need development. Standardized work requires employee feedback and control. It is a benchmark for other tools like 5s and pull methods. Establishing standards leads to minimal wastage and improves efficiency. The standard work should be continuously upgraded and the efforts of improvement should be sustained.

Advantages
1. 2. Standard work is important to achieve consistency. Moreover, if the standards are recorded, it would lead to a consistency in the performance levels and thus delivering high quality products and services. Standard work helps in ongoing improvement. It helps everyone to follow the same procedures and work in the same manner. However, it is not important that the standards should be rigid and permanent. New standards can be created if they help in improving the performance. Standards are the measure of performance. A fair output rate can be set and work of two employees can be compared. Standard work also ensures that the work is carried out in a safe manner. If the standards are enforced effectively, they ensure safety because the unsafe practices are eradicated from the organization. Establishment of standards is essential during the training of new employees.

3. 4.

5.

7. Kaizen
Kaizen is a philosophy which strives for continuous improvement. The term originated in Japan and is applied to all aspects of life there. However, it has become a very popular tool and is applied both in manufacturing and service industries. Kaizen approach believes in making minor improvements in ongoing processes and does not concern itself in making major changes. The idea of Kaizen is to optimize existing processes. The basic aim is to persuade organizations to achieve quick, transparent, and sustainable processes. The term is generally used for business processes in America. Kaizen became a fad in the business world when it was first introduced to the corporate world by Masaaki Imai through his book Kaizen: The Key to Japans Competitive Success in 1986. The book was translated in fourteen languages. One of the committed followers of Kaizen includes Toyota. Imai soon realized that the concept was not being executed in a proper fashion. So, he introduced an advanced form of kaizen in his book Gemba Kaizen: A Commonsense, Low-Cost Approach to Management. Through this book, Imai stressed the significance of the shop floor to bring about continuous improvement in an organization. There are two mechanisms in any given organization- process improvement and process control. Control means to sustain the current improved performance of the process. If there

are no indications regarding the deviation in the performance of the process, then standard operating procedures (SOPs) are considered. On the other hand, improvement implies conducting experiments and altering the performance to produce better results. When the improvement is made, the SOPs are altered and a new way of doing things is established. According to Imai (1986) the job responsibilities regarding the improvement and maintenance of a process are divided according to the level of position held by personnel in the organization. The figure below represents how and where Kaizen fits in an organizational hierarchy.

In the figure drawn above, there is a portion which goes beyond Kaizen. It is a point of radical innovation. This is where Lean Thinking is related to Six Sigma. The figure drawn below illustrates the point.

Positions and Responsibilities


1. Top Management They should be determined to introduce Kaizen as a corporate strategy

They allocate resources and support and give direction to Kaizen efforts. They develop policy for Kaizen and cross-functional activities. They help to achieve the goals set through Kaizen policy deployment and audits. They build systems, procedures and structures which are favorable for Kaizen.

2.

Middle Management They help to deploy and execute the policies of Kaizen according to the directions given by the top management.

They make use of Kaizen in functional capabilities. They setup, preserve and improve standards and staff. They provide training to the staff and make them Kaizen-conscious. They help employees to develop skills and tools for problem-solving.

3.

Supervisors They make use of Kaizen in functional roles.

They make plans related to Kaizen and give a direction to the customers. They motivate the workers by communicating with them. They help to maintain discipline. They provide suggestions for Kaizen They support small group activities.

4.

Workers They take on Kaizen with the help of the suggestion system and small group activities.

They follow discipline. They engage in continuous self-development activities.

They increase their skills and performance expertise with cross education.

The Kaizen approach is related to the PDCA cycle given by Deming/Shewhart. This is because like PDCA, it involves planning, doing, checking and acting. Kaizen approach is scientific in approach. The methodology is applied to all the aspects of the production cycle in Japan and to research and development in other countries.

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LeanManagementCertification- Total ProductiveMaintenance


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1. Definition
Total Productive Maintenance (TPM) is a management system or a maintenance philosophy which helps in the optimization of production machinery. It involves employees across all levels and strives for organized equipment maintenance. TPM reduces the production losses occurring due to repairs to a great extent. In the earlier days, till the 1950s, no precautions were taken for the maintenance of machinery. However, the factory managers soon realized the importance of preservation of machinery to increase production. During the 1970s, the theory of productive maintenance appeared. According to this concept, preventive measures were taken to maintain the machinery according to a specified schedule. The technical or the engineering staff is mainly responsible for the maintenance of the equipment. TPM originated from Total Quality Management or TQM. TQM had evolved as a result of Dr. W. Edwards Deming's principles of quality management on the Japanese industry. The concepts of quality introduced by Dr. Deming were very popular and became a way of life for the Japanese industries. He introduced statistical procedures and quality management methods that came to be known as Total Quality Management. The aim of any TPM program is to reduce the losses which happen as a result of maintenance of the machinery. The reason behind keeping the equipment in good shape is to manufacture high quality products with no unplanned downtime.

2. Origin
The original source of the concept of TPM is debated. According to some, it was invented by American manufacturers about forty years ago. Some say that it was invented by Nippondenso, a Japanese manufacturer of automotive electrical parts in the late 1960s. The concepts associated with TPM were derived and executed in the Japanese industries by Seiichi Nakajima, an officer with the Institute of Plant Maintenance in Japan. The first widely held TPM conference took place in the United States in 1990. The concept of TPM followed the theory of productive maintenance. The theory of productive maintenance was not appropriate for the maintenance environment. According to the theory

of TPM, everybody from the workers to the top management is involved in the equipment maintenance. Everybody in the organization should feel that it is their moral duty to maintain the machinery. The operators of the machines have to examine, clean, oil and alter the machines themselves. They also have to perform simple calibrations on their machines. Simply put, everybody in the organization should be familiar with terms like zero breakdowns, maximum productivity and zero defects. TPM gives a lot of freedom and at the same time provides a sense of responsibility in the employees. TPM is an effort that requires some time for effective implementation. It is initially carried out in small teams and gradually it spreads to the entire organization.

3. Application
Maintenance and production were seen as two different things in conventional times. TPM developed as a result of the emerging role of maintenance in increasing productivity and asset availability. TPM is a shift from the process of reactive or corrective maintenance environment to a preventive maintenance environment. The application of the TPM concepts in an organization requires total commitment from the entire staff. It is imperative to hire a TPM coordinator for the purpose. The job of the TPM coordinator is to disseminate the knowledge of TPM concepts among the employees. It is not an easy task to convince the employees to change their routine way of working to a new way. When the coordinator is convinced that the work force is able to comprehend the TPM concepts, the action teams who would carry out the TPM program are formed. The operators of the machine, maintenance personnel, supervisors and upper management are included in a team. These are people who have a direct bearing on the issue at hand. Each team member is held equally responsible for their actions. The TPM coordinator heads the team until the concepts are practically put to use and the team members become proficient with them. The teams often begin by addressing small problems and move on to solve the problems involving complexity. The tasks of the action teams include indicating the problem areas, specifying a course of action and implementing the corrective measures. In good TPM programs, the team members pay a visit to the cooperating plants to study and evaluate the work in progress using the TPM methodology. The comparative process is a measurement technique and a significant aspect of the TPM methodology. Ford, Eastman Kodak, Allen Bradley and Harley Davidson are some of the big names using the TPM methodology. There has been tremendous hike in productivity by making use of the methodology. Also, there has been a great reduction in down time, decrease in the stock of spare parts and increase in the number of on-time deliveries. TPM is the done thing these days. The importance of TPM in some companies is such that their success depends on it. It is suited for all kind of industries like construction, transportation and many other industries. The most important consideration for a TPM program remains full commitment from the entire work force because it would result in high ROI.

4. Lean Manufacturing and TPM


TPM helps to eliminate waste out of the production process by decreasing or eradicating the manufacturing time which is lost during the failure of machines. The goal of TPM is to make sure that the machines are always available for manufacturing. Maximum value can be added to a product by diminishing or reducing the defects and rework, by removing the slow running

equipment and reducing the downtime. Lean systems reduce excess capacity and link all the machines and processes. If one machine stops, productivity comes to a standstill. The true value of TPM is realized when the maintenance issues are dealt with and total productive maintenance programs are carried out. Lean Manufacturing is dependent on Kaizen or continuous improvement and TPM allows for Kaizen in maintenance programs. Issues can be resolved if they are tackled at the root level. TPM decreases the maintenance cost to a significant amount and increases equipment availability and profitability. A lot of teamwork is involved in carrying out TPM programs and there is a lot of employee involvement. All this contributes in successfully carrying out the manufacturing process and in helping the organization become Lean. TPM endows the tools with the ability to turn the maintenance operations into a competitive advantage.

TPM is a major accessory of Lean Manufacturing. If the machine uptime is not foreseeable, and if the process capability is not prolonged, then production cannot be matched with the pace of sales. It is not important for the machines to run all the time to be productive. To state an example from ordinary life, you use a car to go somewhere. It is not important for the car to run all the time to prove that it is productive and running in a proper condition. Similarly, the machines must be ready when they are needed by the operator and they must be shut down in a way that they are ready for use the next time the need arises. It is important to calculate the change that has taken place with the help of any new initiative taken by the organization. OEE or Overall Equipment Effectiveness is a metric to calculate the success of the TPM programs. It is a simple and easy to understand metric and helps to gauge the success of the TPM program and to seek areas for improvement.

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LeanManagementCertification- Total ProductiveMaintenance


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1. Definition
Total Productive Maintenance (TPM) is a management system or a maintenance philosophy which helps in the optimization of production machinery. It involves employees across all levels and strives for organized equipment maintenance. TPM reduces the production losses occurring due to repairs to a great extent. In the earlier days, till the 1950s, no precautions were taken for the maintenance of machinery. However, the factory managers soon realized the importance of preservation of machinery to increase production. During the 1970s, the theory of productive maintenance appeared. According to this concept, preventive measures were taken to maintain the machinery according to a specified schedule. The technical or the engineering staff is mainly responsible for the maintenance of the equipment. TPM originated from Total Quality Management or TQM. TQM had evolved as a result of Dr. W. Edwards Deming's principles of quality management on the Japanese industry. The concepts of quality introduced by Dr. Deming were very popular and became a way of life for the Japanese industries. He introduced statistical procedures and quality management methods that came to be known as Total Quality Management. The aim of any TPM program is to reduce the losses which happen as a result of maintenance of the machinery. The reason behind keeping the equipment in good shape is to manufacture high quality products with no unplanned downtime.

2. Origin
The original source of the concept of TPM is debated. According to some, it was invented by American manufacturers about forty years ago. Some say that it was invented by Nippondenso, a Japanese manufacturer of automotive electrical parts in the late 1960s. The concepts associated with TPM were derived and executed in the Japanese industries by Seiichi Nakajima, an officer with the Institute of Plant Maintenance in Japan. The first widely held TPM conference took place in the United States in 1990. The concept of TPM followed the theory of productive maintenance. The theory of productive maintenance was not appropriate for the maintenance environment. According to the theory of TPM, everybody from the workers to the top management is involved in the equipment maintenance. Everybody in the organization should feel that it is their moral duty to maintain the machinery. The operators of the machines have to examine, clean, oil and alter the machines themselves. They also have to perform simple calibrations on their machines. Simply put, everybody in the organization should be familiar with terms like zero breakdowns, maximum productivity and zero defects. TPM gives a lot of freedom and at the same time provides a sense of responsibility in the employees. TPM is an effort that requires some time for effective implementation. It is initially carried out in small teams and gradually it spreads to the entire organization.

3. Application

Maintenance and production were seen as two different things in conventional times. TPM developed as a result of the emerging role of maintenance in increasing productivity and asset availability. TPM is a shift from the process of reactive or corrective maintenance environment to a preventive maintenance environment. The application of the TPM concepts in an organization requires total commitment from the entire staff. It is imperative to hire a TPM coordinator for the purpose. The job of the TPM coordinator is to disseminate the knowledge of TPM concepts among the employees. It is not an easy task to convince the employees to change their routine way of working to a new way. When the coordinator is convinced that the work force is able to comprehend the TPM concepts, the action teams who would carry out the TPM program are formed. The operators of the machine, maintenance personnel, supervisors and upper management are included in a team. These are people who have a direct bearing on the issue at hand. Each team member is held equally responsible for their actions. The TPM coordinator heads the team until the concepts are practically put to use and the team members become proficient with them. The teams often begin by addressing small problems and move on to solve the problems involving complexity. The tasks of the action teams include indicating the problem areas, specifying a course of action and implementing the corrective measures. In good TPM programs, the team members pay a visit to the cooperating plants to study and evaluate the work in progress using the TPM methodology. The comparative process is a measurement technique and a significant aspect of the TPM methodology. Ford, Eastman Kodak, Allen Bradley and Harley Davidson are some of the big names using the TPM methodology. There has been tremendous hike in productivity by making use of the methodology. Also, there has been a great reduction in down time, decrease in the stock of spare parts and increase in the number of on-time deliveries. TPM is the done thing these days. The importance of TPM in some companies is such that their success depends on it. It is suited for all kind of industries like construction, transportation and many other industries. The most important consideration for a TPM program remains full commitment from the entire work force because it would result in high ROI.

4. Lean Manufacturing and TPM


TPM helps to eliminate waste out of the production process by decreasing or eradicating the manufacturing time which is lost during the failure of machines. The goal of TPM is to make sure that the machines are always available for manufacturing. Maximum value can be added to a product by diminishing or reducing the defects and rework, by removing the slow running equipment and reducing the downtime. Lean systems reduce excess capacity and link all the machines and processes. If one machine stops, productivity comes to a standstill. The true value of TPM is realized when the maintenance issues are dealt with and total productive maintenance programs are carried out. Lean Manufacturing is dependent on Kaizen or continuous improvement and TPM allows for Kaizen in maintenance programs. Issues can be resolved if they are tackled at the root level. TPM decreases the maintenance cost to a significant amount and increases equipment availability and profitability. A lot of teamwork is involved in carrying out TPM programs and there is a lot of employee involvement. All this contributes in successfully carrying out the manufacturing process and in helping the organization become Lean. TPM endows the tools with the ability to turn the maintenance operations into a competitive advantage.

TPM is a major accessory of Lean Manufacturing. If the machine uptime is not foreseeable, and if the process capability is not prolonged, then production cannot be matched with the pace of sales. It is not important for the machines to run all the time to be productive. To state an example from ordinary life, you use a car to go somewhere. It is not important for the car to run all the time to prove that it is productive and running in a proper condition. Similarly, the machines must be ready when they are needed by the operator and they must be shut down in a way that they are ready for use the next time the need arises. It is important to calculate the change that has taken place with the help of any new initiative taken by the organization. OEE or Overall Equipment Effectiveness is a metric to calculate the success of the TPM programs. It is a simple and easy to understand metric and helps to gauge the success of the TPM program and to seek areas for improvement.

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LeanManagementCertificationImplementationof LeanManufacturing
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Introduction
Taichi Ohno and Shigeo Shingo developed and carried out Lean Manufacturing at Toyota Production Systems over a period of 20-30 years. They developed a mental model for the

implementation of the same. Ohno was the first one to visualize an ideal production system in terms of workflow. He drew inspiration from observations made by Eiji Toyoda at Ford Motor Company. The ideal production system was to have a series of workstations with no piles of stock lying between the stations. The final output would be delivered to the customer exactly when they raised a demand to buy it. According to Ohno, inventory was the main reason for the occurrence of waste. The main aim of Ohnos and Shingos model was to build on Toyotas model and resolve the issues that arose by applying this model.

Example
One of the reasons for the piling up of stock is the scale of the equipment. If an organization has certain equipment which is very big in size, it would affect batching, set up, workflow and ultimately lead to a high inventory. If the equipment is very large, it would produce multiple products. The production of multiple numbers of products will give rise to a changeover because each different product would follow a different route because of different steps and processes. A large batch of products would be produced which may not be required and that would give rise to a huge pile of stock. This is shown in the figure given below:

The huge stock that gets piled up will give rise to all kinds of waste as far as handling the material, space and quality is concerned. Shigeo Shingo found a solution for large equipment and reducing changeover times. The SMED system was developed to reduce changeover times. The size of the equipment was scaled down with the help of Cellular Manufacturing or one-piece flow and the simple manner

with which it is carried out. Lean Enterprise is not merely a set of mutually supporting techniques. It involves a change in the entire organizations culture and thought processes. The Lean methods should be imbibed in every employee and be made a part of the routine, as a way of life.

1. Change Management
Change Management consists of two steps: 1. 2. It means to convince the organization that change is inevitable. It also involves getting the personnel in the organization to accept and imbibe the change, if possible.

This is important as change is most effective when it is adopted by the people themselves rather than when forced upon them. Frederick Winslow Taylor described the need for change management about ninety years ago. According to Taylors original version of scientific management, the managers used to bring in a change in the organization by introducing work efficiency methods and rewarding the employees for implementing the same. One of the ways to introduce this was to select a group of workers and reward them for helping increase the efficiency. The other workers would follow suit and strive to work harder to gain the benefits themselves. Taylor wanted the workers to leave their brains behind when they left the organization. His point of argument was that he was dealing with unskilled worker whose primary interest lay in the hike in wages rather than any other intrinsically motivating work. However, the truth was that Taylor wanted the frontline workers to suggest ways to make their job more efficient. He believed in worker empowerment and was way ahead of other thinkers of his time in implementing this idea. He wanted the workers to apply kaizen blitz or the one best way to their work. Therefore, he applied scientific management with worker participation. When the workers actively participated to implement the change, they were able to ingrain the change faster. The most important thing when a change is to be implemented is a commitment from the top management. Their commitment is very important for a continuous improvement program. Another thing to be kept in mind is the standards for performance measurement standards. In the example stated above, the main goal is to reduce the inventory and this can be done by reducing the size of the equipment. Standard and Davis (1999) defines three standards for appropriate performance measurements: 1. 2. 3. Measurements must be goal-oriented, defined to the point and quantifiable. The performance must be controlled by the people of that particular department. This is also a criterion for self-control. The criterion for measurement must provide motivation for the employees and thus help them to achieve the goals of the organization.

In an earlier chapter it was described how the Theory of Constraints limits the pace at which downstream operations work. For instance, if the equipments utilization is increased, it may not be under the control of a particular department. This may be because lack of demand from an earlier operation could limit the manufacturing operation. The theory of constraints uses three measurement standards:

throughput, which includes the finished goods which have been sold to the customers

inventory, which includes the investments made by an organization in the products and services that it plans to sell operating expense

2. Eliminating Classification of Jobs


If an organization wants to become Lean, the system of classification of jobs should be abolished. The employees should be provided cross- training to perform more than one job. Henry Ford believed that anything that affected the organizations welfare was part of an employees job. Taiichi Ohno was also against restrictive work rules. He was of the view that defining employees jobs hindered the implementation of work cells and cellular manufacturing. Workers unions must be in favor of the abolition of restrictive work rules. The intelligent workers and managers should know that work rules result in the closure of the organization and job losses and they should be against work rules.

3. Lean Does Not Mean Downsizing


Lean does not mean reducing or cutting down on the work force and making the rest of them work much harder for the same pay. It also does not mean downsizing the workforce after the productivity is doubled because of implementing the Lean principles. This kind of practice is very de-motivating for the employees and could act as a deterrent to their commitment. This could also hinder the flow of production as this kind of behavior is very demoralizing. Womack and Jones are (1996) are of the view that the workers should not be laid off. They believe that they should be reassigned work in the improvement programs or given some other work. The improvements in manufacturing will help the business to expand and also reduce costs and this, in turn, would help increase productivity. This is where the importance of cross-training and the elimination of job classifications are felt. Lean Manufacturing helps to get rid of certain job positions. The workers should be ready to give up their earlier positions and take up more responsible and challenging jobs. According to Taylor, this kind of a progression is a result of the application of scientific management. Scientific Management gives more emphasis to the frontline workers and they should be ready for a transformation. In return for workers commitment, the management should be ready for a hike in the wages of the workers. If the manufacturing becomes efficient and if the company is able to save costs, then the management should also be willing to pay incentives and increase the salary of the workers.

4. Deploying Lean in the Organization


Deploying Lean in an organization means bringing in a cultural change. A certain guidelines need to be followed while deploying Lean in the manufacturing process. They are:

1. Identifying Value
The organization should be able to ascertain the demands created by the existing and the potential customers.

2. Mapping the Value Stream

The flow of the work and information must be identified to determine how it creates value. Measures to identify the non-value added activities must be taken and muda must be reduced.

3. Distribution of Work
The work must be distributed evenly among the employees and the process must be balanced.

4. Standardizing the Process


The key processes must be identified and work should be reduced in terms of variation, errors and defects.

5. Elimination of Just-in-Case Activities and Resources


The delivery of the products should be just-in-time. No extra items should be ordered from the suppliers and there should not be a huge pile of inventory. Temporary or per diem workers or labor should not be hired to deal with unforeseen issues.

6. Build Strong Relationships with Suppliers


The Supply Chain should be made a part of the work process. The delivery and information system of the organization should be incorporated with that of the supplier.

7. Use Design for Six Sigma


The most important thing for an organization is customer satisfaction. New ways should be found out to keep the existing customers satisfied and bring in new customers. New designs and methodology should be adopted irrespective of the investment already made in the form of existing assets and processes to keep the customers happy.

8. Autonomation
Autonomation is a word coined by Taiichi Ohno to describe a manufacturing system which imitates the human autonomic nervous system. According to him, the production system automatically adjusts to external and internal conditions. Just like your body reacts to conditions of heat and cold, in the same way, the manufacturing system automatically reacts to rising or falling demands. When the demand rises, production rises and when the demand falls, the production falls. Lean uses tools like Takt time, Theory of Constraints and visual controls to keep a control on the production.

9. Role of the Senior Management


The senior management plays an important role in the implementation of their Lean Manufacturing. They need to discuss and agree on their vision for Lean. The management must also brainstorm to identify the project leader and the goals.

10.

Building a Lean Team


The Lean plan must be communicated to the workforce and a lean implementation (involving five to six people) of the volunteers must be formed. The role of the team members must be demarcated.

11.

Pilot Project
A pilot project must be chosen and run for two to three months. The pilot should be rolled out to all the departments one by one. It should be evaluated, reviewed and lessons should be learnt from the mistakes. The results should be evaluated and feedback should be encouraged. The Lean implementation can be divided into three important stages. They are: 1. 2. 3. Data Collection Stage Data Analysis Stage Data Implementation Stage

The Lean implementation can be summed up in the form of the following diagram:

Conclusion

Lean is applicable not only to manufacturing but to all other functions of the organization such as transportation and delivery. A lean enterprise is always better than a lean manufacturing unit. The application of the Lean principles to the supply chain management has been discussed in an earlier chapter. If the senior management is not willing to commit or does not posses the requisite knowledge, Lean transformation efforts fail. Lean should be viewed as a long term objective. The emphasis should be to make the whole organization turn Lean instead of focusing on one particular area.

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LeanManagementCertification- Lean andSix Sigma


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Introduction
A question frequently asked in organizations is, should Six Sigma or Lean methods be used to improve on quality of operations? To understand this, it is essential to know the similarities and differences between Six Sigma and Lean production. In spite of the differences in the way they work, they have inherent similarities. The goal of both Lean and Six Sigma is to improve the way organizations run. Both are quality enhancement techniques which improve quality of the product or the service attribute the organization is involved in producing. It is not a question of Six Sigma or Lean; it is Six Sigma and Lean. Any of them can be integrated into the system depending on the size and the scope of the project to give beneficial results. The Lean system is based on the Toyota Production System. A Lean system can greatly improve productivity as compared to outdated mass production systems like batch- and -queue operations. It stresses on the prevention of waste, improvement of quality, reduction in delays, manufacturing costs and total costs. A Lean systems distinctive tools and techniques can help the organization to reduce costs and shorten lead times, and achieve just-in-time manufacturing.

A. What is Six Sigma?


Six Sigma is a way to improve quality. Quality here means reducing defects or nonconforming units to a dramatic level of 3.4 defects per million opportunities. Six Sigma projects have been applied to complex, and even organization wide problems and not surprisingly, they have been known to deliver breakthrough results. Six Sigma uses well established quality improvement and productivity enhancement techniques and tools. The aim of Six Sigma programs is to reduce variation in processes, which are the main causes of defects in the business product and service requirements. Sigma-written with the Greek letter - is a measure of process variation or spread. Process improvement can be achieved by reducing that spread, delivering output which is more

consistent and has lesser defects, and increases customer satisfaction. The word Six Sigma means six standard deviations between the process mean and the specification limits. This means that the process spread is reduced by reducing until the specification limit is 6 away from the process mean. A shift of the process mean by 1.5 over time is allowed. This means that if the process drifts 1.5 standard deviations, defective output would be only 3.4 per million opportunities or 0.00034%.

Six Sigma also refers to process capability. It refers to the capability of any process to produce a defect free product; in other words, a product that is within the specification limit. Process capability indices measure the ability of the process to meet specifications. Process capability assures sigma defect rates only when the process is under statistical control and is a normal distribution. DPMO (defects per million opportunities) is a common term used for defect rate in Six Sigma. Another s igma metric is the sigma level. Organizations striving for Six Sigma quality focus their efforts to produce these near perfect figures in their businesses.

Goals of Six Sigma


Six Sigma addresses business problems by using a data driven approach to analyze the root causes and carve out a solution. At a strategic level, it aligns the organization to the marketplace and delivers results. At an operational level, it aligns the business product or service characteristics with customer specifications and greatly decreases process variation, which is the main cause of defects.

Methodologies and Tools of Six Sigma


The improvement process of Six Sigma is known as DMAIC (Define, Measure, Analyze, Improve, and Control)

Define the selected projects characteristics that need to be improved or goals, using tools like Pareto charts, process maps, critical-to-quality trees, work breakdown structures, etc. Derive goals from customer requirements through Voice of Customer (VOC) tools like surveys, focus groups, interviews, customer complaints etc. Measure the current process capability (baseline) and establish project metrics to steer projects towards the expected goals; using graphical and statistical tools like flow charts, process maps, SIPOC, cause and effect matrix, histograms, run charts,

box-whisker plots, scatter diagrams, probability distributions etc.

Analyze the current process to comprehend the problem and find out their root causes; using statistical tools such as correlation and regression analysis, scatter diagrams, hypothesis testing, ANOVA, and non-parametric tests. Improve the current process by identifying the solutions, and applying the solutions to the problems using tools such as design of experiments (DOE), EVOP, Response Surface Analysis etc. Control the improved process by applying standardization, and constant monitoring to prevent the process from backsliding by applying tools such as control charts.

When a new product or a process has to be developed, or when a process needs to be revamped, a method called DFSS (Design for Six Sigma) is used. A process used in DFSS is called DMADV (Define, Measure, Analyze, Design, and Verify).

The detailed steps for each phase are described as follows:


Define Phase This is the first phase of DMAIC. In this phase, the key factors like Critical to Quality (CTQ) variables and problems present in the process and as identified by the customers are defined. A process is an ordered sequence in which input metamorphoses into an output. The process that needs to be amended is clearly defined by a tool called SIPOC which stands for SupplierInput-Process-Output-Customer. The Voice of the Customer is critical to define the goals of the organization. There are other issues to be taken care of as well and they include cycle time, cost and defect reduction. The essence of Six Sigma is to solve problems that are impacting business. The process of improvements starts immediately with the "Define" step. When a Six Sigma project is launched, goals are chalked out to have an idea about the degree of satisfaction among customers. These goals are further broken up into secondary goals such as cycle time reduction, cost reduction, or defect reduction. The Define Phase comprises of base lining and benchmarking the processes that need improvement. Goals and sub-goals are specified and the infrastructure to accomplish these goals is established. An assessment of changes in the organization is also taken into consideration. Measure Phase The second phase is the measure phase in which the reviewing of information and collection of data takes place. This phase helps measure the performance of the ongoing process. In this phase the data collected is quantified. The process is measured in terms of defects per million opportunities. This is imperative for Six Sigma because only if the measurement is correct will the results be good. The important thing to be kept in mind while measuring is that there should be cost and time savings. The important thing required in this phase is that the measurement system should be one which can be substantiated when required. It should be orderly and correct to the last detail. Analyze Phase The Analyze phase is the one where the interrelation between the variables and the impact they have on the quality is studied. This is also the phase where the root cause of the defect is analyzed, new opportunities are searched for and the difference between the current and

the target performance is found out. The idea behind this kind of analysis is to find out the inputs that directly affect the final output. Also, it can help to answer several questions like:

The analysis helps to determine the blend of inputs that can affect the output. If an X input is changed, will it alter output Y? (In the equation Y=f(), are the inputs, and Y is the final output) If one input is changed does it affect the other inputs?

In the analysis phase, it becomes easy to determine the variables which would affect the CTQ factors. Improve Phase The Improve phase comes next in DMAIC. The personnel working on the project select the method that would work best for the project keeping the organizational goals in mind. The root cause analysis is chronicled in the Analysis stage. The Improve stage is the one which implements the conclusions drawn through root cause analysis. In this phase, an organization can improve, retain or negate the results of root cause analysis. In this phase (like the analysis phase), the Open-Narrow-Close approach is used. The approach makes it easy to narrow down the options and choose the best solution. However, the emphasis remains on choosing the result which leads to maximum customer satisfaction. This is also the phase where an innovative resolution is found out and it is executed on an experimental basis. Control Phase It is very important to maintain the standard that has been established. The control phase is the one where improvements that have taken place are sustained. This is done by chronicling the improvements and also keeping a check on the new process that has been created by mitigating the defects. This is done so that the defects that were earlier present in the process or the product are absent in the new process or product. All the major QC tools are used in Six Sigma. Tools like Benchmarking, SPC, and QFD etc. are used frequently. Some general tools have been bent and applied according to Six Sigma requirements like project charter, SIPOC, CTQ trees etc. A review is held after each phase of DMAIC or DFSS to ensure that all the necessary work and follow-ups are done. Six Sigma is an efficient way of correcting processes because Six Sigma stresses on using data, statistical analysis and designed experiments to make intelligent decisions. Since it focuses on bottom line impact, involving the management is a precursor to any Six Sigma initiative. A Six Sigma improvement program cannot be successful without the involvement of the management. It involves the roles of the executive leadership, the champion, the deployment personnel, and the Master Black Belts, Black Belts and Green belts who apply Six Sigma techniques.

A Comparison: Lean Thinking Vs. Six Sigma A few pointers to Lean and Six Sigma are listed below:
1. A Lean system views waste as anything that does not produce value, but Six Sigma views waste as process variation.

2. 3.

Lean focuses on process flow, and Six Sigma focuses on process variation which causes defects. Lean uses process flow tools like value stream mapping, process mapping etc. to eliminate waste. Six Sigma uses methodologies like DMAIC and DFSS to eliminate problems. Six Sigma uses statistical tools and analytical tools to find out the root causes of process variation and eliminate them. Six Sigma, like Lean Thinking also focuses on customer satisfaction, prevention of defects and waste, and cycle time reduction.

4.

To look at how Lean relates to Six Sigma, the word quality needs to be analyzed in a different manner. Quality is a measure of value added by a productive endeavor. The difference between potential and actual quality is called Muda. (Thomas Pyzdek, 1976) Six Sigma describes quality in terms of defects rather than in terms of value. But when quality is defined in terms of value, it can be seen that Six Sigma also tries to achieve ways to reduce muda or waste. Six Sigma is: (Thomas Pyzdek, 1976)

A general approach to reducing muda in any environment. A collection of simple and sophisticated methods for analysis of complex cause and effect relationships. A means of discovering opportunities for improvement.

Comparing this with Lean, Lean has readymade solutions to eliminate muda. Lean offers tried and tested solutions to these problems. Six Sigma can also be applied to the problems addressed by Lean, but Six Sigma goes beyond that, it has the power to tackle problems at the organizational level. However both methods tend to converge because both aim to deal with the problem of muda. They use two different approaches to get the same end result process improvement. The conclusion that can be drawn is that these two approaches complement each other. It is not a question of Six Sigma or Lean; it is Six Sigma and Lean. In areas where it is seen that Lean will solve the problem, it should definitely be used. Six Sigma methods also help with Lean and Six Sigma will help when it is time to push improvement in administrative and other non-manufacturing areas. Similarly when Lean is not solving the problem, then Six Sigma (in case when processes show excess variability) can be used to help identify and address the root causes of the problems.

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LeanManagementCertification- LeanandSix Sigma


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B. What is Lean Six Sigma?

Lean Six Sigma is a fusion of Lean and Six Sigma techniques. Organizations applying this technique in their business and service processes take the key ideas of both the methodologies to achieve significant process improvement.

The goals of Lean Six Sigma are similar to both the methodologies: 1. To deliver higher quality of service (high sigma) with greater speed (Lean)
Lean Six Sigma projects start with finding out the needs and wants of the customer, because it is the customer who will spend money on the organizations products. Here the customers are not just the external customers; the internal customers (people who work for the organization) also present valuable inputs into the quality of the product or what they want from the company they are working for. The customer data collected from the Voice of Customer (VOC) tools like surveys, focus groups, customer complaints, interviews, etc. present valuable information about whether products and services are meeting the expectations of the customers. The organization focusing on customers should build up an environment where their daily work is molded keeping customer desires in mind. The goal is to improve quality by eliminating defects or non-conforming products. If a pizza delivery chain promises the home delivery of a pizza in 30 minutes and takes 35 minutes to do the same, it is a defect. Example A pizza chain discovers that its customer satisfaction levels were going down. They started to analyze where the problem lay by listening to the Voice of the Customer. A survey conducted by them brought to light the critical to quality requirements (CTQ) of the customers, which they had to improve on to reverse the problems. They were:

On-time delivery (within 30 minutes) Taste and appearance of pizza Friendly service Hotness of pizza Variety in the menu

Another goal is to achieve consistency in the products and services. What is the probability that the customers are constantly getting what they need? What are the chances that the pizza chain is baking pizzas that have tastes or sizes of pizzas or delivery speed that are consistent? Quality, speed of the process, and low cost are linked. Low quality and slow speed makes the process expensive and pushes up the cost of the product. Therefore the idea of efficient quality is to deliver products with no defects, on time (with speed) and at the lowest possible price.

2. To improve processes by eliminating defects and observing how work flows through the process
Improving processes means reducing or eliminating variation, and improving the process flow or speed. Methods like DMAIC and DFSS are used to improve processes. (DMAIC and DFSS are not discussed in length in this course. However a brief description is given in the earlier part of this chapter) A great deal of emphasis is laid on studying the flow of work between

people and work units and training people with the necessary expertise to improve on their work areas. One of the most common sources of problems in a process is variation. As stated elsewhere in this chapter, the word sigma is used to denote the amount of variation in a process. A process becomes efficient when it reaches the sigma level. (This concept has been briefly discussed in the earlier part of this chapter.) When the process performance is compared with customer requirements and it is seen that the performance does not meet those requirements, which means it is producing a lot of defects, it means the process has a lot of variation. Reduced variation means making processes more consistent, more predictable to get high levels of quality. For example, a customer expecting a delivery by noon will be satisfied if he gets the delivery between 11 am and 1 pm. Refer to the figure below to understand variation better.

Another problem in a process is the work flow, or the physical path of how the work flows in an office or in a factory floor. The best way to improve the process is to do away with waste

or non-value adding activities in the process steps. There are process steps which are not really necessary in the process; the process flow can be made quicker by eliminating those steps. Unnecessary steps add complexity, cost and time. Another way is to redesign how work physically flows though a plant. Work flows from one person to the other and from one workstation to another. Waste can be identified by using tools like flowcharting, process mapping, value stream mapping and various other tools. Example An organizations design engineers were taking too much time to apply design changes in one of their products. When they analyzed the process, they realized that they needed approvals to go ahead from four different managers. This slowed the decision making process. Upon looking closely at the necessity of getting all four approvals, they discovered that two of them did not provide any special know-how to the process. Therefore the design team changed the process steps by narrowing down to only two approvals from two managers. These helped the redesign process move at a faster rate, and quicken the total process speed, because the remaining two managers took very less time to review the design, and arrive at a decision, and let the rest of the process move. Thus Lean Six Sigma focuses on process improvement.

3. To work as a team to get the most efficient results


Lean Six Sigma lays emphasis on team work. This just doesnt include teams working on improvement efforts, but a creation of an environment where there is room for cohesive discussion and suggestion-giving, and a sense of team effort in all process achievements. Teams should be motivated, appreciated or remunerated rightly for their contribution towards positive improvement. There should be an air of sharing and learning. Lean Six Sigma stresses on building effective communication and collaborating skills by encouraging team work and team management. Team roles are assigned to get the best output. Teams are trained to listen, organize, and taught decision making techniques through the use of various tools. Brainstorming, affinity diagrams, multivoting, tree diagrams, interrelationship diagraphs are some of them.

4. To arrive at decisions based on data


The very basis of Lean Six Sigma is data collection. Without data, the very basis of process analysis gets nullified. When information about customer requirements is needed, data needs to be collected. When the process is to be improved, data on defects, variation and process flow are required. Data is essential because it helps save a lot of time and money and it streamlines research and helps in making crucial business decisions. To monitor process performance, historical data on the process is required. Data can be analyzed to know where the root causes of problems lie, what the current state of the process is, and which solutions will apply in the process. Data can be interpreted to arrive at important conclusions. For example, how many of your customers are happy with the product you delivered? How many times did the average handling time go beyond the permissible limit? How many times did your pizza delivery men deliver the pizza in time? The four important kinds of data are:

Customer satisfaction Speed of delivery/ lead time/ cycle time Revenue/costs/ expenses data

Quality/ errors/ defects

There are numerous tools for data gathering and data analysis and Lean Six Sigma uses them all throughout the project. Many of them are statistical and graphical tools like Box plots, stem and leaf plots, scatter diagrams, histograms, run charts, trend charts, correlation and regression analysis, ANOVA etc.

The Five laws of Lean Six Sigma


The five laws of Lean Six Sigma have been formulated to provide guidance to improve quality and business processes. These five laws are a fusion of important ideas from Lean Enterprise and Six Sigma methods.

Law 0: The Law of the Market - Quality is shaped by customer needs and is placed at
the highest level on the priority list. Getting sustained revenue growth without this is impossible; it is the customer who determines what quality standards should be. It is called law zero because everything else is centered on this law.

Law 1: The Law of Flexibility The speed of any process depends on how flexible the

process is. This means how smoothly people can switch between tasks or how easily a task can be reconfigured without affecting the process speed. For example, inflexibility in the plant floor is seen in queues, rigid set ups and changeover times. In service processes, bureaucracy is seen as inflexibility. Change from one computer system to another also reveals how inflexible a process is.

Law 2: The Law of Focus Data has shown that 20% of the activities in a process

cause 80% of the delays or the problems. So all efforts should be directed on that 20% for better process results.

Law 3: The Law of Velocity(Littles Law) The speed of any process is inversely
proportional to the amount of its work-in-progress (WIP). This means, as WIP increases, the speed goes down. Therefore efforts should be directed at reducing the WIP at any given time.

Law 4: The Law of Complexity and Cost The complexity of the service or

product usually adds more cost and work-in-process than either poor quality (low sigma) or slow speed (un-Lean) process problems. For example, one of the initial improvement targets should be reducing the range of products a work group is involved in producing.

Implementing Lean Six Sigma


Implementing Lean Six Sigma takes time, effort, and money. But companies still adopt this methodology because it churns out better products and services; it cuts costs and gives higher returns on investment, and gives job security to its employees. Any Lean Six Sigma project entails starting out with the following activities:

Selecting the projects that are linked to the core organizational goals Training the people according to Lean Six Sigma requirements

1. Initialization
A Lean Six Sigma program starts at the executive level, with management training and planning. The chief executive of the enterprise should understand the nature of Lean Six

Sigma and how the Lean Six Sigma project will affect the core business of the company.

2. Execution
Once the CEO formally decides to proceed he should depute a deployment leader who will oversee the working of the project. The deployment leader along with the top management will develop a series of directives, policies, and rules alongwith this project. New positions and new roles like Champions, Green Belts, and Black Belts will have to be created and trained to staff Lean Six Sigma efforts. There will be existing staff like Process Managers and Business Unit Managers who will have to expand their responsibilities to fit into the Lean Six Sigma framework. Selecting the right projects is the foremost activity. This means selecting projects that are linked to the organizational goal, that will have the biggest payoff , that are realistic in scope, that have measurable metrics, and that can be completed with the available resources. After the teams are selected, their roles and responsibilities have to be defined, and appropriate training has to be given to them to make them familiar with new procedures that are put into place for the deployment of the Lean Six Sigma project. Project selection and training generally occurs in batches, once a group of people are trained, they start work on the initial projects. Most Lean Six Sigma projects go through the DMAIC steps. Once the DMAIC project is underway, a tollgate review should be held between each of its phases, to ensure that the project is moving in the right direction, and adjustments can be made wherever necessary. Team dynamics should also be looked into, and all kinds of unproductive friction among team members should be corrected. It takes restraint to stumble upon valid answers to issues troubling an organization. Restraint is provided to an organization in the form of DMAIC. The whole process of DMAIC involves a lot of steps like gathering data, learning lessons and sustaining the efforts. These steps may, sometimes seem, to be very lengthy and monotonous. However, one thing that DMAIC assures is the fact that it provides a step-by-step effort and proves to be a very fruitful exercise.

3. Assessment
An unbiased and timely assessment of the project has to be done to ensure that the project implementation plan is happening in the right manner and any gaps between the actual level of the process and the expected or desired level of the process can be covered in time. The positive results of the completed project should be sustained. An analysis of the cost and benefits should also be done to get the maximum benefits in the stipulated time frame of the project.

Implementing Lean Six Sigma in Service


Lean Six Sigma has been applied to a range of sectors like healthcare, banking, and aerospace industry in their service and business processes. Although the objectives of these sectors are totally different from each other, each of them found out that the most effective way to achieve their objectives was to integrate Lean and Six Sigma in their processes. Getting improved quality with better speed can only be achieved when both Lean and Six Sigma methods are applied. Applying Lean Six Sigma in service sectors helps achieve a fast rate of improvement in customer satisfaction and quality, cutting costs, increasing process speed, and invested capital. A blend of Lean and Sigma is required because only Six Sigma can bring a process

under control though the use of analytical and statistical tools likes SPC. Similarly, just applying Six Sigma alone cannot greatly improve process speed and decrease lead times. The application of Lean techniques together with Six Sigma makes this possible.

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LeanManagementCertification- Lean EnterpriseandNonManufacturingServices


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Introduction
Organizations in the recent past have applied a lot of information technologies to their business to improve revenue, customer satisfaction and to decrease operational costs. Many process improvement technologies like Six Sigma and Lean are being applied to organizations to determine whether these information technologies are giving a satisfactory return on investment (ROI). Lean is an excellent tool to increase margins, retain customers and reduce stress. It can be applied in the front office of a small firm or a coffee shop in the nearby street. The application of Lean to businesses means identifying the causes of waste, productivity lost and customer dissatisfaction. The next step is to modify the internal processes to eliminate these causes. The success stories in the manufacturing processes have encouraged the retailers and service sectors to apply Lean to non-manufacturing operations. Any organization can be described in terms of the value stream and any value stream consists of waste. This waste can be detected and eradicated by applying the Lean principles. Therefore, Lean is not limited to manufacturing but has been applied successfully to various non-manufacturing environments like financial services, healthcare, military, non-profit foundations and government organizations. The Lean manufacturing process adopted by the manufacturers can be applied to the service sector to build a robust and effective process. Both the sectors face challenges like increasing productivity and at the same time saving costs. Both the sectors are labor intensive and there is a need to optimize capacity and respond to changing market trends. The important thing while applying Lean to non-manufacturing is to follow a systems approach and not a command-and-control approach as applied in Lean manufacturing processes. The systems approach helps in delivering improved service, generating better revenues and costs savings, and at the same time boosting the morale of the employees. The hierarchical decision-making system, that is the command-and-control approach, is characterized by high costs and poor service quality, and there exists a wide gap between the higher authority and the lower managers and workers. By adopting a system approach, the managers can be reconnected with their operations by taking purpose-related measures (like improvement in services and customer satisfaction) rather than activity-related measures (like budgets and achieving the targets). This would help the higher authority to get closer to the middle and lower management and exploit opportunities for improvement.

Thus organizations should shift their focus from command-and-control management to local control. Better results can be achieved if activities of the employees are controlled at the point where work is being done. The aim should be not just to achieve the goal, but to stress on learning, improving and implementing it as a routine.

Example 1. Lean and Financial Services


Countries like China, Poland, India and Russia are fast emerging as consumers and producers of products and services. Moreover, the baby boomers in the United States are experiencing retirement. These two major events will open remarkable prospects for financial services. The financial service industries must be ready to compete globally. To achieve this, the financial industries must adopt efficient systems and practices like Lean. Some companies like Bank of America and JPMorgan Chase have already led the way for Process Excellence in Financial Services with Lean Six Sigma programs. Lean is used in financial services and helps to create customer value by carefully selecting the projects. The cash flow of the financial services can be streamlined by applying Lean principles to them. Lean also helps to streamline the processes, improve capacity and customer satisfaction. Some of the important things to be kept in mind while applying Lean to financial services are:

Customer needs Eliminating non-value added activities Improving total shareholder returns by driving revenue, profits and return on assets Drawing, maintaining and upgrading personnel who provide excellent customer experience Creating returns of approximately 10 times the investment made by shareholders in approximately two years

The processes in financial services such as portfolio management, insurance claims, financial long-term healthcare planning and retirement planning measure customer satisfaction per executive or a new account opening or profits gained or the level of customer satisfaction. The processes where Lean can be applied in various financial services are described below. Banks Processes such as loan applications, small business and consumer loans, monthly dispensation of the bank statement should make use of the measurements of deposit assets, market share and client capture along with factors like level of customer satisfaction and profitability. Credit Unions The processes in the credit unions must make use of deposit assets, margin loan per unit, customer satisfaction and profitability as their scale of measurement in processes like mortgage applications, auto loans and personal savings accounts. Insurance Companies The processes in the insurance companies like claim resolution, quoting and company

assessments must use measurements like new group enrollments, leverage of client base for referrals and profitability and level of customer satisfaction.

2. Lean and Healthcare


Lean is good for any industry which has a clearly defined set of activities running to manufacture a product or service. Healthcare units like diagnostic labs make the introduction of Lean Healthcare innate and its effects are initially very visible. Once Lean gets incorporated in one part, it quickly spreads to other areas as well. The cost of health care is rising by the day and the health care providers are facing increasing pressure to reduce costs, provide the patients with better safety and care, improve profits and reduce errors to avoid litigation and reduce dependence on government funds and insurance premiums. The needs of a patient come foremost in the priority list of the healthcare sector. The tests performed on the patients and the care provided to them can make a difference to their lives. Therefore, hospitals are investing big money to install information system projects. However, they have not succeeded much in their purpose due to lack of real process change to take advantage of the information system itself. The Lean healthcare is a process which generates value by eliminating waste and delivering best quality of products and services at a low cost. One of the challenges in implementing a Lean strategy is that people find it challenging to identify waste in the tasks they are so involved in. All workers, especially the healthcare workers want to feel that their work adds value. The nurse, who serves the patients and hunts supplies for them, is doing that to help the patients. She does not realize the fact that she is wasting valuable time in hunting for supplies. If the supplies were readily available on a specialized counter or a shelf, she would be able to work more efficiently and help serve the patient quicker. She would also be able to put that wasted effort to some productive use. Key processes are those which support the core products. The core product in healthcare consists of a visit to the doctor, or a visit to the emergency ward or to the operation theatre. The processes for these core products should be identified and duties should be allocated to the personnel to fix responsibility for improving that particular process. A healthcare system should focus on six key areas: 1. 2. 3. 4. 5. 6. The healthcare system should adopt the policy of patient first like other organizations who put the customer first. The system should adopt a no-layoff policy. The organization should adopt a defect alert system for the entire organization. Innovation and brainstorming should be encouraged. Elimination of waste should be a priority. Accountable leadership should be made compulsory.

The no layoff policy is important for the implementation of Lean thinking. The healthcare workers will commit and involve themselves in the improvement work if they are satisfied that their jobs are secure. Attrition, which is common in this sector, makes organizations redirect and reassign personnel to other important and urgent work. It is a common trait among healthcare employees that they do not view themselves as working for the whole

organization. Instead they are particularly loyal towards their own department or care team. The foundation of Lean thinking is customer/patient satisfaction, and healthcare employees should understand that they work for patients. This means they may be reallocated depending on the requirements of the patient. The defect alert system is an important element of the Toyota Production System and is known as stopping the line. Every worker in the Toyota plant has the authority and duty to stop the assembly line as soon as somebody detects an error or defect in the production system. The supervisors and workers fix the problem there and then so that the problem does not get ingrained in the final product. Example A Virginia Mason hospital staff nurse noticed one of the patients wearing a pink-color wrist band. The pink wristband signified that the revival of the patient had been withheld. However, she felt something wrong with it as she remembered that the patient had recently been diagnosed with operable lung cancer. She enquired the patient about the significance of the wrist band and came to know that the wristband meant allergies to certain drugs. The nurse immediately replaced the pink wristband with an orange one which was meant for drug allergies. She also reported the incident to her manager who called a Patient Safety Alert. A new procedure was developed on the same day to print Allergy Alert on the orange wristbands.

Conclusion
Lean in not a new concept but it is definitely new for the non-manufacturing sector. Many aspects of the Toyota Production System and the Ford System do apply excellently to the non-manufacturing industries. Lean management has proven to deliver exceptional results which help to eliminate waste in non-manufacturing units with the results which are easily comparable to other manufacturing units. Leaders in the non-manufacturing industries who have adopted Lean principles are of the view that the organization should create a culture where the people are ready to adopt the Lean principles. If the people are not receptive, the Lean efforts are bound to fail. The Lean management tools can be applied to the non-manufacturing units with as much ease as they are applied to the manufacturing enterprises. Lean helps in creating an efficient, effective and truly responsive system for the customers.

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