Fundamentals of Lean

Professor Deborah Nightingale

September 9, 2002

Deborah Nightingale © 2002 Massachusetts Institute of Technology 1

 Lean is a New Approach to Managing
Enterprises

¾ Origin and evolution of lean concepts

¾ Core lean principles & practices
¾ How lean differs from craft and mass
production models of industrial organization
¾ Lean implementation steps
¾ Value stream mapping

Deborah Nightingale © 2002 Massachusetts Institute of Technology 2

 Lean was Born out of Necessity: How to
Withstand the Mass Production Behemoths

¾ On August 15, 1945 -- end of war with Japan -- Toyota faced a

daunting challenge: How to succeed against Western mass
production auto giants poised to enter Japanese market?
¾ Kiichiro Toyoda to Taiichi Ohno (father of lean production): “Catch
up with America in three years.”
¾ Ohno’s challenge: How to design a production system exploiting
central weaknesses of mass production model
¾ Japan faced many dilemmas: small & fragmented market,
depleted workforce, scarce natural resources, little capital
¾ Lean evolved as a coherent response to this challenge over a
number of decades -- a dynamic process of learning and
adaptation later labeled as “lean production” by Western
observers

Deborah Nightingale © 2002 Massachusetts Institute of Technology 3

 Lean Response: Use Less of Everything, Offer
Greater Variety of Higher Quality & More Affordable
Products in Less Time
¾ Best Japanese auto companies developed a
fundamentally different way of making things
¾ These companies changed the dynamics of
international competition
¾ New goals in manufacturing systems --
combined benefits of craft and mass
production
¾ Improved quality
¾ High productivity
¾ Efficiency at low volumes
¾ Production flexibility
¾ Rapid, efficient development cycle
¾ Product mix diversity
¾ Lean production contrasts with traditional
mass production paradigm
¾ Systemic principles are transferable

Deborah Nightingale © 2002 Massachusetts Institute of Technology 4

 What is Lean Thinking?

The removal of muda!

Muda- Is a Japanese word for waste
Waste- any activity that absorbs resources & creates no
value!

Source: LeanThinking by Womack & Jones

Deborah Nightingale © 2002 Massachusetts Institute of Technology 5

 More Japanese Terms

¾ Kaikaku- radical improvement

¾ Kaizen- continuous incremental improvement

Deborah Nightingale © 2002 Massachusetts Institute of Technology 6

 Taiichi Ohno (1912-1990)
Toyota Executive

¾ Types of Muda:
¾ Mistakes which require recertification
¾ Production of items no one wants
¾ Processing steps which really aren’t needed
¾ Employee or goods movement/transport from one
place or another without any purpose

Deborah Nightingale © 2002 Massachusetts Institute of Technology 7

 Taiichi Ohno (1912-1990)
Toyota Executive

¾ Types of Muda:
¾ People in downstream activity waiting because
upstream activity has not delivered on time
¾ Goods and services that don’t meet the need of
customer

Deborah Nightingale © 2002 Massachusetts Institute of Technology 8

 Antidote to Muda: Lean Thinking

¾ Provides way to specify value

¾ Line up value creating actions in best sequence
¾ Conduct activities without interruption whenever
someone requests them
¾ Perform them more and more effectively
¾ Provides a way to make work more satisfying

Deborah Nightingale © 2002 Massachusetts Institute of Technology 9

 Lean Thinking is the Dynamic Process of Eliminating
Waste with the Goal of Creating Value for all
Enterprise Stakeholders

¾ Customer-focused: Customer needs and expectations

“pull” enterprise activities
¾ Knowledge-driven: Draws upon knowledge and
innovation from everyone -- workers, suppliers
¾ Eliminating waste: Stresses elimination, not just
reduction, of all types of waste
¾ Creating value: Puts premium on “growing the pie”, not
just reducing costs, to benefit all stakeholders
¾ Dynamic and continuous: Pursues on-going systemic
as well as incremental improvement -- both innovation
and continual improvement
Deborah Nightingale © 2002 Massachusetts Institute of Technology 10
 Lean Encompasses a Set of Mutually-Positively-
Reinforcing Concepts, Practices and Tools Creating
a Virtuous Cycle

¾ Synchronizing flow and pull: “Pull” based just-in-time production

enabled by kanban system
¾ Striving for perfect quality: Completely defect- free parts must flow
to each subsequent process; variability reduction; quality designed-
in, not based on inspection
¾ Flexibility and responsiveness: Small lot sizes and quick set-up
times; ability to respond to shifts in demand
¾ Trust-based relationships: Mutual commitments and obligations,
internally and externally with suppliers
¾ Continuous improvement (Kaizen): Continuous improvement
through work standardization, productive maintenance, error
proofing, root cause analysis, and worker training & empowerment

Deborah Nightingale © 2002 Massachusetts Institute of Technology 11

 5 5 Steps to
4
*
Becoming
3 Lean
2
1
Northrop Grumman
ISS
Deborah Nightingale © 2002 Massachusetts Institute of Technology 12
 5 Steps to Becoming Lean

1. Define Value Customer

2. Identify the Value Follow the Product
Stream
3. Flow the Product Eliminate Waste
4. Pull Produce Just-in-Time
5. Strive for Perfection Continuously Improve

Deborah Nightingale © 2002 Massachusetts Institute of Technology 13

 1. Define Value

Definition

Information/Material in a Form That the

Customer Is Willing to Pay for

Value is Defined by the Customer

Value is Created by the Producer

Deborah Nightingale © 2002 Massachusetts Institute of Technology 14

 Who’s the Customer?

Cuser
Who’s the
customer? C
shareholder

C
employee

C
environmental
Deborah Nightingale © 2002 Massachusetts Institute of Technology 15
 2. Identify the Product’s Value Stream

The Value Stream Consists of the Actual

Tasks Required to Bring a Specific Product
Through Three Critical Processes:
Design -
Problem-solving From Concept Through Detailed Design
and Engineering to Production Launch C
U
S
Order - T
Information Management From Order-taking Through
O
Detailed Scheduling to Delivery
M
E
R
Make -
Physical Transformation from Raw Materials to Finished
Product In the Hands Of the Customer

Deborah Nightingale © 2002 Massachusetts Institute of Technology 16

Example: Structural Design Value Stream Map Pre-Contract
Req’m’nts &
Concept’l Des.
Manage Program Program
Prime System Spec
Req’m’nts
Component Systems Engineering
Procurement Spec Product:
Product: Allocate Requirements to Vehicle
Component
Component Structure Specs Des.Proc.
Allocate Requirements to SEMP Customer:
Procurement ICDs Structure Guidance Prime
Req’m’nts U.S. Government
- Design for
Contractor/
Supplier: Manage Team Manufacturing Team Process Value:
XXX Apply Program Plans - Design for – Affordable
Assembly
Apply Technical Plans - Design to Cost
– High Quality
Apply Processes & Tools - Design for Key – High Performance
Apply Resources Characteristics Product
- Design for – On Time Delivery
Supportability
- Design for 6 Sigma
- Design for ..........

To All Processes Shown

Des. Ref.
Library
- Specs
- Environmental
Criteria
- Standard Parts
- Standard Designs
- Design Handbook
- Geometric Design &
Tolerancing
- Mfg. Process
Capability
- Etc.

Define Structural Prepare Perform Detail Release

Produce Test
Arrangement Prelim.Design Design BTP
• Finalize Conceptual Design Product System
• Conduct Structural • Design Parts & • Build to Package
• Develop Layouts Details • Buy to Package
Configuration/Cost/Mfg. Trades
• Perform Airframe Analysis • Create Assemblies • Perform Structural • CDRLs Suppliers • Fab Tooling
• Build & Inspect
• Development
• Verification
- Weights • Create Sub-Assemblies Analysis • Reports Procure • Build and • Deliver • Validation
• Perform Structural Analysis • Assemble
- Finite Element Model
- Environmental Model - Stress
- Internal Loads - Environmental
- Observability Model - Weight
• Develop Material Allowables • Production Factory
• Define Arrangement Requirements Analysis
- Production Breaks • Develop Adv. Mfg. Plan
Iterate
• Develop ICDs Tooling & Mastering
Concepts Iterate

Analyze Rework
Change / Rework Root Cause

System Req’m’ts System Design Prelim. Design Critical Design

Review Review Review Review
@ 80% BTP
0 xx yy zz Release
J. Wessels
months months months months 4/27/2001
Rev. 4
 3. Flow the Product

1. Eliminate 2. Prefer One 3. Focus on the Product

Activities That Piece Flow and Its Needs Rather
Are Pure Waste Where possible Than the Organization
or the Equipment

4. Focus on actual object and never let it out of sight

from beginning to completion

5. Ignore traditional boundaries of jobs, careers, functions,

and organizations to form a Lean enterprise removing
all impediments to the continuous flow of the product

6. Rethink specific work practices and tools to eliminate

backflows, scrap, and all stoppages

Deborah Nightingale © 2002 Massachusetts Institute of Technology 18

 What Is a Value-Added Activity?

Definition

A value-added activity is any action that

transforms information/material into a
capability for our ultimate customer at
the right time and the right quality.

Deborah Nightingale © 2002 Massachusetts Institute of Technology 19

 Waste

Definition

Any Activity That Consumes

Resources Yet Adds No Value

Deborah Nightingale © 2002 Massachusetts Institute of Technology 20

 Batch Production Example

Processes - Oriented Layout

With Transfer Lot Size of Five

Throughput Time (5 Units) = E

L 0 A B C D
A
5x1 + 5x1 + 5x1 + 5x1 =
P
S 5 A B C D
20 Min. E
D
10 A B C D
T
Work in Process I
M
E 15 A B C D
5+5+5+5=
M
20 Units I 20 A B C D
N

A B C D
= Different
Processes
Processing Time = 1Min./ Unit

Deborah Nightingale © 2002 Massachusetts Institute of Technology 21

 Batch Production Example

Processes - Oriented Layout

With Transfer Lot Size of Five

Throughput Time (5 Units) = E

L 0 A B C D
A
5x1 + 5x1 + 5x1 + 5x1 =
P
S 5 A B C D
20 Min. E
D
10 A B C D
T
Work in Process I
M
E 15 A B C D
5+5+5+5=
M
20 Units I 20 A B C D
N

A B C D
= Different
Processes
Processing Time = 1Min./ Unit

Deborah Nightingale © 2002 Massachusetts Institute of Technology 22

 One - Piece Flow Example
Product-Oriented Layout
With Lot Size Of One

Throughput Time (5 Units) = E 0 A B C D

L
1x4 + 1x1 + 1x1 + 1x1 + A 1 A B C D
1x1 = P
S 2 A B C D
8 Min. E
D 3 A B C D
Work in Process
T 4 A B C D
1+1+1+1= I
M 5 A B C D
4 Units E
6 A B C D
M
I
7 A B C D
N
A B C D
= Different
Processes 8 A B C D
Processing Time = 1Min./ Unit
Deborah Nightingale © 2002 Massachusetts Institute of Technology 23
 One - Piece Flow Example
Product-Oriented Layout
With Lot Size Of One

Throughput Time (5 Units) = E 0 A B C D

L
1x4 + 1x1 + 1x1 + 1x1 + A 1 A B C D
1x1 = P
S 2 A B C D
8 Min. E
D 3 A B C D
Work in Process
T 4 A B C D
1+1+1+1= I
M 5 A B C D
4 Units E
6 A B C D
M
I
7 A B C D
N
A B C D
= Different
Processes 8 A B C D
Processing Time = 1Min./ Unit
Deborah Nightingale © 2002 Massachusetts Institute of Technology 24
 4. Pull

¾ Definition
¾ Letting the Customer Pull
Value from the Enterprise
¾ Don’t Make Anything Until It
Is Needed
¾ Then Make It As Quickly As
Possible

Deborah Nightingale © 2002 Massachusetts Institute of Technology 25

 Pull

¾ Concept of letting the customer pull product

from as needed instead of pushing it on them
¾ Reduces inventories and produces one time
cash windfall & return on investment

Deborah Nightingale © 2002 Massachusetts Institute of Technology 26

 5. Strive for Perfection

¾ Definition
¾ Continuous Process
Improvement
¾ Pursue Perfection, Not
the Competition
¾ There Is No End to the
Process of Reducing
Efforts, Space, Costs
and Mistakes

Deborah Nightingale © 2002 Massachusetts Institute of Technology 27

 Perfection

¾ Continuous radical and incremental improvement

¾ Continuous banishment of muda

Deborah Nightingale © 2002 Massachusetts Institute of Technology 28

 Seven Categories of Waste

¾ Over Production …………...… Making Ahead of Demand

¾ Waiting ………………………... Delay From Previous Processing Steps
¾ Transportation ……………….. Unnecessary Transport of Materials
¾ Over Processing …………….. Doing More Than Is Necessary
¾ Inventories ……………………. More WIP Than the Absolute Minimum
¾ Movement …………………….. Unnecessary Movement of People
During the Course of Their Work
¾ Making Defective Products … Products Do Not Meet Customer
Requirements

Deborah Nightingale © 2002 Massachusetts Institute of Technology 29

 Some General Product Definition Wastes
• Inaccurate / Incomplete
Information
• Inadequate Analysis • Generating More Info
• Requirements Creep Than Required
• Task to Be • Excessive Iterations,
• Change / Multiple Tools
Accomplished Don’t Stop at Good
• Inadequate Testing
(New, In-work, Enough
etc.) • Fine Tuning Beyond
• Undocumented Making Defective Products
Required
Information (Rework)
• Over Designing
• Prioritization Products Do Not • Unnecessary Interim
• Too Much Inventories Meet Customer Drawings for Build
Information • Over Analysis
More WIP Than the Requirements
Absolute Minimum Over Processing • Excessive Test Points
• Required to Stop a Doing More Than Is • Duplicate Tasking
Given Task Due to Necessary
Unavailable,
Inaccurate, And/or Waiting Seven
Late Information
Delay From Previous Types of
• Jobs in Queue Waste
Processing Steps Over Production
Waiting for
Resources Making Ahead of Demand
• Setup Time
Movement
(Computer Logon,
Printers, Xerox, etc.) Unnecessary • Tasks Finished
Movement of People Transportation Before Required,
During the Course of Unnecessary Transport e.g. Making
Their Work of Materials Drawings Before
They Are Needed
• Access to Data Storage
• People Are Not Co-located
• Walk to Tools (Printer, Copier,
• Transferring Data From One
CADAM, Etc.)
Database to Another
• Hand Carry Product for Signatures
• Physical Movement of Product
• Travel to Meetings
• Unnecessary Movement of Data
Deborah Nightingale © 2002 Massachusetts Institute of Technology
(Physical or Electron Flows) 30
 Exercise – Specific Examples You Encounter

Making Defective Products

(Rework)
Products Do Not
Inventories Meet Customer
More WIP Than the Requirements
Absolute Minimum Over Processing
Doing More Than Is
Necessary

Waiting Seven
Delay From Previous Types of
Processing Steps Waste Over Production
Making Ahead of Demand

Movement
Unnecessary
Movement of People Transportation
During the Course of Unnecessary Transport
Their Work of Materials

Deborah Nightingale © 2002 Massachusetts Institute of Technology 31

 Apply Five Simple Principles:

¾ Specify value from the standpoint of end

customer

¾ Identify the value stream for each product

family

¾ Make the product flow

¾ So the customer can pull

¾ As you manage toward perfection

Deborah Nightingale © 2002 Massachusetts Institute of Technology 32
 Lean Thinking Differs Sharply from Craft and
Mass Production in Important Ways

FOCUS CRAFT MASS LEAN

PRODUCTION THINKING
Focus Task Product Customer

Operations Single items Batch and queue Synchronized

flow and pull
Overall aim Mastery of Reduce cost and Reduce waste
craft increase and add value
efficiency
Quality Integration Inspection (a Prevention (built
(part of craft) second stage, in by design &
after production) methods)
Business Customization Economies of Flexibility and
strategy scale and adaptability
automation
Improvement Master-driven Expert-driven Workforce-driven
continuous periodic continuous
improvement improvement improvement

Source: Lean Aerospace Initiative

Deborah Nightingale © 2002 Massachusetts Institute of Technology 33

 Value Stream Mapping

Deborah Nightingale © 2002 Massachusetts Institute of Technology 34

 Lean/Value Stream Philosophy

The CUSTOMER’S
CUSTOMERS

CUSTOMER
VALUE
VALUE STREAM

PERFECTION
SUPPLIERS

FLOW PULL

The EXTENDED ENTERPRISE

NORTHROP GRUMMAN

Deborah Nightingale © 2002 Massachusetts Institute of Technology 35

 What is a Value Stream Map?

¾ A Visual Representation of Every Process in

the a Product’s Path from Order to Delivery

¾ Includes:
¾ Information and Materiel Flow Integration
¾ Product Through-Put and Cycle Times
¾ Resources Utilized
¾ Value Added Times
¾ Location of Significant Waste

Deborah Nightingale © 2002 Massachusetts Institute of Technology 36

 Why Value Stream Map?

¾ Systems Approach To:

¾ Visualize the Entire Product Flow

¾ Identifies the Sources of Waste
¾ Basis of an Lean Implementation Plan
¾ Determine Future Operating State

Deborah Nightingale © 2002 Massachusetts Institute of Technology 37

 Using the Value Stream Mapping Tool

Product

Current-State
Understanding how the product
Drawing currently flows

Future-State
Drawing
Designing a lean flow
Business Case
Justification

Work Plan How to get there

Deborah Nightingale © 2002 Massachusetts Institute of Technology 38