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The Lean Management Approach Published: Sunday, April 3, 2005 By: Dr. Manuel Ángel Morales

When Bob Womack, autor of The Machine that Changed the World, first visited Toyota’s manufacturing plants in Japan, he was so impressed by the efficiency of the manufacturing system they operated that he coined the term: lean manufacturing. Today, lean manufacturing or lean enterprise encompasses a group of concepts, practices, and tools, initially developed by Toyota, to compete worldwide.

The essence of “Lean” is the systematic elimination of waste throughout the value stream of a product or service; where waste is defines as any activity that does not add value to the customer. Lean pursues providing the customer with what he wants, when he wants it, where he wants it and how he wants it.

A Lean initiative invites employees to identify and evaluate all process activities and to eliminate those activities that do not add value. The purpose of a manufacturing process is to transform raw material and information into a finished product. Hence, whenever and wherever transformation is not taking place, we have waste. Some examples of waste are over-production, waiting for an operation to take place, transportation, over-processing, inventory, re-work, and movement. As waste is identified and analyzed, employees agree on actions and projects directed towards eliminating or minimizing the sources of waste.

Pursuing Lean requires five steps. First, the organization needs to define the value customers obtain from their offer or proposition. Unless we have a clear picture of what the customer values and what the customer doesn’t value, we are not in a position to evaluate activities within our process. You don’t want to fall into the trap of protecting a particular action of process because you assume the customer values the product of such action or process.

The second step consists of identifying all of the activities that are performed throughout the value chain or value stream. For a manufactured product, these activities entail everything that takes place from receiving raw material to shipping a finished product. For a service, we consider all the steps a customer needs to go through to purchase and receive the benefits of a product.

The third step consists in assuring that the process satisfies three requirements: the process is capable, the process is always available, and the process is adequate. By capable, we mean that the variability of the process is so small, it always produces an output that meets requirements. Six Sigma techniques are an excellent set of tools to increase the capability of a process. “Always available” implies a process with zero downtime and zero interruptions. Total Productive Maintenance and Quick Changeover techniques are excellent tools to achieve high levels of availability. Finally, “adequate” means that we’ve eliminated bottlenecks in the process. Theory of Constraints techniques are excellent in identifying and eliminating bottlenecks.

If the process is capable, always available, and adequate, we can operate in a continuous flow. Ideally, a continuous flow implies no inventory waiting between stations. Once a unit is processed, it is advanced to the next station in the value stream.

Once step three is achieved, we can move to step four: let the customer pull. This step requires that we stop manufacturing product against forecasted schedules and we produce only if and when the customer “pulls” product from our value stream. Many managers resist this step because they are afraid that unless they have inventory they will miss shipments when something goes wrong. These fears arise from attempts to implement some kind of just-in-time initiative in the past without working with the requirements of step three: a capable, available, and adequate process. Just-in-time, without a robust process, is a big mistake.

Finally, the fifth step of Lean is to encompass the previous steps in a continuous improvement framework. The idea is to manage towards perfection. If you think Lean does not apply to your business, think twice. Although Lean has its roots in manufacturing, the principles and tools of Lean are applicable to service and information driven processes, as well. Every product and service can benefit from a systematic approach to eliminating waste throughout its value stream.

 


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