Lean Operations can radically reduce the operating costs and improve the profitability of any company. The central idea of lean is to maximise customer value (see Value) while minimising waste. This requires a lean organisation to understand customer value and to focus on continually increasing it. To achieve this, lean thinking changes the focus of management from optimising activity within separate vertical departments to optimising the flow of products and services through entire value streams which flow horizontally across departments to customers.
Eliminating waste along entire value streams instead of at isolated points creates processes which need less human effort, less space, less capital and less time to make products and services at substantially lower cost and with fewer defects compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost and with very fast throughput times. Information management also becomes simpler and more accurate.
Where did Lean come from?
The name "Lean" was coined by Womack, Jones & Roos as a description of the Toyota Production System (TPS) in their 1990 book The Machine that Changed the World (see Guidebooks). Although the lean philosophy was developed in the motor industry, the principles apply equally to any other manufacturing industry, service or office.
It is important to appreciate that lean impacts upon every part of a business and requires a change in the way management thinks about running the business every bit a great as the changes required by the workers operating the processes.
Lean has five principles which are applicable to all business types:
Value is specified from the point of view of the customer. It is represented by those features of a product or service for which the customer is prepared to pay. If an activity is not something for which the customer is prepared to pay, it is not adding value.
The value stream is the sequence of activities by means of which the value is delivered to the customer. The value stream includes both value adding and non-value adding activities. Activities which do not add value are considered to be wasteful and should be removed from the value stream.
Value should always flow, it should never stand still. A value adding step should never be delayed by a non-value adding step - they should be done in parallel.
Use pull control to ensure that value only flows in response to customer demand.
Perfection means producing or delivering exactly what the customer wants at a price they are happy to pay, when they want it and with a minimum of waste.
Muda, Mura, Muri
Three aspects of work which in a lean business should be reduced.
Reduction of waste is central to lean operations. Anything resulting in waste should be eliminated unless it is a necessary waste, in which case the process should be simplified to minimise the cost. For more about waste see Lean Wastes.
Irregularity leads to waste. Irregularity in the rate of completion of work is addressed by implementing standard procedures for all activities. Irregularity in demand is addressed by load balancing.
If a task requires more effort to complete than it should, then it will be done more slowly and inconsistently than it could be, resulting in waste. In a lean business, work is made as straightforward and effortless as it can be.
A couple of lean tools form the foundation of a lean operation and are applicable to any type of business.
The Five S system of efficient workplace organisation lies at the heart of all lean businesses. If the workplace is not efficiently and functionally organised there is little chance of a business becoming lean. The workplace needs to be organised to support process flows, whereas most workplaces are organised along departmental lines. To learn more about this important tool visit the Five S page.
Continuous improvement or Kaizen
A lean business accepts that it will never be perfect - there will always be improvements which can and should be made, improvements which will reduce the Lean wastes. To learn more, visit the Kaizen page.
The following benefits are typical, though many companies have reported far larger improvements:
- Inventory reduction: 60 - 70%
- Floor space reduction: 50%
- Productivity increase: 25 - 40%
Sherpa will help you to understand the principles behind lean, to explore your value-chain and to focus on the flow of product or service to your customer. We will guide you on your journey, and will teach you the techniques you need along the way.