Lean Thinking

© Operational Excellence Consulting. All rights reserved.
LEAN
THINKING
Eliminate Waste, Create Value

© Operational Excellence Consulting. All rights reserved. 4
Outline
• Introduction to Lean Thinking
• Key Concepts of Lean Thinking
• Overview of Lean Methods & Tools
• Ways to develop “Kaizen Eyes”
• Lean Roles
• Sustaining a Lean Culture
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What Lean IS NOT
• Laying off employees by the bus load
• Offshoring or outsourcing
• Delivering less or working harder
• Being mean to people
• Automation or implementing an IT system
• Narrow focus on unit cost management
• Another “extracurricular activities”

Lean Enterprise Framework
(a.k.a. Toyota Production System)
Stability
Standardization
Just-In-Time
Jidoka
Involvement
1
2
3
4
5
Stability
Heijunka Standardized Work Kaizen
Just-In-Time
• Continuous flow
• Takt time
• Pull system
• Flexible workforce
Jidoka
• Separate man &
machine work
• Abnormality
Identification
• Poka yoke
Goals:
highest quality,
lowest cost, shortest lead times
Involvement
1
2
3 4
5

What does Lean in a service environment
look like? (2/2)
Hospitals
•Emergency,
operating room
•Resource
management
Application Common Issues Typical Solutions
•“Unpredictable” nature
•On-demand service
•Highly skilled
surgeons, varied
backgrounds
•Historical pattern
planning
•Visual management of
resources
Airlines
• Airport operations
• Call centers for
priority travellers
•Unpredictable weather
•Network effect
•Unique customer
segments
•Weather response SOPs
•Customer resolution
based on severity and
frequency
Public Services
• Social services
• Legal services
• Funds administration
•Variability in demand
by volume and types
of services
•Capability building to
provide consistent
services
•Resource management
Source: Operational Excellence Consulting Research

Methods to Increase Productivity
How to Increase
Productivity?
Quantitative
Approach
More Staff
More Machines
Work Longer
Qualitative
Approach
Work Harder
Eliminate Waste
& Simplify
Focus of
Lean
Let’s work smarter!

“There is nothing
so useless as
doing efficiently
that which should
not be done at
all.”
- Peter Drucker

Types of Waste
• Creating reports that no one needs or
making extra copies
• Exceeding customer needs (“gold-
plating”)
• Exceeding scope of agreement
• Purchasing items before they are
needed (e.g. items on sale)
• Providing more information than the
customer needs
Over-Production

Types of Waste
• Poor office layouts and workplace
organization (5S)
• Insufficient use of tele-/video-
conferencing
• Double or triple handling
• Sub-optimal dispatch and routing
• Retrieving or storing files
• Taking files to another person, or going
to get signatures
Transportation

Types of Waste
Defects • Data entry errors, mistakes or rework
• Missing information, missed
specifications, or lost records
• Poor process controls
• Managing subcontractors to correct
mistakes
• Incorrect schedules and information
• Inadequate trials before full
implementation
• Lost or damaged goods

Non-Value Added activities in service
environments
1. Checking
2. Signatures
3. Asking
4. Approving
5. Reviewing
6. Filing
7. Copying
8. Reporting
9. Monitoring
10. Rework
11. Transporting
12. Double or multiple
handling
13. Searching
14. Gathering

Lean Principles
1. Specify value from the customer’s perspective
2. Identify the value stream for each service
family
3. Make the service flow
4. Deliver when the customer pulls from your
operations (just in time delivery)
5. Manage towards perfection
Source: Lean Thinking by James P. Womack and Daniel T. Jones

Activities that do
not add value
Workload that is
not balanced
Overloading creates burden for the
team members or processes
Source: Toyota Motor Company
The 3 MU’s: Muda, Mura, Muri

What is 5S?
5S Is…
• Daily organization,
maintenance and
cleaning of an area
• Cornerstone for visual
management
• The building blocks for
developing a Lean
culture
• Setting up an area in the
most efficient manner
possible
5S Is Not…
• A thorough spring
cleaning
• A way of getting ready
for an upcoming tour
• A way to keep
employees busy during
slow periods
• Organizing and cleaning
everything that currently
resides in a work area

What is the purpose of 5S?
Immediately make problems visible

Attach Red Tags
• Fill in everything
except disposition
• Perform tagging swiftly
• Place tags on all items
in question
• Move “tagged items”
to a holding area
G42
Not in Use
3 06/13/2007
Hydraulic Motor

2S : Set In Order
• Functional placement of documents, supplies
and tools
• Quick and easy retrieval or placement of
documents, supplies and tools
Test: Can you find an item in less than 30 seconds?
• Clearly designated names and places
• Easy-to-read notice boards

2S : Set In Order - Examples
5S on desk top drawer5S on desk top drawer
Cabinet filing with labelsCabinet filing with labels
Files are color-coded and
neatly arranged
Files are color-coded and
neatly arranged
A diagonal stripe was taped
on to the spines of a set of
binders. At a glance, anyone
can tell if any file is missing.
A diagonal stripe was taped
on to the spines of a set of
binders. At a glance, anyone
can tell if any file is missing.
Marker pens sorted by colorMarker pens sorted by color

4S : Standardize
• Principle
5S standardization
Visual management
• Meaning
Establish standards and
guidelines, and make them
visual
Maintain the workplace at a
level in which deviations
become obvious
“If you can’t see, you don’t
know; and if you don’t know,
you can’t control.”
“If you can’t see, you don’t
know; and if you don’t know,
you can’t control.”

5S : Sustain
• Principle
Habit formation
Disciplined workplace
• Meaning
Make 5S a habit
Conduct regular ‘gemba’ walks
Schedule for 5S audits
Communicate“Maintain the gain, forget the
blame.”
“Maintain the gain, forget the
blame.”

Board is filled by hand. Checklists (beside board) are also made manually.
Example: 5S Activity Board

Why Visual Management?
• Visual measures allow everyone to “know the
score” and they make abnormal situations
immediately obvious
• Enables everyone to ‘see’ how we’re performing
• Helps highlight problems, or variances from
standard
• Encourages employee involvement and open
discussions

Example of Visual Metrics
Process Costs
Product Profitability
100%
Revenue
Rework
On TimeCycle Time Reduction WIP Backlog
Internal Quality

5S Implementation Roadmap 1
Phase 1: Prepare the
Project
1. Get management
involvement
2. Identify target areas
3. Form an implementation
team
Office Scan
Phase 2: Perform an
Office Scan
4. Select project measures
and collect baseline data
5. Photograph current
conditions
6. Apply the office scan
checklist
7. Post a project
storyboard
Phase 3: Sort
Through & Sort Out
8. Determine criteria for
sort
9. Prepare a holding area
10. Apply Sort
Phase 4: Set Things
in Order & Set Limits
11. Map the current state
12. Create a Set-In-Order
plan
13. Apply Set-In-Order
• Define 5S zones
• Assign responsibilities
• Develop publicity
materials
• Educate everyone
• Purchase cleaning
equipment as needed
• Red tagging• Set up 5S activity
board
• Define 5S project
charter

Why Office Layout?
• Ensures most efficient layout for employees and work
flow
• Reduce or eliminate excess travel and motion wastes
• Allows for workforce flexibility via sharing of work when
necessary
• Provides foundation for small lot work flow
• Can be U-shaped or L-shaped, depending on area
• Facilitates communication and reinforces team work
• Increases organizational process knowledge, versus
individual process knowledge

Why Value Stream Mapping?
• To set strategy before diving into tactics
• Visualize the process at multiple levels
• Provides a common language for analyzing
processes
• Enables us to see the flow and sources of
waste
• Provides a blueprint for creating flow

Current State Value Stream Map
Purchasing – Non-repetitive purchases less than $5,000

What is Standard Work?
• Standard work is an agreed-upon set of work
procedures that establish the best and most reliable
methods and sequences for each process and each
staff
• Standard work aims to maximize performance while
minimizing waste in each person’s operation and
workload
• Standard work is the fluctuating level of optimum work to
be done by people and equipment each day to meet
customer demand

Takt Time = 10 seconds
Standardization

Heijunka by Service Type
Traditional service provider
Lean service provider
SERVICE DELIVERY SEQUENCE
Order A
Order B
Order C
Order D
Demand per week

Philip Crosby: Law of 10
Minimal defects due to prevention-
based activities
Defects found within the service
provider and corrected internally
External customer finds defects and
makes complaints
1
10
100
IncreasingCostsIncreasingCosts

Dealing with Root Causes
• Solutions must deal with
root causes, not
symptoms
• Make use of the fishbone
diagram
• Ask “Why?” five times to
get to the root cause
The system for quality is prevention.The system for quality is prevention.

Poka Yoke – Dual Focus
DefectsMistakesProcess
Prevention
Poka-Yoke that focuses here
works on mistake prevention or
making mistakes impossible.
Detection
Poka-Yoke that focuses here
works on mistake detection,
or making sure mistakes do
not turn into defects.
People and systems do make mistakes.
A portion of mistakes turn into defects.

What is Kaizen?
• Kaizen means improvement. Improvements
without spending much money, involving
everyone from managers to employees, and
using much common sense.
• The aspect of Kaizen is that it is on-going and
never-ending improvement process.
• Examples of Kaizen activities:
Process improvement (WITs, Just-Do-Its, etc.)

Kaizen Event
• Rapid, focused application of Lean to reduce waste to
improve cost, quality, delivery, speed, flexibility and
responsiveness to customer needs
• 3-5 day dedicated event
• Clear objective and scope
• Continuous small
improvements
• Changes are
implemented quickly
• Everyone gets involved
Source: "The Idea Generator” by Norman Bodek

Example of A3 Storyboard
Source: Lean Enterprise Institute

Pareto Chart
• Purpose
To show relative importance of a set of measurements
Also called the “80/20” rule
• When to use
To differentiate the ‘vital few’ from the ‘trivial many’
After improving a process, to show relative change in
a measured item
Sorting a set of measurements to emphasize their
relative sizes

How to Construct a Pareto Chart
1. Set the method and time period for the data collection.
Collect the data and classify them according to problems,
causes or subject matter.
2. Arrange the data of the items in the order of the most data,
and enter each item’s data respectively. At the same time,
add up the cumulative figure.
3. Create the framework for the horizontal and vertical axes.
Horizontal axis is for categories, problems or causes. The
left vertical axis represents frequency whereas the right
vertical axis represents the percentage scale.
4. In the order of the most data, draw the bar graphs from the
left. Using the cumulative figure, draw the cumulative curve.

Example: Cause and effect diagram used in solving
the problem of “Late Payment of Invoices”
Computer
System
Internal Mail
System
Staff
Finance
Policy
Documentation
Older System
Downtime
Excess
Demand
Access Limitations
Low Priority
Manual Sort
ProcessNew
Maintenance
Contractor
Excess
Demand
Cost-Reduction Program
One Pick-Up Daily
Workspace Equipment
Lost/Misplaced Mail
Turnover
Inexperienced Staff
Manual
Files
Crowded
Space
Resigned
No Limit Manager
Missing Documentation
Branch Offices
Forward Payments Weekly
Reorganization
of Purchase Org.
Centralized
Payment
Authorization
Audit Recommendation
for Tighter Control
Missing
Purchase Orders
Maximize
Cash
Payment
Delays
Increased
Workload
Turnover
Hiring
Freeze
Access Limitations
Low Priority
Morale
Paycuts
Overtime
Reduced
Productivity
Deadlines
Validated
root causes
Legend
Late
Payment
of
Invoices

How to Complete the 5 Whys
1. Write down the specific problem. Writing the
issue helps you formalize the problem and
describe it completely. It also helps a team
focus on the same problem.
2. Ask Why the problem happens and write the
answer down below the problem.

Ways to Develop
“Kaizen Eyes”This document is a partial preview. Full document download can be found on Flevy:

Ways to Develop “Kaizen Eyes” 2
21.Record annoyances
22.Look from different frame (i.e.
quality, safety, materials)
23.Follow the flow
24.Do an experiment
25.Swim up the process
26.Test a theory
27.Ask a child
28.Look for patterns
29.Understand the financials
30.Imagine what the activity would
look like with different staffing
31.Build something
32.Specify value through the eye of
the customer
33.Start to Kaizen something
34.Join an improvement team
35.Create a poka-yoke
36.Brainstorm possibilities
37.Study other Kaizens
38.Collect examples of improvements
from all parts of life
39.Practice at home
40.Teach to a child

Role of Lean Steering Committee
• Create a vision for the Lean initiative
• Define Lean implementation roadmap
• Define the strategic goals and measures
• Create an environment within the organization that will
promote the use of the Lean techniques and tools
• Create awareness and publicity
• Identify and track projects/Kaizens
• Establish rewards and recognition system
• Make resources available – team members and budget

Role of Process Owner
• Takes ownership of the project when it is complete
• Is responsible for maintaining the project gains
• Removes barrier for Lean project teams
• Support the project team, e.g. make resources available
• Maintain the countermeasures and ensure that they are
active and compliant
• Participate in Lean project reviewsThis document is a partial preview. Full document download can be found on Flevy:

Role of Lean Team Members
• Is trained in the subset of the Lean methodology
and tools
• Works small scope projects, typically in his/her
respective work area
• Can be an effective team member on a Lean
team

“Whether you
think you can,
or you think
you can’t,
you’re right.”
- Henry Ford

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Operational Excellence
Consulting

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