Lean Thinking

James P. Womack
Daniel T. Jones
 Lean Principles
• Lean Principles
– Way to specify value
– Line up value-creating actions in the best sequences
– Uninterrupted flow
– Processing on demand
– Efficiency increases over time
– Visible tracking of progress/immediate feedback
• Waste (muda)
– 8 kinds that absorb resources and create no value
– Mistakes
– Producing something that no one wants
– Unnecessary processing steps
– Movement without purpose
– Waiting time downstream
– Goods and services that do not meet the customer’s needs
• May be counterintuitive, but is then blindingly obvious
 Value
• Value is determined by the end customer
– In terms of a specific product or service meeting
needs at a specific price at a specific time
• What is the process of value creation?
– From raw material to the hands of the ultimate
consumer
– Who asked for this improvement?
– Why do these “economies of scale” increase value?
– What is the overall value creation time?
– What are the total costs of this decision?
– Does the organizational hierarchy create drag?
 Value cont
• Have a dialogue with the customer to determine what
they want
• Define value in terms of the whole product
– Travel
• Determine a target cost and work toward it
– The waste-free cost is the target
• Choices
– Reduce price
– Add new features or capabilities
– Add services to the package
– Expand distribution and service network
– Underwrite new products and developments
 The Value Stream
• The set of all actions required to bring a product through
3 critical management tasks
– Problem solving (design to production launch)
– Information management (order taking to delivery)
– Physical Transformation (raw material to finished good or
service)
• 3 types of actions
– Creating value
– Must do because of current technology or assets
– Creating no value
• Extend beyond the firm
– Back to raw materials and forward to ultimate consumer
 Stream cont
• Manage stream instead of aggregates
• Look for inefficiencies as materials cross
firm boundaries
– Tailor production with an eye toward how it
will be used downstream
– Most of the value stream lies outside any one
company’s control
• The art of the possible
– Compete against perfection
 Flow
• Assembly line versus batch processing
– Efficiency may be the enemy of value creation
– Can have optimized flow in low volume
operations
• Change over tools quickly
• Reduce set up time
• Co-locate tools, materials, and workers
• Right size machines/tools
• Workers perform multiple tasks
– Redefine work of functions, departments and firms
 Flow cont
• Service consumers are being acted upon
– Easier to notice wait time
– Example: Construction 5/6 of time is wait time for
next set of specialists or rework
• Seek continuous flow, standard processes, no
expediting, clear quality standards at each step
(poka-yoke), synchronize production with
demand, order taking supports production
needs, visual control used to keep all notified of
where we are
 Pull
• Only make something in response to customer
demand, then make it quickly, in full compliance
with the customer’s need
• Shipping schedule and actual production time
become pacemaker
• Keep track through visual control
• Eliminate treasure hunts
– Do not start production without full kit needed
– Reduce inventory levels
– Flatten the enterprise and remove chaos
 Perfection
• As the first 4 begin to happen, there is suddenly no end to the
process of reducing effort, time, space, cost and mistakes while
offering a product or service that is ever closer to what the customer
actually wants
• Transparency is the most important spur to perfection– where are
we and where to we all agree we need to go?
– Instant and positive feedback
• Policy deployment
– A few simple goals
– A few projects
– Designated resources applied
– Clear targets for improvement
– Set deadlines
• Will require a change agent to start the problem solving and keep it
on course
 From Thinking to Action :
The Lean Leap
• Examines 3 cases
 Simple Case
• Implementing lean thinking in a plate that manufactures
shrink wrapping machines
• Good ideas
– Manage customer expectations so they understand the drop
dead time for final requirements and the delivery schedule
– Order takers and producers need to have deconflicted goals and
expectations
– Need to reorganize into product-centric teams
• Delayer hierarchy
• Standardize work and outcomes
• Slow down machines to maximize value and speed rate of change
in turnovers
• Need long view, technical virtuosity and passionate will to succeed
• Keep workers on board
 Harder Case
• Wiremold Company
• Good Ideas
– Deal up front with extra people and anchor draggers
• Create value, create value after training, or never will create value
– Big changes require leaps of faith
– Make them see the waste
– Smooth flow through the system (where am I)
– Make only products customers really want
– Set clear expectations
– What business are you really in? What products?
– Fix order process- figure out flow (economies of scale)
– Introduce lean techniques in all parts of the company
 Acid Test
• Pratt-Whitney engines
• Good Ideas
– Lean knowledge is not enough– need a support
structure for new cells
– Need to ensure managers and workers do not go
back to old ways
• Get rid of anchor draggers– more on in-grown organizations
– May need to change the change agent
– Need to get the union on board
– Will need to move the monuments
– Keep looking for the next leap
 Lean vs Technik
• Why German engineering is counter to lean
• Focus on the product rather than the customer
• Culture of guaranteed jobs
• Family owned companies for generations
• Firmly entrenched hierarchy
• Craft-centric
• Crisis was required to move Porsche to lean think
– Reduce supplier base
– Reorient workforce on lean craft of rapid and radical continuous
improvements
– Replace or reinvent the managerial staff
– Flow needs to move outward to raw materials and service
support
 Lean Experience in Japan
• Worked in small (Showa) and large (Toyota)
enterprises
• Good ideas
– Focus on product families that share parts
– Reinvent yourself out of business lines as processes
improve and new opportunities are exposed
– Evaluate total human effort involved instead of
feasibility of fitting in a given production time
– Calculate total costs of performance before
determining where work will be done
 Action Plan
• Find a change agent
• Get the knowledge from someone who speaks
your language and has produced results
• Lind a lever by seizing a crisis
• Forget grand strategy for the moment
• Map the value stream
• Begin ASAP with a important and visible activity
• Demand immediate results
• Keep up the monentum
 Imbedding in the Culture
• Reorganize by product family and value stream
• Create a lean promotion function
• Deal with people at the beginning
• Devise a growth strategy to reallocate resources as they
are freed up
• Remove the anchor draggers
• Keep fixing it
• Failures are ok, backward progress is not
• Reach out to your suppliers and customers
• Go global
• Switch to bottoms-up inititatives
 Business Systems
• Utilize policy deployment
• Create a lean accounting system
– Value stream/product-based costing
• Tie bonuses to the overall firm
performance
• Make everything transparent
• Teach lean thinking to everyone
• Right size your tools
 Lean Enterprise
• Correctly specify value for the customer
– Avoid specifying value differently to favor your segment
– Identify all action required to produce
• Eliminate non value added
• Make value added tasks a continuous flow
• Make actions transparent along the value stream
• Rethink career paths to allow broad skill base and
diverse experiences
• Go beyond Walmart drive to pull down margins in
suppliers
– Think about how to drive down costs along whole value stream
Questions?