Lean Management

Introduction
 Agenda

Introduction

What is Lean

Its Roots

Success and Benefits

Challenges
What Is Lean?

4
 Overview of Lean

• Creating more value for customer with fewer resources

• Philosophy: To provide perfect value to the customer through a perfect value creation
process that has zero waste

• Lean reduces cost, improves quality, and speeds delivery by eliminating non-value-added
activity in a process by identifying and eliminating waste

• Lean is not a tactic or a cost reduction program, but a way of optimizing end to end
processes
 Principles of Lean

5. Seek
Perfection 1. Identify Value

4. Establish Pull 2. Map Value

Stream

3. Create Flow
 Types of Waste

• What is waste?

• Non-value-add activity

• Some types of waste with examples

o Anything that could have been avoided

o Customer is not willing to pay for it
o Defects/rework

• The 7 types of waste

• Muda (Japanese word for waste)

• Uncommon common sense

 Lean Journey

• Lean journey is on the principle “I will believe it 1

when I see it”

• Lowering the tide and uncovering more reefs that

can sink the boat

• Three stages of Lean journey

2
o Lean operations
o Lean enterprise
o Lean network
Roots of Lean
 Lean at Ford

• Henry Ford (at Highland Park, MI USA) in 1913

• Car “Model T”

• Integration of entire production process

• Flow production
o Interchangeable parts
o Moving conveyance
o Automated assembly line
o Fabrication steps
o Go/No-Go gauge
• Model T (one color, one specification)

• Need for variety

 Toyota Production System (TPS)

• Based on Ford’s original thinking

• Rebuilding Japanese economy after World War II (1930)

• Kiichiro Toyoda, Taiichi Ohno, and others at Toyota

• Series of simple innovations to improve process flow and provide variety

in product offerings

• Focus on improving end to end processes rather than optimizing

individual machines

• Result: Low cost, high variety, high quality, and very rapid throughput
times to meet customer desires
 Just-In-Time (JIT)

• Introduced by Ford

• Supply-chain/ production/inventory strategy

• Demand-pull system

• Get the right thing at the right time at the right place

• Relies on signals between processes to keep things moving

• Requires producers to accurately forecast demand and use

integrated production management tools

• Saves warehouse space, inventory cost and prevents

obsolete inventory, resulting in higher ROI
 Lean Successes and Benefits

Profit
• “Efficiency” Business Model Fit

• Cash Flow Improvement Attract & Retain

Customers
• Increased Capacity for Revenue
Employees
Engagement & Morale
 “Efficiency” Business Model

• Business Model

o Employees
o Customers
o Profits

• Higher Efficiency

o Do More with less

o “Just Enough” in everything
o No more band aid solutions that become future problems

• From managing numbers to managing process

 Cash Flow Improvement

• Reduced inventory

• No waiting

• Space reduction

• Cycle time reduction

• Reduced waste

• Reduced defect
 Increased Capacity for Revenue

• Attract and retain customer

• More with less

• Fewer support calls

• Lean increases capacity

o Your process can produce more with the same number of people
o Your process can produce the same amount with fewer people
Challenges
 Process Changes Cause a Rethinking of Process Flow

• Process

o Input
o Processing
o Output

• Process changes

• Process flow

• In-process metrics

• Training
 Disruptions, Downtime, Design Failures

• Process change

• Disruptions

• Downtime

• Design failures
 Low Volume/High Mix

• Toyota production system

• High volume/low mix manufacturing

• Low volume/high Mix Needs

• Example
 High Variable: Customization, Demand

• Customer demands
• Customization
• Made-to-order
• Variability
• Support and maintenance
 Summary

Lean overview

Types of waste

History

Successes and challenges

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Knowledge Check
Knowledge
Check
Lean manufacturing is a:
1

A. Method for reducing labor cost

B. Means to improve responsiveness to the customer

C. Efficiency improvement technique

D. Set of tools designed to improve productivity

 Knowledge
Check
Lean manufacturing is a:
1

A. Method for reducing labor cost

B. Means to improve responsiveness to the customer

C. Efficiency improvement technique

D. Set of tools designed to improve productivity

The correct answer is C

Lean manufacturing is efficiency improvement technique, once this is achieved, it will help in improving productivity,
becoming more responsive to customers and reduce cost.
Knowledge
Check
The main objective of Lean manufacturing is to:
2

A. Produce goods using less resources

B. Keep labor costs as low as possible by using more of other resources

C. Produce products with fewer options to simplify consumer choices

D. Outsource much of manufacturing in order to focus on final assembly

 Knowledge
Check
The main objective of Lean manufacturing is to:
2

A. Produce goods using less resources

B. Keep labor costs as low as possible by using more of other resources

C. Produce products with fewer options to simplify consumer choices

D. Outsource much of manufacturing in order to focus on final assembly

The correct answer is A

The main objective of Lean manufacturing is to produce goods using less resources.