Lean Management

LEAN IN PRODUCTION AND SERVICE The word term ‘’LEAN’’ was put together to describe and personalize Toyota’s business activity during the 1980’s by a research team headed by one Jim Womack, Ph. D. , at MIT’s international Motor vehicle programme. According to them, the concept of ‘LEAN’ was fathered by Taiichi Ohno of Toyota. Ohno developed a contrasting approach to the mass production methods of US car firms through necessity. Later, in 1996, Jim Womack’s team espoused the five lean principles and also lean tools that they believed were the secret for Toyota’s success. According to Oxford dictionaries, Lean means efficient and with no wastage. The core idea of lean is to minimize wastage and at the same time maximize customer value. Customer value is of utmost importance to a lean organization and the organization will focus on its key processes to continue increasing the value. Ultimately, the goal is to provide the perfect value creation process that has no wastage. To accomplish this value creation and zero wastage goal, lean thinking changes the focus of a management from optimizing separate technologies, assets and vertical departments to optimize the flow of products and services through entire value streams that flow horizontally across technologies, assets and department customers. By reducing or eliminating waste along the entire stream of value, we will be able to come up with processes that would need less effort, less space, reduced capitals and reduced time in order to make products and services at prices far less than normal and with fewer defects. Organizations will be able to be responsive towards changing customer needs and wants with a lot of variety, higher quality, reduced costs and with less throughput times. Information management will also be much simpler and much more accurate. Lean management is a concept which can be applied in every business and every process. It should not be compared with a cost reduction program or tactic because it is a way of thinking and acting that applies to the whole organization. Nowadays, it is common that businesses across all industries and services, including the health care and even governments around the world are applying the concept of lean as the way they think and operate their business. Many of these organizations does not use the word lean out of choice and tend to label their practices as their own system, such as the Toyota Production System or the Danaher Business System. It is done to instill a point that lean is not a simple programme or a short term ost reduction solutions, but the way the company operates. the term ‘Transformation’ or ‘lean Transformation’ are usually used to characterize a company that is moving from an old way to a lean thinking way. this transformation requires a complete transformation on how a company usually conducts their business, thus, requiring long term perspective and perseverance through the changing time. It is also interesting to note that the concept of lean in production and servic e has the touch of one of the greater management thinkers, W. Edwards Deming who had great influence in Japanese manufacturing. He believed that the present manufacturing scenario is a prison of interacting people and stressed the importance of re-inventing the management processes in order to achieve higher efficiency and value. In implementing lean in production or services, I will be following the concept espoused by Womack’s team that stressed on three important business issues that will be able to guide the transformation process of an entire organization into a lean organization. In order to achieve lean objectives in an organization, it is important first of all to note that the organization and the people leading the transformation need to have a lean vision. In order to develop this lean vision, we can concentrate on three fundamental business issues which are Purpose, Process and People. By thinking deeply into these three aspects, a lean implementer can try to answer critical questions on the vision of the organization. If we are able to answer the key questions that I have associated with each of the aspects, I believe that we can develop a vision for lean implementation in our organization. The questions would be:- 1. purpose what are the customer problems will the organization try to solve in order to achieve their own purpose of prospering? 2. Process: how will the organization assess each major value stream devised to make sure each step in the value stream is valuable, capable, available, adequate and flexible? 3. People: how will the organization ensure that every important process in the value stream has someone responsible for continually evaluating it in terms of business purpose and also lean process? How will everyone involved in the value stream be engaged actively in the process of operating it correctly and continually improving it? As for the next step that I would take, it would be on the possible implementation of the core lean principle into my organization. This, I believe would involve the core of lean which is basically waste reduction. Usually, in an organization including production and service oriented organizations, we can find seven basic types of waste, which I am listing below. ? Producing goods and services beyond the immediate need of the customers. Unnecessary movement of products due to poor layout planning. ? Wasted motions when working. ? Time idling and wastage. ? Implementing processes that are unimportant to finish a product. ? Poor inventory management. ? Many defects in the finished product or output. Usually, waste will be present in any activity that does not add any value to the finished product or services. By trying to eliminate waste, the materia l velocity will be increase drastically. This means products will reach the customers hand in a very quick manner. This is an advantage because it delivers high strategic advantages beyond the obvious cost savings. Bad quality will be eliminated and lead times are shortened effectively. Eliminating waste can be considered as a strategic goal in service oriented and manufacturing oriented organizations. As I have mentioned before, elimination of waste will ensure increase in strategic advantages such as increased income and increased customer satisfaction. In adapting lean processes and services, we may be confronted by some constrains and challenges. The adaptability of lean depends on the nature of our business. We have to remember that there is a vast difference in between the service and production industries, and it lies in the source that creates the variation that causes waste to happen. Logically, manufacturing operations are far more controllable compared to service industry, because of its laboratory like settings compared to the service industry. Uncertainty usually does result from material and labor inputs, but we can still anticipate those uncertainties and take steps to control it to a great extent. For example, Toyota, pioneer in lean management is production/manufacturing based organization, and the employees, product esign and the production tools are usually under the control of the operations to a great extent, rendering it easier for implementers to anticipate uncertainty and implement the efficient lean management. In contrast, service organizations operate in a vast sea of uncertainty and risks and when uncertainty is present, it is much harder to anticipate and control variability that will be present together with it, For example, a project management company. We know that each project that the company will receive or implement will be different in nature. The volatility of the service industry, in particular a project management company, requires that lean management principles is implemented on a case by case method, i. e. different implementation and methods for different projects. This nature of the service industry is contributed by a few causes. Let's look at these causes one by one:- ? Uncertainty in task times. It is the nature of service products that the execution of each and every service delivery has some uniqueness. Taking the example of the project management company, each project taken may not be similar to each other, thus making it difficult to judge the task time needed. This variability in the service industry leads to a negative exponential distribution of task times. This simply means to say that most of the tasks execution will fall within a tight range, and some execution will take a longer time. Considering airplane boarding as another example, there is uncertainty present in the sense that it will take different amount of time among different groups of customers to board the plane. ? Uncertainty in demand. While there are ways to forecast demand in service industry, we can’t claim that it is 100% perfect. Usually, manufacturers buffer this forecast uncertainty with some finished goods inventory, but this is not the case in the service industry for example, we can forecast that reservations for a hotel will increase during peak seasons but it depends on many other fluctuating factors. Sometimes it is very hard to predict the demand of individual customer. As an example, a wedding planner essentially does planning job for customers wedding, but this lanning differs based on customer preferences, budget and also other factors. This uncertainty renders each wedding and the process that the organization goes through to put together the wedding, a unique one. ? Customers' production roles. As we can see from both the uncertainties above, we can summarize that it has much to do with customers. This is because typically, customers have some role to play in the production of a service, w e introduce variability based on how well we perform our roles. Customers almost always have to provide some information to the service agents to initiate service, and we usually have some tangible tasks to perform. So, as I have already stated it before, this condition create unique situations that needs personal implementations of lean in order to make sure wastage is reduced and value is delivered to each individual customers. Lean implementation involves finding solutions that will be able to offset the challenges and difficulties that we may face in our organization to achieve a successful outcome that will support a competitive operations strategy. Professors Kent Bowen and Steven Spear (HBS DBA '99), drew on a framework of 4 principles of the Toyota Production System that they believed will reduce the constrains, difficulties and challenges to a minimum in order to enjoy leaner productions and service. The framework contains 4 easily implement able rules:- Rule no. 1: all work should be highly specific as to content, sequence, timing and outcome. Rule no. 2: every customer-supplier connections must be direct, and there must be an unambiguous yes or no ways to send request and receive responses. Rule no. 3: the pathway for every products and services must be simple and direct. Rule no. 4: any improvements must be made in accordance with the specific method, under the guidance of a teacher, at the lowest possible level in the organization. Basically, my plan for a successful implementation of lean depends on the 4 rules given above, but I am going to give it some twist with adding some additional techniques that I feel would encourage faster and easier ways to overcome challenges faced by organizations implementing lean. I am going to add a three step initiative taken by Wipro, an Indian software developer, which can boost the implementation of lean, which are:- †¢ Abolish Hierarchies. Devise a bottom-up organization that allows many people to have a field-wide view of the process to spot problems and identify efficiencies. †¢ Continuous Improvement. Using â€Å"kaizen† initiative. Encouraging organizational level knowledge sharing through effective and efficient work improvement. †¢ Lean Tools. Use of tools specific to the process based on lean principles which can be utilized to pinpoint wasted time and effort. A combination of both these initiatives, I believe can lead to a lean flow which will be the tool that I would utilize to mitigate the challenges that can be faced during lean implementation. Drawing up a process flow chart that represents each step that a product/service would go through is essential. It is advisable to represent these sequential processes graphically in a flow chart. This is the first step towards an error and waste free production. For each and every products or processes that are present in the process flow charts, another level of details is required. This involves the task-level work with associated , with associated work-content times, with associated work-content times, quality verifications and worker qualifications. We can also produce a product/process matrix with products on the vertical axis and processes on the horizontal axis. At every intersection of product and process, this matrix, or spreadsheet should be recording the total reasonable validated work times that has been devised. We must also be able to calculate Takt. Takt is a German word which basically mean beat, pace or rhythm. Businesses, especially service oriented business must march to the beat of the customers and we must keep up with our customers pace.. Takt, can be calculated as, work time per day divided by customer requirements per day. This calculation represents how often each process must be performed, and at what capacity level, to take care of your customer’s needs and demands and be able to meet it as soon as possible. In order to have sustainable lean benefits, the implementation of lean must bridge the gap from project to project and also business practices. Quality documents procedures, policies and measures must reflect and drive Lean as a way of life. This will ensure success in reducing waste. Planning and procurement drives daily lean execution. Lean manufacturing is more responsive, with shorter lead time and greater mix and volume flexibility. We must be able to change our planning to take full advantage of lean. Bibliography Womack. J. P, Lean Enterprise Institute Inc. 2009, What Is Lean (Online) Available at: http://www. lean. rg/WhatsLean/ (Accessed 20th October 2009) Ahlstrom, P (2004) ‘Lean service operations: translating lean production principles to service operations’ International Journal of Services Technology and Management, Vol 5, nos 5-6 pp545-564 Spear and Bowen 1999 ‘Decoding the DNA of the Toyota Production System’ Harvard Business Review Sept-Oct Womack, J. P. and D. T. Jones 1996 ‘Lean Thinking’ New York, Simon & Schuster. Taylor: FW 1998 ‘The Principles of Scientific Management’ Dover Publications: New York. First published in 1911 Ohno, T 1988 ‘Toyota Production System’ Productivity Press: Portland, Oregon. Translated from Japanese original, first published 1978 David McPhetrige, 2009, An industry consultant provides guidance on implementing a basic Lean plan. MPO magazine. (Online) Available at: http://www. mpo-mag. com/articles/2009/09/meeting-the-challenges-of-lean-flow (Accessed on 21st October 2009) Hanna. J, 2007, Bringing ‘Lean’ Principles to Service Industry. Harvard Business School (Online) Available at: http://hbswk. hbs. edu/item/5741. html (Accessed on 21st October 2009)