Lean Enterprise

The "Lean Enterprise" concept represents a new

paradigm in the way businesses are managed in
highly competitive market environments. This
concept embodies a collective set of principles,
tools and application methodologies that enable
companies to remove waste from the system and
achieve dramatic competitive advantages in speed
to market, cost, quality, and delivery performance.
2001 V2R Consulting Group
 Lean Enterprise

Uses time and the relentless pursuit of waste

elimination as competitive leverages
Seeks to make value flow from raw material
through consumption
Using least amount of resources (time, people,
materials, etc.)
Creates a culture of never-ending improvement
at all organization levels
2001 V2R Consulting Group
 Toyota Management System
S e n io r M a n a g e m e n t -
* B u s in e s s O b j e c t iv e s
* C u lt iv a t e a s u p p o r t iv e , f a c ilit a t iv e m a n a g e m e n t s t y le
* M o d e l p r o c e s s m a n a g e m e n t a p p r o a c h t o a c h ie v e n e e d e d r e s u lt s .
( S e t a n e x a m p le f o r o t h e r s t o f o llo w )
* R e c o g n iz e e a c h le v e ls r o le a n d t h e n r e in f o r c e in p r a c t ic e .

P r o d . A d m in . A re a M g m t.
H ig h Q u a lit y
M a n * S u p p o r t s s e n io r
M a n a g e m e n t M a ch m a n a g e r s g o a ls ,
d e v e lo p e d t o M a t l m is s io n s , a n d
s u p p o rt d ir e c t iv e s
o p e r a t io n
im p r o v e m e n t JIT M in .
I n p u t
P ro c e s s M a x .
O u tp u t
J id o k a * P r a c t ic e o p s
m g m t . O n a d a ily
b a s is
M e th o d * D e v e lo p y o u r s t a f f
e v e ry d a y
* K a iz a n e y e lo o k s
f o r im p r o v e m e n t
M in im u m L e a d T im e
e v e ry w h e re
O p e r a t io n s
d e v e lo p m e n t S t a n d a r d iz e d W o rk
g ro u p to
s u p p o rt sh o p
f lo o r
O p e r a t io n s M a n a g e m e n t C o n d it io n s
S h o p F lo o r * M u s t b e o p e n
* F o rm e r
C o lla b o r a t io n to s u p p o rt a n d
m a n a g e rs fro m
c o lla b o r a t io n
s h o p f lo o r
O p e r a t io n r a t e * R e c o g n iz e
* C o n s u lt a n t s
I n d ic a t o r s P r o b le m S o lv in g N e e d fu tu re n e e d s
f o r s e r io u s
K a iz a n O p p o r t u n it ie s
o p e r a t io n s
C o lla b o r a t io n
p r o b le m s
O D G O p e ra to rs

* S im u la t io n s P ro je c t A c t iv it ie s
* E d u c a t io n S e t T a rg e ts
* L iv e G r a s p S it u a t io n
Im p ro v e m e n t S e t S t r a t e g ie s
p ro je c ts P D C A
* D e v e lo p s t a f f

M M

A M

G L
E n a b le r s
* C a p a b le s t a f f
* O D G P ro j. E x p e r. T L
* R e f e r e n c e M a t l.
* W illin g / o p e n I m p ro v e d O p e r a t io n s
 The Goal

To paraphrase Tom Peters Turn

Manufacturing into a Marketing
Weapon, a chapter in Thriving on
Dr. C. W. Richards 1/12/99
Chaos
 Manufacturing as a Competitive Weapon

Shorter throughput (order to delivery)

Lower costs

Higher quality

More flexibility
Dr. C. W. Richards 1/12/99
 The Strategy

Toyota Motor Company,

Toyota Production System, p. 2

Dr. C. W. Richards 1/12/99

 The Plan

Dr. C. W. Richards 1/12/99

 Cost reduction is the goal

Cost
CostReduction
ReductionIsIsthe
theGoal
Goal

There are two ways to increase

efficiency: 1) increase production
quantity or 2) reduce the number of
workersTaiichi Ohno.
In the short
term, you may
need to
Reduce
Over time, lower costs, people at all
levels in the
higher quality, and faster organization
development & production
times will increase sales. Manufacturing
as a
Dr. C. W. Richards 1/12/99 Competitive
Weapon
 A Lean Paradox
(Just One of Many)
Reducing
Reducingcosts
costsmeans
meansreducing
reducingpeople,
people,but
butififyou
youeliminate
eliminatepeople
people
as
asaaresult
resultof
ofimprovement,
improvement,you
youwill
willget
getno
nomore
moreimprovement.
improvement.
The Toyota Production System clearly reveals
excess manpower
Managements responsibility is to identify excess
manpower and utilize it effectively.
Resolve how to
maintain Hiring people when business is good and
mutual trust
while reducing production high just to lay them off is a bad
people practice.
On the other hand, eliminating wasteful and
meaningless jobs enhances the value of work for
workers.
Taiichi Ohno.
Dr. C. W. Richards 1/12/99
 Implementing the TPS

Alllactivitiiteisesmusttsupportt
the
thegoallofofshortening
ingthe
thetime
timeitittakes
takestotoconvertt
Al activ mus suppor goa shorten conver
cus tomer orders into deliverie s. Toyota Motor Corpora tion, 1992
customer orders into deliveries. Toyota Motor Corporation, 1992

Design The
Develop A Manufacturing Establish Flow Establish Pull Strive For
Lean Strategy System Within Cells Between Cells Perfection
Create a sense of urgency Identify the Form
Form cells
cells based
based Design an Institute kaizen
customer base on
on takt
takt time
time information & institutionalize
Throughout the enterprise,
and product system to produce 5Ss throughout
sell lean/TPS as the solution Define
Define standard
standard
range only the products organization
work
work content for
content for
Hire a sensei & retain required by the
Identify takt time each
each operation
operation to
to Transfer
design talent downstream cells
& its range be < takt time
be < takt time ownership of all
Establish targets Incorporate takt processes to
Apply
Apply axiomatic Separate
Separate worker
worker
Resolve how to maintain design to create time to drive work force
from machine
from machine
mutual trust while reducing the basic factory flows
(jidoka)
(jidoka) Push lean down
people system Institute leveled to suppliers
Develop
Develop quick
quick
Give preliminary thought to production
Eliminate non- setups & standard
setups & standard Integrate product
supplier issues (heijunka)
essential WIP
WIP (SMED)
(SMED) development
Consider the competitive infrastructure Use visual control
Standardize
Standardize Reduce people at
environment and layers above systems
operations
operations all levels in the
the factory floor Implement total organization
productive
maintenance
Manufacturing
as a
Competitive
Weapon
Dr. C. W. Richards 1/12/99
 LEAN PRINCIPLES
VALUE
VALUE STREAM
FLOW
PULL
PERFECTION
- LEAN THINKING
by JAMES P. WOMACK
and DANIEL T. JONES
 LEAN PRINCIPLES
VALUE
VALUE IS DEFINED BY THE
CUSTOMER AND EXPRESSED IN
TERMS OF A SPECIFIC PRODUCT
WHICH MEETS THE CUSTOMERS
NEEDS AT A SPECIFIC PRICE AT
A SPECIFIC TIME.
 LEAN PRINCIPLES
VALUE STREAM
THE VALUE STREAM IS THE SET OF ALL
THE SPECIFIC ACTIONS REQUIRED TO
BRING A SPECIFIC PRODUCT THROUGH
THE THREE CRITICAL MANAGEMENT
TASKS OF ANY BUSINESS: PROBLEM-
SOLVING (RUNNING FROM CONCEPT TO
PRODUCTION LAUNCH), INFORMATION
MANAGEMENT (FROM ORDER-TAKING TO
DELIVERY), AND PHYSICAL
TRANSFORMATION (FROM RAW MATERIALS
TO FINISHED PRODUCTS IN THE HANDS
OF THE CUSTOMER).
 VALUE STREAM ANALYSIS
IDENTIFY THREE TYPES OF ACTIONS:

1. THOSE THAT CREATE VALUE

2. THOSE THAT CREATE NO VALUE
BUT ARE UNAVOIDABLE GIVEN
CURRENT TECHNOLOGY
3. THOSE THAT CREATE NO VALUE
AND ARE IMMEDIATELY
AVOIDABLE
 LEAN PRINCIPLES
FLOW
MAKE THE VALUE CREATING STEPS
MOVE CONTINUOUSLY.
 LEAN PRINCIPLES
PULL
LET THE CUSTOMER PULL THE
PRODUCT AS NEEDED.
 LEAN PRINCIPLES
PERFECTION
CONTINUOUSLY SEEK TO IMPROVE
VALUE, MAKE FLOW MORE
CONTINUOUS, AND THE ABILITY
OF THE CUSTOMER TO PULL
FASTER.
 LEAN PRINICPLES
KEY ACTIONS
1. TIME BASED COMPETITION
2. MUDA (WASTE) ELIMINATION
 MUDA - OHNOS SEVEN
WASTES PLUS
1. OVERPRODUCTION
2. WAITING
3. TRANSPORTING
4. INAPPROPRIATE PROCESSING
5. UNNECESSARY INVENTORY
6. UNNECESSARY MOTIONS
7. DEFECTS
8. UNTAPPED HUMAN POTENTIAL
9. INAPPROPRIATE SYSTEMS
10. ENERGY AND WATER
11. POLLUTION
 ORGANIZATIONAL
STRATEGIES
1. AGILITY
2. VIRTUAL MANUFACTURING
 DESIGN STRATEGIES
1. MASS CUSTOMIZATION
2. DESIGN FOR PRODUCTION (DFP)
AND DESIGN FOR ASSEMBLY (DFA)
3. QUALITY FUNCTION
DEPLOYMENT (QFD)
4. TRIZ (CREATIVE PROBLEM
SOLVING)
5. ROBUST DESIGN
 IMPROVEMENT
1. 5S SORT, STRAIGHTEN, SCRUB,
STANDARDIZE, SELF-DISCIPLINE
2. KAIZEN
3. KAIKAKU (KAIZEN BLITZ)
4. ROOT CAUSE ANALYSIS
5. TIME CHARTING (PROCESS FLOW
CHARTING)
 PRODUCTION
1. KANBAN
2. SET-UP REDUCTION
3. MIXED MODEL PRODUCTION
4. DEMAND SMOOTHING
5. GROUP TECHNOLOGY
6. BOTTLENECK REDUCTION
(THEORY OF CONSTRAINTS)
 QUALITY
1. SHORT RUN STATISTICAL
QUALITY CONTROL
2. POKAYOKE (FAILSAFING)
3. ZERO DEFECTS
4. SIX SIGMA
 A TPS Glossary
5Ssfive Japanese words, all beginning with an s sound, which
establish the cultural environment for continuous improvement
Cycle timefor a machine or cell, time from completion of one item to
completion of the next. Cycle times must harmonize with takt time
(which defines balanced production). Often confused with throughput
time, which is the length of time a part is in the cell (also, factory
throughput time, from the start of production to delivery).
Heijunka(fm. Japanese*, smoothing, making level) production
leveling. Involves producing in sequences like abacababac rather than
aaaaabbbcc (where a, b, and c are models or products). Solves problems
inherent in the TPS that can cause queuing and line stoppages.
Jidoka(fm. Japanese, automation with human characteristics)
separation of worker and machine. Implies that machines will stop if an
error occurs. Alternative is people watching machines work. Allows
manning of cell to vary with demand. Encourages teamwork and
facilitates kaizen. Dr. C. W. Richards 1/12/99
*Many thanks to Lennart Kampman of the Copenhagen Business School for his
translations and interpretations.
 A TPS Glossary, II
Just-in-timeIn a flow process, the right parts needed in assembly
reach the assembly line at the time they are needed and only in the
amount needed. (Ohno, p. 4). As Ohno explains, this does not imply
that the parts must arrive exactly when needed. Instead, a pull
(kanban) system is used. Toyota explains that the goal of JIT is to
translate each order into a delivery of a finished, quality vehicle as
quickly and efficiently as possible.
Kaizen(fm. Japanese kai, change, modify, improve and zen,
goodness, virtue - not the zen in Zen, which comes from the original
Chinese, Chan) continuous improvement. Activities carried out by
the members of a cell or other unit in order to improve production
within that unit. May involve work process or machines. Ultimate
goal is to shorten throughput times and increase the ratio of
processing (value added) time to total time, leading to an eventual
reduction in manpower. Other improvement efforts are kaikaku, or
radical change, carried out under the direction of sensei.
Dr. C. W. Richards 1/12/99
 A TPS Glossary, III
Kanban(fm. Japanese for signboard) Primary means for
controlling production in the TPS. Kanban are usually cards that the
downstream cells take to the upstream cells in order to withdraw (pull)
parts. The upstream cell then uses the kanban as shop orders to
replenish just the parts taken.
Lean productionproducing with a shorter delivery span, at lower
cost, with greater quality, and with more flexibility (variety on the line;
quicker introduction of new models)
Senseiteacher, commonly of the martial arts; used to denote an
expert with a track record of implementing the TPS
SMEDsingle minute exchange of dies. Very rapid set-ups so that
heijunka sequences can be produced economically

Dr. C. W. Richards 1/12/99

 A TPS Glossary, IV
Takt time(fm. the German for meter or measure, as in
music) pace of customer demand. Time to produce one item
sold, e.g., a car every 2 minutes or an aircraft every 8 days.
Cycle times of all components of the factory must
harmonize with takt time (axiomatic design ensures this), or
shortages & build up of inventory will occur.
Toyota Production System (TPS)only known example of
a lean production system. Pillars of the TPS are just-in-time
(pull) and jidoka. These rest on leveled (heijunka) &
balanced production, and lead time reduction, which
depends on reducing set-up times to under 10 minutes
(ideally less than 1). The basic form evolved at Toyota from
1948 to 1973, largely under the guidance of Taiichi Ohno.

Dr. C. W. Richards 1/12/99

 A TPS Glossary, V
Total Productive Maintenanceensuring that machines
are 100% available during the production period.
Generally requires operating machines at well under full
utilization to allow time for maintenance & modification
Value addeda term used by Toyota only in connection
with kaizen, where it is generally synonymous with
processing (see Ohno, p. 57)
Visual controlmanagement by sight. The TPS arranges
the factory so that abnormalities stand out and so can (and
will) be eliminated.

More info? Most of these terms are well defined and illustrated in Lean Thinking, by
James P. Womack and Daniel T. Jones (New York: Simon & Schuster, 1996)

Dr. C. W. Richards 1/12/99