In today’s business it’s critical to incorporate “Lean Enterprise Thinking” and principles into the culture of the entire business.
Governments and businesses throughout the world are facing increased pressures to do more with fewer budget dollars and shrinking workforces. These and other challenges require a new way of thinking – Lean Thinking!
So what is Lean? Lean is a philosophy that seeks the involvement of all workers in the elimination of delay and the adding of value in every step of the process. Although Lean has its roots in manufacturing, it works just as effectively in transactional or service organizations and has been successfully deployed in all sectors.
Process steps and activities that do not add value are targeted for elimination, or at the very least, reduction. Eliminating delay and non-value added activity from a process is a simple way to increase its efficiency.
It is called “Lean” because it uses less of everything as compared to traditional methods. It provides a way to do more and more with less and less......
Lean recognizes that for most processes only 5% of the total cycle-time is actually adding value for the customer.
With the Lean methodology, value-add is any activity that changes the “deliverable” in a way that the customer is willing to pay for.
It stands to reason that if only 5% of the total cycle-time is spent adding value, then 95% of the cycle-time represents the opportunity for improvement – reduction of delay.
By clearly defining value for a specific process or product from the customer’s perspective, non-value added activities and waste can be targeted for removal or minimization.
Eliminating non-value added activities from the process is the quickest and greatest potential source of improvement that a company can make.
Once non-value activities and waste have been identified, the process is redesigned to reduce delay and increase its efficiency.
Below are some examples of non-value added activities and Lean waste that reside in most processes.
Lean is a continuous improvement philosophy, which has been successfully used in manufacturing environments since post World War II.
Typical gains of 25 percent in productivity, and reductions of 90 percent in work-in-process, 50 percent in floor space and 75 percent in travel distance are real and immediate.
Lean has worked in manufacturing, worked quickly, and worked well!
It is results based and measurable. Sustainment of improvements, the most difficult aspect of Lean, requires ongoing action by leaders to remove obstacles and create the new behaviors that support a culture of continuous improvement.
Faith and good intentions are replaced with a bias-for-measurable-action!
Riding on the successes in manufacturing, Lean has made its way into business transactional and service environments with dramatic results. On average 85 percent of enterprise costs reside outside of manufacturing, indirect and overhead costs are greater than manufacturing direct costs.
More opportunity for savings and avoidance reside outside of the manufacturing arena. Realizing the true benefits of lean can only be achieved by transitioning to a Lean Enterprise.
As Lean improvements are implemented, revised internal governance processes are implemented to lock-in the improvement gain. Lean seeks the involvement of all workers in the elimination of waste and the adding of value to their work.
Lean is simple and based on common logic, but also has a disciplined approach with well-developed tools such as process mapping and 5S. These tools are used to identify and retool inefficient processes.
Lean also supports the ongoing use of consistent performance measures. Managing performance is equal parts measuring performance and improving performance. Quality guru Dr. W. Edwards Deming’s message was simple. You can't manage what you don't measure.
Lean is not a tool for head count reduction. This misses the purpose of Lean, which is to create customer and business value through eliminating waste. As the need for resources decreases due to Lean, they are reallocated onto new and greater value-creating work.
Being a Lean Enterprise means incorporating “Lean Thinking” and actions into all functions of the business and not just manufacturing.
This includes processes within finance and accounting, contracts and procurement, legal, human resources, information technology, design and development, literally everywhere.
Transitioning to a Lean Enterprise offers opportunities for:
As with every successful enterprise initiative, an unwavering leadership commitment is critical in order to transition to a Lean Enterprise. Executive ownership and commitment are essential to building a continuous improvement culture.
Implementing a Lean Enterprise provides business leaders, and the workforce, with the needed strategies and a set of common tools to mitigate threats through focused process redesign and problem solving.
A Lean Enterprise seeks to understand its processes through mapping, then removes or reduces the non-value added activities from within them. The reality of most processes can be seen in the figure below. The hidden factory/workplace reigns!
Becoming a Lean Enterprise and implementing a Lean strategy will:
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