Lean is a set of principles and methodologies for improving cycle times and quality through elimination of waste, sometimes known by its Japanese name of muda. Lean thinking allows us to distinguish between value-added and non-value-added activities. The immediate result is the removal of unnecessary non-value-added activities. The objective is to improve cycle times, reduce waste, and increase value to the customer.
Lean thinking has been shown to reap dramatic benefits in organizations. Organizations are able to sustain production levels with half the personnel, improving quality and reducing cycle times from 50 percent to 90 percent (Womack and Jones, 1996).
The lean methodology is credited to Taiichi Ohno of Toyota; it has been popularized by James Womack and Daniel Jones in The Machine That Changed the World and Lean Thinking. The methodology goes by several names, including lean manufacturing, when used in manufacturing applications, and the Toyota Production System, owing to its origins. The more recent label of lean thinking, used by authors Womack and Jones, applies the methodology across a broad range of businesses. While the lean methods have been a hot topic in business only since the 1970s, it is well acknowledged that Henry Ford pioneered many of these same techniques.
Several of the lean methods are fairly well known in and of themselves. Just-in-time, for example, has been a buzzword within automotive manufacturing for over two decades. Other well-known methods include kanban (Japanese for cards), kaizen (which refers to rapid improvement), and 5S.
There may be some confusion regarding the use of lean methods and Six Sigma. Some recent practitioners of Six Sigma have struggled in their Six Sigma deployment by retaining separate functional teams responsible for lean deployment. Six Sigma is an umbrella deployment strategy for implementing value-added improvement projects aligned with an organization’s business strategy. Lean provides essential methods to define value and waste to improve an organization’s responsiveness to customer needs. As such, the lean methods enhance the Six Sigma strategy and can be seen as critical methods for accomplishing the Six Sigma goals.
Lean focus is on three areas: visibility, velocity, and value. Visibility, also known as transparency or visual control, broadens our awareness of problems. Visibility implies that problems become immediately (or very quickly) known to all stakeholders so that action may be taken. Visibility fosters an 'all hands on deck' philosophy: Stakeholders stop what they’re doing to help relieve the bottleneck caused by process problems.
Velocity, sometimes known as flow, refers to the speed of process delivery. Speed provides flexibility and improved responsiveness to customer demands. By reducing process lead times, we can quickly respond to new orders or changes required by the customer.
Value simply is the opposite of waste. Value can be defined as something for which the customer is willing to pay. If a process step does not produce value, it is a source of waste and should be removed. More detail is provided in the Value-Stream Analysis section of Chapter 6.
Although we often think of physical inventories of product or work in process as useful for satisfying customer demands, lean thinking challenges this assumption. Instead, we should view inventory as money spent on partial work that generates no income until it is completed. Inventories hide problems, such as unpredictable or low process yields, equipment failure, or uneven production levels. When inventory exists as work-in-process (WIP), it prevents new orders from being processed until the WIP is completed. Although these concepts are most clearly identified with manufacturing processes, they persist in service processes, where inventory may refer to healthcare patients, hamburgers at a fast-food counter, or an unfinished swimming pool under construction.
Visibility, velocity, and value are key focus points of lean. Visibility (or transparency) allows the organization to see progress and barriers to success. A focus on value forces resources to activities important to customers. Improved velocity allows us to be more responsive to customer needs. Velocity can be improved by the following means:
Learn more about the Lean Six Sigma principles and tools for process excellence in Six Sigma Demystified (2011, McGraw-Hill) by Paul Keller, in his online Lean Six Sigma DMAIC short course ($249), or his online Green Belt certification course ($499).