IS LEAN ENTERPRISE GOOD FOR YOUR BUSINESS?

Toyota posts quarter profits up +32%, $4.1 B -- GM posts quarter loss -18%, $15.5 B

If you are wondering whether the tools and concepts of Lean Enterprise might offer benefits for your business, the answer is probably yes. I say, probably yes, because most businesses that have applied the tools and concepts have seen some cost reduction, some quality improvement, and have solved some production problems. The scope and amount of benefit depends entirely on you as leader of your organization.

Lean Enterprise, sometimes called the Toyota Production System (TPS), is a systems approach to management that strives to understand the flow of value from concept to the customer. It uses a very analytical approach to define, measure, standardize, improve, and innovate the flow of value.

The “lean” approach to managing a business was identified by an extensive study of the auto industry in the mid-1980's. The MIT International Motor Vehicle Program identified the Toyota Production System as one having the least waste, or “fat,” with the greatest value to both the product customer and the profit customer. The TPS approach has since been better defined and applied to a broad range of business types.

TOOLS
Most businesses begin by trying out the TPS tools that are aimed at reducing cost, improving quality, and speeding production flow. Following the sequence mentioned above, the tools begin by defining and measuring a work process.

Value Stream Mapping produces a visual image of the material and information flow in work processes with key measures. The level of detail of the image may vary depending on the objective of the study - from the steps in a single work task, to a plant-wide view, or even to a view that includes everything from mining the product's raw materials to its final disposal.

Standard Work is a tool that leads to standardizing a consistent, predictable, repeatable delivery of customer value using best practices. This builds the foundation for refining the work steps to remove waste and improve customer value. Within the scope of implementing standard work, a variety of tools are applied to identify and solve problems. A technique called “5S” focuses on creating and maintaining an orderly workplace. The five “S” words describe the steps - sort, simplify & sweep, standardize & sustain.

Root Cause Analysis provides a disciplined approach to better understand the reasons for problems and opportunities for improvement. This broadly applicable approach helps to identify information that can lead to better decisions, better solutions, and lasting improvement.

Another tool that is very helpful in a repetitive manufacturing process is the Quality Control Process Chart (QCPC). This simple data-gathering approach measures and records the variations in a standardized process that allows the work team find root causes for delays, scrap, and rework.

Error-Proofing is a tool that may be used to correct problems identified by QCPC and root cause analysis. Error-proofing develops and deploys improved work operations that prevent incorrect actions. Examples are: parts without holes in the proper place cannot be removed from a jig; or computer systems that reject invalid numbers or require double entry of data outside of a defined range.

Part of process standardization includes maintaining the equipment in the production process. Successful implementation of Total Productive Maintenance maximizes the operations uptime and the service life of equipment.

Each of the tools mentioned is applied as part of a team effort to involve those closest to the work process being improved. The Japanese word, kaizen, has been used in American business as a concentrated analytical team effort that applies these basic tools and many others that are part of implementing a Lean Enterprise management approach.

Now, I'll get back to that “probably yes” mentioned at the beginning. The scope and amount of the benefit depends on you, your leadership, your goals, and your business. In the most successful applications (Toyota, Honda, Southwest Airlines, and may others), the principles and techniques of a Lean Enterprise are pursued throughout the business, from the factory floor to the executive offices, and to the person delivering the products and services to the customers.

Actually, almost 20 years of experience around the world has shown that success is not tied to just using the tools. Success is more tied to believing the management principles. General Motors knows about the TPS tools. And, they have studied and applied them since they were identified by the MIT study in 1990.

The Lean management principles are:
- The customers' perception defines the value of the product or service.
- Define, measure, and manage the process that forms the value stream to the customer.
- Assure smooth flow toward the customer.
- Flow value in response to a demand or “pull” by the customer.
- Strive for perfection. Never stop implementing improvements to the process.


Lean Value Solutions International offers an intensive five-day hands-on experience to help you answer the question of whether Lean Enterprise will be good for your business. It is an opportunity for business leaders, including manufacturing operations executives, operations managers (plant managers, supervisors, process owners), and continuous improvement practitioners to learn by doing and to talk with experts about Lean Enterprise and TPS.

In the Lean Now University seminar, experienced instructors will help you answer the questions about whether Lean Enterprise may help your business. The instructors have been trained and mentored by the founding members of the Toyota Production System and have implemented it across Fortune 500 leadership teams. Our primary focus continues to be on implementation and driving results within manufacturing companies.

By Gerald Davies
A founding partner in Lean Value Solutions International, LLC

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Examples of Results of Implementing

Lean Enterprise Principles and Techniques

Lean Enterprise applies cross-functional team-based continuous improvement that supports business goals to remove waste, and improve the quality, efficiency, and customer value of all enterprise activities, products, and services.

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Organizations that successfully apply Lean Enterprise concepts and techniques improve value flow to their customers through Lean Manufacturing, Lean Office, and Lean Service.

Significant improvement opportunities are available through the use of Lean principles and techniques. Typical benefits, that have been realized by companies through the application are:


• Manufacturing Lead Time 50 - 60% less
• Administrative Lead Time 50 - 90% less
• Space requirements 30 - 50% less
• Inventory reduced 50 - 70%
• Worker Productivity 15 - 25% more
• Quality 25 - 50% better
  
• Overhead Costs reduced 20 - 50%

Our goal at Lean Value Solutions International is to help our clients:

• Dramatically improve value, speed, and profitability.
• Build cross-functional teams that tap the synergy of integrated processes.
  
• Create and implement new approaches to manage work.
  
• Learn how to improve the flow of customer value.
  
• Catalyze memorable team experiences in process improvement.

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Will the Lean principles and techniques work in your business process?

The following is a partial list of our experience in implementing process improvements in a variety of environments. We have found that the type of work process is never the element that determines success or failure of the improvement. That is set by the commitment of the leaders and workers within the process.

Reduce the lead time for the preparation of Service Bulletins to the customer. Reduce the lead time of Engine Component Design and Product Definition. Integrate and standardize two similar Software Development processes for Engine Controls Partnering Business Agreement - Establish a working process and principles for business partners clarifying partner responsibility, commitment, and contingencies. Improve the responsiveness and efficiency of Service Office Work Management Improve the contracting and process management of the Preliminary Product Design Process. Remove material travel and handling waste from a complex Manufacturing Process. Define and assess the entire Material Flow and Cost Value Streams for critical forgings and castings. Reduce the time and resource commitment for the Supplier Certification Process. Standardize and improve Customer Inquiry and Response. Define a new process and organization for Competitive Information Research and Analysis. Enterprise Model Implementation - Develop a long-term plan to integrate manufacturing and product development into a single value stream. Improve the response and effectiveness of Public Works Snow Removal in a hospitality business. Improve the effectiveness of the Internal Audit operation and establish improved relationships with internal departments. Improve the timely response of public Safety departments. Integrate Fire and Life Safety operations into a single organization. Improve the profitability and customer satisfaction for a Hotel Food & Beverage operation. Improve the arrangement of a community Health Services facility to comply with requirements and improve customer service. Improve the Document Storage operation to reduce warehousing requirements and the cost of retrieval. Reduce the lead time of the Hiring Process while maintaining security requirements. Improve North American value stream Logistics for raw materials and product delivery. Others

Organization Assessment and Realignment Value Stream Assessment & Planning Customer Order Entry Product Repair Process Customer Complaint Data Collection Corrective Action Response Producing Purchase Orders from MRP Manufacturing In-Process Material Tracking Assuring On-time Delivery Proposal Development Purchasing Cost Estimating Insurance Data Management

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