Lean management

Lean Management
Introduction
Module - 1
Copyright © 2012 BSI. All Copyright © 2012 BSI. All rights reserved. rights reserved. 1

Program Objectives
To present
Lean Management philosophy
“Lean Thinking” as a proven strategy for managing plants
and factories.
2
Underlying principles
Various Lean tools and practices
To Learn in detail the tool of Value Stream Mapping
Copyright © 2012 BSI. All rights reserved. 2

Ultimate Goal of an
Organization
3
Making Profits
Survival
Growth

Rate of Improvement Matters
4

Rate of Improvement Matters
5

6
Ultimate Goal of an
Organization
Profits = Revenue - Cost

Who wants what…. 7
$ Cash !!
CCCCCCCCUUUUUUUUSSSSSSSSTTTTTTTTOOOOOOOOMMMMMMMMEEEEEEEERRRRRRRR YYYYYYYYOOOOOOOOUUUUUUUURRRRRRRR CCCCCCCCOOOOOOOOMMMMMMMMPPPPPPPPAAAAAAAANNNNNNNNYYYYYYYY
Low Cost
High Quality
Availability
Profit
Repeat Business
Growth
Value !!

8 Ultimate Goal of an
Organization
Revenue depends on ability RRReeevvveeennnuuueee dddeeepppeeennndddsss ooonnn aaabbbiiillliiitttyyy ttttoooo pppprrrroooovvvviiiiddddeeee aaaa
CCCCuuuussssttttoooommmmeeeerrrr pppprrrreeeeffffeeeerrrraaaabbbblllleeee pppprrrroooodddduuuucccctttt

9
Ultimate Goal of an
Organization
Preferable
Quality
Ability to
customize
Preferable
Price
Preferable
Product
Availability

Organizational Challenge
The challenge is to make
• what the customer wants,
• when the customer wants it,
• at a price the customer is willing to pay.
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CRAFT MANUFACTURING - Late 1800’s
Car built by workers who walked around the car
Built by craftsmen with pride
Components hand-crafted, hand-fitted
Excellent quality
Very expensive
Few produced
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Starting about 1910, Ford and his right-hand-man,
Charles E. Sorensen, fashioned the
first comprehensive Manufacturing
Strategy.
They took all the elements of a manufacturing
system-- people, machines, tooling, and
products-- and arranged them in a continuous
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system for manufacturing the Model T
automobile.

Ford is considered by many to be the first practitioner of
Just In Time and Lean Manufacturing.
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Assembly line - Henry Ford
Low skilled labor, simplistic jobs, no pride in work
Interchangeable parts
Affordably priced for the average family
Millions produced - identical
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Customer Expectation
• Much better quality
• More customized variants
• Just-in-time delivery
• Shorter lead times
• And freedom to order in small quantities
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…..At Lower Lower Prices

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Time
Customer Expects
Industry
100%
Quality
Customers’ expect 100%
Quality
Time
Delivery
Enterprise
Customer Expectations
Industry Trends
TTiimmee
Industry
Customer Expects
Cost
Time
Industry
Customer Expects
Time
Price
TTiimmee

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Cost Vs. Selling Price
DON’T WAIT...
NNNNOOOOWWWWIS THE TIME
Cost
Selling Price
Profit
Loss
Time
How to survive?

How to Survive?
• During 1970s, Japanese were redefining the
manufacturing paradigms.
• Began to incorporate quality
• into cost focused strategy
• Discovered the power of FLOW
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• Use of TIME as a new competitive dimension
Toyota Production System was born

What if Flow is not proper?
• Traffic jam
• Trains/ flight not on time
• Blood pressure
• Heart attack
• Flood/ draught
• High Inventory
• High lead time
• Increased cost
What else…
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Taiichi Ohno …
All we are doing is looking at the time line from the
moment the customer gives us an order to the point when
we collect the cash.
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And we are reducing
that time line by
removing the non-value
added wastes.
Taiichi Ohno, 1988
CCCCuuuussssttttoooommmmeeeerrrr
OOOOrrrrddddeeeerrrr Waste PPPPrrrroooodddduuuucccctttt
SSSShhhhiiiippppmmmmeeeennnntttt
LLLLoooonnnngggg ““““TTTT””””

Toyota Management
Cells or flexible assembly lines
Broader jobs, highly skilled workers, proud of product
Low lead time
Excellent quality mandatory
Costs being decreased through process improvement.
Global markets and competition
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Lean Management
• During 1980s Americans realized that the things
are not the same anymore.
• Japanese were not only making better cars,
they were also doing it cheaply.
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• Toyota was making cars in America at 25% less
cost.
• Severely denting American market share.

Lean Management Philosophy
An outcome of study of Toyota Production Systems, by a team of
researchers in USA, led by James Womack Daniel Jones.
Their books detailing how Toyota has emerged, as the world’s
most efficient automaker popularized Lean Manufacturing as a
new manufacturing philosophy.
The first book was published in 1990 as
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“The Machine That Changed the World”

Lean Management
Popularized by another book in 1996.
“Lean Thinking - Banish Waste
and Create Wealth
in Your Corporation”.
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Jim Womack’s Comments
“We also know that lean thinking is spreading
across the world.
This summer, when Dan Jones, Jose Ferro, and I
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visited India for the first Lean Summits, we were
amazed to find some of the leanest operating
practices we have ever encountered outside of
Toyota City.”

In Order to Survive…
We have to make our Organizations Lean by
understanding the Lean philosophy and
promoting Lean Thinking throughout the
organization .
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Lean
As defined by Webster Dictionary :- Adj
1. Containing little or no fat
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Definition of “Lean”
The term “lean” is used because lean
manufacturing uses “less”…
Labor in the factory
Manufacturing space
Capital investment
Materials
Time between the customer order and the product shipment
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Term “lean” coined by
John Krafcik,
one of the research members
on Jim Womack’s MIT team
for the 5 year study.

Lean Management: Purpose
The purpose of Lean Management is to make your
company strong and fast.
• Strong = High performance, repeatable performance
• Fast = Easily adapts to fluctuations in market conditions
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Reduced operating costs and improved customer
satisfaction are natural by-products of being Lean

Lean Management: Philosophy
A management philosophy that demands shorter lead
times to deliver high quality, low cost products
through improved flow in the value stream.
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Design (concept to customer)
Supply (order to delivery)
Build (raw material to finished Product)

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1
Lean Management
Improved
Flow
Decreased
= Cost
New Business
Sustainable Profits
Decreased
Cost =

Lean Management: System
An integrated system to ensure
• Value for the customer
• Improvement in flow in
• Product development,
• process engineering,
• operations management
• corporate governance processes
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• Respect for people

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The Three Objectives
CUSTOMER WORKER
Machine
1
Machine
2
PROCESS
Respect for
human dignity
Highest
satisfaction
of needs
Machine
3
Machine
4
Total elimination of
muda or waste

Lean management

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