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Learning Objectives
1. Understand the principles and key concepts of Lean
2. Acquire knowledge on the common Lean methods and
tools and their applications to eliminate waste, create
more value for customers and improve personal
effectiveness
3. Identify ways to develop “Kaizen eyes” to look for
improvement opportunities
4. Describe the various Lean roles
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Outline
1. Introduction to Lean Thinking
2. Key Concepts of Lean Thinking
3. Overview of Common Lean Methods & Tools
4. Ways to develop “Kaizen Eyes”
5. Lean Roles
6. Sustaining a Lean Culture
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Lean has been adopted in many
different environments since its creation
Toyota
Automotive
Industrial products
High fashion
Medical
devices
Consumer
products
Aerospace
Shipbuilding
Pharma
Food
production
Pulp
and paper
Chemicals
Airlines
Railways
Naval operations &
maintenance
Healthcare
Insurance
Banking
Retail Store
Upstream E&P
High Tech
Consulting
Law Firms
Hospitality
ITO/BPO
Services
Process
industries
Manufacturing
Time
Complexity
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Impact of Lean Principles in Industry
Source: Virginia Mason Medical Center
Performance Metrics Results*
Direct labor / Productivity Improved 45 – 75%
Cost reduced 25 – 55%
Throughput / Flow Increased 60 – 90%
Quality (Defects/Scrap) Reduced 50 – 90%
Inventory Reduced 60 – 90%
Space Reduced 35 – 50%
Lead Time Reduced 50 – 90%
*Summarized results, subsequent to a five-year evaluation,
from numerous companies. Companies ranged from 1 to >7
years in lean principles application/execution.
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What does Lean in a service environment
look like? (1/2)
Banks
•Mergers and
acquisitions
•Loans application
IT
•Outsourced
managed services
Application Common Issues Typical Solutions
•Differences in
business practices
•Loans approval
process
•Complicated tasks
•Unbalanced capacity
•Manpower utilization
•Process integration and
streamlining
•Fast track processing
for low-risk loans
•Segmenting complexity
•Pooling resources for
economies of scale
•Flexible manpower
systems
Telco
• Procurement
• Call centre
operations
•Cost-based and capex
management
•Customer service
•Inventory management
•Network sharing
•Channels efficiency
Source: Operational Excellence Consulting Research
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What is Lean?
• Value streams or processes
• Focused on improving process performance
• Clear view of end state
• Wide range of Lean techniques & tools
are available
• Learn-by-doing approach
• Culture of continuous improvement
• Lean is a management philosophy based
on the Toyota Production System (TPS)
• Eliminate everything that does not add value
(waste) in the customer’s eyes
Objective
Focus and
scope
Approach
and tools
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What Lean IS NOT
• Laying off employees by the bus load
• Only applies to manufacturing companies
• A cost cutting program
• Delivering less or working harder
• Just a set of “tools” like 5S, kaizen events, etc.
• Automation or implementing an IT system
• Another “extracurricular activities”
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Lean Facilitates a Culture Change
Work Systems
& Processes
Behavior
Attitude
Culture
The way we act
The way we think
Waste elimination
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Traditional Culture vs. Lean Culture
Traditional Culture Lean Culture
Function silos Interdisciplinary teams
Managers direct Managers teach/enable
Benchmark to justify not improving:
“just as good”
Seek the ultimate performance, the
absence of waste
Blame people Root cause analysis
Rewards: individual Rewards: group sharing
Supplier is enemy Supplier is ally
Guard information Share information
Volume lowers cost Removing waste lowers cost
Internal focus Customer/Patient focus
Expert driven Process driven
Source: A.P. Byrne, O.J. Fiume
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Lean Management Framework
(a.k.a. Toyota Production System)
Source: Adapted from Toyota Production System
Stability
Heijunka Standardized Work Kaizen
Just-In-Time
• Continuous flow
• Takt time
• Pull system
• Flexible workforce
Jidoka
• Separate man &
machine work
• Abnormality
Identification
• Poka yoke
Goals:
highest quality,
lowest cost, shortest lead times
Involvement
Stability
Standardization
Just-In-Time
Jidoka
Involvement
1
2
3
4
5
1
2
3 4
5
Focuses on
Quantity and
“Flow”
Focuses on
Quality and
Prevention
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Methods to Increase Productivity
How to Increase
Productivity?
Quantitative
Approach
More Staff
More Machines
Work Longer
Qualitative
Approach
Work Harder
Eliminate Waste
& Simplify
Focus of
Lean
Let’s work smarter!
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“Waste is anything other
than the minimum
amount of equipment,
materials, parts, space,
and worker’s time which
are absolutely essential to
add value to the product.”
Shoichiro Toyoda
President, Toyota
Definition of Waste
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Work versus Waste
Value Add
Non-Value Add:
Incidental Waste
Non-Value Add:
Pure Waste
Focus here for
improvement
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Value Defined
Transform or shape
material or information
Customer wants it and
willing to pay for it
Done right the first time
No value created but
required by current
thinking
No value created but
required by process
limitations
No value created but
required by current
technology
No value created but
required by government/
business regulations
Consume resources but
creates no value for the
customer
Could be stopped and it
would be invisible to the
customer
Value-Added
Activities
Non-Value Add:
Incidental Waste
Non-Value Add:
Pure Waste
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Cost Reduction Principle
Cost Plus Principle
COST 1
SALES
PRICE
1
PROFIT
1
Present
COST 2
PROFIT
2
Future
SALES
PRICE
2
Cost Reduction Principle
COST 1
SALES
PRICE
1
PROFIT
1
Present
COST 2
PROFIT
2
Future
SALES
PRICE
2
Higher profit is
achieved by
increasing sales price
Higher profit is
achieved by reducing
cost (waste) while
maintaining sales price
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Eight Types of Waste
Over-production
Producing more than what
the customer needs
Inventory
Building and storing extra
services/products the
customer has not ordered
Transportation
Moving product from
one place to another
Defect
Reprocessing, or
correcting work
Over-processing
Adding excess value
when the customer
does not require it
Motion
Extra physical/mental
motion that doesn’t add
value
Intellect
Not using employees full
intellectual contribution
Waiting
Employees waiting for
another person, process
or equipment
Waste
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Lean Thinking Philosophy
Identify and eliminate all activities that are waste.
Focus on optimal flow throughout the process.
Focus on creating value for customers.
“True North”
Value Added Time = Lead Time
Full of Waste,
Variation, and
Rigidity
Current
State Future
State
Eliminate
Waste
Identify
Waste
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Activities that do
not add value
Workload that is
not balanced
Overloading creates burden for the
team members or processes
Source: Toyota Motor Company
The 3 MU’s: Muda, Mura, Muri
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Gemba Framework
Source: Gemba Kaizen by Masaaki Imai, 1997
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5S Principles
Sort
Set In OrderShine
Standardize
Sustain
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What is the purpose of 5S?
Immediately make problems visible
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What is Visual Management?
• Visual management is a
technique where information is
communicated by using visual
signals instead of texts or other
written instructions
• Examples include signs, labels,
photographs, trend charts and
displays
Note: Visual management IS
NOT decoration
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Three Types of Visual Management
• Label to make it perfectly clear
where things belong and what
the procedures are
Visual
Displays
• Quantify the path to targets for
success
• Graphs and Pareto charts
Visual
Metrics
• Create an mistake-proofed
environment to promote easy
adherence to standards
Visual
Controls
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Daily Management Meetings
Agenda
• Yesterday’s issues
• Lessons learned
• Manpower status
• Update from top management
• 5S & Kaizen activities
• Today’s target & actions
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• Creates an end-to-end view of the system
• Demonstrates interaction between material/work and information flow
• Provides a common visual language for understanding a complex system
Supplier/
Customer Management
Control
Customer
Work & Information Flow
Information flow
Value stream mapping provides an overview
of the end-to-end business process
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Standard Work
Make it the only way:
• No alternatives left
Warning:
• Warns for abnormalities
Showing:
• One-point-lesson
• Visual information
Reading:
• Manuals
• Procedures
• instructions
Fail-safe
Visual
control tools
Visual
aids
Procedures, Instructions
and Manuals
The Compliance Pyramid
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Heijunka (Load Leveling)
Level out the workload - Work like
the tortoise, not the hare
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Flexible Workforce (Multi-skilling)
• The ability of the workforce to “flex” to other jobs as
demand fluctuates within the system, and the efforts the
organization undertakes to ensure this occurs
• Improve staff skill set
• Maximize organizational
flexibility
• Focused training and
development plans
• Allow the ability to flex to
our customer’s demands
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The source of good quality lies in
Prevention. . . . through:
PRODUCT DESIGN
PROCESSES
MATERIALS
PEOPLE
. . . Not in Inspection or Correction
Make It Right First Time, Every Time
Quality At Source
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Poka Yoke (Mistake-proofing)
• Mistake-proofing refers
to techniques that make
it impossible to make
mistakes
• Also known as Poka
Yoke in Japanese
• Mistake-proofing helps
people and processes
work right the first time
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Kaizen Event
• Rapid, focused application of Lean to reduce waste to
improve cost, quality, delivery, speed, flexibility and
responsiveness to customer needs
• 3-5 day dedicated event
• Clear objective and scope
• Continuous small
improvements
• Changes are
implemented quickly
• Everyone gets involved
Source: "The Idea Generator” by Norman Bodek
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Example: Kaizen Summary
Project type: 5S Area: Sales & Marketing Office Team Leader: John Smith
Before After
Reasons project chosen:
• Difficult to move around a cluttered
office
• Difficult to find information and
supplies
Tools used on project:
• Cleaning equipment and tools
• 5S principles
Results:
• Unwanted materials were discarded
• Less waste – e.g. transportation,
motion, waiting, etc.
• Improved staff morale
Next steps:
• Conduct monthly 5S audits
• 5S for other common areas
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PDCA Five–step problem solving process
Define the
Problem
Analyze the
Root Causes
Define
Solutions
Implement
Solutions
Check &
Evaluate
Results
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Example of 5 Whys
Why? Because…
1 Why is Tom injured? …he had a fall
2 Why did he fall? …the floor was wet
3 Why was the floor wet? …there was a leaking valve
4 Why was the valve leaking? …there was a seal failure
5 Why did the seal fail? …it was not maintained
1 3 4 52
A continuum of causes
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Cause & Effect Diagram
EffectCauses
Problem
Statement
cause
Policies
People
Technology
Procedures
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A Simple Lean Implementation Roadmap
Create
Awareness
Build
Capability
Operations
Management
&
Improvement
Lean Thinking
Training
Lean
Leadership
Training
Build Lean
Activity Board
Kaizen #1:
5S
Kaizen #2:
Waste
Elimination
Value Stream
Mapping for Key
Processes
Train-the-
Trainer
Training
Information Sessions
for Whole Organization
Senior
Management
Awareness
Kaizen #3:
Standardization
Month 1
Lean Methods &
Tools Training
Month 3Month 2
Daily Management Meeting
Lean Update in
Monthly
Newsletter &
Intranet
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About Operational Excellence
Consulting
• Operational Excellence Consulting is a management
training and consulting firm that assists organizations in
improving business performance and effectiveness.
• The firm’s mission is to create business value for
organizations through innovative operational excellence
management training and consulting solutions.
• OEC takes a unique “beyond the tools” approach to enable
clients develop internal capabilities and cultural
transformation to achieve sustainable world-class excellence
and competitive advantage. For more information, please visit
www.oeconsulting.com.sg
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