Lean Principles for Business Processes

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Lean Principles for Business Processes

• An Overview for St Louis ISPI-
• January 12, 2007
• Presented by Ellen Irons and George Friesen

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What is Lean?

• Quick Definition
• Lean thinking is a comprehensive set of
  methodologies based on a system of beliefs
  principles which lead to maximizing value and
  minimizing waste
• At the heart of lean is the determination of
  value.
• Value is defined as an item or feature for which
  a customer is willing to pay.
• All other aspects of the process are deemed
  waste.

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Historical Industrial Paradigms
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Waste is Seen Differently in Lean

• One of the stumbling blocks to lean is
  understanding the concept of waste.
• Traditionally waste has been viewed as an object.
  It is very easy to envision a barrel of scrap and
  identify it as waste.
• In lean thinking the term waste actually refers
  not to the physical material but rather the
  relationship of the resource to the end customer.
  In short, if the end customer wouldnt choose
  to pay you for it, it is waste.

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Types of Waste Lean Mfg

• Overproduction
• Excess inventory
• Defects
• Non-value added processing
• Waiting
• Excess motion
• Transportation
• Underutilized/Misused people

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Value Added vs Waste
Value Added -5
Incidental 30
Waste - 65
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Traditional Process Improvement

• Focuses on improving the Value Added work and
  quickly runs into diminishing returns

Only 5 of time involved here
Heres where the opportunities lie for reduction!!
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Some Key Tools Concepts of Lean

• 5S Visual Controls
• Value Streams
• Pull Manufacturing
• Mistake Proofing
• Quick Changeover
• Six Sigma
• Kaizen
• Human Factors

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Lean for Business Processes

• Manufacturing is less than 20 of economic
  activity in the advanced economies.
• How do we apply lean, process thinking to all
  activities to maximize its impact on society?
• Lets return to value as defined by the customer
  waste in business processes.

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Typical Waste in Business Processes

• Waiting e.g. paperwork is in-process but
  really is just sitting in In-boxes, traveling
  between mail rooms, or waiting for signatures
• Defects customer information is collected
  improperly or is incomplete, errors in transfer
  from one form to another
• Misuse of People both underutilization of
  people who could be trained for higher work and
  use of highly qualified people for tasks not at
  the higher end of their capability levels

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Typical Waste in Business Processes

• Excess Motion poor office layout, poor
  distribution of key equipment eg copiers,
  printers lack of easy access to job elements
  needed for processes (e.g hard copies of forms or
  no computer access, etc)
• Overproduction /excess capacity producing or
  having on hand more product than needed or at a
  higher quality than requested
• Would the customer choose to pay for these?

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Typical Lean Improvements in Business Processes

• Make Work Flow
• Reduce steps reduce handoffs by combining into
  logical chunks
• Create a cadence of expectations to reduce daily
  schedule changes
• Eliminate waiting
• Manage interrupts to maximize flow
• Separate work into categories of routine and
  special
• Implement business process supermarkets to
  eliminate long queues

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Typical Lean Improvements in Business Processes

• Create Standardized Work and Built In Quality
• Standard Work
• Balanced work
• Visual management
• Baseline for continuous improvement
• Stabilize the process to enable quality

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Typical Lean Improvements in Business Processes

• Create Standardized Work and Built In Quality
  (continued)
• Quality at the Source
• Each person must be sure the product that he/she
  passes along to the next work area is complete
  and accurate
• People must be given the means to perform
  inspection at the source
• Standards and samples are provided as visual
  tools
• Continuous Improvement

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Summary of Thinking Lean

• Specify value
• can only be defined by the ultimate customer
• Identify the value stream
• exposes the enormous amounts of waste
• Create flow / standardize the work
• reduce waiting, combine steps handoffs
• Let the customer pull product through the value
  stream
• make only what the customer has ordered
• Seek perfection
• continuously improve quality and eliminate waste

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Case Study Exercise Jacks Taxes

• Get into two groups
• Review Jacks Taxes Case Study
• Work with facilitator to address three areas
• What is the Value to the Customer?
• Where and what is the Waste?
• What Improvements can be made?
• Rejoin whole group and briefly discuss how the
  Lean approach compares to HPT

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Case Study Exercise Jacks Taxes
Break into two large groups Obtain Copies of
the Case Study. Then
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Transition-To-Lean Roadmap
From Lean Aerospace Initiative 2004