The Skinny on the Lean Enterprise--

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The Skinny on the Lean Enterprise--

• Peter Ward
• Fisher College of Business
• The Ohio State University

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The Skinny on the Lean Enterprise

• What we have learned
• Understanding lean processes and value streams
• Seeing processes fully and communicating what
  you see through value stream mapping
• Managing lean processes
• Using basic tools

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Sr.
Mgmt.
Flow Kaizen
VALUE STREAM
IMPROVEMENT
Process Kaizen
ELIMINATION OF WASTE
Front
Lines
FOCUS
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The Skinny on the Lean Enterprise

• The skinny
• Five principles
• Seven Wastes (old news for us)
• A paradox

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Apply Five Simple Principles

• Specify value from the standpoint of end customer
• Identify the value stream for each product family
• Make the product flow
• So the customer can pull
• As you manage toward perfection

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Value

• Specify value from the standpoint of the end
  customer
• Ask how your current products and processes
  disappoint your customers value expectation
• price?
• quality?
• reliable delivery?
• rapid response to changing needs?
• ???

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Value Stream

• Identify all of the steps currently required to
  move products from order to delivery
• Challenge every step Why is this necessary?
  Would the customer think the product is worth
  less if this step could be left out?
• Many steps are only necessary because of the way
  firms are organized and previous decisions about
  assets and technologies

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Value Stream
Total Value Stream Concept Launch Order Cash Ra
w Material Finished Product
Action
Action
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Flow

• Line up all of the steps that truly create value
  so they occur in a rapid sequence
• Require that every step in the process be
• Capable right every time (6 Sigma)
• Available always able to run (TPM)
• Adequate with capacity to avoid bottlenecks
  (right-sized tools)

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Pull

• Through lead time compression correct value
  specification, let customers get exactly whats
  wanted exactly when its wanted
• For the short term Smooth pull loops to reduce
  inventory
• For the near term Make-to-order with rapid
  response time, using the Web
• For the long term Diagnostics and prognostics in
  a stable relationship to take out the surprises
  for consumers and producers?

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Managing Toward Perfection
Next Future State
Future State
Current State
Original State
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Managing Toward Perfection
Future State
Current State
Original State
Original State
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Lean Principles In Summary

• Specify enhance value from the end customer
• Identify the value stream for each product family
  remove wasted actions (muda)
• Make the product flow
• So the customer can pull
• By managing toward perfection

Always repeat the principles as you start,to
avoid focus on isolated techniques!
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The Skinny on the Lean Enterprise

• The skinny
• Five principles
• Seven Wastes (old news for us)
• A paradox

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The paradox

• Lean processes are under very tight control.
• SPC, standardized work, safety, 5S, TPM, Poke
  Yoke, etc.
• At the same time, people who work in lean
  processes are truly empowered to experiment.
• The tension between control and empowerment is
  difficult to manage or even to understand.

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The Seeming Paradox Explained

• Tightly controlled processes have much of the
  variation removed.
• With controlled processes experimentation is more
  effective because there is little random error to
  confound results.
• Therefore, learning is promoted.
• We dont lose the results of our experiments in a
  sea of natural variation.
• Continuous improvement is nothing but a
  manifestation of organizational learning with the
  discipline to apply what has been learned every
  time.

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The Skinny on the Lean Enterprise

• By the way, this stuff really works.
• Inventory turns is a leading measure of both
  performance and flow.

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Inventory Turns
Manufacturing and Automotive
Automotive
Manufacturing
77 79 81 83 85 87 89 91 93 95 97 99
Source US Department of Commerce, Bureau of
Economic Analysis
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Whats Next?Bus Mgt 841

• Builds on the spring course and your summer
  experience.
• First 5 weeks of Autumn quarter on Friday
  mornings
• Focus is on integration with the other things
  MBAs learn about management.
• Document what you do this summer. Keep track of
  your accomplishments and what they mean to your
  organization. (Hard and soft benefits.)

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Have a great summer!