12th lean thinking

Lean and Lean ThinkingApril 2009

Saeed Hessami P.Eng.

Today we will cover…

- What is Lean?- What is Lean Thinking?- Is this a new concept?- How does this apply to me (I am an Engineer!)- Q/A

I am an engineer!What is Engineering?

the practical application of science to commerce or industry

What Engineers do?build products or deliver services

For whom?end-users = customers

Who pays Engineers Salaries? customers

The Lean Philosophy

What is value?

Value vs. Non-Value

Start of Operation End of Operation

= Value-adding Operation Time

= Non-value-adding Time

What Percentage of a typical company

activity is add-value?

Value vs. Non-Value

Typical company

95% Non-value-added 5% Value

“Lean” company

50% Non-value-added 50% Value-added

Toyota

What is lean?• To become “fit” in terms of business and

performance• To systematically and continuously remove

waste (muda)• To challenge the tradition (status quo)• To bring out the best in people and allow teams

to develop ideas and implement changes• To focus on long-term, sustainable changes as

opposed to short-term gains• A way of life, never ending journey toward

world-class status

The Lean in terms of sports

SpeedStaminaStrategy Stability Strength

What is lean thinking?

Lean = Lean Thinking

What is no-blameEnvironment?

When did “lean” start?What year?

History of Lean

1912 – Model T Assembly Line

His

tory

of

Lean

1st Oil Shock1st Oil Shock19731973

Leveraged NetworkChina and India becoming global manufacturer21st21st

(Statistical Process Control)

Total Quality Management)

James Womack

“Lean is consideredFundamental to business

growth and success”Corporations throughout North Corporations throughout North

America are creating new positions America are creating new positions such as such as ““Vice President of LeanVice President of Lean”” and and

““Director of Continuous ImprovementDirector of Continuous Improvement””e.g. Kodak Director of e.g. Kodak Director of KOSKOS““KodakKodak Operating SystemOperating System””

Result?

• encourages and promotes teamwork• integrates lean concept throughout• makes lean part of company vision

To compete and achieve world-class status, focus must be on creating an environment that . . .

Without discouraging or hampering creativity, innovation, or out-of-the-box thinking

. . . and

Possible

Impossible

“Think of the Solutions”

Three Key Drivers for Lean Organization

Process

Technology People

Achieving “balance”among three drivers is absolutely critical

Basic Lean Principles

Five Principles of Lean Thinking

• Define value from the customer’s perspective

• Identify the value stream and the specific steps

• Make the process flow• Pull from the customer• Head toward perfection• Never give up! No ErrorsNo Errors

No WasteNo WasteNo ProblemsNo Problems

Basic Principles of Lean Development• Add Nothing But Value (Eliminate Waste)

– “Zero Defects”– “Do It Right the First Time”– “Test First”

• Center On The People Who Add Value– upgrading the skills of developers through training and apprenticeships– forming teams that design their own processes and address complete

problems– managers exist to support developers, not to tell them what to do

• Flow Value From Demand (Delay Commitment)– “Just-In-Time”– Develop in small, rapid increments– Driven by customer priority and feedback

• Optimize Across Organizations– structure around teams that maintain responsibility for overall business

value– Downstream department is a customer, and satisfying this internal

customer is the ultimate performance measurement

Identify Value Stream –Airport Example

Line Up Check-in Line Up Go throughSecurity Fly

MudaMuda!! MudaMuda!! MudaMuda!! MudaMuda!!

Working in Sync – Balance is the key

Seven Forms of Waste(Manufacturing)

• Overproduction– Producing more or sooner than customer needs

• Waiting– Long periods of inactivity: people, information, machinery, or

materials• Transportation

– Excessive movement of people, information, or materials• Inappropriate Processing

– Using wrong tools, procedures, or systems• Unnecessary Inventory

– Excessive storage and delay of information or products• Unnecessary Motion

– Any motion which does not add value• Defects

– Frequent error in paperwork, product quality, or delivery

Seven Forms of Waste (Software Development – Extreme/Agile Programming)

• Extra Features (= Overproduction)– Develop only for today’s stories

• Waiting - Including Customers (= Waiting)– Deliver in small increments

• Handoffs (= Transportation)– Developers work directly with customers

• Extra Steps (= Inappropriate Processing)– Code directly from stories; get verbal clarification directly

from customers• Requirements (= Unnecessary Inventory)

– Story cards are detailed only for the current iteration• Finding Information (= Unnecessary Motion)

– Have everyone in the same room; customer included• Defects - not caught by tests (= Defects)

– Test first; both developer tests and customer tests

Dilbert’s definition

Typical Achievements of Lean

0%

25%

50%

75%

100%

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Lean Affect Entire Supply Chain

BUY MAKE MOVE STORE SELL

Suppliers

CustomersDesign

• Performance Management• Design Collaboration• Cost Reduction Collaboration• Vendor Managed Inventory• Kanban

• Strategic Sourcing• Buying Pattern Analysis• Consolidation• Invoice Reduction• Blanket Agreement• Leveraging• Specification Changes

• DFA/DFM• Synchronous Engineering• Gating Process• Lean Project Management

• 5S• Root Cause Analysis• Value Stream Mapping• Setup Reduction• Poka Yoke• TPM

• Logistics Analysis• Transportation Optimization• Freight Audit• Consolidation

• Warehouse utilization• Kanban/VMI• Material Flow Analysis• Spaghetti Diagram

• Collaborative Program• Voice of Customer• Call Centre Programs• Automated Processes• Centralized Info System• Demand Forecasting

Over 50 lean toolsOr programs

Getting Strategy Right

Material Flow

Takt Time• Takt time is the rate at which products are produced that just meets the

demands of the customer• Put it another way, Takt time paces the production at the “heartbeat” of

the customer• Takt time SYNCHRONIZES production to true customer demand; you

don’t produce more or less• Any work cells that take longer than Takt time becomes a bottleneck

Takt Time =Operating hours or min/dayOperating hours or min/day

Output demand per dayOutput demand per day

480 minutes (8 hrs)480 minutes (8 hrs)1000 units demanded by 1000 units demanded by

customer per daycustomer per day

== == 0.48 min/unit0.48 min/unit

What is Kanban?• Kanban literally means “sign display” in Japanese, and is one of

the fundamental tools used in lean manufacturing• Kanban allows efficient flow of materials by managing its

demand automatically• It is essentially a form of “trigger” for flow of materials, in much

the same way traffic light controls cars on the road• Kanban could be applied to an internal or external process

• Internal Kanbans are used to manage the flow of materials internally within the plant

• External Kanbans are used to trigger the replenishment of materials from the outside vendors

MaxQty

MinQty

What kind of Kanbans Exist?

• Bin Kanban = Kanbin• Fax Kanban = Faxban• Email Kanban = eBan• Card Kanban = Kanban Cards

• It does not matter what the “flagging” system uses to trigger the material flow, they all work on the same principle of replenishing on demand

Getting Strategy Right

PerformanceManagement

Performance Measurement Provides Yardstick

• It’s next to impossible to determine “how well” you are doing unless objective data can be mined and compared against the industry averages

• Performance measurement brings objectivity into the lean practice and minimizes “guessing”

• Visual tools, pareto charts, and other tools work hand-in-hand with performance measurements to provide additional details

““What gets measured, gets doneWhat gets measured, gets done””

Performance Measurement

• What do you measure now?• Are your metrics “visually available”?• Do you know your company’s performance?

Sales volumeCustomer baseCall rateNumber of successful installation

Potential Performance Measures

–Error rate–Turnaround/lead time–Invoicing error–% backorders–….

Order Entry & Procurement

–Defect rate–Cycle time/Takt time–Lead time–Improvements/employee–…

Manufacturing–# of turns–Inventory levels–Days of inventory–Obsolete inventory–Inventory accuracy–Warranty returns %–….

Inventory Management

–% of successful “wins”–Actual vs forecast–Customer satisfaction level–Customer buying pattern–Customer complaints–Error rates–….

Sales

–Delivery-to-promise–On time delivery–Fill rate–Turn around/lead time–Freight cost–….

Shipping

Visual example

Key Metrics Current C

ompany D

ataIndustr

y Ben

chmark

Future Targ

et (in

3 yrs

)

On Time Delivery 85.0% 99.0% 95.0%First Pass Yield 89.0% 99.0% 94.0%

Number of Turns 3 20 10Sales Per Employee $85,000 $175,000 $150,000

Fill Rate 73.0% 99.0% 94.0%Error Rate 7.0% 1.0% 5.5%

Metric AMetric BMetric CMetric D

GoodOK

Needs ImprovementKey Measures

Getting Strategy Right

Project PlanningTools

Solutions Prioritization

Quick Hits

Mid Solutions

Strategic

3 ~ 12Months

1 ~ 3Months

1 ~ 4Weeks

“Balance”the Projects

Carefully

Plan, Execute, then Follow Up

PurposeOutcomeWorkplanExecuteRe-check

• POWER provides structure and focus into project planning• POWER forces “closure” by following up on the work performed

to ensure sustainability

P

E W

OR

Getting Strategy Right

Continuous Improvement

Kaizen

“Kaizen . . . Everyday,Everybody”

Evolution of World Class

Framework& Strategy

Education& Training

Pilot Projects

Expansion

• Management Support• Sponsorship• Vision

• Increased accountability• Launch other projects• Value Stream Mapping• Kanban• Others

• Launch Initial Project• 5S• Turbocharged Solutions Teams• Kaizen

• Knowledge Base• Foundation• Employee Involvement

Approach differs for each company!Approach differs for each company!

Key Drivers of Team Success• Commitment• Can Do Attitude• Proper Sponsorship• Financial Support• Emotional Support• Weekly Meetings• Results-oriented• Accountability• Ownership• Rewards & Recognition

What to do?

• focus on quick hits• cross-functional solutions• identify longer term issues• facilitate sessions• become the “champions”• spread the “good words”• implementations

Exception Management Manage only the exceptions

Don’t need to knowWhen activities are within acceptable range

Document/Information Approval Process

Milk Run Model“typical”Start

End

Document/Information Approval Process Spider Method

“lean”

StartEnd

Advantages of Daily Meetings

First

15 minuteStandup Meeting

• Quick daily meeting• Stand-up only• Discuss issues• Discuss today’s to do• No more than 15 min

Issues & problems pile up“Batch” system

Issues & problems get resolvedeveryday first thing in the morning

“One piece flow” system

The Lean Journey

“Make things so simple, so obvious, so easy that operations can be carried out without thinking . . .”

5S Definition

5S refers to a list of five Japanese words which are part of the Kaizen philosophy of workplace management. It is a method of organizing and managing your workspace and work flow to improve efficiency, eliminate waste (muda) and improve Processes.

A clean workplace will improve the morale of those that work in it.

5S Definition

• Remove anything which isn’t needed for current work

• Leave only the bare essentials• Focus on what you really need• Apply the 80/20 rule

The First S: Sort (Tidy)The First S: Sort (Tidy)

• Arrange items in a way that they are easily accessible

• Arrange items that are visible

“A place for everything and everything in its place”

Second S: Set in place (Orderly)Second S: Set in place (Orderly)

• Clean everything• Eliminate all sources of contamination• Find ways to keep the work areas clean• Adopt cleaning as a form of inspection• Make cleaning a part of everyday work

Third S: Shine (Clean)Third S: Shine (Clean)

• Standardize:– Standardizing tools– Standardizing methods– Standardizing colours– Standardizing procedures– Standardizing materials– Standardizing equipment processes

Fourth S: Standardize

• Practice • Training• Continuous

Improvement• Inspection• Feedback

• Total Employee Involvement

• Coaching• Facilitation• Education• Discipline

Fifth S: Sustain (Discipline)Fifth S: Sustain (Discipline)

5S Definition

A 5S System will:- get rid of anything that is not needed, - organizing everything that is needed, - cleaning on a daily basis, - standardizing to maintain the system - having leadership and team members exercise the self-discipline to make it a daily habit…

The Lean Journey

Problem Solving Tools

Value Stream MappingValue Stream Mapping

PickMaterials

SortParts

WeldFrames

AssembleComponents

Continue

1. IdentifyKey Steps

2. Cycle TimeIdeal Case

5 min 15 min 20 min 55 min

3. Cycle TimeWorst Case

30 min 60 min 37 min 120 min

4. Input &Output

List Input List Input List Input List Input

Output Output Output Output

5. Key Issues& Problems

List List List List

Look for long cycle times

Eliminate Muda

Fishbone Diagram Fishbone Diagram –– Root Cause AnalysisRoot Cause Analysis

MANPOWER METHODS

MATERIALS MACHINERY

Fishbone Diagram

Problem:

Watch too much TV

Watch too much TV

Feel stressed outWorry about tomorrow

I might lose my job

I need to relax

Effo

rts

Req

uire

d

Value/Benefits Big ValueSmall Value

Big

Effo

r tSm

all E

ff ort

Takes significant

time, efforts, but

benefits are huge

Easy to do, but pay back is

small – “Quick Hits”

Difficult to do, and

small value – DON’T DO IT!

Small effort but big

value – DO THIS NOW!

PLOT POSSIBLE SOLUTIONS ON THE

GRAPH

Value Graph Value Graph –– One Tool to ConsiderOne Tool to Consider

Strategic

GEMS

DON’TDO

QUICKHITS

Effo

rts

Req

uire

d

Value/BenefitsBig ValueSmall Value

Big

Effo

r tSm

all E

ff ort

Value GraphValue Graph

StrategicDon’t Do

Quick Hits Gems

Take shorter showers

Move house

Marry someone rich

Change jobs

Don’t eat junk foodTurn lights off when you leave

the room

Take up a more meaningful hobby (cooking)

Move furniture around

Project Power Charter ExampleEffort: Easy Medium Difficult

Cost: Cheap Medium Expensive

5S Project

Sponsor/Champion: Project Deadline:

PURPOSE:

WORKPLAN: List Recommended Key Steps

EXECUTE: List Team Members

OUTCOME: List Deliverables

John Smith, David Wilson Sep 1st, 2002

• Become more organized• Provide structure into work areas• Standardize methods, procedures, approach• Optimize efficiency through better organization of materials, processes, and work flow

• Create a Lean Team• Provide 5S Training• Apply to one area• Expand to another area• Continue to standardize, organize, and optimize

• List Team Members• List Team Members• List Team Members

• Clean, organized work areas• Materials and tools are easy to find

Re-chec

k Date

Oct 1

Lean StepsPower

TemplateImplementation

Schedule

ProcessMappingProblem

FishboneDiagram

ValueGraph

UCLA Study shows that . . .• Average five-year olds engage in creative

tasks 98 times, laugh 113 times, and ask questions 65 times in a day

• By the time we reach mid-40s, these numbers shrink to 2 creative tasks, 11 laughs, and 6 questions per day

What What happened?happened?

Kaizen Principles Kaizen Principles –– Be InnovativeBe Innovative

Kaizen Principles Kaizen Principles –– Share prizes and successesShare prizes and successes

Kaizen Principles Kaizen Principles –– Choose your battles carefullyChoose your battles carefully

Kaizen Principles Kaizen Principles –– DonDon’’t be afraid to try thingst be afraid to try things

Kaizen Principles Kaizen Principles –– Help whenever you canHelp whenever you can

Kaizen Principles Kaizen Principles –– Maintain Youthful SpiritMaintain Youthful Spirit

Kaizen Principles Kaizen Principles –– Learn to get along with EVERYONELearn to get along with EVERYONE

Kaizen Principles Kaizen Principles –– Be creative!Be creative!

Kaizen Principles Kaizen Principles –– All ideas are good ideasAll ideas are good ideas

So we covered…

- Lean meaning- Lean Thinking concept- It is not a new concept- It applies to Engineering and is way of living

Links and References• The Lean Enterprise Academy

– http://www.leanuk.org/• InfoQ - An Introduction to Lean Thinking for Software

– http://www.infoq.com/articles/lean-thinking-software• Lean Software Development

– http://www.poppendieck.com/• Lean Manufacturing Strategy

– http://www.strategosinc.com/implementation0.htm• The role of leadership in software development (Google tech talk

video)

– http://www.youtube.com/watch?v=ypEMdjslEOI&feature=user

Thank you…