Conclusions and Summary
What is Lean about? Lean is about reducing the lead time of a process. Applying Lean requires that we find the waste in the process, where waste is those activities that increase lead time but do not add value to a product or service. The seven deadly categories of waste guide us toward identifying it. The Lean methodology can be summarized by these steps:
- Define the metrics that are important for improving the target process.
- Construct a value stream map of the current process.
- Find waste and brainstorm process improvements.
- Construct a value stream map of the future process reflecting the proposed improvements.
- Prioritize the improvements and implement them, possibly using kaizen events for improvements needing additional planning or work to implement.
- Verify that the process has improved according to the hypothesis (the future state value stream map).
- Go back to step 2 and repeat.
It is obvious that reducing lead time increases the responsiveness of a process. In addition, we have seen that reduced lead time always generates other benefits. Inventory or work-in-process is always reduced and other benefits are also realized, which depend on the process, including increased productivity and efficiency, improved quality, fewer errors, increased customer satisfaction, improved cash flow, and many others.
Philosophically, we can view the Toyota Production System and Lean as a fundamental shift in how we think about manufacturing processes. From the Industrial Revolution throughout much of the 20th century, manufacturing managers paid attention predominantly to keeping machines and people busy, focusing on measures such as capacity utilization and utilization of workers’ time. Lean, conversely, focuses on steady utilization of the products and services flowing through a process: If value is not being added to a part, then it is simply unproductive inventory requiring an investment but getting no closer to yielding a return. So one might look at the traditional approach to manufacturing as keeping investments in machines and people busy while Lean focuses on keeping the goods flowing through the process busy. A naïve approach to choosing between these two philosophies would revolve around the cost of machines and people versus goods: One might think that, obviously, whichever represents the greatest investment is the most important to keep busy. However, further reflection on the goals of manufacturing might suggest that business success involves producing goods in sufficient quantity to meet customers’ delivery and quality expectations without producing any more goods than necessary and using any more of other resources than necessary. In financial terms, this means maximizing revenue, minimizing cost, and minimizing investment. Lean clearly helps on-time delivery and reduces inventory cost, but what about minimizing consumption of other resources? We have seen that applying Lean can also increase worker efficiency so that the same output can be achieved with fewer workers and labor cost is reduced. Lean can also reduce the amount of equipment and building space needed. Many factories make this point apparent by roping off the floor space freed up by Lean with yellow tape. The people and equipment formerly in this space are no longer needed, and the floor space is available for expanded output. So for the traditional mind-set, keeping machines and people as busy as possible sounds attractive, but not if the people are not doing anything to benefit the customer (wasted motion) or the machines are making product that is not needed in the near term (overproduction, excess inventory). Blindly keeping resources busy, then, can be detrimental to profitability. One of the benefits of Lean is that it helps us decrease inventory by keeping machines busy with the right goods, which are those that downstream processes can consume and what customers want (e.g., using a kanban system). Furthermore, Lean helps us expand the capacity of people and machines: Worker efficiency increases as processes are simplified and streamlined, and machine capacity is expanded by reducing changeover time. Thus Lean can minimize the investment made by a company. We have also seen in this book many examples where revenue is enhanced by Lean. Operating a business according to the principles of Lean, therefore, trumps the traditional manufacturing mind-set because it simultaneously maximizes revenue, minimizes cost, and minimizes investment. Although the foregoing argument is grounded in a manufacturing context, this book has entertained processes in many nonmanufacturing contexts and demonstrated the analogous benefits of Lean in those contexts.
Another conceptual observation about Lean is that it is a data-driven improvement methodology. Lean is data driven because the value stream map is based on actual data from the process, on which our ideas for improvement are based. Other Lean efforts rely on data as well, such as reducing changeover time and constructing a work cell. Lean is not about using our intuition to improve a process and trusting that our ideas, without any supporting data or analysis, will improve a process. This is important because we do not always (perhaps rarely) have a good idea about how processes are actually performed until we go out and observe them. Hence, acting on intuition, at best, would not likely address the best opportunities for improvement and, at worst, might not result in improvements at all. It is important to take time to understand the process before we can improve it. Think about Taiichi Ohno’s idea about standing in a circle (see chapter 4). This is, indeed, the scientific method, which is to develop improvement hypotheses based on data, test the proposed changes to see if improvement has resulted, and use the changed process if improvement has indeed occurred. Until a better way to execute a process is proven with data, then the process is executed according to the old definition. Thus the scientific method, as applied to business processes, requires the standardization of how processes are executed.
The definition on which we should standardize includes the value stream map. We have argued that any improvements we find might not be improvements tomorrow if the process has changed, and our future state value stream map will yield no benefit because we cannot ensure that we will execute the process that way. We have also discussed standardizing on the details of a process using Standard Work documents, which should reflect the best method found to date. The process should be executed according to the value stream map and Standard Work documents until a data-driven approach identifies an improved process. Theoretically, process improvement never ends. We can always revisit a process and find improvements.
I hope this book has clearly explained the philosophies of Lean, as well as how to apply Lean tools that are generally applicable and the most frequently used. This is not a comprehensive book on every philosophy and tool having to do with Lean. Instead, it is a quick-start manual. Other books and materials that have been referenced throughout this book provide clues on where to find more in-depth coverage of particular topics if it is needed. It is also useful to identify someone who has experience with Lean to help you or your company get started. While the concepts of Lean are straightforward, leaning on the expertise of others can accelerate the effectiveness of a Lean program and help ensure that early endeavors are successful, which will have great bearing on whether a Lean program is successful in the long term.
One way to solidify the concepts in this book is to perform a Lean project for an organization. This book can be used in a course that involves applying Lean in a company setting. Alternatively, consider analyzing one or more of the cases found in the appendix of this book. They offer an opportunity to test if a reader has understood the foregoing material. Moreover, although reading material may breed familiarity, truly understanding a topic at a deeper level requires that the concepts be applied. Applying Lean in a project setting is, therefore, a requirement of truly understanding Lean and, certainly, the only way to experience firsthand how effective it can be.
Exercise
- Read The Goal, by E. M. Goldratt.1 For an opportunity to comprehensively apply the methods discussed in this book, answer the following questions:
a. Describe the components of the Drum-Buffer-Rope method used in The Goal to control the release of work onto the plant floor. Describe how the Drum-Buffer-Rope could be considered a pull system and, in that regard, analogous to a kanban system. Describe the similarities and differences of that pull system with the more common version described in this book.
b. Describe the methods used in The Goal to improve the plant’s performance that are consistent with Lean methods as described in this book.