Lean methodology focuses on only spending money on resources that create value for your customers. Anything which does not ultimately increase value for your customers is considered wasteful and a target for savings.
A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.
Lean has an a very long history. Originally the Lean methodology has roots going back to Ford’s production lines for the model T and before. The works of Taylor and Gilbreth all impact on lean, their ideas along with Ford were adapted by Toyota to begin to form the Toyota Production System which is where lean has come from. Toyota took these ideas and combined them with the works of Deming, Shewhart, and Juran to give employment involvement and a drive towards continual improvement.
Lean Manufacturing is a business improvement philosophy that has developed over many years (as well as a collection of lean manufacturing tools), it is a method to better focus your business on the true needs of the customer to help you prevent waste from being built into your system. The benefits of Lean manufacturing are many. Lean centred around seven core areas of wastage in their manufacturing operations but many business areas now use it.
Lean methodologies can be applied in every business and all processes and should be seen as a way of thinking and a way of changing the culture of your business for the better. To implement lean methodology, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.
Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.
Financial Benefits of Lean Manufacturing
The financial benefits of Implementing Lean Manufacturing are highly significant, everyone of the improvements mentioned above will impact on your bottom line in some way. They may also release much needed capital back into the business.
If you reduce the amount of work in progress (WIP) and finished goods that you are holding then you automatically reduce either the cash tied up in that stock or reduce your borrowings from the bank.
The improvement in efficiencies that you gain allow you to make more products for same overheads, improving your profits. The reduction in the need for things like forklift trucks and other things for moving inventory around also reduces your costs.
Lean for Production and Services
A popular misconception is that lean is suited only for manufacturing. Not true. Lean applies in every business and every process. It is not a tactic or a cost reduction program, but a way of thinking and acting for an entire organization.
Businesses in all industries and services, including healthcare and governments, are using lean principles as the way they think and do. Many organizations choose not to use the word lean, but to label what they do as their own system, such as the Toyota Production System or the Danaher Business System. Why? To drive home the point that lean is not a program or short term cost reduction program, but the way the company operates. The word transformation or lean transformation is often used to characterize a company moving from an old way of thinking to lean thinking. It requires a complete transformation on how a company conducts business. This takes a long-term perspective and perseverance.
The characteristics of a lean organization and supply chain are described in Lean Thinking, by Womack and Dan Jones, founders of the Lean Enterprise Institute and the Lean Enterprise Academy (UK), respectively. While there are many very good books about lean techniques, Lean Thinking remains one of the best resources for understanding “what is lean” because it describes the thought process
The overarching key principles that must guide your actions when applying lean techniques and tools. Lean has proven itself such a good fit with Six Sigma that it is taught throughout the various levels of Six Sigma certification (White Belt, Yellow Belt, Green Belt, Black Belt and Master Black Belt).
Customers are becoming more demanding, markets are becoming more customised, and product life-cycles that are getting shorter are just a few of the reasons why Lean could be important to you. As the demands on our processes increase they evolve and adapt accordingly which often results in processes that end up inefficient and wasteful. Lean is about challenging the way things are done and opening our eyes to that waste and inefficiency. The environment in which an organization operates will continue to change; Lean can help organizations meet the challenge.
Delivery of products or services means all three parties involved in the processes benefit. Customers get a much quicker and personalised services or products. Providers work with a simpler and more sensible system. The organisation is able to provide a more cost-effective and less wasteful service because less time and expense is taken up on unnecessary activities.
How to implement lean methodology?
Lean is about defining value as perceived by the customer, actual features and services that they expect. Mapping the value stream from raw materials to the customer, then making that value flow at the pull of the customer whilst working towards perfection. To do this you must respect all of your employees and involve them in a continual drive to improve your business, without this respect and involvement no improvements will be sustainable.
Lean Sigma may be one of several improvement methodologies offered by your organization (as is the case at Johns Hopkins), or it may be deployed across the organization. The following steps are suggestions for introducing and gaining buy-in for the methodology. They may be performed in any order, or simultaneously.One of the best ways to roll out a lean is to treat the process as a lean process in and of itself. The following are some basic guidelines, arranged in the classic five-stage process:
First step in deploying lean in your organisation begins with defining the scope of a change. You need to identify the core sources of waste to tackle in your organisation. These sources need to be written down with as much data available on the current state of production or service delivery. You need to define your goals as of: reducing the number of errors or defects on a progressive scale that tightens over time.
Since we belive that what cannot be measured cannot be managed you need to manage the progress against metrics defined in the previous step. This should give you a clear overview of where your organisation is heading and how fast can you approach the assumed targets in terms of quality, customer satisfaction or reduction of costs, or whatever you have defined in the previous step as the goal for your organisation.
You need to be analytical to spot variances in the plan and be able to track them down to the root cause. Being analytical would allow you to make neccessary corrections as you move along with implementation of your plan. Many factors need to be taken into account as in some organisations being driven towards one specific set of goals creates waste in another areas of the business. Since lean is a wholistic approach so should be your analysis.
Keep on improving the process as you iterate on measuring and analysing the current situation. Remember, this is a continual process and not a straight line. Being able to make corrections and improvements on your way gives you much more control over reaching the goals, deadlines and numbers assumed in the initial definition of what you wanted to achieve by introducing lean methodology to your company in the first place.
Take neccessary actions to control the environment and deployment of lean in your organisation. This means direct action based on the analysis you’ve done. Set goals for departments and even individuals responsible for rolling out the plan in the organisation. Control means being both supportive and decisive in respect to the direction you need to take, as well as resources you want to be engaged in the process of deploying lean methodology in your company.
In order to deploy lean methodology in your organisation you also need to prepare and build organisational infrastrcuture to support your initiative. Identify an area or two with possible high impact, leadership who will support a new approach, and the presence of an interested clinical champion (if it is a clinical area). A manager should get training and complete a project that meets an organizational goal that has a quantifiable impact on the bottom line. Ensure that these staff have support from a Master Black Belt—either externally to start, or internally if resources allow.
The continuous performance improvement of Agile & Lean allows organizations to increase their productivity at an system-wide in compounded fashion year-after-year. An organization that starts a program of Agile & Lean today will achieve the same sustained competitive advantage over their competitors that wait that Toyota has over Ford. An organization that allowed a competitor to start an Agile & Lean program first had better start theirs as soon as possible, because every day they wait increases the gap between they are their competitor that they may never be able to overcome.