School of Business Administration

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Lean Management
Dr. Gene Fliedner
Decision and Information Sciences
School of Business Administration
Oakland University
4/13/2015
1
Lean Management Defined
• The basic tenet of lean is the enhancement of productivity through
waste elimination.
• Toyota Production Systems: An operating philosophy in which the
best quality, cost and delivery of a product or service is achieved
through shortening the production flow by eliminating waste.
• Elimination of 3 M’s: Muda (waste), Mura (inconsistency), Muri
(unreasonableness)
• Womack, Jones, Roos, The Machine that Changed the World



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Half the hours of human effort in the factory
Half the defects in the finished product
One-third the hours of engineering effort
Half the factory space for the same output
A tenth or less of in-process inventories
4/13/2015
2
Lean History
•
Dunham (1956) notes the Egyptians used an assembly line (flow) practice and divided labor to
enhance productivity and speed in the building of the pyramids.
• The foundation of ergonomics appears to have emerged in ancient Greece. It focuses on employee
safety and eliminating waste in tasks such as repetitive movements, work design, and improving
quality It has been divided into three domains:
1. Physical ergonomics: concerned with human anatomy and delves into relevant topics such as
working postures, materials handling, repetitive movements, lifting, workplace layout, as well as
safety and health
2. Cognitive ergonomics: concerned with mental processes and mental workload among other
relevant topics, and
3. Organizational ergonomics: concerned with relevant topics that include work design, design of
working times, teamwork, and quality management among other relevant topics.
• In as early as 1104, the Arsenal of Venice utilized a vertically integrated flow process consisting of
dedicated work stations to assemble standardized parts into galley ships which enhanced
productivity.
• Eli Whitney’s introduction of interchangeable parts in 1798 as a major breakthrough
• During the scientific management era of the late 1890’s and early 1900’s, several industrial
engineers such as Frederick Taylor and the Gilbreths contributed practices such as standardized
work, time and motion studies, and process charting
• Starting in about 1910 through the 1920’s Henry Ford extended these practices by marrying
interchangeable parts with standard work and moving conveyance as well as incorporating
behavioral concepts such as worker motivation in order to design a more comprehensive lean
system
• Mid and later 1900’s came the contributions of Toyoda, Ohno, Shingo, Imai, and others and their
identification of the 7 wastes
• The ideas spawned from Toyota were largely generated by financial necessity.
4/13/2015
3
Current Competitive Environment:
Value Add versus Non Value Add
$
Profit
“fixed” price
K
a
i
z
e
n
time
Total Cost = VA + NVA
•
Classic business model:
Cost + Profit = Price
•
New business model:
Price – Cost = Profit
4/13/2015
4
Lean Waste: Seven Plus Two
1. Over production: prior to demand
2. Waiting: for information, materials, people, equipment,
etc.
3. Transportation: more conveyance than is necessary
4. Over-processing: e.g., any form of inspection
5. Inventories: having more than absolute minimum
6. Motion: more than necessary to complete the task
7. Defects or Rework
• Note the internal nature!
8. Knowledge Disconnection: inhibition of knowledge,
ideas and creativity flows
9. Sustainability
4/13/2015
5
4 Elements of Lean Systems
1. Leadership: Styles, Skills, Abilities, Behaviors,
and Practices
2. Culture and Principles: Atmosphere, Beliefs,
Practices, Behaviors, Norms
3. Team (stakeholders: employees, management,
supply chain)
4. Tools
4/13/2015
6
Lean Leadership
•
•
•
•
•
Leadership refers to the collection of managerial styles, skills, abilities, behaviors, and practices.
Leadership within an organization includes setting the direction the organization through a thorough, longterm vision of the organization’s value-producing processes.
Leadership theories have been discussed in the literature for decades but can largely be classified into
one of eight primary groups:
1. Participative Theory (Lewin, et al, 1939; Likert, 1967)
2. Great Man Theory (Redl, 1942)
3. Behavioral Theory (Merten, 1957; Blake and Mouton, 1961; Pfeffer and Salancik, 1975)
4. Contingency Theory (Fielder, 1964; Fielder, 1967; Fielder, 1987; Hickson, 1971)
5. Trait Theory (Mischel, 1968; Peterson, 1968)
6. Situational Theory (House, 1971; Vroom and Yetton, 1973; Hersey, et al, 2007)
7. Management or Transactional Theory (Dansereau, et al, 1975; Graen and Cashman, 1975)
8. Relationship or Transformational Theory (Burns, 1978; Bass, 1985; Kouzes and Posner, 2007)
Flinchbaugh et. al. (2008) argue that lean leadership builds upon traditional leadership theories and
includes additional skills of:
1. Teaching
2. Creating a source of energy that encourages employees to pursue stretch objectives
3. Eliminating fear that discourages the risk taking associated with experimentation, action, and new
thinking
4. Leading through participation, and
5. Imbedding lean within one’s own personal practices.
Mann (2009) suggests that cultures develop from reinforced behaviors and the most important source of
reinforcement is leadership. He notes that sometimes culture contradicts stated rules and practices which
is detrimental to lean initiatives. The failure of most lean initiatives can be pinned on the failure to change
leadership practices (Mann, 2005).
4/13/2015
7
Lean Culture
• Lean culture refers to workplace beliefs, practices, behaviors, and norms. It is the
principled atmosphere of the system.
• Mann (2009) notes that culture is simply the way things are done in an organization.
• Dennis (2002) suggests lean culture is comprised of day-to-day practices and
behaviors.
• Collins (2001) describes great companies as those that blend an entrepreneurial spirit
with discipline. He notes that the creation of culture it is an inherently iterative process,
not an event. Namely, it is a aspect of continuous improvement where lean culture:
1. Avoids bureaucracy and hierarchy,
2. Creates a culture of discipline, and
3. Does not focus on what you accomplished, only what you’ve accomplished relative
to exactly what you said you were going to accomplish
• In a lean system, these practices and behaviors need to include reliance upon:
1. Shewhart’s Plan-Do-Check-Act (PDCA) cycle to grasp the current reality,
2. A team work approach,
3. Standardization of methods,
4. Visual management techniques, and
5. Discipline (the recognition that lean is a lifelong path of continuous improvement
which if pursued honestly and diligently creates energy, focus, and longevity)
• Lean culture promotes involvement, experimentation, and new thinking which in turn
leads to improved productivity, quality, lowered cost, shortened delivery time,
enhanced safety and environment, and improved morale.
4/13/2015
8
Lean Team
• Team member involvement is the heart of lean production; it’s an
understanding of Aristotle’s idea that “the whole is greater than the sum of
the parts” (Metaphysica); it is Toyota’s respect for people
• Collins’ Good To Great… “Executives who ignited transformations did not
first figure out where to drive the bus and then get people to take it. They first
got the right people on the bus (and the wrong people off).” Lessons:
1. Think about the effort involved with the “wrong” people
2. If you begin with “who” rather than “what”, you can more easily adapt to a
changing world
3. If you have the right people on the bus, the problem of how to motivate
and manage people largely goes way
4. If you have the wrong people, it doesn’t matter whether you discover the
right direction; you still won’t have a great company
5. What if the “great” leader leaves?
• Collins’ idea: Great Vision Without Great People Is Irrelevant. What’s needed
is a great team (a system), not the vision of a single person.
4/13/2015
9
Lean Team (continued)
• Place greater weight on ingrained character attributes than on
specific educational background, practical skills, specialized
knowledge, or work experience
• Understand value of people: Training, Education, Empowerment
• Leverage knowledge of those closest to problems
• Participative management
• Nothing is sacred (ask 5W2H often)
• Fear-free environment
• Standardized thinking
• 100% participation
• External view (supply chain)
4/13/2015
10
Lean Tools
•
•
•
Many of the breakthroughs in tools and production system practices came to light with
MIT’s International Motor Vehicle Program study of comparative automotive assembly
plant performance differences.
These investigations led to the seminal publication of Womack et al. (1990)
14 Lean Tools
1. Quick Changeover (SMED) of Machines and Cross Trained Workers
2. TQM
3. Continuous Improvement: kaizen and kaikaku events
4. Value Stream Mapping
5. Workplace Organization: 5 S’s (sift, sort, sweep, sanitize, sustain)
6. Leveled and Balanced Production (uniform plant loading)
7. Pull Approach and Produce/Withdrawal Signal (kanban)
8. One Piece Flow
9. Visual Management Techniques (i.e., Simple Audio/Visual Status Signals)
10. Error Proofing: Poka-yoke, Andon, Jidoka (quality at source)
11. Total Preventive Maintenance and Wellness Programs
12. Cellular Configuration (plant within a plant)
13. Standard Work Instructions (SWI’s)
14. External: greater supplier participation/collaboration
4/13/2015
11
Lean Goals and Strategies
• Goals: Cost, Quality, Speed, Flexibility, Longevity, Personnel Development,
Sustainability
• Cost Strategy: waste elimination
• Quality Strategies
1. Operator empowerment
2. Perfect parts every time
3. A new customer definition
4. “Quality at the Source” tool kit
5. Operator responsibility
6. Visibility management
• Productivity (Speed) Strategies
1. Produce to exact customer demand
2. Single piece flow (produce one unit at a time versus batch)
3. Eliminate waste
4. Commit to continuous improvement
5. Understand the value of people
6. Allow for no contingencies
7. Promote long-term perspective.
4/13/2015
12
Lean Goals and Strategies (continued)
• Flexibility Strategies
1. Increase operator skills
2. Multifunction equipment
3. Plant within a plant (various layout types)
4. Resources always ready
• Longevity: Decision-making with long-term time horizon
• Personnel Development: Training, education, skills (leadership,
decision-making, interpersonal communications, etc.)
• Sustainability Strategies
1. Product and process life cycle considerations
2. Environmental stewardship
3. Facilities design, construction, environmental control and
maintenance.
4/13/2015
13
Sustainability Defined
• Sustainability commonly refers to the characteristic of a
process or state which can be maintained at a certain level
indefinitely.
• Sustainability addresses how processes and operations can
last longer and have less impact on ecological systems.
• Non-value adding activities consume resources and therefore,
over the long run are not economically sustainable.
• If an activity does not add value, it should be reduced or
eliminated if possible.
4/13/2015
14
Emergence of Sustainability
1.
2.
3.
4.
5.
6.
Regulatory compliance requirements
Health and safety
Rising ratio of material to labor costs
Cost savings or cost avoidance
Ethical, legal and societal concerns
Opportunity to improve corporate image, community
and customer relations
7. Anticipate and pre-empt customer demands.
4/13/2015
15
Sustainability Strategies or Initiatives
• 3 Broad Categories of Initiatives:
1.Product and process life cycle considerations
2.Environmental stewardship
3.Facilities design, construction, environmental control
and maintenance
4/13/2015
16
Product and Process Life Cycle Considerations
• This category of initiatives looks for ways to achieve sustainability
objectives over the entire life cycle of a product or service.
• It is common for this category to include look externally, beyond the
boundaries of a single transformation process to the entire value
chain.
• Sustainability activities in this category span design, development,
manufacture, as well as reverse logistical flow of items in a closedloop value chain.
• The firms implementing initiatives within this category are often more
mature in terms of their sustainability programs.
• Activities in this category emphasize the triple-bottom line, which
promotes product design that enhances (1) ecology, (2) society
while generating (3) economic value.
• Examples: reuse, reclamation, refurbish, remanufacturing, recycling,
dematerialization, etc.
4/13/2015
17
Environmental Stewardship
• This category of initiatives looks for ways to achieve
sustainability objectives given societal concerns of: global
warming, resource depletion, energy and water shortages,
solid waste disposal and other environmental concerns.
• It is common for activities this category to be confined to a
single facility (i.e., they are seldom extended to the value
chain).
• Initiatives in this category include industry specific voluntary
programs: the Environmental Protection Agency’s 33/50
program, International Organization for Standardization (ISO)
14000 environmental management systems standards
program.
• Example: reliance upon renewable energy sources (e.g.,
biomass, solar power, wind power, etc)
4/13/2015
18
Facilities Design, Construction, Environmental
Control and Maintenance
• This category of initiatives also looks for ways to achieve
sustainability objectives given societal concerns of: global
warming, resource depletion, energy and water shortages,
solid waste disposal and other environmental concerns.
• It is common for activities this category to be confined to a
single facility (i.e., they are seldom extended to the value
chain).
• Initiatives in this category examine material use (e.g., using
recycled and recyclable materials), reducing natural resource
consumption thereby achieving long-term reductions in
operational costs (e.g., capturing greywater), employing
automatic environmental monitoring, sensing and control
systems (e.g., light dimming), reduced maintenance (e.g.,
living roofs).
4/13/2015
19
Development of Sustainability
• Slow adoption rates (low price of resources and disposal
costs)
• Step-wise manner:
1. Process-based capabilities are instilled internally in a
single set of transformation activities
2. Integrate and coordinate capabilities across several
activities or systems within the firm
3. Embedding these capabilities within the routines and
knowledge of the firm making them multifunctional,
organizational-based capabilities
4. Network-based capabilities reaching outside the limits of
the transformation process encompassing the value chain
network.
4/13/2015
20
Sustainability History
• Six Historical Eras:
1. “Resistant adaptation” years ≈ 1970-1985, least expensive means to minimally
comply with environmental legislation
2. “Embracing environmental issues without innovating” years ≈ 1985-1988
3. “Reactive” organizations ≈ 1988-1992, “end-of-pipe” solutions for treating waste,
but with little effort to prevent waste production
4. “Receptive” stage: the early 1990’s, environmental considerations can be a source
of competitive advantage, organizational “policy entrepreneurs” focused company
efforts on being more socially responsible
5. “Constructive” stage: mid 1990’s, due to continuing environmental pressures
organizations began to adopt a “resource-productivity framework to maximize
benefits attained from environmental initiatives,” companies began to look at
product and process design to achieve sustainability objectives
6. Value chain partnerships: 2000 and beyond, world-class companies acting in a
proactive manner, creating a new vision for the whole system that includes all
organizational personnel as well as value chain suppliers and customers
4/13/2015
21
Future of Sustainability
• Sustainability initiatives must increasingly reflect shared
value chain objectives
• Corporations must strive to find opportunities that
simultaneously:
1.Lessen environmental impacts,
2.Achieve cost savings,
3.Enhance corporate image, AND
4.Drive additional revenues
4/13/2015
22
Lean Management Summary
• What is Lean?
1. The basic tenet of lean is the enhancement of productivity through waste
elimination.
2. Toyota Production Systems: An operating philosophy in which the best quality,
cost and delivery of a product or service is achieved through shortening the
production flow by eliminating waste.
3. Elimination of 3 M’s: Muda (waste), Mura (inconsistency), Muri
(unreasonableness)
• 4 Elements of Lean Systems
Leadership
Culture
Lean
Team
Tools
4/13/2015
23
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