By Mike Loughrin, CEO for Transformance Advisors
Make No Mistake
Don’t let anyone steer you wrong. Lean is the #1 improvement program in the world.
The only real competition for popularity comes from inaction or weak attempts which rely upon naive trial and error.
In terms of comprehensive programs, the runner up methodology is six sigma. It is a great program, but far less popular.
Let’s look closer at how lean is working, for all types of organizations, in terms of:
1. Foundation = Definition and Principles
Lean can be defined as the systematic elimination of waste.
The first key word is systematic – we are not interested in a chaotic scramble.
The second key word is waste – we are not going for a cost cutting frenzy.
It takes a systematic approach to find and eliminate the root causes, which create the waste, found in all organizations.
Any fool can cut costs (and revenue) to zero.
Lean is far more effective than chaotic cost cutting efforts.
There are 5 principles of lean. These 5 principles were first articulated in the bestselling book “lean thinking” by James P. Womack and Daniel T. Jones. The 5 principles are:
- Specify Value
- Identify Value Streams
- Create Flow
- Leverage Pull
- Seek Perfection
A principle is a fundamental truth. If you are serious about a lean transformation, then you should be leveraging these principles. If you are not serious, then ignore these principles at your own peril.
One caution is to understand how these fundamental truths are guiding principles while you work to eliminate waste. Unlike many other methodologies, lean principles are not a sequence of steps, or milestones, you need to accomplish. You can specify value and identify values streams at the same time. You can create flow and leverage pull at the same time. A fundamental truth is simply something you must do.
Lean is built upon a solid foundation – the systematic elimination of waste by practicing the 5 principles of lean.
2. Focus = Value vs. Waste
Types of Value
Lean views all activities in terms of the type of value they create.
There are 3 types of value:
- Value Add: Activities which are necessary for meeting customer requirements
- Business Value Add: Activities which are necessary for meeting other stakeholder requirements
- Non-value Add: Activities which are not valued by any stakeholder
While it sounds simple, value can be challenging. One customer will value one thing and another will value something else.
Beyond customers, contemporary lean enthusiasts understand how many other stakeholders value what their organization does. It would be foolish to ignore owners, employees, investors, your local community, and many others.
“An economist is someone who knows the price of everything and the value of nothing.”
– misquote of Oscar Wilde
Types of Waste
Lean is focused upon eliminating all types of waste.
The 7 classic types of waste are:
- Poor Processing
- Over Production
As lean evolves, two other types of waste are gaining acceptance:
- Underutilized Employee Capabilities
- Environmental Waste
Waste is defined as an act or instance of using or expending something carelessly, extravagantly, or to no purpose. For lean enthusiasts, waste is found in those non-value add activities.
Creating value and eliminating waste, through a lean transformation, is an exceptional investment.
There are a large number of problem solving tools which are used to systematically eliminate the types of waste.
Some of the commonly used tools include:
- Value Stream Mapping
- Root Cause Analysis
- Standard Work
- Visual Controls
- Mistake Proofing
- The 5S System
- Changeover Reduction
Many of these tools will be used by employees working in teams during Kaizen Blitz events.
Kaizen is Japanese and can be thought of as continuous improvement. Blitz is German for lightning fast. Kaizen Blitz is lightning fast continuous improvement.
“If all you have is a hammer, then every problem looks like a nail”
– attributed to Mark Twain (based upon no evidence whatsoever)
4. Vision = Cultural Transformation
A key aspect of the lean vision is to make a cultural transformation where everyone is empowered to participate in continuous improvement.
Beyond empowerment, a growing number of leaders see the opportunity to create a better quality of work life for their organizations.
Processes filled with waste do not provide the value sought by customers and other stakeholders. The “work” for people trapped in broken processes is frustrating, exhausting, and unrewarding.
These broken processes are often found at medium sized organizations which have grown to the point where tribal knowledge no longer works. You can also find broken processes at larger organizations which have downsized the number of employees, but not the amount of work.
A lean assessment is an ideal technique for organizations to track their progress with a transformation. It quantifies how the culture is changing as an organization journeys through a transformation. You should measure progress in terms of leadership, knowledge, teamwork, alignment, and results.
The ultimate objective with lean transformation programs is to craft a sustainable organization.
This requires creating:
- A culture where all functional areas are completely committed
- Alignment from suppliers to customers using proven best practices and emerging trends in relationship management
- Rock solid support for all value streams in terms of leadership, knowledge, and teamwork
- Performance and results which meet customer and other stakeholder value agreements
Two key responsibilities for a leadership team are to:
- Create the vision of a sustainable organization
- Define a lean transformation program as a strategic initiative
A sustainable organization meets the needs of the present without compromising the future.
5. Applicability = Everyone and our Planet
Transformation for Everyone
Lean is an all inclusive improvement methodology and is growing rapidly in all types of organizations.
You can find success stories in terms of:
- And Many Others…
Lean and Green
The tools for lean and the tools for green are being blended to provide a powerful toolkit for lean and green.
We define lean and green as the systematic elimination of unsustainable practices.
Adding environmental waste to the 7 classic types of waste is a powerful enhancement to the goal of saving our planet. The Environmental Protection Agency defines environmental waste as an unnecessary or excessive use of resources or a substance released to the air, water, or land which could harm human health or the environment.
The most exciting aspect of merging lean and green is how organizations are creating a competitive advantage, while at the same time, having a positive impact on our environment.
“Anything else you’re interested in, is not going to happen, if you can’t breathe the air and drink the water. Don’t sit this one out. Do something.”
– Carl Sagan
Lean has earned the crown as the #1 improvement methodology.
Don’t be fooled by charlatans, who have simply been chaotic cost cutters. These clowns do not understand the principles, or fundamental truths, and the other aspects which make lean so powerful.
Success comes to those who take a systematic approach to the elimination of waste.
Look for key components such as principles, types of value, types of waste, continuous improvement, cultural transformation, and the focus on creating a sustainable organization.
About Mike Loughrin
Mike is passionate about helping people create sustainable organizations. He brings exceptional experience in both industry and consulting services and has helped organizations such as Levi Strauss, Warner Home Video, Lexmark, and Sweetheart Cup improve their performance. Mike teaches for Louisiana State University Shreveport and Loyola University Chicago.
Using a balanced approach to defining strategy, improving processes, and leveraging the appropriate technology, he keeps the focus on ROI and delivers results by leveraging skills in leadership, knowledge transfer, project management, and the application of best practices. As a frequent speaker at conferences and other educational events, he provides informative and energizing presentations by leveraging his passion for excellence.
Keeping a commitment to a balanced life, Mike loves downhill skiing, bicycle rides, and hiking in the mountains. See one or more of his trails of the month, such as Tomorrow River or Little Switzerland.
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Lean Thinking by James P. Womack, Daniel T. Jones.
Lean Transformation by Bruce A. Henderson and Jorge L. Larco.
What is Lean? by Lean Enterprise Institute.
Three Types of Value by Tom Cassidy.