Lean, Mean Business Machine - Article On Lean Part 2

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The International Society of SixSigma provides the acronym DOTWIMP for recalling the seven wastes associated with Lean:

· Defects : A defect is defined as anything produced through the process that the customer is not satisfied with or is unwilling to pay for. Usually referred to as errors, defects disrupt the production process and require a greater final investment to produce a product for profit. Initially, most defects require less production time to produce than the intended high-quality product. This is because most defects occur because at least some facet of the production process was skipped or missed. In the end, however, defects are cost nightmares for companies. The additional steps they add to the production process are exponential, since most steps in the process are repeated. In addition, the intrinsic costs are immeasurable. Lack of customer confidence, added customer operating costs, and dissatisfaction with the purchased products are all end costs of defects that destroy company profits and longevity in the marketplace.

· Overproduction : Think back to the Ford model of production in the early 1900's. What value did the hundreds of excess Model T’s create? In essence, they only created greater expenses for the company. Valuable resources were tied up in goods that could not be readily sold. This creates wasted time, labor and resources that could be allocated to other areas, such as customer needs, process improvement, or business growth.

· Transportation : This deals with the movement of raw materials from vendors, to parts through the production process, to the finished goods reaching the end user. Lean seeks to streamline this movement so that unnecessary handling of raw materials, excess movement of parts, and increased steps in the distribution process are eliminated.

· Waiting : One of the major problems with the Ford assembly line approach is that not all steps are in synchronization with each other. One step might require five minutes of labor to complete, while the following step might require only two minutes to complete. Obviously, when this is the case a disruption of movement will occur, and the process will be in a "waiting" mode. Lean works to eliminate or minimize this waiting period by combining some steps and separating others, so that each step is more closely matched to the ones before and after. This reduces the amount of time an employee has to sit idle while being paid.

· Inventory : When Toyota began developing into an automobile manufacturing facility, they were forced to eliminate as many additional costs as possible. One way they did this was to eliminate capital resources sitting unused in their parts warehouse. They realized that if their revenue was tied up into parts that could not be turned around into saleable goods in an efficient manner, then they would most likely not survive as a young company. Instead, they worked closely with their supply partners to receive inventory that was needed to manufacture goods in accordance with customer demand. The goods were then sold more quickly, and greater cash flow was created to purchase the next order of parts from suppliers.

· Motion : Hours and hours of production are wasted seconds. Lean addresses this problem by streamlining the production process at the workstation itself. If a worker takes minutes to find the parts needed to complete their step in the process, Lean finds a way to make the parts more accessible, thereby reducing the minutes to seconds. This might not seem like much of a waste reduction, but consider this model. One worker uses one screw per product in their step in the process. The same worker produces one hundred of these products each workday. The worker must stoop down below the work table each time the screw is needed. This step takes thirty seconds, or 3000 seconds per 100 products. By placing the screw bin in front of the worker at shoulder height, the worker can retrieve the screw with less effort and in only 10 seconds. This motion reduction has saved 2000 seconds per 100 products. When calculating the end cost of this reduction annually, it becomes obvious how reduced motion saves money as well as time. This simple example can save a company as much as 137 production hours over the course of a year. These costs really start to add up when one considers that there are several production steps involved in creating a product for sale. Ergonomically, reducing physical motion decreases cumulative trauma disorders associated with time and expense loss due to injury.

· Processing : This concept can take on several dynamics. It can be simplified to say that any flaw in the process which creates a slowdown in production, a disruption of the process flow, or an increase in needed labor greatly increases a company's initial investment to create a desired result. This, of course, creates a greater cost, which hinders a company's ability to remain competitive in the marketplace.

Go Lean or Go Home

Lean is currently a hot topic in most major industries and is coming to an industry near you. Practically every type of industry is currently using Lean: distribution centers, electrical, government agencies, manufacturing, mechanical, office, healthcare, customer service and software and system companies. The current big players in lean manufacturing are Cascade Engineering, General Electric, Hewlett Packard, Intel, Microsoft, Oracle and Toyota. The use of lean thinking is being applied to improve competitiveness and accelerate a company's growth by managers and CEO’s alike. Perhaps, the most interesting aspect of Lean is that it does not stop with upper management. Instead, Lean is a philosophy that embraces the worker who actually produces the product or service being bought and sold. Today the leader in manufacturing is the United States, due at least in part to the implementation of lean principles in so many of our industries.

Other industries have taken notice and are now applying lean principles to compete. Channel 9 billionaire James Packer had this to say about Lean, "New management at Channel 9 has launched a concerted attack on its cost base in order to restore margins through eliminating waste, improving efficiency and lowering programming costs."

Companies, no matter how big or small, are switching practices over to Lean methods. Many companies that implemented Lean practices such as General Electric and Hewlett Packard cut their overhead operations by 30% or more. Furthermore sales double and they've continued to grow at an accelerated rate. Companies have experienced this growth and success without cutting jobs, which seems to have been the primary solution used to cut cost in the past.

With such overwhelming evidence, and such compelling arguments, it would seem reasonable that all companies would embrace Lean concepts. This is not always the case. There are two primary reasons some companies are not implementing Lean. Some companies are simply ignorant to Lean methodology and clearly do not understand what is involved in process improvement. Since they are ignorant of these practices, they tend to use older methods with which they are more comfortable. Lean cannot and will not happen overnight. Converting to a Lean system takes time and effort, and results-driven people want immediate results. The other primary reason companies fail to implement Lean practices is that they see process changes as new investments, which of course equals new cost. They have invested such great sums of time and money in their current process, regardless of inefficiencies, they fail to understand that initial costs of Lean processes is simply an investment for future growth and profit.

Lean manufacturing is not a set of isolated techniques. It is a complete business system. By eliminating inherent wastes, Lean creates a new way of designing, a new way of selling, a new way of producing, and most importantly, a new way of involving all employees in improving processes, product quality, and customer satisfaction.

It should be recognized and remembered that Lean is not a final goal that a company works towards. It is an ever-changing way of thinking to make the company the best it can be at all times. Simply put, Lean 5S is making the customer happy by getting them their product in the fastest way possible with the highest quality possible while making the largest profit possible. There is no better way to succeed in today's changing business world. Darwin's idea that it wasn't the strongest species, but the most adaptable species that were able to survive and thrive in the changing world, is equally applied to business. Companies who are consistently able to adapt to the changing needs of their customers, and companies who are able to meet these changes with the fewest costs while producing the greatest profits are the companies who will continue to succeed. These companies understand that Lean is a process, a journey, not an end state.

Lead them over the River of Jordan to the Promised Land!