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Principles of Lean Management
Systems
Randy Cook Karina HauserClinical Professor Assistant Professor
Introductions
Proper method for sleeping in class
Re-engineering the classroom nap
Why Lean?Why Toyota?
Brief Toyota History
THE BUSINESS CASE
Danaher
S&P 500
GE
Comparison Industrial Conglomerates
Toyota
Autoliv
GM
Ford
Comparison Automotive
LEARNING FROM TOYOTAVS. COPYING TOYOTA
Toyota Production System
PROBLEMSOLVING
PEOPLE & PARTNERS
PROCESS
PHILOSOPHY
4 Ps
Philosophy as the Foundation Maintain continuity of purpose through corporate
philosophy
Process The right process will produce the right results
People and Partners Add value to the organization by developing your
people and partners
Problem Solving Continuously solving problems drives organizational
learning
Toyota Production System
JidokaJust-in-TimePull & Flow
Standardization
Stability
Customer FocusQuality, Cost, Delivery,
Safety and Environment, Morale
Basic Image of Lean Production
Flexible, motivatedteam members
continually seeking abetter way
Involvement
Toyota Production System
JidokaJust-in-TimePull & Flow
Standardization
Stability
• Flow• Heijunka• Takt time• Pull System• Kanban• Visual Order (5S)• Involvement
• Poka-yoke• Zone Control• Visual Order (5S)• Problem Solving• Abnormality control• Separate human & machine work• Involvement
• Standardized work• Kanban, A3 thinking
• Standardized work, 5S, Jidoka • TPM, Heijunka, Kanban
• Visual order (5S)• Hoshin planning
Customer Focus Hoshin planning, Takt, Heijunka
Involvement, Lean Design, A3 Thinking
Lean Activities
Involvement• Standardized
work• 5S• TPM• Kaizen circles• Suggestions• Safety activities• Hoshin planning
The Toyota Way
JidokaJust-in-TimePull & Flow
Standardization
Stability
Involvement
Flexible, motivatedteam members
continually seeking abetter way
PROBLEMSOLVING
PEOPLE & PARTNERS
PROCESS
PHILOSOPHY
Customer FocusQuality, Cost, Delivery,
Safety and Environment, Morale
The way we think The way we manage the process
Strategic – Integrated - Tactical
The Transformation Model
JidokaJust-in-TimePull & Flow
Standardization
Stability
Customer FocusQuality, Cost, Delivery,
Safety and Environment, Morale
Involvement
Flexible, motivatedteam members
continually seeking abetter way
PROBLEMSOLVING
PEOPLE & PARTNERS
PROCESS
PHILOSOPHY
Principles – Systems - Tools
Tool Driven
Event based: one-time, or infrequent tool based events with little or no sustaining 5S event, Kaizen event, Value Stream Map with
no connection to action, install Andon lights, implement Kanban cards (and stop).
17
System Driven A system is an integrated series of parts and subsystems, with a
clearly defined objective
Toyota found that the system was guided by asking the question, “What is the need?”
A System defines approach, use of tools , measurement & feedback, and is self-sustains.
A system could be based on a single tool, or a combination of tools
The complete Lean system has been difficult to grasp as a whole. There has been a tendency to cherry pick tool based activities.
I am going to show you a set of number = symbol combinations (for example 1 =├ )
I will give you a few seconds to view the combinations then right down as many as you can remember.
6 =
7 =
8 =
9 =1 =
3 =
4 =
5 =
2 =
The Value of a Systems Perspective
Principles Driven
Company philosophies and culture are based on principles
Principles are the most correct map or paradigm for navigating today’s environment
Principles are valid in the past, present and future
Principles guide “thinking”, which in turn guides behaviors, systems, and culture
20
Shigeo Shingo
KNOW -HOWWHY
The Shingo Prize Model
The Next Generation of the Model
Sales & Marketi
ng
Product
Development
Technology
Purchasing
Production
Business
Planning
Quality Contro
l
Cost Management
Employee
Involvement
Financial /
Acctg & MIS
Office
Work
TPS TQM
New Mental Models: 7 Wastes
Unit Cost Reduction
Who can understand it?
How long does it take?
How well does it drive improvement?
Who is the focus?
Identify & Eliminate Waste Who can
understand it? How long does it
take? How well does it
drive improvement?
Who is the focus?
LEAN IS A PRINCIPLE DRIVEN MANAGEMENT PHILOSOPHY AND ORGANIZATIONAL CULTURE WHICH DRIVES INCREDIBLE LEVELS OF CONTINUOUS IMPROVEMENT
Summary
14 Management Principles
Philosophy as the Foundation
1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
The Right Process
2. Create a continuous flow to bring problems to the surface.
3. Use “pull” systems to avoid overproduction4. Level out the workload5. Build a culture of stopping to fix problems6. Standardized processes are the foundation
for continuous improvement7. Use visual control so no problems are hidden8. Use only reliable, thoroughly tested
technology that serves your people and process
People and Partners
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others
10.Develop exceptional people and teams who follow your company’s philosophy
11.Respect your extended network of partners and suppliers by challenging them and helping them improve
Continuous Problem Solving
12.Go and see for yourself to thoroughly understand the situation
13.Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly
14.Become a learning organization through relentless reflection and continuous improvement
General Concepts
Lean is a Way of Thinking:
Setting priorities
Making decisions
Problem solving
Learning
Management approach
Lean is an Integrated Management System
Management Philosophy
Human Resource Management
Operations Management
Sales and Marketing Management
Financial Management
Information Technology Management
Product and Process Design
Lean is Learning: PDCA
Plan Understand completely the current situation Identify in detail the future state
Do Implement specific changes
Check Measure results according to future state
Act Convert new learning into organizational learning Repeat PDCA
PDCA at all Levels
Strategy Setting
Corporate Planning
Coaching (Management)
Process Improvement
Problem Solving
Toyota Production System
Stop & FixPass No Defect
Pull & Flow
Standardization
Stability
Customer FocusQuality, Cost, Delivery,
Safety and Environment, Morale
Involvement
Flexible, motivatedteam membersand partners
continually seeking abetter way
TPS or House of Lean
Stability
Standard Work
Pull and Flow
Pass No Defect
Involvement
Customer Focus - Defining Value
What is the purpose of Your Company?
Defining Company Purpose and Philosophy
Stop & FixPass No Defect
Pull & Flow
Standardization
Stability
Customer FocusQuality, Cost, Delivery,
Safety and Environment, Morale
Involvement
Flexible, motivatedteam membersand partners
continually seeking abetter way
It’s all about VALUE!
Society
Community
Customers
Employees
This requires long-term existence This requires growth All this requires long-term, consistent profitability
Cost View of Quality
TLSpec USpec
Cost
Value View of Quality
TLSpec USpec
LossTo
Society
Another Look at Purpose
Company
Purpose
Learning Community
ST: Capable PeopleLT: Learning to Improve
Learning Enterprise
ST: Capable PartnersLT: Learning Enterprise
Internal
Peop
leB
usin
ess
External
Value-Adding Contributor
ST: ProfitableLT: Growth and
Contributing to Society
Lean Systems
ST: Capable ProcessesLT: Value Stream
Improvement
Value Drives Profitability
Value relative worth, utility, or importance of something
Profitability is also the difference between the customer’s perception of value and the cost of creating it
Value has different meanings to different types of customers
• Profitability Selling at a price greater than the cost of producing a product or service
Value Attributes of Consumers
Consumer Product (service) performance and benefits Cost – What does it cost for the total time of ownership?
Quality – Does it meet my needs?
Convenience – How easy is it to get?
Timeliness – How quickly can I get it?
Personalization – Will the business treat me as special? Do they know me?
Ethical Issues – Is the business acting responsibly?
Style/Fashion – Is the product the most current style?
Technology – Do I need technical skills to use this product?
Value Attributes of Business Customers
Business Potential to add value to the products or services they sell to other customers Return on investment is the key criterion
Cost – What does it cost for the total time of ownership?
Quality – Does it meet our specifications?
Delivery Dependability – Does the firm meet delivery promises?
Flexibility – Can they adapt to special needs?
Response Time – How quickly can they get it to us?
Consumption Experience Provider selection
Purchase or Service experience
Product or Service use
Maintenance, repair, etc.
Product disposal and replacement Or repeat service
Studying the consumption experience is crucial to understanding the value proposition
Definition of Flow
Speeding up the delivery of Value to the Customer (internal or external) approaching the value added time
Definition of Waste
Anything that delays flow of value to customers (internal or external)
Value Stream
A value stream “encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction), through the end user, as well as the associated information flows. “
BasicProducer
Converters Fabricators Assemblers
Support ServicesTransportStorage
Finance, etc.
