Lean Six Sigma Lesson #7 - Principles of Lean


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Toyota invented "lean production" according to Jeffrey Liker, author of The Toyota Way. It's also known as the Toyota Production System or TPS for short. And it seems to work well: Toyota's profits in March 2003 were larger than GM, Ford, and Chrysler combined!

Six Sigma and Lean are clearly on a collision course. So are all of the quality disciplines whether it's ISO 9000 or software's CMMI. Each is a slightly different view through a different facet of the same diamond.

Lean

At it's heart, lean is about speed and the relationship between steps in a process. It's about eliminating non-value added elements from the process. It's about shrinking batch sizes down to create a "one-piece flow."

And where did Toyota get this silly idea called "lean?" From U.S. supermarkets, that's where. On an early visit to the U.S. they saw how supermarket shelves held minimal inventory and were replenished only as quickly as customers "pulled" the products off the shelf. In a pull system, the preceding process must always do what the subsequent process tells it. The visual ability to see low stock and replenish it became known as the kanban (a.k.a. "card") system.

Here's Toyota's critical discovery: When you make lead times short and focus on keeping production lines flexible, you actually get better quality, responsiveness, productivity, and utilization of equipment and space. Some core beliefs include:

  1. The right process will produce the right results.
  2. Developing your people and partners adds value.
  3. Continuously solving root problems drives organizational learning.
  4. One-piece flow increases productivity, profitability, and quality.
  5. Products don't like to wait in line. Material, parts, and products are impatient.
  6. The only thing that adds value is the physical or informational transformation of raw material into something the customer wants.
  7. Errors are opportunities for learning.
  8. Problem solving is 20% tools and 80% thinking.

Non-Value Added Time and Work

There are seven major types of non-value added work:

  1. Overproduction produces inventory that must be stored until needed
  2. Waiting (idle time)
  3. Unnecessary movement
  4. Overprocessing or incorrect processing causes waste and rework
  5. Excess inventory
  6. Defects
  7. Unused employee creativity

Counterintuitive Insights

  1. Mass production focused on economies of scale; TPS focuses on economies of flexibility. Mass production focuses on results, TPS focuses on process. Push systems focus on a schedule; pull systems focus on consumption.
  2. Stop making product: Overproduction is the main non-valued added activity.
  3. Stop the production line whenever there's a defect. Fix the process, then continue.
  4. Only build up enough inventory to level out your response to customer demand, because inventory hides problems.
  5. Most business processes are 90% waste and 10% value added. When you eliminate waste and speed up the process, you also improve quality.
  6. Toyota does not have a Six Sigma program, but they have one of the highest levels of quality in the industry. "Most problems do not call for complex statistical analysis, but instead require painstaking, detailed problem solving. We have a very sophisticated technique for solving problems: We ask "why?" five times."
  7. "There is an obvious case for the harmonious marriage between Six Sigma, which fixes individual processes, and lean, which fixes the connections among processes."
  8. The ideal batch size is always the same: one.
  9. Use technology to support, not replace people. Focus on process and people first, then add information technology to support them. Use low-cost reliable alternatives to expensive new technology.
  10. Make decisions slowly, implement decisions rapidly.
  11. Learn by doing first and training second. "You cannot Powerpoint your way to lean. The Toyota way is about learning by doing. In the early stages of lean there should be at least 80% doing and 20% training. The best training is training followed by immediate doing, or doing followed by immediate training."
  12. Use experts for getting quick results. The word "sensei" is used in Japan with some reverence to refer to a teacher who has mastered the subject. An expert can quick-start the process by educating through action.

The Five "S" Lean Tools

  1. Sort through items keeping only what's needed
  2. Straighten - a place for everything and everything in it's place.
  3. Shine - cleanliness
  4. Standardize - Develop systems and procedures to maintain and monitor the first three S's.
  5. Sustain the new level of performance.

Piloting Lean

  1. Who is your customer (i.e., next process in the flow)? What do they want?
  2. Analyze the current state of your process (non-value added, movement, etc.)
  3. Develop a future state that:
    a. Creates a one-piece flow (no big batches)
    b. Group work "cells" by product, not process.
    c. Avoid handoffs
    d. Level the load
    e. Standardize the tasks
    f. Eliminate redundancy
    g. Include visual controls to make management easy
  4. Implement the change
  5. Measure performance
    a. Lead time (days)
    b. % on time delivery
    c. Defects in PPM
    d. Productivity (widgets/hour)
  6. Monitor and sustain the improvement
  7. Do it again

Benefits (Source: Competing against Time)

The 25-20 Rule: Every 25% reduction in elapsed time will double productivity and reduce costs 20%.

The 3X2 Rule: Companies that routinely reduce cycle time enjoy growth rates three times the industry average with twice the profit margins.

Definitions

  • Andon: Line stop system
  • Genchi genbutsu: Personal involvement: Go to the place to see what's going on
  • Hansei: Reflection (thinking)
  • Heijunka: leveling the workload
  • Hoshin Kanri: Quality planning
  • Jidoka: built in qualitiy
  • Kaizen: Continuous improvement
  • Kanban: Card system for visually monitoring flow
  • Muda: Waste
  • Muri: overburdening people
  • Mura: unevenness
  • Nemawashi: Decide slowly, implement rapidly
  • Takt Time: Time required to complete one job at the pace of customer demand

Six Sigma and Lean

Six Sigma can help you improve the value-added steps and Lean can help you eliminate the non-value added activities. I cover both aspects in the Six Sigma Simplified book and Lean Simplified Book .

Both Six Sigma and Lean are about achieving long life and long-term profitability for your company. As Toyota's leaders would say: "You can't get anywhere by jumping willy-nilly from fad to fad."

Special Bonus: Download our Lean Simplified Quick Reference Card. See past articles about applications of Lean in various industries at http://www.qimacros.com/sixsigmaarticles.html.

We can help you get started on Lean with our One Day Lean Six Sigma Workshop or our Two Day Lean for Labs Workshop. We also have a 1 hour Lean Training DVD and a Lean for Healthcare Labs Training DVD.

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