Philosophy Of Lean Principles

Published Date: 02 Nov 2017

January 16th

Abstract: The concept of Lean Principles as an improvement process methodology in terms of a being a philosophy and its various aspects are discussed in detail. The limitations of implementing lean principles and the effects that it leaves on an organization in terms of failure and success have been analyzed. Comparisons against other improvement methodologies such as Agile, BPR and the Theory of Constraints have been presented as models to understand the differences between their concepts and the contemporary concepts of lean principles. Lean has a major strategic significance, though implementing it as a philosophy rather than embracing it as a set of tactics highly influences the success rate. In the end the report concludes that a variety of factors are needed in order to obtain success through the implementations of lean principles, not only is it important for the technical lean tools to be implemented but a transformation of the organization’s overall culture to adapt lean principles is a necessity too.

Q2 Concept of Flow, Pull and Takt. Q3b Philosophy of Lean thinking.

Contents

Section B

Introduction

In production plants across the globe, lean manufacturing techniques are being used to meet increasing demands placed on manufacturers. Lean principles are a generic set of management strategies used to change the culture of organizations to bring about dramatic improvements to key metrics. It is a systematic approach to identifying and eliminating waste through continuous improvement, following the product at the pull of the customer in pursuit of perfection. The main philosophy behind lean manufacturing is maximizing customer added value whilst minimizing non value adding activities, this ultimately leads to manufacturing excellence through the creation of more value with less resource [18].

Lean principles and its application methodology are primarily to increase speed, reduce waste and process complexity including zero waiting time, pull rather than push scheduling, smaller batch sizes, line balancing, and a shorter process time resulting in an improved business processes capability [27]. There are 5 principles of lean processes which provide the framework for a lean enterprise:

Fig 1, The 5 principles of Lean

Q2 Concept of Flow, Pull and Takt

Flow

The progressive achievement of tasks along a value stream so that a product proceeds from design to launch, order to delivery, and raw materials into a finished products in the hands of the customer with no stoppages, scrap, or backflows.

Pull

A system of cascading production and delivery instructions from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need.

Takt Time

The available production time divided by the rate of customer demand, Takt time sets the pace of production to match the rate of customer demand and becomes the heart of any lean system. Takt Time is a key concept in lean manufacturing. It is the heartbeat of a lean organization – matching actual production to customer demand [25]. It is not a goal to be surpassed, but rather a target for which to aim:

Producing faster than Takt Time results in overproduction – the most fundamental form of waste

Producing slower than Takt

Lean organizations seek to maximize the flow of information and materials. The production process is designed to maximize the flow of the product through the value stream, initiated by the pull of customer demand. Lean administrative processes design a maximized smooth flow necessity using tools of single-piece flow production, setup reduction time, pull process production system, and perfection goals.

Lean organizations refer to Takt time as the rate of demand from the consumers. If a product has been indicated with an hour of Takt time, it would mean that on an average that consumer would require one per hour throughout their working day. The key significance of a Takt time is that lean organizations would establish their processing methods in a way that the products and services are manufactured or provided at the same rate as that which the consumer is requiring or pulling the products. This method of Takt time applies not just to the primary processes but to all supporting processes, including order entry, engineering, purchasing, scheduling, and so forth

Lean organization refer to a pull system such that each stage of a production process yields exactly what the instant downstream stage demands, in effect, goods are pulled through the process by each stage, producing only what is required of it from the following stage. The goal of pull production systems in lean manufacturing is to eliminate no value-adding work

The relationship between Flow, Pull and Takt

The most basics principle in lean methodology is to create and maintain flow. Flow is accomplished by applying cellular arrangements of equipment and passing parts effective and instantly to the next process at the rate of Takt time. Takt time is to make sure that the operations sustain and produce accordingly to meet the demand generated. It’s the starting point for the designing of a flow. If flow cannot be applied due to technology or machine quantity constraints, then pull systems must be implemented. Pull system helps to create a situation similar to flow by implementing the controlled flow of small batches.

Effect of Flow, Pull and Takt on a Puttick Grid

Puttick grids can be used to represent as a quadrant with dimensions of complexity and uncertainty.

Fig 2, the Puttick Grid

Complexity is a means of evaluating the large number of both physical product items and process knowledge units. Uncertainty arises from the impulsive behavior of the market place. From the grid shown above a manufacturing organization can classify its product as commodity, consumer durable, super value good or jobbing product. A market is uncertain when a manufacturer doesn’t know what goods a consumer will seek from it. Above shown is the product complexity/market uncertainty grid along with the choice of production strategy that is agile or mass and suitable enterprise type. Once the product type is know the proper strategy can be selected. Super value goods, jobbing products and user durables are all virtual products that will need to be prepared by agile manufacturers. Agile manufacturers seek companions, be the other strategic business units of the organization or other companies, to be part and share the risk when the market is uncertain. A complex product means that manufactures have good relations with suppliers who know their own production method very well. Commodities that are mass produced indicate that there is a low risk and production of the product is ready to master due to their inherent low market uncertainty and low product complexity.

An organization manufacturing plastic utensils would be classified as low complexity product/low market uncertainty compared to companies manufacturing special capital equipment’s such as Cummins power generation which tend to move towards high complexity and high uncertainty quadrant. Which every quadrant it may be all the manufacturing companies work towards achieving the following important requirements

Greatly reduced product life cycles

High product variety

Unpredictable demand patterns

Shorter customer lead times

These essential requirements are really part of the challenge to corporations to gain competitive advantage which results the company in approaching towards different production planning and control strategies. These requirements are also difficult to accomplish due to the uncertainty of the market environment. Manufacturing organizations work towards decreasing the uncertainty of the market and finding a way to ease the complexity of products and process managements. Also competitive pressures make organizations to respond with wider range of products and complex systems. The key challenge resides in being able to condense and simplify the complexity so that things can be manageable, and the attempt of shorter lead times. The easier it is to manage the company the greater the probability of being able to achieve competitive advantage.

Super Value goods

The first quadrant of the grid- Super Value goods are usually composed of manufactures that are at the leading edge of industry and at the forefront of technology, Their production process is greatly influenced and affected by the demands and variations of the markets. They require a customer Pull in order for their production Flow to start. The takt time in this sector would vary for various products and as lot of the products would be specified to meet the requirements of an individual product, takt time has a little effect on the overall production process. Example: Cummins Power Generation produces gen-sets that are specially required for a particular consumer and might not be manufactured again after that order has been processed. In order for the manufacturing of that gen-set a Pull was required by the customer which started the Flow process, In this case the Takt time had little or no effect.

Mass Production

In the fourth quadrant of the grid- Mass production, manufactures tend to produce quantities on a large scale regardless the number of orders or the demand from consumers. Example: Anixter Limited provides common buy and expensive items (nuts, bolts, washers etc.) to Cummins power Generation for the assembly purpose of various different types of gen-set models. These items are provided to the company in the forms of various line side bins. Each bin might not be used on a regular basis or on each model but the Anixter Company produces the items and goods to maintain the stock level of the bins on a weekly basis. The flow in this instance is not determined by the pull of the consumer. The Takt time in this quadrant is usually kept to a minimum as the production of the goods is a repeated process. Goods are not measured in terms of quantity used rather they are produced to maintain the stock level regardless the demand or pull or the consumption rate by the end customer.

Jobbing Products

This quadrant consists of industries that have to provide an impulsive response to the market fluctuation. Sectors such as the Fashion industry where the market prediction is always uncertain and so the manufactures much be prepared for the demand in a short period of time, Takt time plays an important role in this quadrant and is likely to be at the minimum, The flow and pull are closely related as in this quadrant the pull from the customers determines the flow that will be generated by the manufactures

Consumer durables

The bottom left quadrant contains industries that may produce quantities on a large scale similar to mass production but the cost of the actual product manufactured in this quadrant tends to be higher and therefore unlike the bottom right hand quadrant where products are pushed downstream to the customer due to economies of scale, this quadrant requires a lot more focus on Takt and the customer pull to dictate the flow. This system relies heavily on matching supply with demand using forecasting techniques to minimize inventory holdings and over capacity, seasonal demand and long product lifecycles are expected generally. If these rules are not put in place, the results can be costly for the manufacturing due to the complex supply chains involved and the actual cost of parts required for assembly left in inventory. Such manufacturers who are located in this quadrant produce items such as cars, white goods and large electrical items. The Takt time in this quadrant is always matched to the demand rate at which the customer is pulling and like the jobbing products flow is determined by the rate at which the customer pulls.

Q3b Philosophy of Lean Principles

The philosophy of lean is built on an extensive account of continuous process improvement and just in time production processes. Lean thinking is a term used to define a production philosophy that seeks to gradually eradicate waste while maintaining the crucial value in the process. It centers on the steady flow of the process so that work moves seamlessly from one step to the other, resulting in no waiting time between process steps. This philosophy is also a way of thinking. It focuses on improving consumer value and must be organization wide. It cannot be accomplished by only one worker in an organization. Organizations, that practice lean thinking, analyze closely each process within the company. They use flowcharts and other types of illustrations to help assist. After a company has analyzed the process, it explores any areas, within the process, that are wasteful. If a procedure offers zero value, the company reflects it as wasteful, and eradicates it or re-structures it. In addition to the aim of reducing waste and eventually eliminating it, lean thinking also intends to smooth flow in any system, so that work may move between process steps with no waiting between these steps. In order to achieve maximum flow there must be evenness, steady work arrival and transfer between steps in a system. Variability in work arrival disrupts flow, and any reduction in that variability will enhance the flow. Lean is concerned with delivering more value for the business and its customer by increasing the velocity of throughput and minimizing wasteful practices by balancing process flow. While lean focuses on removing waste and improving flow, it too has some secondary effects. Quality is improved. The product spends less time in process, reducing the chances of damage or obsolescence. Simplification of processes results in reduction of variation. As the company looks at all the activities in the value stream, the system constraint is removed, and performance is improved.

There are 5 key aspects overriding lean principles for implementation within an organization:

Identify Customer and specify which features create value

The aim at the start is to acknowledge that only a small fraction of the overall time and effort in any organization really contributes and adds value for the end consumer. By clearly defining value for a specific service or product from the consumer’s perspective, all the non-value activities and waste can be targeted for removal.

Identify the sequence of activities and map the value stream.

The Value Stream is the total set of activities across all departments of an organization getting involved in delivering the product or service. This represents the end-to-end process that delivers the value to the consumer. Once an organization understands what its consumer wants the next stage is to classify how the organization would deliver those values to them.

Make the activities in the value stream flow by Eliminating Waste

As an organization first maps the Value Stream, they notice that only 5% of activities add value, this can increase to 45% in a service environment. Eliminating those excess waste would ensures that the service or product flows to the customer without any detour waiting, or interruption.

Let the consumer pull the product or value through the streams.

This is about understanding the customer demand on a service and then creating process accordingly to respond towards it. Such that an organization produces only what the consumer wants and when the consumer wants it.

Pursue and perfect the process.

Creating flow and pull starts with radically reorganizing individual process steps, but the gains become truly significant as the entire steps link together. As this happens more and more layers of waste become visible and the process continues towards the theoretical end point of perfection, where every asset and every action adds value for the end customer.

Other key component of lean thinking is the acceptance and realization that employees possess a lot of power. Organizations operating under this philosophy, realize the benefits of listening to employee's proposals, criticisms and comments. This philosophy also focuses on giving power and control to the employees. This increases the employee morale and loyalty towards the organization. When employees feel a sense of ownership, they have more of an incentive to complete their job duties, and to complete them well. The final important aspect in lean thinking is employee placement. Companies strive to place each employee in the best suited position. This will increase productivity, because every employee is able to use his full capabilities and complete their jobs thoroughly and accurately. Under this element, companies also train employees for multiple positions within the organization

the lean thinking philosophy ties together several key parts of business. Each part promotes managing costs, cutting waste and utilizing employee resources. Under this way of thinking, companies strive to make continuous improvements, always eliminating wasteful processes and looking for ways to increase customer value and company profits.

Comparison of other Methodologies

Methodology 1- Sigma Six and Lean Methodology

Six Sigma

Six Sigma is a set of tools and strategies for process improvement, it claims that concentrating on reduction of variations will resolve process and business difficulties by using a set of statistical tools to recognize the fluctuation of a process; management can begin to expect the predicted outcome of that process [8]. If the result is not agreeable, associated tools can be used to additionally understand the fundamentals influencing that process. Through an organized and planned investigation, the process steps are understood completely. The theory is that by eliminating variations of multiple elements the outcome of the entire process will be enhanced. Six Sigma strategies are made up of 5 steps which are as follows:

Define,

Measure,

Analyze,

Improve,

Control.

Lean on the other hand focuses on the elimination of waste, which reflects any step in the process not necessarily taken to produce the product or service. One aspect of the elimination is the touch time; amount of time the product is actually being touched or worked on, by the operator. Lean strongly focuses on the speed of the process in terms of reducing the amount of time between activities, events, and cycles. The smaller the cycle time, the more cycles can completed in the given amount of time. Lean even detects areas where process waste and bottlenecks can be removed. While lean stimulates rapid business processes, the downfall that arises from it is the lack of quality. It doesn't matter how many forms are completed or calls are taken if the data and information captured is not up to bar. Simply completing steps rapidly, without the use of check marks an environment prone to errors is created which often requires rework and reorganization. This is where Six Sigma becomes essential to business process management [2].

Lean Six Sigma Methodology

Lean Six Sigma is another methodology which combines process speed along with quality. In order to become a more efficient and effective organization in terms of operations and business processes, both Lean and Six Sigma methodologies work better by means of a symbiotic relationship, with each methodology mutually benefitting from the others involvement. The Six Sigma methodology is a quality tool that emphasizes on reducing the number of errors and steps in a process. It also identifies variation in the types of data inputs, and analyses the root cause to determine the origin of errors. To ensure success in the organizational process a combination of both lean and Six Sigma are required. This methodology works through process mapping, re-modeling and automating the most efficient, quality workflows possible, enabling an organization to maximize productivity, while eliminating waste and reducing costs [2].

Methodology 2- Theory of Constraints and Lean Methodology

The theory of constraints

Theory of constraints (TOC) is a relatively recent approach for refining organizational performance. It is defined as the rate at which the system generates money through sales. TOC links the production system of an organization to a network of chains [6]. A system is always constrained or has something that limits its performance to achieve its goal. That limit may be a procedure or a step that might have insufficient capacity, or a lack of market demand for the output of the system. Theory of constraint advocates that a system can be improved by focusing towards improving the constraint of that system, as it is the thing that is preventing the system from moving towards its goal

Primary strength of TOC is its focused orientation towards the optimization of the system or process on a global level rather than on a local procedure of a system that may have a little effect on the overall performance. It focuses on system improvement which is defined as series of interdependent steps linked together to work towards the overall goal. The constraint is a weak link and limits the performance of the chain. In a manufacturing organization, Theory of constraint focuses on the step that slows down the speed of the products through the system [6].

Theory of constraint doesn’t require a great number of people to understand all the elements of the system nor does it focuses on having an intimate knowledge of data analysis. Understanding by few people with the power to implement the changes is all that is required. The whole effort can be localized with a minimum participation or involvement of the workforce

The similarity between both lean and TOC is that they focus on increasing the overall profit of the organization; however they both have different ways to approach a problem. The main difference being, Lean focuses on reducing the costs through elimination of the waste while TOC contributes by focusing on improving throughputs [6].

Methodology 3- Agile and Lean Methodology

Agile

Agility uses the knowledge of the market and virtual coop to achieve profitable opportunities in an unstable market environment. The Agile stratagem gives priority to how tasks can adapt to fluctuating situations. Agile manufacturing process normally refers to a manufacturing line of attack where new and current goods are brought into the quick and swiftly altering market to display in an extremely competitive market which is typified by unexpected alterations. It relies on the ability of the firm to stay alive to chances which come into its way and be prepared to impact changes at the right time to be able to stay a step further than other companies in the industry. The Agile is capable of finding results in the market quickly and as a result, the development cycle is significantly reduced; ineffective projects are abandoned earlier than intended hence avoiding great losses and priority changes are effortlessly and instantly put into effect with the lowest of surplus [4].

There are numerous variances between lean and agile manufacturing, including manufacture style, inventory levels, and customization abilities. A lean manufacturing technique is built on the mass assembly line strategy with a combination of employees and machines making products from the tiniest constituents to the greater external assemblies. In contrast, agile manufacturing relies mostly on production automation and segmental fragments to create a wanted product. On the other hand, agile manufacturing focuses on automation as its main manufacturing strategy. The amount of employees is reduced, to save on labor expenditures; the employees that remain along the production line are generally present to regulate or mending the robotic machines when required, instead of creating a product [7]. Therefore, the production line is efficient and profitable for the business and customers. The Agile Supply Chain model recommends that preferably the supply chain should become a ‘demand chain’ –basically, everything that is moved, handled or created should ideally be according to a known customer necessity. A supply chain has a tendency, by its very nature, to concentrate on creating efficiency in terms of the flow of material from source to user. In contrast, a demand chain is concentrated more on effectiveness in the sense that it seeks to be market-driven, reacting to the requests of the market more promptly. The key to this transformation– from supply chain to demand chain – is agility.

At its simplest the lean paradigm is most powerful when the winning criteria is cost; however, when service and customer value enhancement are prime requirements for market winning then the likelihood is that agility will become the critical dimension. Whereas quality, service level, and lead-time are market qualifiers for lean supply, with the market winner then being cost, the latter benchmark is merely an important qualifier in agile supply Both agility and leanness demand high levels of product quality. They also require minimization of total lead-times [13].

Methodology 4- BPR and Lean Methodology

Business Process Re-Engineering

The radical redesign and rethinking of the process of a system to obtain dramatic improvements in vital measures such as the overall quality, service, cost and the speed in order to achieve optimum performance changes. BPR’s main focus is on the process and not on the jobs or people, neither the tasks involved. BPR redesigns the strategic process and value added steps that surpasses the organizational boundaries [30]. BPR seeks to completely restructure the organization by focusing on the ground up policy of the business processes. A process is a step of logically linked tasks preformed to obtain a defined outcome. BPR emphasizes to focus on the organizational objectives and the various processes related to them, encouraging a complete recreation of the system rather than partially optimizing the sub processes. BPR is also known commonly as business process change management, business transformation or business process redesign.

Fig 3, BPR Cycle

Conclusion – Lean Principles and Different Methodology

Fig 4, Methodology comparison table

All the above methodology approaches and eventually acts to be driving towards the same concepts and have common goals. However, they begin their journey from different perspectives by the time the methodologies reach the secondary stage they tend to show effects and results that are similar to one another. Many of the secondary effects of one methodology might be the same as the primary focus of another methodology. Lean however differs from other improvement methodologies in a number of ways. Especially two of the differences in lean are noteworthy; first it aims to focus on improving the entire value stream, while the rest tend to focus only on particular individual processes. Secondly most of the other methodologies tend to focus on improve the efficiency and productivity of major value adding procedures, whereas lean stresses on eliminating and reducing wastes and other non-value adding activities [8]

Limitations and Disadvantages

Improving effectiveness and output is essential for Lean production, which requires taking more out of less inventory, working money, workforce and raw materials. This might seems a good thing but there are compromises towards being flexible to a certain point, and the market which needs rapid answers to great demand swings should not expect same benefits. Almost every company can make profit from the principles of Lean as it has become a widespread idea. However, it is not a solution to all business problems.

If lean is applied to value stream without improving the importance for the buyers or without concentrating on the limitations, it will end up in cost reductions and since there are not any throughputs, will result in job cuttings. If lean is used to enhance product or service value, it is focused on the constraint and thus enhances throughput while raising productivity and reducing cost, it will also cause a chain reaction of raising demand and competitiveness of a company [3].

Limitation of the key aspects of lean principles:

Specify Value from the stand point of end customer- Gaining knowledge about consumer’s actual values can be hard at times. Organizations cannot always gain the whole customer segment to ensure that their product features and processes policies are all in line with the expectations of the customer [26]. As a result of this no organization can be truly Lean from this point of view

Eliminate non-value added processes in the value stream- It is a well know theoretical aspect, but actually a need will always be required for final inspections to check the finished product, especially when the number of goods failing is monumental.

Flow-The main issues of flow are the process legacy, where goods are either ready for batch production, for these methods the material outages, maintenance time, traffic jams and other kinds of disruptions are not yet identified or eliminated.

Pull- It is one of the simplest aspect and principle of lean. But due to demand patterns suddenly shifting from one service to another and during times when there is no traceable demand pattern, the number of inventories can be increased due to Pull or a scenario of running out of stock can be created.

Pursue Perfection-The disadvantage of this principle is the willingness and perseverance of the stakeholders to maintain the day to day activities to achieve Lean. The support from management is a key requirement. A constant retaining of talent to fit into the lean philosophy and thinking, also a constant Lean training program for the entire workforce is essential.

In summary, Lean thinking and principals are limited by its environment, by its people, and by the legacy of the organization trying to implement it. For Lean thinking to be effective, companies need to apply the complete set of Lean principles to be at least a mandatory. They shouldn't only apply Lean tools to improve productivity and then lay-off employees; instead organizations need to clearly devise a growth strategy to redeploy freed-up resources in new areas [26].