0

The theory: Reason for using and applying Lean in current business environment

Strong pressure on EBIT combined with increased customer demands requires

companies to improve their processes

Process improvement opportunities through the value chain

Issues

■ Need for both cost reduction and constant high

quality outputs at the same time

■ As organisations grow they tend to accumulate

inefficiencies and they lose sight of what truly

adds value for their customers

■ Improvements are often temporary; sustainable

changes and continuous improvement are hard to

achieve

■ Need for continuous and fast adaptation to a

changing environment

The voice of the customer becomes more

important

■ Increased competition with pressure on margins

■ Need to continuously increase shareholder value

■ Increased demand for customer added value

■ Increased value chain cooperation

Realise constant high quality

Increase service levels

Shorten time to market

Set up a learning

organisation

Optimise transportation

Improve planning

Shorten finance cycle

times

Speed up administrative

processes

Shorten R&D processes

More stable production processes

Optimise inventory

levels

Smarter supplier processes

Improve

customer

satisfaction

Improve shareholder

and management

satisfaction

Improve

employee

satisfaction

Improvement challenges

=+ + Lean

1

The theory: The Lean Concept

Lean provides significant improvement potential by reducing spreading and

elimination of unnecessary process steps

Realise low costs

■ In a Lean process there is no ‘waste’ in terms of what is not valuable for the

customer

■ Workspace lay-out is optimal and easy to understand, everything is on-hand

and easy to find. Activities are error proof, defects are prevented

Eliminate non-value added work

■ The business processes are viewed from the customers’ perspective where the

value of an activity is defined solely by the customer, this is what he wants to

pay for

■ Any activity in the workflow that adds time, effort or cost but does not create

value to the customer is considered as waste

Improve the whole system

■ In stead of optimising individual parts or processes, Lean seeks to improve the

whole system (Operating System, Management Infrastructure, Mindset and

Behaviours)

Lean

Speed and efficiency by identifying added value and eliminating waste

2

The theory: The Lean Concept

The essence of Lean is the integration of the elements Management infrastructure,

Operating systems and Mind setting & behaviour

Lean operating system

■ This system is about the way in which people, goods and resources are being

controlled in the process to create value for the customer with minimized

losses. In this way, the so called flow is created, by which a product, as a figure

of speech, flows through the process and no double work has to be done. The

information streams form part of this, this is about making the processes,

procedures and the lay out of the process at an office or a factory visible.

Management infrastructure

■ This concerns the management organisation, processes and systems that are

necessary to support the Lean operating system. Part of this are the

organisational structure and the processes to develop people, like for example

the target and appraisal system

Mind setting & behaviour

■ This element concerns the way of thinking and behaving at all levels of the

organisation underlying the formal systems and structures. It is important to

use the mind set of the customer; what does he want and what creates value in

our process and the continuing desire to improve

De 5 principals of Lean:

1. Value: What creates value from the customer’s point of view?

2. Value stream: What does the total value chain look like, from supplier to

customer?

3. Flow: Creating a standardized workflow with a constant input

4. Pull: Creating the process in such a way that customer demand drives the

proces

5. Perfection: Realise continuous improvement

Lean

Lean

operating

system

Management

infrastructure

Mind setting &

behaviour

■ Customer focus

■ Lay-out

■ Process renewal

■ Work instructions

■ Performance management

■ Planning methods

■ Clear roles and responsibilities

■ Controlled processes

■ Coaching

■ Teamwork

■ Communication

3

The theory: The Lean Concept

Cost reduction can beTheory: The Lean concept accomplished with Lean through

reducing ‘waste’ (non value-adding activities)

Lean concept

■ Working in a Lean environment

means eliminating waste from

everything we do in business

■ Using the Lean concept, the

business processes are viewed

from the customers’

perspective where the value of

an activity is defined solely by

the customer

■ Activities that add value to the

customer are those that make

the product or service resemble

more of what the customer

actually wants and for which he

is willing to pay

■ Any activity in the workflow that

adds time, effort or cost but

does not create value is

considered as waste

■ A Lean process eliminates

waste that reduces the speed

and efficiency of the operation

Eight types ofwaste

Defective or ineffective treatmentWaste from

producing defects

Waste from

inventory

Excessively long queues;

excessive levels in stock

Unnecessary moving of

employees, equipment and

products

Waste in

transportation

Excessive complex processes;

over-specified processes

Waste from

overproduction

Periods of inactivity for people,

machines, equipment and

information

Waste of waiting

time

Producing too much or producing

too early

Waste in

processing

Excessive walking, bending,

turning, reachingWaste of motion

■ Low skill levels

■ Poor machine conditions

■ Instable processes

■ Poor forecast or scheduling

■ Inadequate purchase conditions

■ Insufficient insight into inventory

■ Poor layout

■ Sequential processes physically separated

■ No immediate testing of semi finished products

■ Ineffective or unnecessary steps in the process

■ Poor product design

■ Excessive testing

■ Poor supplier delivery performance or quality

■ Poor labour utilisation

■ Lack of flexibility in skills

■ No alignment with customer needs

■ Poor scheduling

■ Unbalanced material flow

■ Poor layout of workplace, tools and materials

■ Lack of visual controls

■ Undesired split of activities

Non-optimal use of talent, skills

and time of employees Waste of talent

■ Poor scheduling of employees

■ Poor use of talent of employees

■ Detachment of employees and management

4

In practice: Lean

The application of Lean process provides significant and structural improvement

potential

Lean – Speed and efficiency by ‘creating value and eliminating waste’ by means of the structured DMAIC approach

Lean: the fastest delivery (speed), without defects (quality), against the lowest possible price (costs)

• The structured DMAIC approach will be combined with the pragmatic tools of Lean

Se

rvic

e Q

ua

lity

Stop the

Bleeding

Move to

Excellence

Reduced variation

Low

Variation

High variation

Chaos

Non productive

Stable Operations

Improved productivity

Operational Excellence

Operating Leverage

High

Performance

86% or more

Mediocre

Performance

less then 86%

Lean

Lean