the lean toolbox a handbook for lean transformation

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THE LEAN TOOLBOX A HANDBOOK FOR LEAN TRANSFORMATION Fifth edition

by John Bicheno Buckingham Lean Enterprise Unit, University of Buckingham and Matthias Holweg Saïd Business School, University of Oxford

PRODUCTION AND INVENTORY CONTROL, SYSTEMS AND INDUSTRIAL ENGINEERING (PICSIE) BOOKS BUCKINGHAM, ENGLAND 2016

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Table of Contents 1

THE LEAN JOURNEY ................................................ 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11

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2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 3

THE ‘IDEAL WAY’, ‘TRUE NORTH’, AND PURPOSE ...13 THE FIVE LEAN PRINCIPLES .................................13 LEAN IS NOT TOOLS – OR EVEN A SET OF INTEGRATED TOOLS! ..........................................................15 GEMBA AND GENCHI-GENBUTSU .........................15 PULL ..............................................................15 MUDA AND THE SEVEN WASTES ..........................17 THE ORIGINAL SEVEN WASTES ............................18 THE NEW WASTES ............................................21 LEAN IS ALL ABOUT PRODUCTIVITY .......................24 LEAN IS SYSTEMS THINKING ................................25 LEAN IS CONTINUOUS LEARNING .........................29 LEAN IS BOTH REVOLUTION AND EVOLUTION..........29 LEAN IS ‘DISTRIBUTED DECISIONS’........................30 LEAN IS GREEN .................................................30 LEAN IS COMPRESSION ......................................31 THE 25 PRINCIPLES OF LEAN ...............................32 THE TOYOTA WAY ............................................35 THE DNA OF TPS: FOUR RULES AND FOUR QUESTIONS ....................................................35

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SUSTAINABILITY–MAKING CHANGE STICK ............ 97

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BACKSLIDING ................................................... 97 THE FAILURE MODES OF LEAN IMPLEMENTATIONS . 98 A WORD OF WARNING ON LEAN IMPROVEMENT ... 102 PROCESS (AND SYSTEM) SUSTAINABILITY ............ 102 STAFF SUSTAINABILITY..................................... 104 STRATEGY AND DEPLOYMENT ............................109

7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 8

WHAT IS AN ‘OPERATIONS STRATEGY’? .............. 109 FORMULATING AN OPERATIONS STRATEGY.......... 109 TRADITIONAL PLANNING .................................. 111 HOSHIN KANRI – DEPLOYING AN OPERATIONS STRATEGY .................................................... 111 ‘NEMAWASHI’, ‘HANSEI’ AND ‘CATCHBALL’......... 113 CONCLUDING REMARKS ON POLICY DEPLOYMENT . 115 BUSINESS MODEL GENERATION ........................ 116 VALUE STREAM ECONOMICS: WHAT TO MAKE WHERE .................................................................. 117 THE ESSENTIAL PARETOS ................................. 119 DISRUPTIVE TECHNOLOGIES ............................. 122

PREPARING FOR FLOW .......................................124 8.1 8.2 8.3 8.4 8.5

DEMAND MANAGEMENT ................................. 124 DEMAND ANALYSIS......................................... 125 VALUE STREAM ORGANIZATION ........................ 128 TOTAL PRODUCTIVE MAINTENANCE (TPM) ........ 129 TAKT TIME, PITCH TIME, PLANNED CYCLE TIME, AND CADENCE. .................................................... 134 8.6 ACTIVITY TIMING, ACTIVITY SAMPLING AND WORK ELEMENTS .................................................... 135 A NOTE ON ACTIVITY SAMPLING ......................................... 136 8.7 5S ............................................................... 136 8.8 VISUAL MANAGEMENT.................................... 140 8.9 STANDARD WORK, STANDARDIZED WORK AND STANDARD OPERATING PROCEDURES ................ 142 8.10 TRAINING WITHIN INDUSTRY (TWI) ................... 146 8.11 CHANGEOVER REDUCTION (SMED)................... 148 8.12 SMALL MACHINES, AVOIDING MONUMENTS AND THINKING SMALL ........................................... 151

IMPROVEMENT.................................................... 49 HOW TO GET STARTED .......................................49 GEMBA WALKS, AND THE GEMBA ........................49 IMPROVEMENT CYCLES: PDCA, DMAIC, AND 8D ..51 ROOT CAUSE PROBLEM SOLVING .........................54 KATA ..............................................................57 KAIZEN ...........................................................62 MESS MANAGEMENT ........................................68 A3 PROBLEM SOLVING AND REPORTS ...................69 COMMUNICATIONS BOARD ................................71 ORGANIZING FOR IMPROVEMENT ........................73

PEOPLE AND CHANGE IN LEAN ............................ 76 SOCIO TECHNICAL SYSTEMS ................................ 76 RESPECT AND HUMILITY .................................... 77 THE PEOPLE TRILOGY ........................................ 79 MODELS FOR CHANGE MANAGEMENT ................. 82 CREATING THE LEAN CULTURE ............................ 90 THE ADOPTION CURVE AND KEY PEOPLE............... 93

6.1 6.2 6.3 6.4 6.5

THE KINGMAN EQUATION ..................................38 LITTLE’S LAW ...................................................42 CRITICAL WIP ..................................................43 BUFFERS .........................................................45 INVENTORY TRADE-OFF CURVES ..........................46

4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10

MANAGING CHANGE ........................................... 76 5.1 5.2 5.3 5.4 5.5 5.6 5.7

THE SCIENCE OF LEAN .......................................... 38 3.1 3.2 3.3 3.4 3.5

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5

THE LEAN MINDSET.............................................. 13 2.1 2.2 2.3

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WHAT IS LEAN….? ..............................................1 LEAN EVOLUTION ...............................................1 THE DOUBLE DIAMOND .......................................2 LEAN, THE S-CURVE AND INNOVATION ....................3 WHERE TO START? LEAN TRANSFORMATION FRAMEWORKS ...................................................4 VALUE STREAM MAPPING (VSM)..........................4 THE HOUSE OF LEAN ...........................................4 THE LEAN ENTERPRISE HOUSE ...............................5 SHINGO PRIZE FRAMEWORK .................................6 THE HIERARCHICAL TRANSFORMATION FRAMEWORK.8 OTHER APPROACHES TO LEAN IMPLEMENTATION. ..11

9

MAPPING AND ANALYSIS....................................153 9.1 9.2 9.3 9.4 9.5

WHAT IS THE AIM OF MAPPING? ...................... 153 BEFORE YOU BEGIN MAPPING…........................ 153 INTRODUCTION AND WARNINGS ....................... 153 THE FIVE STAGES OF MAPPING ......................... 154 TYPES OF MAPS ............................................. 160

9.6 10

A NOTE ON INTERVENTION THEORY AND CHANGE .. 95 LAYOUT, CELLS AND LINE BALANCE .................... 175

10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 11

14.6 14.7

LAYOUT, CELL AND LINE DESIGN, LEAN PLANT LAYOUT ................................................................. 175 MAJOR TYPES OF LAYOUT: THE PRODUCT PROCESS MATRIX ...................................................... 175 GENERAL LAYOUT: GOOD AND NOT SO GOOD AT THE FACTORY LEVEL............................................. 175 MATERIAL HANDING: GOOD AND NOT SO GOOD AT THE FACTORY LEVEL. ...................................... 180 CELLS .......................................................... 181 CHAKU-CHAKU CELL OR LINE ........................... 187 VIRTUAL CELLS .............................................. 187 MOVING LINES AND PULSE LINES ...................... 188 ERGONOMICS................................................ 190 3P: PRODUCTION PREPARATION PROCESS .......... 191

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DIFFERENT

PROCESSES REQUIRE DIFFERENT APPROACHES TO SCHEDULING .......................... 193

GENERAL COMMENTS ABOUT SCHEDULING ......... 194 THE LEVEL SCHEDULE ..................................... 195 MASTER SCHEDULING AND FINAL ASSEMBLY SCHEDULING ................................................ 196 11.5 THE TEN VALUE STREAM SCHEDULING CONCEPTS .. 196 SALES AND OPERATIONS PLANNING (&)............................... 206 11.6 KANBAN, PULL AND CONWIP ......................... 206 11.7 CELL OR LINE BALANCING ................................ 182 11.8 APPLYING REPETITIVE SCHEDULING ................... 213

15.10 15.11 15.12 16

12.8 12.9

17.7 17.8 17.9 17.10 17.11 17.12 17.13 17.14 18

QUALITY ............................................................ 233 13.1 13.2 13.3 13.4 13.5

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KANBAN, DRUM BUFFER ROPE, AND CONWIP ... 215 BUFFERS: TYPES, SIZING, LOCATION .................. 216 THE BUILDING BLOCKS .................................... 217 SHARED RESOURCES ....................................... 219 BATCH SIZING ............................................... 222 THEORY OF CONSTRAINTS AND LEAN ................. 228 CONSTRAINTS, BOTTLENECKS AND NON-BOTTLENECK RESOURCES: THE SYNCHRONOUS RULES ............ 228 THEORY OF CONSTRAINTS IMPROVEMENT CYCLE . 229 CONFLICTS BETWEEN LEAN THINKING, TOC AND FACTORY PHYSICS?........................................ 230

UNDERSTANDING CUSTOMER NEEDS: THE KANO MODEL ....................................................... 233 A FRAMEWORK FOR LEAN QUALITY ................... 235 MISTAKES AND ERRORS................................... 235 VARIATION AND SIX SIGMA .............................. 240 COMPLEXITY ................................................. 245

LEAN PRODUCT DEVELOPMENT ......................... 247 14.1 14.2 14.3 14.4 14.5

FOUR OBJECTIVES AND SIX TRADE-OFFS ............. 247 LEAN IS DIFFERENT IN PRODUCT DEVELOPMENT .. 249 WASTES IN NEW PRODUCT DEVELOPMENT ......... 249 SYSTEMS FOR NPD ........................................ 251 DESIGN THINKING .......................................... 254

THE ROLE OF CONTEXT ..................................... 307 PRODUCT OR SERVICE? .................................... 307 TYPES OF SERVICES ......................................... 308 A MANUFACTURING LOGIC FOR SERVICES? ........... 308 THE SEVEN SERVICE WASTES ............................ 309 PERFORMANCE AND WORKLOAD: PARKINSON’S LAW AND SCARCITY ............................................... 310 LEAN HEALTHCARE.......................................... 313 LEAN FINANCIAL SERVICES ................................ 313 LEAN IT ........................................................ 314 LEAN CONSTRUCTION ...................................... 315 LEAN PROFESSIONAL SERVICES .......................... 315 LEAN IN THE PUBLIC SECTOR ............................. 315 LEAN IN THE OFFICE ........................................ 316 LEAN START-UP ............................................. 317

LEAN – HOW IT ALL CAME ABOUT....................... 318 18.1 18.2 18.3 18.4

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LEAN ACCOUNTING ......................................... 295 PERFORMANCE MEASURES ............................... 300 THE BASIC LEAN MEASURES ............................. 302 TARGET COSTING, KAIZEN COSTING AND COST DOWN .................................................................. 303

LEAN BEYOND THE FACTORY FLOOR ................... 307 17.1 17.2 17.3 17.4 17.5 17.6

SCHEDULING BATCH PROCESSES ........................ 215 12.1 12.2 12.3 12.4 12.5 12.6 12.7

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WHAT IS SUPPLY CHAIN MANAGEMENT? ............. 272 THE THREE SUPPLY CHAIN ‘ENEMIES’ .................. 274 SO WHAT MAKES A SUPPLY CHAIN LEAN? ............. 275 DYNAMIC DISTORTIONS – THE BULLWHIP EFFECT . 275 MANAGING SUPPLIER RELATIONS ....................... 278 SUPPLY CHAIN COLLABORATION ........................ 284 LEAN LOGISTICS.............................................. 285 MANAGING SUPPLY CHAIN RISK ........................ 286 ORDER FULFILMENT AND PRODUCT CUSTOMISATION .................................................................. 288 THE SCOR MODEL .......................................... 292 MEASURING SUPPLY CHAIN PERFORMANCE......... 292 CREATING HIGH-PERFORMANCE SUPPLY CHAINS ... 292

ACCOUNTING AND MEASUREMENT .................... 295 16.1 16.2 16.3 16.4

11.2 11.3 11.4

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CREATING THE LEAN SUPPLY CHAIN.................... 272 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9

SCHEDULING LINE PROCESSES ............................ 193 11.1

MAIN LEAN DESIGN TOOLS .............................. 256 ADDITIONAL TOOLS FOR LEAN PRODUCT DEVELOPMENT .............................................. 262

LEAN BEFORE TOYOTA ..................................... 318 TOYOTA: THE BIRTHPLACE OF LEAN .................... 318 WHY DO WE CALL IT ‘LEAN’? ............................ 320 A LEAN CHRONOLOGY ..................................... 322

FURTHER RESOURCES – WHERE TO GET HELP...... 326 19.1 19.2 19.3

COMPANION VOLUMES ................................... 326 CERTIFICATION ............................................... 326 RESEARCH CENTRES, RESEARCH PROGRAMMES AND WEB RESOURCES ........................................... 326

ABBREVIATIONS ............................................................ 327 INDEX ............................................................................ 329

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THE LEAN JOURNEY │ 1

1

The Lean Journey

This book has a single purpose: to help you make Lean work in your organisation. It provides you with the key principles and tools needed for a lean transformation. It will guide your implementation and act as a reference guide for you to go back to as you advance on your lean journey. The philosophy will always remain, yet as new challenges arise, different tools will be required. In this book we have assembled the main tools, systems and principles we have found to be useful when applying Lean to manufacturing, as well as services, the public sector, IT operations, and the office. We wish you good luck in your journey! 1.1

energy, pollution sustainability.






Waste reduction Value enhancement People involvement

Without all three, Lean will not survive. Through time, as conditions change, the emphasis may shift from one to another and back again. But always there should be elements of each and guided by a clear customer-related purpose. Note that the capabilities of your people need continuous development. Especially important is that value must be defined in the eyes of the customer, in terms that are meaningful to the customer. A ‘quick and dirty’ definition of Lean is ‘doing more with less’. This is of course directly in line with the definition of productivity (outputs / inputs). But this should be interpreted more widely as doing good for customers and stakeholders with less resources – materials,

to

achieve

ultimate

The Lean Enterprise Institute states, ‘The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.’ In 2014, Quality Progress magazine defined Lean as ‘the permanent struggle to flow value to each customer.’ This concise definition captures several points:


There is no end point; it is a journey.




It is not easy.




Long term consistency is required.




It is about flow – and improving flow means understanding both customers and the system, and reducing impediments to flow.




The individual customer should be the focus. Not ‘mass’ but ‘one at a time’.

What is Lean….?

Lean is about moving ever closer to uninterrupted flow in the sequence of operations that deliver perfect quality – in other words – becoming more of a time-based competitor. ‘Flow’ is not only of physical products and services but also the information and designs necessary to run operations. This requires continuous improvement in three dimensions:

–

Roger Schmenner, emeritus professor at Indiana talks about ‘swift, even flow’, which is also a neat and succinct summary. Masaaki Imai, pioneer of Kaizen, now thinks the core concepts are Flow, Synchronization, and Levelling, or ‘FSL’. Gitlow has the useful concept that value is a function of time, place, and form – to make progress at least one has to be improved, if not all three. Time is delivery lead time. Place is to do with customer convenience. Form is to do with design and utility. The TRIZ concept of value is the ratio of Benefits divided by Cost plus Harm. Benefits may accrue before, during, or after the event. Harm includes all the possible ‘victims’ – environment, energy, and safety as well as any social harm that may be caused. 1.2

Lean Evolution

For many, Lean started with ‘tools’. Often, these were not even a set of tools but completely independent: 5S here, SMED there, kanban here and A3 there. But, like any set of tools, they are

2 │ THE LEAN JOURNEY there for a purpose, not an end in themselves. Like Michelangelo chipping away all marble that was not David, so Lean tools are there to chip away everything that does not enhance value for the customer. For a while, a pure tools approach is not a bad thing. Like Michelangelo’s original marble block, a lot can be removed with little skill. Then came Lean through Principles – often the 5 Lean Principles of Womack and Jones, or principles of self-help, respect, responsibility towards staff, customers and society. This is much better, and better still if systemically brought together. But now some have begun to realise that ‘real’ Lean is behaviour-driven. What everyone does every day without being told. But how to get to this state of nirvana? Behaviour is built through confidence and security. An example would be pulling the Andon chord when a problem occurs and doing this as a habit, in the confidence that this will be supported and expected. No ‘lip service’. And the habit of using an experimental approach. Over time, with persistence, this builds the ‘world view’ – the things we take to be selfevident. The most important behaviour is that, at every level, leaders are teachers – continually reinforcing the correct usage of the principles and the tools. Not relying on a 10-day Lean course, or a book, or intranet for their staff to learn the principles and tools – but by selfdemonstration and coaching every day. In some ways the word ‘Lean’ is an unfortunate one, because it has connotations of being manufacturing only (but by no means is confined to it), as well ‘mean-ness’ or ‘cutting back’, generally in terms of headcount. On the contrary, Lean is about growth and opportunity. For example, Toyota has grown not cut back. They have grown because they have capitalized on the huge advantages that Lean brings. It is better to grow into profitability rather than to shrink into profitability. This leads to another important idea – that of ‘Lean Enterprise’. Womack and Jones have

emphasized that Lean is concerned with enterprise not just with manufacturing. If you have already started on your Lean journey without involving design, marketing, accounting, HR, distribution, and field service, you will have to do so very soon or risk the whole programme. These functions have a vital role to play in answering what the organization will do with the improved flexibility, times, and the rest. If the answer is just ‘reduce costs’ management has missed the point. But the Lean enterprise also needs appropriate people policies, measures, accounting, design and new product introduction, supply chain activities, and service initiatives – perhaps ‘servitization’. David Cochrane makes an excellent point: Lean, says he, is not what organizations need to do. Lean is what organizations should become by effective system design and implementation. One way of understanding Lean is to view it as a (proven) approach to dispense with increasingly inappropriate ‘economies of scale’ and to adopt ‘economies of time’. To conclude, take Ohno’s Method: 1. Mentally force yourself into tight spots. 2. Think hard; systematically observe reality. 3. Generate ideas; find and implement simple, ingenious, low cost solutions. 4. Derive personal accomplishing Kaizen 1.3

pleasure

from

The Double Diamond

The ‘Double Diamond’ is a useful concept that has been used for decades in value engineering, design (British Design Council), culture change, and service. A typical example is shown in the figure. Within each diamond various alternatives are generated, considered, and the appropriate solution selected. Widen out the possibilities, then narrow the focus. Never go blindly after one solution – and then sometimes find it is a bad solution and all the work has been wasted.

THE LEAN JOURNEY │ 3 growth, slowing growth, and maturity. Lean is no different. Neither is Six Sigma. In the mid 1960’s the Olympic record for the high jump was progressing slowly. The dominant approach was the ‘Western Roll’. Enter Dick Fosbury with a radically new approach, initially scorned by his coach. But persistence won out and the ‘Fosbury Flop’ triumphed in the 1968 Olympics. From that moment other approaches were instantly outdated. The Western Roll could be improved upon continuously, but will never again win gold.

Lean has traditionally been seen to apply in the lower diamond. But to confine Lean to Execution is increasingly inappropriate. Much waste, cost and effectiveness is built in during stages in the upper diamond. So the diamond concept is useful as Lean has extended into design (for example by Westrick and Cooper), into ‘3P’, into Lean software (for example ‘Lean Startup’), and into Lean Service (Bicheno). Each diamond in the broad double diamond contains several diamonds or sub-phases. In the top diamond, for example, there is innovation design, and Production Preparation Process (3P). In the bottom diamond, the same widen-it-outthen-narrow-it-down would be recommended practice in A3, kaizen, value stream mapping, layout, and Six Sigma – to mention just a few. So in this book increased attention is paid to the top diamond in comparison with the previous edition, and the methodology is recommended throughout. 1.4

Lean, the S-curve and Innovation

Throughout history, every innovation has gone through an S-curve. Slow start, take off, fast

So it is with Lean: Kaizen and Breakthrough (or Kaikaku) need to work together. Breakthroughs often come from outside. As Steven Johnson has pointed out in “Where Good Ideas Come From”, they almost invariably involve ‘the adjacent possible’. Innovations are imported from adjacent areas. So Henry Ford used ideas from cattle slaughter disassembly, from ‘scientific methods’ and from the electric motor that enabled high consistency of parts and movement. Toyota built on Ford, but added ideas from the loom, from Juran’s quality ideas and Deming teaching, and from American supermarkets and trams. Within each big S-curve there are little s curves – smaller innovations that accumulate through time. These are necessary, but not sufficient. Without the occasional breakthrough, Lean will invariably stagnate. A great danger in Lean, as in other fields, is Groupthink. Lean people always talking to Lean people. Always taking only one company as the role model. As Harvard Business School professor Clayton Christensen has shown, ‘disruptive’ innovations classically come from the outside and are seen as irrelevant until they too improve and cross the line to become ‘good enough’. Perhaps the future of Lean lies with frugal innovations from India, from additive manufacturing, and from service concepts. (Please see also Section 15.3.)

4 │ THE LEAN JOURNEY 1.5

Where to start? Lean Transformation Frameworks

In 2015, Lean is well established in many organizations. Many have developed their own frameworks. Lean Transformation is the core topic of this book, yet if you are hoping to find a shortcut for your Lean journey here, we will have to disappoint you. While one tends to look for the ‘3 steps to heaven’, unfortunately all Lean transformations are different, and there is no one ‘golden bullet’ recipe to follow. Three Frameworks are presented here – Toyota House of Lean, the Shingo Model and the Hierarchical Transformation Framework. These are intended to help with the appropriate use of the tools that follow. These are not the only frameworks, and we will review some other proven ones in section 1.11. In addition, there are thousands of ‘house of Lean’ versions, plus other (often rather) fuzzy frameworks. The frameworks may help with deciding the approach and priorities. But no framework should be merely ‘lifted’. Innovation and adaptation will always be required.

1.7

The House of Lean

First, let us look at the conventional ‘House of Lean’. The original was developed at Toyota. An early version is shown below. Note the two pillars: JIT and Jidoka (Flow and Quality or ‘Go’ and ‘Stop’. Note that having both pillars is a necessary regulating mechanism – you need both. Ohno noted that in the West, the preference was for Just in Time and he was dismayed that Jidoka and ‘automomation’ (automation with a human touch) were frequently downplayed.

As George Box the famous statistician said, ‘All models are wrong, but some models are useful’. 1.6

Value Stream Mapping (VSM)

It is possible to use VSM as guiding framework for Lean Transformation. The basic idea is to go to 'gemba' (the workplace) and define the current state or 'as is' map. In a second step, the future state or 'should be' process is defined. The gap between these two maps becomes the implementation plan: what actions need to be taken to get from the current state towards the future state. After improvements have been made, and the process is stable, new current and future state maps are generated, and the cycle begins again. One will never reach the initially defined future state, but progressively move to an emerging vision of a lean process (See Chapter 9 for details on mapping).

Later versions replace the two main pillars of Just in Time and Jidoka with Continuous improvement and ‘Respect for people’, built on a foundation of Learning cycles. Even more lately Rother and Liker have suggested that the Toyota system rests on a scientific way of thinking. But there is more. Scientific thinking is certainly needed for incremental improvement or kaizen. But occasionally creative ‘out of the box’ thinking is needed to break through to the next level. Here is the good news about such houses: They are familiar and easy to understand. They seem to make sense. They may have a proven record at organizations like Toyota. Here is the not so good news: They suggest you need to build from the foundations up irrespective of situation. The walls are not started before the foundations are complete –

THE LEAN JOURNEY │ 5 but often implementation is iterative. Several successful implementations have begun with the Policy Deployment roof. Moreover, the house is strongly tools oriented, rather than system oriented. Where does the customer come in? What happens if you are failing your customers due to poor delivery performance? How do you deliver value? Sustainability issues often result because employees misinterpret tools such as 5S – seen as clean up but not extending to the power of visual management. Another example is Andon – seen as just a signal instead of a big change in responsibility for both operator and team leader. Management becomes disenchanted because there is no impact on the bottom line, and little on customer satisfaction – for quite some time. 1.8

The Lean Enterprise House

Toyota and TPS continue to evolve. Toyota, like many others, have recognised the limitations of too much emphasis on tools. They now use a Lean Enterprise house that differs from the ‘tools’ house. The enterprise house is a wider view and emphasizes philosophy and approach. The ‘whats’, not the ‘hows’. The Toyota Production System may be a house of tools, but the Toyota Enterprise system is far more broad.

The foundation is the ongoing challenge of continually adapting to the needs of customers, employees, and environment. There is kaizen or

continuous change for the better. There is teamwork and emphasis on working together. And there is Gemba - the approach of hands-on, going to see oneself rather than management by remote control. The pillars are now continuous improvement and respect for people. These two go back to the origins of Toyota in the 1930s to 1950s with Sakichi and Kachiro Toyoda. Perhaps they go back to a main source of their inspiration, Samuel Smiles’ Self Help. These two support the Toyota Way – that hard to capture set of principles that Jeffrey Liker as attempted to summarise. And finally, the roof – thinking people – the real root of sustained performance. The concept of enterprise is important. ‘Enterprise’ means that Lean is not limited to ‘manufacturing’ or ‘operations’. A Lean mindset is necessary for all functions – accounting, IT, HR, marketing, sales, purchasing, distribution, and of course design and development. And not just waste, but value. Appropriately some have begun to say that TPS stands for Thinking People System, rather than Toyota Production System. Similarly with customers. There are today’s customers and tomorrow’s customers. And today’s customers come in different categories – those that are very valuable, an intermediate set, and a third set that are just not worth having. Possibly your products or services are inappropriately focused. So waste and value may be perceived differently depending on the customer group. A pensioner may be loyal because extra time and attention is taken, but for a businessman extra time could be waste. Scott Adams, in the stimulating book, Good Products Bad Products, gives dimensions against which a product will be judged by customers as Performance and Cost, Human fit and ergonomics, Craftsmanship, Emotional appeal, Elegance and sophistication, Symbolism and cultural values, and concern for the environment. Adams makes the point that it is well nigh impossible to score highly on most of these factors, and that different customers will have

6 │ THE LEAN JOURNEY different perceptions. Value, then, is an elusive commodity and one that must be continually adapted and refined. Kano, speaking about quality, talks about ‘Basics’, ‘Performance Factors’, and ‘Delighters’. (See Quality chapter.) Much the same can be said about value. There are some activities that are basic to value – defect free has become a basic in some industries. There is ‘performance’ value – lead time for example in some businesses, and ‘delighter’ value. Thus in the Kano model, value and quality are dynamic. Similarly, Terry Hill talks about ‘order qualifiers’ and ‘order winners’. Qualifiers get you into the league, but winners win the match. Both continually escalate.

2014). The model further implies that principles govern the laws of science and determine the consequences of human relationships which ultimately influence the outcome of business endeavours. The Shingo Model is built on 10 guiding principles which are supported with 20 supporting concepts and categorised into four dimensions: Cultural Enablers, Continuous Improvement, Enterprise Alignment, and Results. Simply put, principles should drive behaviour and tools that support those systems. The Shingo Institute contend that “when taken in their totality, these timeless principles become the basis for building a lasting culture of excellence in the execution of one’s mission statement” (Shingo-Institute, 2014, p. 10).

Further reading Darrell Mann, Hands-on Systematic Innovation, IFR, 2009 Scott Adams, Good Products, Bad Products, McGraw Hill, 2012. 1.9

Shingo Prize Framework

In 1988 The Jon M Huntsman School of Business at Utah State University introduced The Shingo Prize in recognition of Shigeo Shingo’s life-time accomplishments in the field of Operational Excellence. The Shingo Model is a comprehensive transformational model that recognizes that to be truly successful the tools and techniques must be led by guiding principles and that an organisation must be able to demonstrate that these guiding principles are embedded in their culture through the behaviour of all employees (Shingo-Institute, 2012). The model asserts that lean transformation occurs not through tools as tools only answer the question of “how”, but rather through collective behaviour which is realised through understanding the interrelated and interdependent relationships between guiding principles, systems, tools and results so that we can answer the “why” question (Shingo-Institute,

The model has two assessment scales, Behaviour and Results: Behaviour (Cultural Enablers, Continuous Process Improvement and Enterprise Alignment) assesses the business through lenses that look at Role, Frequency, Duration, Intensity and Scope to determine the degree to which the Leaders’, Managers’ and Associates’ behaviours are in alignment with the principles of operational excellence. Results (Quality, Cost/Productivity, Delivery, Customer Satisfaction, and Safety/Environment/Morale) view the business

THE LEAN JOURNEY │ 7 through lenses that look at stability, trend/level, alignment and improvement.

“Results” are assessed in terms of stability, trend, alignment, and improvement.

The scoring system is based on a 1,000 point scale. The points are then divided between the two categories (800 points for Behaviours and 200 points for Results). The elements of the categories are weighted and then awarded points based on importance to the operational excellence model.

These categories – behaviours and results – are a valuable thinking framework for Lean transformation even without knowing the detail.

“Behaviours” are assessed on three levels – leaders, managers, an associate - in terms of their role. Other aspects of behaviour are frequency, duration, intensity, and scope.

Perhaps the greatest advantage of the Shingo Prize model is that it is a comprehensive and proven assessment method. (Other assessment models will be discussed in a later section.) Arguably this may be the best way into Lean or to make further progress with Lean. As such it helps prevent ‘pet projects’, ‘quick fixes’ and other suboptimisations. Finally, the Shingo Prize framework should not be thought of as a checklist or ‘tickbox’, but rather as prompting an integrated set of questions that should be asked.

Note: Thanks to George Donaldson of News International that became the first Shingo (Gold) winner in the UK in 2014, with help for this section.

8 │ THE LEAN JOURNEY 1.10

The Hierarchical Transformation Framework

All too often Lean implementations have begun by collecting up a team and then immediately drawing up a current state value stream map followed by kaizen bursts based on the ideas of the team. This is almost invariably a bad idea. While simple, it has been found too simplistic in practice to guide you to the right improvements. It is far better to stand back, understand customers, products and demand, review the ‘system conditions’ such as KPI’s and the costing system that drive behaviour, assess the skills and culture and then take actions that may or may not initially include value stream mapping. This chapter sets out a general framework for Lean implementation. However, it is not intended to be generally prescriptive. That would be presumptuous! Any framework will need local adaptation. There are overlaps with both the frameworks discussed earlier. A manager may decide to adapt (say) the Shingo framework but rely on sections of the Transformation Framework for the detail. Any framework for Lean must by its nature be iterative, adopting an experimental approach – trying, succeeding, failing, retrying, learning. The Transformation Framework is intended to be hierarchical and iterative. The hierarchy is

presented on three levels. The steps in Level 1 are the broad, general, early steps. The steps in Level 1 are then expanded upon in Level 2, and in some cases the Level 2 steps are further expanded on in Level 3. The corresponding tools discussed in this book are given in Levels 2 and 3. In each level or sub-level the steps should be regarded as a set rather than a strict sequence. Level 1: Gaining the Big Picture At Level 1, the key objective is to set the scene for leading any Lean Transformation. This level is concerned with doing the right things. Lower levels are concerned with doing things right. Doing the right thing requires gaining an appreciation of the many aspects that could be involved in both the short term and the long term. Prioritisation will depend on circumstance, but understanding the Principles will apply in all cases. An appropriate Strategy will always be required. Some quick wins may be possible, but sooner of later any Lean transformation needs to bring together people, customers, money as well as operations. By the end, you should be familiar with the range of topics that are needed for Transformation and have a ‘systems view’ of their interdependencies. The relevant book sections are Chapters 1 and 2, Sections 4.1, to 4.3; 5.1 to 5.3; 7.1 to 7.2. (You also may want to read up on the history of Lean in Chapter 18.) Level 2: Driving a sustainable transformation At Level 2, the key objective is concerned with ‘doing things right’. This Level gets into the detail of the ‘whats’ and ‘hows’ to achieve sustained Transformation. By

THE LEAN JOURNEY │ 9 the end, you should be familiar with substantial detail of many of the tools and systems of Lean.

Level 2.4: ‘Check’, map and develop the Future State

This stage falls into many subcategories, which do not necessarily have to be addressed in sequence. Iteration is likely.

Here, the main purpose is to develop expertise with the vital mapping tools that are an essential feature for any Transformation.

Level 2.1: Understanding the principles

By the end, you should be familiar with a range of mapping tools and how they may be integrated effectively to transform a current state into a future state.

At first, understand the principles that form the basis of Lean. These are fundamental to all activities, regardless of the firm’s context and stage of the implementation. Chapters 2, 3 and 4 are relevant here. Level 2.2: Understand the customers and the nature of demand Here, the main purpose is to provide the relevant tools and systems for analysing and managing demand. By the end, you should be familiar with both segmenting demand so as to gain maximum advantage from various demand patterns and with influencing demand to that demand variation can be limited to what customers actually require rather than by variation caused by the organisation itself. Relevant sections are: Chapter 8.1. and 8.2., Chapter 13, and 11.1 and 11.2. Level 2.3: Strategy, planning, communication Here, the main purpose is to identify those products and processes that will have the greatest impact on a Lean Transformation, and to develop and deploy strategy and tactics so that everyone is empowered to take actions appropriate to their level or function. By the end, you should be familiar with the formulation of strategy for Lean and the concepts of how best to deploy strategy and policy. Relevant books sections are: Chapters 5 and 6 and most importantly, Chapter 7.

Most relevant here is Chapter 9. Level 2.5: Product rationalization and Lean Design At this stage the main purpose is to achieve effective product design and rationalization so that the right products are introduced effectively. By the end, you should be familiar with concepts that relate to pre-manufacture. Design methodologies that both reduce development time and ensure quality products are discussed. The essential tradeoffs in product design and rationalization are presented. See Chapters 13 and 14. Level 2.6: Implement the Foundation Stones The Lean foundation stones are applicable in all situations. Whilst they do not have to be fully or even partly implemented at an early stage, a weak foundation leads to a weak and non-sustaining general implementation. The foundation stones are 5S in Chapter 8.7., Standard Work in Chapter 8.9., and the improvement cycles in Chapter 4.3. Level 2.7: The Value Stream Implementation Cycle Value Stream implementation is a central, ongoing activity within a Lean enterprise. The main steps are given in Chapter 9.4., and some steps are detailed further in Level 3.

10 │ THE LEAN JOURNEY Level 2.8: Building a Lean Culture Here, the main purpose is to give guidance for the absolutely essential ‘people’ aspects of Lean Transformation. By the end, you should be familiar with current concepts relating to the psychology of change for Lean organisation. Together, these concepts can create the culture change and buy-in that are essential if Lean is to be sustained. Chapter 5, and especially 5.6., are relevant. Level 2.9: Implement Lean Supply The quality, cost and delivery (lead-time) of a process is the outcome of a co-production between the manufacturing firm and its suppliers. Lean implementations therefore must consider the entire value stream. Here, the main purpose is to address contemporary Lean Supply Chain issues and give guidance as to their successful implementation. By the end, you should be familiar with Lean supply chain concepts such as partnership, risk, measures, inventory considerations and the avoidance of polices that lead to demand amplification

Transformation. Appropriate considerations are also proposed.

measurement

See Chapter 16, and Chapter 5.1.-5.4. Level 2.12: Improve and Sustain Here, the main purpose is to provide frameworks that enable improvement to be both continuous and effective. By the end, you should be familiar with a considerable range of tools and systems for improvement that apply to any aspiring Lean organization. There are appropriate CI tools for every level tools and every stage from concept to customer. An overview is given in Chapter 4, where guidance on finding detailed tools can be found. Level 3: Detailed scheduling, cell and line design In this section two aspects are expanded upon from Level 2 – Detailed scheduling, and Lean Cell and Line Design. Level 3.1: Designing the Scheduling System

Just as important as managing the upstream supply chain, is to manage the downstream (or distribution and retail) end.

Detailed scheduling system design is a late but vital step in Lean implementation. Two sections are given here depending on the type of scheduling environment – repetitive with clear value streams and minor changeovers, and more complex situations having shared resources and batching. Of course, many plants will have elements of each.

See Chapter 15.

See Chapters 11 and 12.

Level 2.11: Costing and Performance Measures

Level 3.2: Cell and Line Deign

‘What you get is what you measure’ – so here the main purpose is to appreciate the vital role that accounting, costing, and measurement plays in any Lean Transformation.

Cells and assembly lines are found in many Lean manufacturing environments. In this section, guidance is given on how best to approach key points and issues in the design of these elements.

By the end, you should be familiar with the risks of not involving the accounting function, the distortions of costing systems, and better ways to incorporate ‘the financials’ in a Lean

See Chapter 11.7.

See Chapter 15. Level 2.10: Implement Lean Distribution

THE LEAN JOURNEY │ 11 1.11

comprehensive foundation. There are also differences between manufacturing and services. Remember also that whilst the Toyota system is undoubtedly effective for short-cycle repetitive manufacturing this does not mean that it will work well in pharmaceutical, or in aerospace or in low volume custom environments. Adaptation is usually required. Always ask where the approach originated and whether that is the situation that you face. The table attempts to summarise some of the better approaches known to the authors.

Other Approaches to Lean Implementation.

Almost every ‘Lean Guru’ and consultancy has their own approach to Lean Transformation. There is no Six-Sigma-like DMAIC agreed process. Inevitably, some are better than others, all claim to work, most of them can quote at least one successful implementation, sometimes many. The point is a ‘horses for courses’ message: there is no right or wrong. The approach should be chosen based on need: Order fulfilment? Culture change? Leadership? An audit approach can be a Traditional

Consultant Leadership

Systems

Factory Physics

Audit

Lean

Blueprint Shingo

Approach

Toyota as exemplar

Leadership

Systems view

Flow

Leading authority

Womack & Jones

Liker, Koenigsaecker

Seddon

Hopp and Spearman

Utah

Method

Prescriptive

Prescriptive

Contingent

Contingent

Contingent

prize

Way in

5 Principles, 14 Principles

Top Down

‘Check’ Plan Do

Lead time,

Audit

Mapping

Principles

Man/Serv

M

M & S?

S

M

M & S?

Direction

Early step (1)

Early step (2)

Top down, Purpose Walk and i/d wastes; map Waste, A3 Capability

Gemba

Listen to Look at b/neck; customer, Audit by expert DBR? involve people

Blueprint

Big consultant Prescriptive Start with top mgmt; use standard blueprint M & S? Top down ‘Exploring opportunity’

Policy Deployment

i/d purpose; understand Demand

Capacity

Spider diagram of strengths weakness

Map; Kaizen events

Events, A3

i/d failure demand

Variation, CONWIP

i/d priority keys

Evaluating change capability

Mapping

Early; Classic VSM

Quite early

Downplay; Outline only; dirty data

Quite early

Later

Early; classic VSM

5S and std work

5S, std work early; takt time

Early

No 5S; no / little std work

Later

Early

5S part of ‘demonstrating change’

Tools

Used

Used

Emerge

Used

Used

Used

Concerns

Expand to s/chain; extend to enterprise

Suppliers

Intervention

Software

Suppliers

Change management

Limitations/ Weaknesses

Automotive / Toyota applies everywhere

Scheduling

Call centre / ‘break – fix’ Dominate

Math

Scheduling

Blueprint approach applied everywhere

Notes

1

2

3

4

5

6

Notes on table: 1. Womack and Jones are authors not consultants or active implementers. Strongly champion Toyota. The ‘House of Lean’ may be one model that is used. Womack and Jones also proposed the ‘Purpose, People, Process’ trilogy. 2. Liker and Convis have written on Lean Leadership. Koenigsaecker is an author and also a CEO who has ‘done it’. Rother, through ‘Kata’, sees learning cycles as the way forward. 3. This is an attempt to capture the Vanguard methodology. John Seddon is a leading figure and author on Service, with emphasis on systems. Recently ‘Ohno and Deming had it right’ but many don't. 4. Goldratt’s Theory of Constraints (TOC) is morphing into Factory Physics. 5. There are several Audit approaches. Kobayashi’s 20 Keys is probably the original. Often attractive to top managers who like a simple score, but a danger is that tick box develops. Shingo prize has emerged as the big one. 6. Several large consultancies use a fairly standardised Lean roll-out procedure, beginning with top level contact.

The Lean Toolbox: A handbook for lean transformation (5th edition, 2016) is available from Amazon.com and Amazon.co.uk.

The Lean Toolbox is also available in the following languages: Swedish: Ny verktygslåda för Lean-Filosofi, transformation, metoder och verktyg, Göteborg: Revere (with J Hillberg) ISBN: 9789163195488

Danish: Lean værktøjskassen, LeanTeam.dk, ISBN: 9788799031641

Chinese: Mechanical Industry Press, ISBN: 9787111531722

Also check out the companion volumes:

The Service Systems Toolbox (2011)

The Lean Games and Simulations Book (2014)