Lean Management Lesson 1

Lean Management
SECTION 1: THE LEAN MESSAGE

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 Describe why Lean IT plays an essential role in the ability of the enterprise
to grow.
Objectives

to grow.
 Explain what Lean IT is all about and how it relates to relevant frameworks.
Objectives

to grow.
 Describe the origins of Lean IT in a way which is relevant for your change
story.
Objectives

to grow.
story.
 Have a general understanding of the concepts of value and non-value.
Objectives

to grow.
story.
 Describe which principles guide us along our Lean journey.
Objectives

to grow.
story.
 Describe which principles guide us along our Lean journey.
 Get the Lean message across, and how to tailor your own Lean message.
Objectives

Lean is a systematic approach of eliminating waste so every step adds value
for the Customer.
What is Lean?

for the Customer.
What is Lean?
Value - A capability provided to a customer at the right time at an appropriate
price, as defined by the customer.
What is Value?

for the Customer.
What is Lean?
Value - A capability provided to a customer at the right time at an appropriate
price, as defined by the customer.
What is Value?
Waste is any activity that consumes time, resources, or space but does not
add any value to the product or service.
What is Waste?

 Creating more value for customer with fewer resources
Overview of Lean

 Philosophy: To provide perfect value to the customer through a perfect
value creation process that has zero waste
Overview of Lean

 Lean reduces cost, improves quality, and speeds delivery by eliminating
non-value-added activity in a process by identifying and eliminating waste
Overview of Lean

 Lean reduces cost, improves quality, and speeds delivery by eliminating
non-value-added activity in a process by identifying and eliminating waste
 Lean is not a tactic or a cost reduction program, but a way of optimizing
end to end processes
Overview of Lean

Principles of Lean

Four Goals Of Lean
Improve quality:
In order to stay competitive in today’s marketplace, a company must
understand its customers' wants and needs and design processes to
meet their expectations and requirements.

Four Goals Of Lean
Improve quality:
In order to stay competitive in today’s marketplace, a company must
understand its customers' wants and needs and design processes to
meet their expectations and requirements.
Eliminate waste:
Waste is any activity that consumes time, resources, or space but does
not add any value to the product or service.

Four Goals Of Lean
Reduce time:
Reducing the time it takes to finish an activity from start to finish is
one of the most effective ways to eliminate waste and lower costs.

To minimize cost, a company must produce only to customer demand.
Overproduction increases a company’s inventory costs due to storage
needs.
Four Goals Of Lean
Reduce time:
Reducing the time it takes to finish an activity from start to finish is
one of the most effective ways to eliminate waste and lower costs.
Reduce total costs:

 The origin of Lean is a story of car manufacturing.
Where does Lean come from?

 The origin of Lean is a story of car manufacturing.
 Henry Ford lined up fabrication steps in process sequence wherever
possible to fabricate and assemble the perfectly fitting components going
into the vehicle. The problem with Ford’s system was not the flow: he was
able to turn the inventories of the entire company every few days. Rather it
was his inability to provide variety.

 As the people at Toyota looked at this situation in the 1930s, and more
intensely just after World War II, it occurred to them that a series of simple
innovations might make it more possible to provide both continuity in process
flow and a wide variety in product offerings. Their ideas became known as
the Toyota Production System. This system in essence shifted the focus of
the manufacturing engineer from individual machines and their utilization, to
the flow of the product through the total process, strongly tied to customer
demand. Toyota soon discovered that factory workers had far more to
contribute than just muscle power.

 Over the past two decades the continued success of Toyota has
created an enormous demand for greater knowledge about lean
thinking. After “The Machine that changed the world” in 1991, there are
literally hundreds of books and papers available to a growing audience.
As lean thinking continues to spread to every country in the world,
leaders are also adapting the tools and principles beyond
manufacturing, to logistics and distribution, services, retail, healthcare,
construction, maintenance, and even government.

 Lean journey is on the principle “I will believe it when I see it”
Lean Journey

 Lowering the tide and uncovering more reefs that can sink the boat
Lean Journey

 Three stages of Lean journey
Lean Journey

 Three stages of Lean journey
– Lean operations
– Lean enterprise
– Lean network
Lean Journey

 Lean at Ford
 Toyota Production system
 JIT (Just-in-Time)
Roots of Lean

 Henry Ford (at Highland Park, MI USA) in 1913
Lean at Ford

 Car “Model T”
Lean at Ford

 Integration of entire production process
Lean at Ford

 Flow production
Lean at Ford

 Flow production
– Interchangeable parts
– Moving conveyance
– Automated assembly line
– Fabrication steps
– Go/No-Go gauge
Lean at Ford

 Based on Ford’s original thinking
Toyota Production System (TPS)

 Rebuilding Japanese economy after World War II (1930)

 Kiichiro Toyoda, Taiichi Ohno, and others at Toyota

 Series of simple innovations to improve process flow and
provide variety in product offerings

 Focus on improving end to end processes rather than
optimizing individual machines

 Focus on improving end to end processes rather than
optimizing individual machines
 Result: Low cost, high variety, high quality, and very rapid
throughput times to meet customer desires

Just-In-Time (JIT)

Just-In-Time (JIT)
 Introduced by Ford

Just-In-Time (JIT)
 Supply-chain/ production/inventory strategy

Just-In-Time (JIT)
 Demand-pull system

Just-In-Time (JIT)
 Get the right thing at the right time at the right place

Just-In-Time (JIT)
 Relies on signals between processes to keep things moving

Just-In-Time (JIT)
 Requires producers to accurately forecast demand and use
integrated production management tools

Just-In-Time (JIT)
 Requires producers to accurately forecast demand and use
integrated production management tools
 Saves warehouse space, inventory cost and prevents obsolete
inventory, resulting in higher ROI

 “Efficiency” Business Model Fit
 Cash Flow Improvement
 Increased Capacity for Revenue
Lean Successes and Benefits

 Business Model
– Employees
– Customers
– Profits
“Efficiency” Business Model Fit

 Business Model
– Employees
– Customers
– Profits
 Higher Efficiency
– Do More with less
– “Just Enough” in everything
– No more band aid solutions that become future problems

 Business Model
– Employees
– Customers
– Profits
 Higher Efficiency
– Do More with less
– “Just Enough” in everything
– No more band aid solutions that become future problems
 From managing numbers to managing process

 Reduced inventory
 No waiting
 Space reduction
 Cycle time reduction
 Reduced waste
 Reduced defect
Cash Flow Improvement

 Attract and retain customer
Increased Capacity for Revenue

 More with less

 More with less
 Fewer support calls

 More with less
 Fewer support calls
 Lean increases capacity
– Your process can produce more with the same number of people
– Your process can produce the same amount with fewer people

 Process Changes Cause a Rethinking of Process Flow
 Disruptions, Downtime, Design Failures
 Low volume/High Mix
 High Variability—Customization, Demand
Challenges

 Process
– Input
– Processing
– Output
Process Changes Cause a Rethinking of Process Flow

 Process
– Input
– Processing
– Output
 Process changes

 Process
– Input
– Processing
– Output
 Process changes
 Process flow

 Process
– Input
– Processing
– Output
 Process changes
 Process flow
 In-process metrics

 Process
– Input
– Processing
– Output
 Process changes
 Process flow
 In-process metrics
 Training

Disruptions, Downtime, Design Failures
 Process change
 Disruptions
 Downtime
 Design failures

 Toyota production system
 High volume/low mix manufacturing
 Low volume/high Mix Needs
 Example
Low Volume/High Mix

 Customer demands
 Customization
 Made-to-order
 Variability
 Support and maintenance
High Variability – Customization, Demand

 Continuous improvement begins by clearly defining value in the eyes of
customers. All the intermediate steps are eliminated and valuable resource
time is freed up. All that is left are the time, the people and the activities
that add value for the customer.
The creation of value

 The unreasonable work that management imposes on workers and
machines because of poor organization and misalignment(muri). We
always need to confirm the meaning and purpose of our work.

 The unreasonable work that management imposes on workers and
machines because of poor organization and misalignment(muri). We
always need to confirm the meaning and purpose of our work.
 An activity performed is such a way that it leads to fluctuation at the
scheduling or operations level, such as unevenness in quality and
irregularities or inconsistencies in outcome (mura).

 An activity that adds no value to a product or service is waste (muda). If
you’re not adding value, you’re probably just adding cost to the product or
service.

 An activity that adds no value to a product or service is waste (muda). If
you’re not adding value, you’re probably just adding cost to the product or
service.
 Necessary non-value: a step or change made to the product which today
is necessary for future or subsequent steps, for compliance to policies,
but is not noticed by the final customer, also referred to as Value-
Enabling (i.e legal requirements).

Waste andinefficiencies
Muri
Overburden due to poor management planning andMisalignment
resourceallocation
Mura
Fluctuation
Inconsistency
Avoidable variation in process input and output
Failure to replicate product qualityunderidentical
circumstances
Muda
Transportation
Inventory
Motion
Waiting
Overproduction
Overprocessing
Defects
Talent
Environmental
Movement of work product, information, materials
Work in progress,havingmore than strategic levels of
products
Unnecessary physical movement
Stoppingor slowing down for work to arrive
Producing more or sooner than isneeded
Excessiveor unnecessarywork
Reworking to correct mistakes, inspection andscrap
Unusedhuman creativity andpotential
Thecarbon footprint left behind on the planet and its
creatures

 To do work better: better quality of service; easier to use by identifying and
removing the causes of defects and minimizing variation.
Continuous improvement

 To deliver output faster: fast order to cash cycle, early customer feedback
to drive further improvements – closer to the customer.

 To supply services cheaper: for increase of profit, improve competitive
advantage.

advantage.
 To create more meaning in our work: pride of workmanship; motivate, and
retain your great employees.

advantage.
 To leave a healthier environmental footprint: responsibility to society, next
generations, and all life on the planet.

advantage.
 To leave a healthier environmental footprint: responsibility to society, next
generations, and all life on the planet.
 The trade-off decision: in order to maximize our effectiveness, we need to be
aware of the consequences of our balancing act between the five basic
intents

 “If we are not improving, we are falling behind!”
Learning organization

 Therefore we embrace change as desirable. It enables us to pro-actively
meet our challenges.

 Therefore we embrace change as desirable. It enables us to pro-actively
meet our challenges.
 We see the synergy of: performing the work, improving the work,
improving our own capabilities.

The Learning Organization
 Is where people continually expand their capacity to create the results they
truly desire;

truly desire;
 New and expansive patterns of thinking are nurtured;

truly desire;
 new and expansive patterns of thinking are nurtured;
 collective aspiration is set free;

truly desire;
 people are continually learning to see the whole together(10).

truly desire;
 people are continually learning to see the whole together(10).
 Only those organizations that are able to adapt quickly and effectively will
be able to excel in their field or market. (Peter Senge).

The Shingo House offers guiding principles for Operational Excellence
 Create value for the customer
Lean principles to apply within IT

 Create constancy of purpose

 Think systemically (see the whole)

 Focus on process

 Embrace scientific thinking (PDCA, DMAIC)

 Create the flow and pull of value

 Assure quality at the source

 Seek perfection

 Seek perfection
 Lead with humility

 Seek perfection
 Lead with humility
 Respect every individual

Today Toyota offers motivational guidelines to keep their
business practices in shape
 Put the customer first

 Always confirm the purpose of your work

 Take ownership and responsibility

 Visualize the work

 Base judgment on facts

 Think and act persistently

 Pursue speedy action in a timely manner

 Follow each process with sincerity and commitment

 Be thorough in your communication

 Be thorough in your communication
 Involve all stakeholders

 Many inconsistent definitions provide a confused picture of what Lean
actually is. Problems occur on:
What Lean is not?

 The level of abstraction: Lean serves as a philosophy, as a way to improve
systems as well as a toolbox and method.
What Lean is not?

 The level of abstraction: Lean serves as a philosophy, as a way to improve
systems as well as a toolbox and method.
 The objective: Lean provides how we can achieve something. A goal
describes why we want to achieve it. Focus on the means create limitation,
focus on the goal creates flexibility. If Lean is regarded as a method, the use
of the method tends to become a goal in itself.
What Lean is not?

 Lean as the silver bullet: to avoid being trivial, it is important to understand
what your Lean effort is for and what it is not for. Who doesn’t want to
respect every individual, continuously learn and get better, increase value
for customers? If Lean is everything that is good, and everything good is
Lean, what is the alternative? So it is important to understand at which
crossroad a strategic intent is started.
What Lean is not?

 Lean as the silver bullet: to avoid being trivial, it is important to understand
what your Lean effort is for and what it is not for. Who doesn’t want to
respect every individual, continuously learn and get better, increase value
for customers? If Lean is everything that is good, and everything good is
Lean, what is the alternative? So it is important to understand at which
crossroad a strategic intent is started.
 Lean provides a strategy on how to run an operation. It is about discovering
the perfect balance between resource efficiency (utilization of man and
machine) and flow efficiency (creation of value throughout the stream
without interruptions, smooth and in the required pace of customer demand).
What Lean is not?

 Standardized manufacturing, simplified work and the emphasis on
efficient production of output drove significant gains in productivity and
gave birth to the ‘factory worker’.
Industrialization and mass production

 Highly skilled workforce. Most workers progressed through an
apprenticeship to a full set of craft skills.

 Extremely decentralized organizations. Most parts would come from
small independent shops. The entrepreneur coordinated the system, in
close contact with everyone involved, from customers, employers and
self- employed contractors to suppliers.

 Low production volume.

 Slow innovation speed.

 Slow innovation speed.
 Tailored products to the desires of individual buyers; no identical
product.

 Improved business performance all the way
What does Lean IT result in?

 Improved business performance all the way
 To do work better; Creation of value means providing customers with what
they want (the hard product requirements as well as the softer service
requirements), when and where they want it and in the right amounts. This
mindset influences the will to deliver the best service … as well as the will to
deliver the services when and where they are wanted. To deliver output faster
is essential to gather early feedback from customers which serves as an
impulse for further improvement. But there’s nothing Lean about delivering
poor quality faster…

 Elimination of waste and inefficiencies means the cost and effort
throughout the entire value stream is well managed. The continuous
improvement of quality will not only result in better services but also helps
to supply services cheaper.

 The sustainable transformation into a learning organization allows staff to
learn and get better at things, tying the organizational purpose to their own
private values, and making them more successful on a individual level. To
create more meaning in our work and lives.

 The sustainable transformation into a learning organization allows staff to
learn and get better at things, tying the organizational purpose to their own
private values, and making them more successful on a individual level. To
create more meaning in our work and lives.
 To leave a healthier environmental footprint. Extending the complete set of
Lean principles to the domain of IT also implies that an organization realizes it
is not alone in the world and it needs others, like suppliers, to be successful
over time. In this perspective, an organization feels the desire to manifest itself
by making a sustainable contribution to society in general.

 Drive all aspects of value,
To do work better

 Customers are willing to pay for value that includes aspects like
quality, flexible responsiveness, safety and environmental
impact.
To do work better

impact.
 Every aspect of an organization should therefore be focused on
creating value that: Customers are willing to pay for Investors
are willing to invest in Employees are willing to commit their
trust, confidence and careers Communities are willing to support
To do work better

impact.
 Every aspect of an organization should therefore be focused on
creating value that: Customers are willing to pay for
 Investors are willing to invest in Employees are willing to commit
their trust, confidence and careers Communities are willing to
support
 Create the ultimate customer experience to win their loyalty
To do work better

 Abusiness should drive all aspects of value. When your customers see that
you truly value them and care about the service you can provide them,
you'll be able to provide them with their ultimate customer experience and
they'll be customers for life.

 Waste manifests itself to people as confusion and frustration. It is the
process whispering to us or screaming for help. Removing waste frees
up resources such as time which then can be spend on more valuable
activities. In pursuit of the perfect flow of value, we will speed up our
delivery process. The rate in which to produce totally depends on
customer demand; so let them pull the value.
To deliver output faster

The concept of flow
• Shorten lead time
• Removing barriers, allowing
for one-piece-flow
• Makes it faster, easier,
better and cheaper
• Safer, better morale
• Consistent quality, fewer
defects
• Better on time delivery
and flexibility
• Lower costs
• More predictable results
The concept of pull
• Matches rate of production to
level of demand
• Removes opportunity for
overproduction
• Regulates work activity
• Work performed just-in-time
• Triggered by customer demand
(Kanban)
• Establishes clear priorities
• Kanban increases visibility and
accountability

 Deming taught that business performance increases by reducing
waste, defects, and staff turnover while increasing customer
loyalty. The key is to practice continual improvement and think of
manufacturing as a system, not as bits and pieces.
To supply services cheaper

 Deming taught that business performance increases by reducing
waste, defects, and staff turnover while increasing customer
loyalty. The key is to practice continual improvement and think of
manufacturing as a system, not as bits and pieces.
 “When people and organizations focus primarily on quality, as the
ratio between the results of work efforts and total costs, quality tends
to increase and costs fall over time. However, when people and
organizations focus primarily on costs, costs tend to rise and quality
declines over time”
To supply services cheaper

Improve quality, and cost will decrease
Organizations must commit to stopping and fixing processes that are creating
defects, rather than keeping products or services moving while planning to fix
the issue later. Problems need to become the evidence used to detect root
causes and prevent their recurrence. Evidence is fresh, workers are engaged
and it prevents the release of additional defects until the root cause is
corrected.

Improve quality, and cost will decrease
Organizations must commit to stopping and fixing processes that are creating
defects, rather than keeping products or services moving while planning to fix
the issue later. Problems need to become the evidence used to detect root
causes and prevent their recurrence. Evidence is fresh, workers are engaged
and it prevents the release of additional defects until the root cause is
corrected.
Prevent time consuming corrections, clarifications, completions, interruptions
and delay which increase costs and aggravation by applying standardized
work, training and error proofing.

Utilize resources wisely
Expertise should be available in teams. Sometimes the cost for attaining and
retaining expertise does not match the way external providers nowadays offer
solutions to the capacity and capability decision, so off-shoring or outsourcing
might be considered as an alternative.

Utilize resources wisely
Expertise should be available in teams. Sometimes the cost for attaining and
retaining expertise does not match the way external providers nowadays offer
solutions to the capacity and capability decision, so off-shoring or outsourcing
might be considered as an alternative.
The speed of delivery, its quality and the necessity of human intervention can be
highly influenced by the amount of automation a process allows. Nowadays test
automation, automated deployment and workflow coordination contribute
largely to the decrease in cost for IT development

Thoughts on quality:
Since its beginnings at the turn of the twentieth century, business process
improvement has focused on solving problems to improve efficiency,
productivity, and quality. Especially World War II necessitated a massive
shift in industrial productivity. The ideas of the ‘quality movement’
included focus on customer, respect for workers, and team problem
solving.
How does Lean IT relate to others?

Thoughts on quality:
Since its beginnings at the turn of the twentieth century, business process
improvement has focused on solving problems to improve efficiency,
productivity, and quality. Especially World War II necessitated a massive
shift in industrial productivity. The ideas of the ‘quality movement’
included focus on customer, respect for workers, and team problem
solving.
During that time, Toyota shaped its concepts on just-in-time delivery and
continuous improvement, what became known as TPS. More thoughts
on quality were added with developed concepts such as Total Quality
Management, Six Sigma, and Goldratt’s theory of constraints.
How does Lean IT relate to others?

 In 2001 the world witnessed the birth of The Manifesto for Agile Software
Development.

Development.
 Up untill then, IT-organizations embraced the concept of ITIL which was
created in the 1980's by the UK governments CCTA (Central Computer
and Telecommunications Agency, todays OCG) with the objective of
ensuring better use of IT services and resources.

Development.
 Early this century, the concepts of Lean and Six Sigma were combined
into a powerful cocktail for fast and rigorous improvement of business
performance.

Development.
 Early this century, the concepts of Lean and Six Sigma were combined
into a powerful cocktail for fast and rigorous improvement of business
performance.
But there are many more Institutions, and movements that offer frameworks
and models for increased IT business performance and product quality.

 Agile refers to a set of values and principles put forth in the Agile
Manifesto. The Manifesto was a reaction against heavyweight
methodologies such as waterfall, that were popular, yet crippling
software projects from actually doing what they needed to do – create
software that helped the customer! In order to achieve agility teams
commonly use:
Lean IT and Agile

 Agile refers to a set of values and principles put forth in the Agile
Manifesto. The Manifesto was a reaction against heavyweight
methodologies such as waterfall, that were popular, yet crippling
software projects from actually doing what they needed to do – create
software that helped the customer! In order to achieve agility teams
commonly use:
 Scrum for “Management Practices”; how to best organize and run a
project
Lean IT and Agile

 Extreme Programming (XP) for Technical Practices and new practices
becoming popular such as Continuous Deployment and Testing in
Production
Lean IT and Agile

 Extreme Programming (XP) for Technical Practices and new practices
becoming popular such as Continuous Deployment and Testing in
Production
 Agile momentum: The number of organizations that have implemented
or have planned the implementation of agile practices is rapidly
increasing for reasons of: the ability to manage changing priorities,
productivity , and project visibility.
Lean IT and Agile

Lean Software Development as introduced by Mary and Tom Poppendieck
 Lean software development practices, or what the Poppendiecks call "tools" are
expressed slightly differently from their equivalents in agile software
development, but there are parallels.

 Lean originates from manufacturing, Agile from software development. Both have
a lot in common and are continuously evolving. Lean urges us to ‘see the whole’ ,
Agile is applicable within just one team. Kanban is a Lean concept and widely
applied within Scrum teams.

 Lean originates from manufacturing, Agile from software development. Both have
a lot in common and are continuously evolving. Lean urges us to ‘see the whole’ ,
Agile is applicable within just one team. Kanban is a Lean concept and widely
applied within Scrum teams.
 Examples of such practices include: identifying waste, VSM, set-based
development keeping options open), pull systems, queuing theory, motivation,
measurements. Some tools map quite easily to agile methods: Lean work cells
are expressed in agile methods as cross-functional teams.

 Lean IT and ITIL share principles on standardized work, its outcome and
improvements
Lean IT and ITIL

improvements
The Information Technology Infrastructure Library provides principles for
the complete service life cycle:
Lean IT and ITIL

improvements
 Service Strategy: developing a clear vision and plan for service portfolio
design, demand management and IT financial management;
Lean IT and ITIL

improvements
 Service Design: developing appropriate and innovative IT services,
including their architecture, processes, policy and documents with the goal
of satisfying current and future business requirements;
Lean IT and ITIL

improvements
 Service Design: developing appropriate and innovative IT services,
including their architecture, processes, policy and documents with the goal
of satisfying current and future business requirements;
 Service Transition: deploying new services, managing service changes
and the knowledge related to those services;
Lean IT and ITIL

 Service Operation: delivering services to clients at the agreed level of
service, while managing the applications and underlying technology to
support their delivery;
Lean IT and ITIL

 Continual Service Improvement: sustaining and improving value to the
customer, collaborating on design improvements and service modifications.
The CSI library is based on PDCA thinking.

 Lean IT and ITIL, both non-prescriptive

 ITIL is non-prescriptive and expects organizations to engage ITSM
processes with their existing way of working.

 Even though Lean IT, Agile Software Development as wel as DevOps and
Continuous Delivery practices evolved independently, ITIL seems highly
supportive to them as there is a great level of shared objectives. ITIL might
serve as a ‘future state’ for process improvement.

 Even though Lean IT, Agile Software Development as wel as DevOps and
Continuous Delivery practices evolved independently, ITIL seems highly
supportive to them as there is a great level of shared objectives. ITIL might
serve as a ‘future state’ for process improvement.
ITIL implementation can be a series of wisely selected improvement initiatives,
each paying its own way through the benefits delivered and collectively
contributing to fleshing out the over-arching ITIL process architecture.

 Six Sigma: the disciplined, data-driven approach for eliminating variation
Developed at Motorola in 1986 and made famous at General Electric in 1995,
Six Sigma today is widely used in many sectors of industry.
Lean Six Sigma

 Six Sigma: the disciplined, data-driven approach for eliminating variation
Developed at Motorola in 1986 and made famous at General Electric in 1995,
Six Sigma today is widely used in many sectors of industry.
Six Sigma improvement projects provide businesses with the tools to improve
the capability of their business processes. This increase in performance and
decrease in process variation leads to defect reduction and vast improvement in
profits, employee morale and quality of product.
Lean Six Sigma

Lean IT primarily focuses on establishing flow of value
 Lean IT focuses primarily on creating flow by eliminating waste.; a
simple ‘do it now’ mentality.

 The approach challenges everything and accepts nothing as
unchangeable. And the Lean filosophy teaches us about ‘continuous
improvement’ and ‘respect for people’, which is less emphasized withing
Six Sigma methodology.

 Lean Six Sigma ties speed to operational excellence; delighting
customers with a flow of quality value and delivered fast. Lean practices
promote speed and flexibility by implementing frequent learning cycles
and delayed commitment.

 Lean Six Sigma ties speed to operational excellence; delighting
customers with a flow of quality value and delivered fast. Lean practices
promote speed and flexibility by implementing frequent learning cycles
and delayed commitment.
 That promotes change tolerance and allows decisions to be delayed until
the last responsible moment, exploring multiple options (e.g. set based
design).

 Since the vast majority of improvement opportunities are found in
wasteful business processes, focusing on removing waste is the best
place to begin. Lean quickly creates early wins as it addresses the low
hanging fruit, preparing employees for more challenging projects that
identify high-value problems which deserve rigorous attention and may
well be more suited for a Six Sigma approach.

Frameworks, models, standards and quality systems offer guidelines for
demonstrating compliance, good practices, a common language and
measurements for improvement. But…“If you think of the standard as the
best you can do, it’s all over. The standard is only a baseline for doing
further Kaizen.” (Ohno)
Lean and others

Frameworks often incorporate the principles of Lean and Operational
Excellence

Excellence
COBIT:
Control Objectives for Information and related Technology offers an overall IT
management framework. It is a supporting toolset that allows managers to bridge
the gap between control requirements, technical issues and business risks.

Excellence
COBIT:
Control Objectives for Information and related Technology offers an overall IT
management framework. It is a supporting toolset that allows managers to bridge
the gap between control requirements, technical issues and business risks.
CMMi:
Capability Maturity Model Integration offers a standard for measuring the maturity
of any process.

Excellence
ISO:
The International Standards Organization, in conjunction with the International
Electro technical Commission, provides standards. Organizations can be audited
against ISO standards and consequently certified.

Excellence
ISO:
The International Standards Organization, in conjunction with the International
Electro technical Commission, provides standards. Organizations can be audited
against ISO standards and consequently certified.
IEEE:
IEEE is the world’s largest professional association dedicated to advancing
technological innovation and excellence for the benefit of humanity. IEEE is a
leading developer of international standards that underpin many of today's
telecommunications, information technology, and power generation products and
services.

Excellence
TOGAF:
TOGAF is a detailed method and set of supporting resources for developing
an Enterprise Architecture. It is a proven enterprise architecture methodology
and framework used by the world's leading organizations to improve business
efficiency.

How to get your Lean message across?
Communication is our vehicle and we need to constantly improve it and
shape our skills.

shape our skills.
 Structuring your thoughts is the first attempt to undertake when in the
business of convincing or persuading others to change their behavior.
Why do they need my intervention? MECEoffers a way to help us get
organized.

shape our skills.
 Structuring your thoughts is the first attempt to undertake when in the
business of convincing or persuading others to change their behavior.
Why do they need my intervention? MECEoffers a way to help us get
organized.
 Excessive information, lists with data, lack of logic …,there are many
ways to completely lose your audience and your credibility asa
professional. Barbara Minto’s Pyramid Principle helps us to write and
present our message in the way the audience wants to hear it, without
any waste.

 The new hype? Or just one of the oldest way of sharing information?
Story telling techniques are becoming increasingly popular nowadays.
Theyhave something to offer for the Lean coach that wants to get the
message across, the kamishibai way.

 The new hype? Or just one of the oldest way of sharing information?
Story telling techniques are becoming increasingly popular nowadays.
Theyhave something to offer for the Lean coach that wants to get the
message across, the kamishibai way.
But what if it all comes down to that small window of opportunity, and the
single few minutes we sometimes have to pitch our message? Better make it
worthwhile and let it be an effective elevator pitch.

Structuring your thoughts with MECE
MECE applies to structuring your questioning. It stands for Mutually Exclusive and
Collectively Exhaustive (MECE).
An approach can take many forms, but the most common is an issue tree. It looks
like the following:

Applying the Minto Pyramid principle
MECE applies to structuring your questioning. It stands for Mutually Exclusive and
Collectively Exhaustive.

The pyramid principle magically forces you to present in the way the
audience needs it.

audience needs it.
Situation
This is what the audience already knows. The situation reminds the audience
where we are now or where they want to be. It helps establish relevance. By the
time your audience wonders…”why are you telling me something I already
now…”, it is time to introduce the next step.

audience needs it.
Situation
Complication
Something is apparently blocking us; it is unsatisfactory to be in the current
situation. Something has impact on where we are now or where we want to be. It
is the problem we face and the audience is concerned about possible loss and
risks.

audience needs it.
Situation
Complication
Something is apparently blocking us; it is unsatisfactory to be in the current
situation. Something has impact on where we are now or where we want to be. It
is the problem we face and the audience is concerned about possible loss and
risks.
Answer to the key question
Then give the answer to the underlying key question. It is the resolution to the
complication. Explain how you solve the problem. Focus on benefits, not products
and services.

Constructing a professional storyline
Story telling is a powerful tool since people are moved by emotion
People use stories to share information People use stories to remember
a lesson learned

a lesson learned
 In business we use stories to deal with conflict, to face challenges, and to
shape our reasoning
 It provides us with a sense of meaning and belonging
 It helps us tying our personal beliefs and convictions to higher values (it
addresses the ‘why’ of things)

a lesson learned
 In business we use stories to deal with conflict, to face challenges, and to
shape our reasoning
 It provides us with a sense of meaning and belonging
 It helps us tying our personal beliefs and convictions to higher values (it
addresses the ‘why’ of things)
It helps us to understand change and deal with the personal obstacles we feel to
embrace the proposed change Sometimes a story is a trick for sneaking a message
into the fortified citadel of the human mind (marketing commercials, political
propaganda).

Lean tools
 waste elimination
 standardized work
 poka yoke
 5s visual workplace
 just in time
 continuous improvement
 material management
 work in process

POKA-YOKE
 POKA-YOKE- means “Mistake proofing”.

POKA-YOKE
 And it also provides visual or other signals to indicate characteristic
state and referred as error proofing .

POKA-YOKE
 And it also provides visual or other signals to indicate characteristic
state and referred as error proofing .
 It is a Japanese word .

 5s visual work place provide a clean environment.
5s visual work place

 It is well organized and efficient .

 It is well organized and efficient .
 It provides the organization for preparing a rapid work
force .

 It can lead to huge improvements in quality and efficiency.
Just In Time

 This method was adopted by Japanese manufacturing company.
Just In Time

 This method was adopted by Japanese manufacturing company.
 JIT means making what the market wants, when it want it.
Just In Time

 Continuous improvement ,in regards to quality and performance .

 And it also improves customers satisfaction through
continuous and incremental approach.

 And it also improves customers satisfaction through
continuous and incremental approach.
 And there by removing unnecessary activities and variation.

 It aims tominimize the work.
Work in progress

 It needs to store the inventory .
Work in progress

 It needs to store the inventory .
 It take time to look above and below work areas for needed storage .
Work in progress

 It is a branch of logistics and deals with tangible components of supply
chain.
Material Management

chain.
 It can consolidate and efficiently handle core service
Material Management

chain.
 It can consolidate and efficiently handle core service
 The parts and materials used in supply chain meets the minimum
requirements by performing quality assurance.
Material Management

 Lean Thinking diagnostic tool that allows you to:
 Visualize work
 “See the waste” (barriers to flow)
 Focus on improvements
Value Stream Mapping

 Lean Thinking diagnostic tool that allows you to:
 Visualize work
 “See the waste” (barriers to flow)
 Focus on improvements
 Value Stream = steps (value added and non-value added) that
are required to complete a service from beginning to end
Value Stream Mapping

Value added activities
 The customer is willing to pay money for the process
 Work that changes the market form, fit or function
Value Added vs. Non-Value Added

Value added activities
 The customer is willing to pay money for the process
 Work that changes the market form, fit or function
Non-value added activities
 Should be eliminated, simplified, reduced, or integrated wheneverpossible
 Two types of non-value addedactivities:
 Required for business
 Not required for business
Value Added vs. Non-Value Added

Thekey takeaways for this chapter
 Lean is relevant because it offers us principles for an operations strategy and
guidelines for operational excellence that support us in delivering value
for customers and in streamlining our processes to do so. This way of
operating affects our paradigms on how managers and employees in
organizations engage in problem solving activities, daily operationsand
knowledge sharing practices.
Summary

Thekey takeaways for this chapter
 Lean is relevant because it offers us principles for an operations strategy and
guidelines for operational excellence that support us in delivering value
for customers and in streamlining our processes to do so. This way of
operating affects our paradigms on how managers and employees in
organizations engage in problem solving activities, daily operationsand
knowledge sharing practices.
 Eventhough Lean asa philosophy, a method and a set of tools and
techniques has come along way, from car manufacturing to the service
industry, it has not lost its relevancy asit is still evolving, just like many other
frameworks and (IT) management practices, offering greatconcepts and
lessons learned that help us improve businessperformance.
Summary

 Most importantly, Leanoffers us ways to deliver improved business outcomes:
better products, cheaper and faster produced, in a way that better matches
what people want out of their working lives, in a way that is more beneficial to
our societies and our planet.
Summary

 To engage people in Lean, we support our efforts with a set of fundamental
communication techniques for the written and spoken word, knowing that
practice leads to excellence.
Summary
 Most importantly, Leanoffers us ways to deliver improved business outcomes:
better products, cheaper and faster produced, in a way that better matches
what people want out of their working lives, in a way that is more beneficial to
our societies and our planet.

The key takeaways for this chapter
 Forecasts are always wrong! To buffer mistakes in forecasting
companies carry a lot of inventory in their warehouses and in their
production pipelines, tying up a lot of capital. If it would be possible to
be independent from forecasts just by reacting fast on actual demand,
inventory would become obsolete. One of the first successful build-to-
order companies was Dell Computers,
Case study Dell
The concept of pull by Dell

 which gained market share by building customized computers using
the Internet as an order fulfillment vehicle. The core strategy of Build-
To-Order is to produce each good based on the likes and
requirements of each customer individually. This means for production
and supply chain, that there is no action until a customer order comes
in and triggers the production process for one specific product
assigned to the customer. The main reason of adopting Build-To-
Order strategies is reduction of inventory. Build-To-Order requires fast
and streamlined operations among supply chains and should
therefore increase operational efficiency, which should decrease
operating costs and increase operating income
Case study Dell

 Dell holds down its inventory to only a five-day supply while shipping 95
percent of customer orders within eight hours. In an industry where materials
costs are dropping and where technologies are rapidly becoming obsolete,
this strategy gives Dell a key competitive advantage as a low-cost producer.

 Dell can reap the benefits of lower material costs almost immediately and
reflect that benefit in its consumer product prices. In addition, it can minimize
any excess or obsolete inventory by responding immediately to softening
demand. Most crucial is the flow of information within the company and
among supply chain partners, since in a Build-To-Order company the
customer order triggers the whole operational process.

 Dell can reap the benefits of lower material costs almost immediately and
reflect that benefit in its consumer product prices. In addition, it can minimize
any excess or obsolete inventory by responding immediately to softening
demand. Most crucial is the flow of information within the company and
among supply chain partners, since in a Build-To-Order company the
customer order triggers the whole operational process.
 The most difficult part adopting a Build-To-Order operation is to reduce order
lead time, since customers of mass products usually do not want to wait long
for their order to be delivered, and to control and manage complexity and
cost as a result of logistic choices.

Shigeo Shingo recognized three types of poka-yoke (mistake-
proofing) for detecting and preventing errors in a mass production
system:
Lean vocabulary
Poka Yoke

system:
1. The contact method identifies product defects by testing the
product's shape, size, color, or other physical attributes.
Lean vocabulary
Poka Yoke

system:
2. The fixed-value (or constant number) method alerts the
operator if a certain number of movements are not made.
Lean vocabulary
Poka Yoke

system:
2. The fixed-value (or constant number) method alerts the
operator if a certain number of movements are not made.
3. The motion-step (or sequence) method determines whether the
prescribed steps of the process have been followed.
Lean vocabulary
Poka Yoke

Jidoka refers to "intelligent automation" or "automation with a human touch.
At Toyota this usually means that if an abnormal situation arises the
machine stops
and the worker will stop the production line. Automation prevents the
production of defective products, eliminates overproduction and focuses
attention on understanding the problem and ensuring that it never recurs.
Detect the issue, stop the line, fix the issue, find the root cause and solve it
permanently
Lean vocabulary
Jidoka

A signaling system (manual pull cord or automated) in the production line
to notify there is a problem and possibly stop the line is what we refer to
as Andon.
Lean vocabulary
Andon

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