The Techniques and Tools of Lean - Term Paper Example

IMPLEMENTING "LEAN" IN A SERVICE OR NON-MANUFACTURING ENVIRONMENT Introduction The techniques and tools of "Lean" are being used by more and more organizations around the world to improve the quality of their output while simultaneously effecting a reduction in costs. Although the genesis and implementation of these techniques and tools is more biased towards manufacturing concerns, however, they are also used with equal advantages in service sectors. They are easy to understand and follow. Once implemented in true letter and spirit they are applicable to all tiers within an organization and not just the top management. The essence of the concept is rooted in mass production. Although the idea was adopted and implemented most successfully in Toyota, the origin of Lean is a brain-child of Henry Ford who conceived the idea of an assembly line and wrote about it in his book "Today and Tomorrow" published in 1926. (Womack and Jones, 1996). USA was the first country where the concept of "Lean" has been adopted in service or non-manufacturing concerns. (Womack and Jones, 1996). The advantages and benefits are now known and accepted by almost all top managers. However, there is still a bit of a hesitation in implementing "Lean" in service and non-manufacturing organizations. The reason is not that they do not want to implement the change but rather because they are unaware of the process involved. Aim This paper seeks to describe the modalities and implications of implementing "Lean" in service and non-manufacturing organizations with a reference to the concept of Kaizen as a Continuous Improvement (CI) agent. Definition of Lean Simply stated, Lean thinking is about achieving more with less. It is not about 'sweating the assets' but about carefully analyzing how best to achieve a given result with the purpose of utilizing resources to their best advantage. In broad terms Lean is usually defined as elimination of waste and things that do not add any value as defined by the customer. In a service or non-manufacturing environment waste can be in many forms. Some of these are listed below:- (Atkinson, 1996). Time spent waiting e.g. for parts, tools and machines to become available. Time spent transporting equipment and parts needed to complete a repair. Inappropriate processes e.g. duplicate data entry, generating unread reports. Inventory or queue problems e.g. obsolete inventory, hidden inventory stashes. Motion of people and machines; non-standard and unnecessary repair techniques. Defects or errors e.g. incomplete data entry, poor workmanship on repairs. Over-design e.g. excessive repair, such as an engine overhaul when a tune up is adequate. Poor use of space (tools and parts in the aisles, space taken up by non-repairable items). (Atkinson, 1996) With this premise the definition of "Lean" , as developed by National Institute of Standards and Technology Manufacturing Extension Partnership's Lean Network is as follows:- "A systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection." It is also pertinent to note at this stage that "Lean" principles are alternatively known by a number of synonyms e.g. Lean Manufacturing, Lean Production, Toyota Production System, etc. But whatever the name given to the process, this definition holds well. Advantages of Lean in Service Organizations Lean is not just a concept to be implemented at various tiers; it is also a commitment at all levels that can bring about dynamic and far-reaching changes in the very culture of an organization. Its advantages are more pronounced and identifiable in manufacturing concerns but service and non-manufacturing organizations can also reap the same benefits. Some of the advantages of implementing Lean in service environment are as follows:- It can not only improve the standard of services but also increase the competitiveness of the people involved. It can resolve severe organizational problems by uniting the change efforts that may be running concurrently through an organization. It helps in improving the response time and quality of key service areas. It can help achieve improvement in service or product quality, performance and cost. It can transform an organization into a relentless effort for constant improvement. (Henderson and Larco, 1999) Usefulness of Lean in Service Environment Although Lean has a pre-dominant bias towards manufacturing concerns, but it also has tremendous room for bringing about improvements in service organizations. In a service organization, the critical factors in quality and efficiency are flow of information and interaction between people, especially interactions with customers. Transforming the process of these flows and making them lean will yield quality results. Analyzing and modifying human performance in service environments is complex, but Lean provides the tools and methodology required to achieve significant long-term improvements. In 'Creating Culture Change' Phillip Atkinson highlighted over 200 work activities which resulted in wastage in staff time through reworking the same cycle of activities, sometimes several times, resulting in a potential wastage of 40% of labour costs. (Atkinson, 1996). The general goals of any Lean project in service environment will be reducing process cycle times, improving on-time delivery, and reducing costs. By focusing on eliminating non-value added waste in a process, Lean will help a service environment become a customer-centered organization and gain control over process complexity. The airline industry is one example of a contemporary service industry that has applied lean thinking to its work. In recent years, most of the airlines have reduced check-in time by offering customers the ability to print a boarding pass on a home computer, or at kiosks in the terminal. Personnel requirements are reduced by the "do it yourself" opportunity for customers. Banking is another service industry that successfully has applied "do it yourself" devices in the form of automatic teller machines (ATMs). Gasoline stations and grocery stores have reduced staffing through the use of automatic checkout devices that allow the customers to pay for the purchases without human intervention. (Pande and Holpp, 2002). Implementing Lean in Service or Non-Manufacturing Environment In service organizations many of the companies are not able to achieve the desired benefits of Lean or face difficulty in implementing the process. Being unaware of the modalities of Lean is one reason why the efforts of many managers in service sector have failed. Successful practitioners realize that they need professional support to start and monitor the process and to effect the change in the prescribed sequence of actions. The sequence of actions followed most of the times, and the allied challenges, are as follows:- 1. Senior Management Support and Approval. Wherever possible the development strategy needs to be agreed and supported at the most senior level prior to action. It is therefore unwise to begin change programs and attempt lean implementations if senior management cannot or will not give support and help during a period when staff roles may be affected or additional training required and new standards of quality and delivery agreed. Problem Area. Managers and staff do no have enough knowledge or awareness of current Lean Tools and Techniques being used around the World. Without this knowledge they are blind to the obvious benefits that could be realised, as a result the lean journey is never begun. Possible Solution. Hold awareness training days for senior managers and discuss what others have achieved or provide case studies so they become aware of current best practice. 2. Analyzing Existing Processes, Value Adding Capability, Systems and Ways of Working. In lean terms this is called "analyzing existing value adding capability" it is an understanding of the current "As is" situation. Analysis prior to corrective action is always preferred and simply applying more software, more staff, more controls, etc in an attempt to cure a problem using a scattergun approach may not work or may even produce additional bad side effects. Problem Area - Processes are not fully understood and most have never been mapped or recorded. Possible Solution. Training in process analysis techniques, case study exercises, hands on experience (using actual data from the staff's area of responsibility) and discussion of lean terminology to aid understanding. 3. Identifying Customer Needs. Aligning Customer Needs and Process Capability. When analysis of existing processes is complete there should be a greater understanding by all staff of the alignment with customer needs. Some central government agencies have performed this type of activity but they are in a minority. Problem Area. No in-depth process analysis and customer alignment has taken place. Lean techniques that help in theses areas are not known to staff and managers. Possible Solutions. Provide training and guidance for staff and managers in the above Lean areas, gather data from their own organization and allow staff to practice mapping and alignment in training exercises (2 - 3 days). 4. Designing the New System or Process. Listing Possible Savings and Benefits. The improvement areas in the public sector are somewhat different than the private sector. Some of these are reducing the amounts of calendar time that are consumed by tasks, reducing queue and waiting time, reducing overhead costs, eliminating non value adding activity, clarifying processes for staff, reducing staff stress levels by balancing activity and putting staff back in control, improving staff morale by engagement in improvement activities. Problem Area. Lack of knowledge, awareness or training in re-designing processes and organizations. Possible Solution. Train staff in lean techniques and allow them to apply what they have learned in re-engineering the processes with which they are familiar. 5. Consensus for Change, Reaching Agreement from All Stakeholders. Some disruption and re-adjustment is of course part of any change program, some staff will feel threatened or insecure and others may need to slow their enthusiasm to begin implementing a new system. Support in this case means a presentation to staff, frequent meetings, frequent emails to check if any problems require solving, and finally the big question, did we achieve what we said we would' Problem Area. Ensure senior management support is in place. Coach and support all levels of staff during the re-engineering phases. Possible Solutions. If senior support is not present then it's difficult to proceed. If support exists, ensure it is shown and visible to the teams responsible for continuous improvement. 6. Does the New Re-Engineered/Re-Designed System Support Our KPI's' The public sector central government agencies in the UK tend to be more demanding than private sector in aligning re-engineered processes to ensure that key performance indicators are supported. Problem Area. None Possible Solution. None required. 7. Implementing and Implementation Plans. At the stages of actual implementation teams may ask for a coach or mentor to guide them. This helps to ensure the team stays on track during the change project. Problem Area. Teams may require coaching or some support during implementation stages. For example one day's support per ten days of project time and advice via phone or email. Possible Solutions. Coaching, guidance and support on a part time basis. (George,M et al, 2004) Kaizen as a Continuous Improvement Agent Concept. Kaizen is an amalgam of two Japanese words; Kai meaning "change" or "action to correct" and Zen meaning "good". So in the literal sense Kaizen means "to change for the better". As a concept its nearest English translation would be Continuous Improvement. First appearing on the scene in 1950s, the Kaizen revolutionized all fields in Japan. The concept basically owes its genesis to America's War Department's training programs known as "Training Within Industry" (TWI). TWI programs included two items i.e. Job Instruction (standard work) and Job Method (process improvement). Coupled with Shewhart Cycle and other statistical methods these became the basis of the Kaizen revolution. (Gershon,2004) Kaizen is used synonymously with Lean as it also seeks to eliminate waste. However, the implementation of Kaizen is slightly different as it involves taking apart the existing process and then putting it back together in a better way. This better way is then standardized. Principles. As a continuous change agent Kaizen is a daily activity which aims at humanizing the work-place, eliminating overly hard physical and mental work, and learning to spot and eliminate waste. As practiced at Toyota Motors in Japan, ten Kaizen principles were suggested. These are depicted below:- Abolish old, traditional concepts and assumptions. Say NO to the status quo and assume new methods will work. Accept no excuses instead look for ways to make things happen. Do not expect or worry about perfection, but look to continually improve - starting now. If something is wrong, correct it Be economical. Save money through small improvements and spend the saved money on further improvements Empower everyone to think of ways to solve problems. Good ideas flow when the going gets tough Before making decisions, ask why five times to get to the root cause. Get information/opinions from multiple people (ten people rather than one). Improvement has no limits. Never stop trying to improve. (Liker,2004) Implementing Kaizen The cycle of Kaizen activity is as follows: Standardize an operation Measure the standardized operation (find cycle time and amount of in-process inventory) Gauge measurements against requirements Innovate to meet requirements and increase productivity Standardize the new, improved operations Continue cycle ad infinitum. There are two essential elements that make up KAIZEN : Improvement/change for the better; and Ongoing/continuity. A system/culture that lacks either of these is not true KAIZEN. Thus, maintaining existing ways of working (good though they may be) lacks the essential 'improvement' element, though it ensures continuity. Similarly, 'breakthrough' improvement, not backed up by effective ongoing improvement, lacks the element of continuity. KAIZEN should contain both elements. KAIZEN is not consistent with the saying "If it ain't broke, don't fix it". (Pande et al,2002) KAIZEN achieves its effects by working through people. All are expected to be involved. Managers, for example, are expected to spend about half their time on improving what they - and those for whom they are responsible - do. Kaizen is a system that involves every employee - from upper management to the cleaning crew. Everyone is encouraged to come up with small improvement suggestions on a regular basis. This is not a once a year, or monthly activity. It is continuous. At Japanese companies, such as Toyota and Canon, 60 to 70 suggestions per employee, per year are written down, shared and implemented. (Pande et al,2002) KAIZEN recognizes that improvements can be small or large. Many small improvements can make a big change - so KAIZEN works at a detailed level. KAIZEN is thus a (relatively) low cost, simple, team-based approach. Teams are trained in the techniques and tools of KAIZEN. They then brainstorm improvement ideas and vote on them for priority action. They then create an action/implementation plan which is submitted to management for approval. Assuming it is approved, the team then sets about implementation (with professional help if appropriate). The team then meets weekly to review progress, identify/overcome barriers, celebrate successes, and document the resulting changed processes. (Efficiency and Performance Improvement Conference, 2005). Conclusion The transformation to lean requires companies to identify and measure the main sources of waste and define opportunities to reduce it. Lean, like any major transformation, demands a sustained leadership commitment and a thoughtful approach to introducing and rolling out change. Bibliography 1. Lean Thinking: Banish Waste and Create Wealth in Your Corporation JAMES P WOMACK AND DANIEL T JONES, Simon and Schuster, 1996. 2. Creating Culture Change PHILIP ATKINSON, Rushmere Wynne, 1996 3. Lean Transformation: How to change your business into a Lean Enterprise BRUCE HENDERSON AND JORGE LARCO Oaklea, Press 1999 4. Pande P and Holpp L. What is Six Sigma ' McGraw Hill 2002. 5. Sir Peter Gershon. Releasing resources to the front line. Independent review of Public Sector Efficiency, July 2004. Treasury Internet site - www.hm-treasury.gov.uk 6. George M, Rowlands D and Kastle B. What is Lean Six Sigma ' McGraw Hill, 2004. 7. Efficiency and Performance Improvement Conference 2005 - Putting People at the Heart of Public Services. 22nd and 23rd March 2005, Leeds, UK. 8. Pande P, Neuman R and Cavanagh R. The Six Sigma Way. Team Fieldbook. McGraw Hill 2002. 9. Jeffrey K. Liker. The Toyota Way. McGraw Hill. 2004. Read More