Lean Management, Lean principle and Lean Framework

LEAN MANAGEMENT

In recent years, lean has become a powerful management philosophy that many of the companies have adopted but only few have actually achieved. This is because lean management is an ever ending journey and most of the companies have diverted their resources somewhere else after achieving lean (Trent, 2008). During his research with companies and cases, Trent found out that almost all the previous work in lean is towards manufacturing firms and the operations within manufacturing and explains that the managers should realize that lean practices goes beyond organizations to supply chain (Trent, 2009). Also researchers such as Sandelands (1994) and Avery (2003) asserted the importance of lean supply strategy outside the manufacturing firms.

Lean is defined as ‘the systematic removal of waste by all members of the organization from all areas of the values stream’ where value stream mapping is mapping and analysing the activities in the processes (Womack and Jones, 1994 cited in Näslund, 2008). By introducing a network of key suppliers and being in good relationship with them will create a sense of shared destiny. This will enable organizations to reduce cost, enable information sharing better than before and create a strong bond with suppliers (Hines,1996). Even though various supply systems shows different characteristics, lean management provides a competitive advantage to them (Lamming, 1996).

Figure : Lean – A Framework (Hines et al., 2004)

Lean management has helped organisations improve their performance by increasing the quality, cutting costs, reducing lead times etc (Emiliani, 2006). The lean supply chain recognises all the different kinds of waste in the value stream chain and helps to remove them for the better operation of the organization (Abdulmalek and Rajgopal, 2007). From a survey of 40 organizations that implemented lean done by National Institute of Standards and Technology, it was found that the improvement could be found in operational, administrative and strategic area. Increase in productivity, reduction in lead time and reduction in inventory were found out to be the most common operational improvement (Andersson et al., 2006). Lean organizations broadens the lean concepts to suppliers, partners and customers which helps the whole supply chain eliminate the waste and operate at the maximum value-added potential (NIST, 2010). Phillips (2000) also emphasize that the elimination of waste with lean management is beyond just the organizations including supplier networks and customers relationship.

Emiliani (2003) argue that because of the existing organizational culture in established business, lean management becomes very hard to implement in such kind of organizations. This not only needs change in thinking but also change in day to day activities of the top level management that have immersed themselves in conventional business practices. Dove (1999)asserted in the point that lean leads to inflexibility and less ability to react to new circumstances, so the organizations that practices lean may become liable and vulnerable to changes. Andersson >et al.(2006) explains the same thing by saying that lean needs a stable platform so that the efficiency is maximised. They further emphasize on the point that because of focus on perfection, flexibility is ruled out of lean.

Hines et al. (2004) have criticised lean in four main aspects:

1. coping with variability,
2. lack of contingency,
3. lack of consideration of human aspects and
4. lack of strategic perspective.

Schonberger (2007) argue that “lean management may take in so many complementary concepts and techniques that keeping them going in the right direction is like herding cats” because of the problems that organizations have in sustaining the lean effort (Schonberger, 2007).

Figure : Relation of value,cost and waste (Hines et al., 2004)

Lean management better serves the customer needs with less time, less effort, less space, less investment, less injuries and less everything. The main idea of lean is to create more value for customers using fewer resources or in other words minimizing the waste (Womack, 2008). Womack (2008) identified 3 elements of lean:

1. Purpose,
2. Process and
3. People.

Purpose in any activity must be to provide value for the customers. Process is a sequence of actions design, delivery and support) that must be taken at right order,right way and right time to create value for the customers. There are other secondary processes to fulfil this primary process. The people should decide what is important to sustain the process that delivers the value for the customers.

LEAN PRINCIPLES

Womack and Jones (1996) identified 5 lean principles:

Figure : 5 Lean Principles

• Identify Value: Value is determined by the end customers and this should be identified.
• Map the Value Stream: After the identification of the value, there should map out of how this value is to be delivered while eliminating the steps that do not add value.
• Create Flow: There should be a continuous flow from the beginning to the end of the value stream.
• Establish Pull: Relay information from downstream entity, i.e. customers to upstream operation about the product/service required, the desired quantity,and when and where it is needed.
• Seek Perfection: Poor quality creates waste. Striving for excellence is an essential part of a lean supply chain. Once the previous 4 principles are established, the cycle once again begins to achieve perfection (Parry et al., 2010; Piercy and Rich, 2009 and Trent, 2008).

LEAN FRAMEWORKS The general framework for Lean Management includes:

Waste Elimination: Waste is an activity and/or any other things that do not add any value to the product or services perceived by the end customers (Emiliani, 2006). Implementing lean management can decrease the waste by forty percent (Bhasin and Burcher, 2006). There are eight deadly wastes:

• Over Production: Production of more than what is necessary
• Waiting: Inactivity in a process because one or more activities has not been delivered in time.
• Transport: Unnecessary movement of materials from one operation to another.
• Motion: Unnecessary movement of employees during work.
• Extra Processing: Unnecessary processing, rework that doesn’t add value to the end customers.
• Defects: Products or Services that do not match the specification or customers’ expectation.
This causes rework.
• Inventory: Raw materials, end goods, work in progress.
• Underutilisation of Staff: Underutilisation of ideas and creative inputs. Staffs waiting for others to finish the activity they are doing or their work (Ohno, 1988; Womack and Jones, 1996 and Gray, 2010).

Just In Time (JIT): The purpose of JIT is to respond more quickly to push and pull of organizations supply chain (Mistry, 2005). JIT is a philosophy which is focused on continuous improvement and waste elimination in the process (Näslund, 2008). This is the reason why Näslund (2008) argued lean as an updated version of JIT. JIT demands on-time delivery, quality, minimal inventories and cost reduction (Gray, 2010). Though just in time; cause congestion in the supply chain, leading to delays, pollution and  shortage of workers (Cusumano, 1994).

5 S’s: The simplicity of the 5 S’s is its main strength. They are:

• Sort Out: Organize the things and eliminate what is unnecessary.
• Systematise: Arrange the things in order so that they can are easily accessed whenever needed.
• Scrub: There should be no dirt in the working area. The machines and the working environment should be clean and tidy.
• Standardise: Maintain a pleasant environment.
• Sustain: Standardise the previous 4 S’s and constantly improve them.

Continuous Improvement: The concept of continuous improvement came from early quality guru Juran’s work. Juran Trilogy defined Quality control, quality improvement and quality planning for the improvement in quality (Juran, 1986). Ishikawa developed the basic 7 tools of quality which also resulted in continuous improvement (Ishikawa, 1989). Continuous Improvement is characterized by TQM and JIT approaches.

 

REFERENCES

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Andersson, R., Eriksson, H. and Torstensson, H. (2006) Similarities and differences between TQM, six sigma and lean. The TQM Magazine. 18(3) 282-296.

Avery, S. (2003) Buyers get back to basics. Purchasing. 132(4) 30-31.

Bhasin, S. and Burcher, P. (2006) Lean viewed as a philosophy. Journal of Manufacturing Technology Management. 17(1), 56-72.

Cusumano, M.A. (1994) The limits of lean. Sloan Management Review. 35 (4), 27-32.

Dove, R. (1999) Knowledge management, response ability and the agile enterprise. Journal of Knowledge Management. 3(1), 18-35.

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Piercy, N. and Rich, N. (2009) Lean transformation in the pure service environment: the case of the call service centre. International Journal of Operations & Production Management. 29(1), 54-76.

Sandelands, E. (1994) Great expectations for lean suppliers. International Journal of Physical Distribution & Logistics Management. 24(3), 40-43.

Schonberger, R.J. (2007) Japanese production management: an evolution – with mixed success. Journal of Operations Management. 25, 403-419.

Trent, R. J. (2008) End-To-End Lean Management: A Guide to Complete Supply Chain Improvement. Florida: J. Ross Publishing.

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Womack, J., Jones, D. (1994) From lean production to the lean enterprise. Harvard Business Review. 72(2), 93-103. Cited in Näslund, D. (2008) Lean, six sigma and lean sigma: fads or real process improvement methods? Business Process Management Journal. 14(3), 269-287.

Womack, J. P. and Jones, D. T. (1996) Lean Thinking: Banish Waste and Create Wealth in Your Corporation. London: Simon & Schuster.

Womack, J. P. (2008). Lean Production to Lean Solutions. [online] Available from:http://video.yahoo.com/watch/5474024 [Accessed 25th May, 2010].