1. Value

2. Value stream

3. Flow

4. Pull

5. Perfection

6. Replication

Lean thinking can best start by giving due consideration to value, which ultimately is the customer’s requirement. The value of any product (goods or services) is defined by customer needs and not by any non-value-added activity at the supplier or producer end. That is, the customer is prepared to pay for operations by producers or their suppliers that transform the product in a way that is meaningful to the customer. Customers do not want to pay for waste at the producer end.

Value is determined by the customers who want to buy the right product with the right capabilities at the right price. That is, the product must be “right” every time – from design to manufacture, from delivery to error-free operation. Lean companies work on making their processes right by eliminating waste – something no customer wants to pay for.

While linking the term “value” generally with customer requirements, the following questions can be asked to review the value for the customer as it relates to any specific product issue:

◉ What is the problem that impacts the customer?

◉ What is the problem that the team is going to take action on?

◉ Why is the project so important that the organization should address it?

◉ Why is the project being done?

◉ Do all the stakeholders understand and agree to the problem and its impact on business? Do they all agree that fixing it is critical for the business? Do they all support the project?

◉ Are the roles and responsibilities of the project team members clearly defined?

◉ Are the needs of the customers clearly identified?

◉ What’s in it for the customers? How do they benefit?

◉ What’s in it for the business? How does the business benefit?

◉ Were the key parameters or the most important thing to be fixed identified?

◉ Does everyone describe what will be measured in the same way?

◉ Can the primary metric be manipulated? How does it drive the right behavior?

◉ What can go worse as a result of the project?

◉ Where does the problem occur? Did the team identify it correctly? Did the team work on this particular issue to completion?

◉ What does success look like? How will success be quantified?

Once value is specified by the customers, the next Lean step is to identify the right process – a process that only adds value to the product, in other words, a waste-free process. The value stream for a product has three categories of activities:

1. Process steps that definitely create value: In any manufacturing process, the steps that are actually transforming the fit, form or function of the raw material, and bring it a step closer to the finished product.

2. Process steps that create no value but are necessary, due to current state of the system: In any manufacturing process, activities like inspection, waiting and some transportation steps.

3. Process steps that create no value and can be eliminated: Any activity that does not fall into the above two categories.

While the parts of a process that create no value should be eliminated, any action or activity that is recognized as non-value-added but currently necessary should be targeted for improvement. At this point a detailed process flow diagram should be generated for each product or product category. To ascertain which steps in the process are unnecessary, an intense questioning and re-examining method (Japanese term is kaikeku) is applied to every aspect of the process under consideration.

The review points at this stage are:

◉ Does the team understand how the whole process works?

◉ Did the team manage to complete a detailed process flow diagram at this stage?

◉ Did the team identify the waste in the process?

◉ Did the team follow kaikeku – the radical improvement approach?

◉ Were there any particular processes that did not support the customer need?

◉ Did the team make use of the knowledge and experience within the business to establish this?

◉ What constraints/flow problems exist in the process that are hurting the business?

◉ Can the team quantify any difference in people, shifts and days causing hidden constraints/flow problems?

◉ Does the team know the causes of the constraints/flow problems?

◉ What impact on the business and customers are these constraints/flow problems causing?

◉ When will the team have enough information/data about the issues that could be causing the problem?

◉ Does the information reveal anything new about the problem?

◉ Did the team understand the type of problem that is being faced?

◉ Can the team state what the current performance of the process is?

◉ Is it clear yet what the business entitlement is from the process?

◉ Is there a need to go back and refine or change what was learned in the two value steps?

This Lean step focuses on rapid product flow (RPF). The specific process waste is identified at each stage of process flow and is eliminated. The team involved in Lean will physically walk the process and write down the distance the product travels during its process flow. The non-value-added distances are eliminated by physical layout change, which involves both human and machine. Factory floors are laid out in cells rather than in functional groupings, which reduces the distance the parts travel in the process flow.

It is at this point that the Lean enterprise implements 5S, a tool developed for reducing the slack hidden in manufacturing processes. 5S is the basis for Lean manufacturing and the foundation for a disciplined approach to the clean workplace. The five steps of 5S are (in Japanese and English):

1. Seiri/Sort: Meaning sorting or segregating through the contents of the workplace and removing all unnecessary items.

2. Seiton/Straighten: Meaning putting or arranging the necessary items in their place and providing easy access by clear identification.

3. Seiso/Shine: Meaning cleaning everything, keeping it clean and using cleaning to inspect the workplace and equipment for defects.

4. Seiketsu/Standardize: Meaning creating visual controls and guidelines for keeping the workplace organized, orderly and clean, in other words, maintaining the seiso, or shine.

5. Shitsuke/Sustain: Meaning instituting training and discipline to ensure that everyone follows the 5S standards.

Questions to be asked at this point are:

◉ How is the impact of customer demand on the process being translated or understood?

◉ Did the team physically visit the process to realize the process steps?

◉ Did the team identify the non-value-added distances traveled by parts?

◉ Did the team identify the movements and transportations?

◉ Have the hot spot(s) that are constraining the process been identified?

◉ What steps have been initiated to stabilize the constraints before the main improvement is made?

◉ Has the Lean team done enough to build 5S culture in the organization?

◉ Has the team taken the right steps to close the loop of each 5S step?

The benefits of Lean Steps 1, 2 and 3 allow a company to produce more than before and in a way that value is added at every step in the production process. The fourth Lean step can be directed toward either removing excess capacity (inventory) or increasing the rate of pull.

Lean, which identifies the seven deadly wastes as defects, over-production, transportations, waiting, inventory, motion and processing (or the acronym, DOTWIMP), lists inventory as a source of waste. Hence, producing anything that is not sold immediately and is waiting at any point of time for delivery is waste. A pull system, which on the production side is making a product at the same rate at which it is being sold, also is a waste-eliminating step. On the supply side, a pull system is flowing resources into a production process by replacing only what has been consumed.

The review points here are:

◉ Did the Lean team define the sequence of operation?

◉ Did the team manage to achieve the balance of operation times?

◉ What can be put in place to support the customer supply needs?

◉ How will this be managed through the business?

◉ How will the internal inventory needs be managed?

This Lean step emphasizes that continuous improvement has to be a part of the organization and is always possible. This is the desired state of any change in any environment. The organization should always try to achieve what is the perfect system for that kind of operation and should aim at continuously improving the present system. The word for this in Japanese is Kaizen.

Questions to be asked here are:

◉ Have all stakeholders acknowledged and accepted that the process has been improved?

◉ What process will be put in place to further improve the process?

◉ What risk is there that these causes will come back and disturb the process again?

◉ Did the team document the project in a form that anyone can understand?

◉ Has the team identified the next stage of continuous improvement?

This Lean step is a confirmation of the system implemented and improvements achieved, and determining that these same system procedures, tools and techniques can be deployed anywhere in the operation or in any business process. The main benefit of this step is that any time spent in analysis is reduced.

Now is the time to ask these questions:

◉ How will the team ensure that the business learns from its experience?

◉ Can this process improvement be replicated in other parts of the business?

◉ Is the control set true enough for a similar type of operation?