What is lean?

Why lean?

Principles of lean

Goals of lean

Types of waste

Steps to achieve lean systems

Lean is a systematic approach of eliminating waste so every step adds value

for the Customer

Value - A capability to provided a productor service to a customer at the right time atan appropriate price, as defined by thecustomer.

• Cost

• Quality

• Delivery

Waste is anything that happens to a product that does not add value from the customer’s perspective

Products being stored, inspected or delayed, products waiting in queues, and defective products do not add value

Quantum Associates, Inc

Traditional thinking dictates that you set your selling

price by calculating your cost and adding on a margin

for profit

In today’s competitive market the customer sets the

price and you don’t have the luxury of adding a profit

margin

The only way to remain profitable and grow your

business is to eliminate waste from your value

stream, thereby reducing costs—cost reduction

principle

8

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Cost

Profit

Price

Price

Traditional Thinking

Cost + profit = price

Cost

Profit

Price Price

Lean Thinking

Price – cost = profit

Quantum Associates, Inc

Quantum Associates, Inc

Determine the price customers are willing to pay,

and subtract your cost to determine what your

profit will be

Eliminating waste is important because

customers not only set the price, but they also

demand price reductions

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• Define value from the customer perspective

• Identify the value stream

• Make the process flow

• Pull from the customer

• Head toward perfection

Specify value :

Specify value from the standpoint of the end customer by product family.

Identify the value stream :

Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.

Create flow :

Make the value-creating steps occur intight sequence so the product will flowsmoothly toward the customer.

Let the customer pull product through the value stream:

Make only what the customer has ordered.

Seek perfection :

As value is specified, value streams areidentified, wasted steps are removed, andflow and pull are introduced, begin theprocess again and continue it until a state ofperfection is reached in which perfect valueis created with no waste.

Improve Quality

Eliminate Waste

Reduce Lead Time

Reduce Total Costs

Quantum Associates, Inc 15

Improve quality:

In order to stay competitive in today’smarketplace, a company must understand itscustomers' wants and needs and designprocesses to meet their expectations andrequirements.

Eliminate waste:

Waste is any activity that consumes time,resources, or space but does not add anyvalue to the product or service.

Reduce time:

Reducing the time it takes to finish anactivity from start to finish is one of themost effective ways to eliminate waste andlower costs.

Reduce total costs:

To minimize cost, a company mustproduce only to customer demand.Overproduction increases a company’sinventory costs due to storage needs.

Over production Waiting (periods of inactivity) Transport (unnecessary movement of

materials) Extra Processing (rework and reprocessing) Inventory (excess inventory not directly

required for current orders) Motion (extra steps taken by employees due

to inefficient layout) Defects (do not conform to specifications or

expectations)

Overproduction : Producing more/soonerthan the Internal or External customerneeds.

Waiting :Long periods of inactivity forpeople, information, machinery ormaterials.

Transportation :Excessive movement ofpeople, information or materials.

In appropriate processing:

Using the wrong set of tools, procedures or systems.

Unnecessary Inventory:

Excessive storage and delay of information or products.

Motion :

people or equipment moving or walkingmore than is required to perform theprocessing.

Defects :

Frequent errors in paper work, productquality problems etc.

The following steps should be implementedin order to create the ideal leanmanufacturing system:

Design a simple manufacturing system

Recognize that there is always room forimprovement

Continuously improve the leanmanufacturing system design

Steps to achieve lean systems