• Value added • An activity is value added if and only if three

conditions are met 1. The customer must be willing to pay for the

activity 2. The activity must change the product, making

it closer to the end product that the customer wants and will pay

3. The activity must be done right the first time.

• A value added activity is one that either (1) directly adds value to the final product or

(2) directly satisfies the customer

• Just-in-Time rests on two pillars:• • Value Adding Manufacturing/ lean manufacturing • • Kaizen/continious improvement • Value Adding Manufacturing (VAM): a management philosophy of

continual improvement, through the identification and the progressive elimination of all wastes (MUDA in Japanese) in manufacturing related activities, i.e. non-value adding activities. A value adding activity is:

• • An activity that transforms the product (transformation, processing)• • An activity or a feature of the product that the client is willing to pay

for• The technical definition of Lean manufacturing is “A systematic

approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.”

• Non-value-added activities are activities that do NOT change the form, fit, or function of the part and activities the customer does not want to pay for.

• Value-added activities are activities that change the form, fit, or function of the part and the customer is willing to pay for them.

• LEAN Manufacturing is applicable to companies ranging from the small job shop to large manufacturing enterprises. It teaches a systematic approach to eliminating wastes and creating flow throughout the enterprise

• Lean manufacturing or lean production, which is often known simply as "Lean", is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. Basically, lean is centered around creating more value with less work.

• The four goals of Lean manufacturing systems are to:• Improve quality: 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.

• 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: To minimize cost, a company must produce only to customer demand. Overproduction increases a company’s inventory costs because of storage needs.

• Eliminate waste: Waste is any activity that consumes time, resources, or space but does not add any value to the product or service. There are seven types of waste:

• • 1). Overproduction (occurs when production should have stopped)• 2). Waiting (periods of inactivity)• 3). Transport (unnecessary movement of materials)• 4). Extra Processing (rework and reprocessing)• 5). Inventory (excess inventory not directly required for current orders)• 6). Motion (extra steps taken by employees because of inefficient

layout)• 7). Defects (do not conform to specifications or expectations)

• Steps to achieve lean systems• The following steps should be implemented to create the ideal lean manufacturing

system:• • 1. Design a simple manufacturing system• 2. Recognize that there is always room for improvement• 3. Continuously improve the lean manufacturing system design• • Design a simple manufacturing system• A fundamental principle of lean manufacturing is demand-based flow manufacturing. In

this type of production setting, inventory is only pulled through each production center when it is needed to meet a customer’s order. The benefits of this goal include:

• Decreased cycle time• Less inventory• Increased productivity• Increased capital equipment utilization

• There is always room for improvement• The core of lean is founded on the concept of continuous product and process

improvement and the elimination of non-value added activities. “The value adding activities are simply only those things the customer is willing to pay for, everything else is waste, and should be eliminated, simplified, reduced, or integrated”. Improving the flow of material through new ideal system layouts at the customer's required rate would reduce waste in material movement and inventory.

• • Continuously improve• A continuous improvement mindset is essential to reach a company's goals.

The term "continuous improvement" means incremental improvement of products, processes, or services over time, with the goal of reducing waste to improve workplace functionality, customer service, or product performance.

• but is not restricted solely to manufacturing activities and instead can be easily applied to the whole organisation’s administrative functions as well as to the service sector too. Lean can be and often is extended beyond the organisation’s boundary to encompass the supply chain.

• The Five Simple Principles for Lean Manufacturing• 1. Identify and understand what creates value for the customer • • By accepting that only a fraction of the total time and effort

expended in the organisation actually adds value for the customer; understanding what the customer wants is the first step towards identifying all the non-value added activities or waste within the organisation.

• 2. Identify, understand and map all the process steps required to fulfil the customer

• • By documenting the entire set of activities across all

parts of the organisation involved in delivering products or services to the customer allows for an understanding how value is delivered to the customer in the current state makes it possible to identify the wasteful activities that can then be targeted for elimination.

• 3. Make the value-added actions within processes flow• • Flow is about creating value for the customer with the minimum number of

process steps with the minimum number of delays between those process steps and the minimum number diversions along the way. The value stream is used to identify wasteful activities to be eliminated; flow concerns the rethinking or reorganisation of the remaining activities to further eliminate waste.

• 4. Only make what the customer wants or Pull• • If one objective for creating flow within processes is to minimize their throughput

time. A clear second is to ensure that processes are only initiated when customer demand requires it. Essentially, this may mean only making products or delivering services at the point the customer demands; just-in-time. As such as many process steps in the value stream should be triggered when there is a firm customer requirement.

• 5. Pursue Perfection through Continuous Improvement• • Creating flow and pull begins with often radical changes to

individual process steps, but the gains delivered by Lean principles really become significant as they are applied with increasing scrutiny. As this happens more and more layers of waste become visible and the cycle continues towards a theoretical end point of perfection; where every asset and every action adds value for the customer. Through continuous improvement the organisation should strive for incremental improvements in the value stream every single day. Go here for more information on Continuous Improvement

• In applying the five principles of Lean your organization will encourage a culture of continuous improvement; it will become “the way things are done” instead of “that’s the way we've always done it”. You will be ensuring that every asset and activity are driving towards the overall organisational strategy through constant review of processes and the targeted elimination of waste to ensure that they constantly and consistently deliver value to the customer.

• But what does that mean?• Lean allows the organisation to maintain high levels of customer

service whilst being able to grow and flex with a changing environment and it does this through implementing sustainable change.

• Consider the following definitions for each of the key words: • • Value: that which the customer is willing to pay for. For

instance, in manufacturing this will typically be the processes that convert raw materials into products; while in administrative functions it may concern the unnecessary paperwork.

• • Value Stream: the sequence of processes that deliver value

to the customer. The complete value stream flows through the complete supply chain.

• • Flow: movement between value adding processes without

delay or interruption. • • Pull: activating a process when the customer wants to

receive, not when the supplier wants to provide. • What are the Benefits of Lean? • • Lean essentially aims to compress time required to deliver

value to the customer. •

• Typically, if you quarter lead-times, you will double productivity and reduce costs by 20%.

• • This is known as the ¼:2:20 rule. Typical results are as

follows: • Halving of lead-times; doubling of stock turnover• 30% to 50% reduction in floor space requirements • 20% to 40% increase in Overall Equipment Effectiveness

(OEE) • 20% to 25% labour productivity gains • Reduction in administration and co-ordination roles

• Kaizen: Kai (to change); Zen (for the better). A Kaizen is an approach consisting of creating a multi-task group

• of persons (including workers) to improve an existing process by small, quick and inexpensive changes,

• without major investment. Since the workers are involved, they are not bent on returning to the production floor

• with the intention of proving that the consultant or management is wrong.

Continuous Improvement

Represents continual improvement of all processes

Involves all operations and work centers including suppliers and customersPeople, Equipment, Materials,

Procedures

• Continuous Improvement• Definition• Continuous -- 1 : marked by uninterrupted

extension in space, time, or sequence• Improvement -- 1 : the act or process of Improving a : the state of being improved;

especially :enhanced value or excellence b : an instance of such improvement : something

that enhances value or excellence

• Continuous improvement is a management philosophy based on employees’ suggestions. It was developed in the United States at the end of the nineteenth century.

• Nevertheless, some of the most important improvements took place when this idea or philosophy arrived in Japan.

• Japan was already using tools such as quality circles, so when Japanese managers combined these two ideas, kaizen was born.

• Continuous Improvement is often referred to by the Japanese word ‘Kaizen’

• Kaizen is the Japanese term for an organizations commitment to continuous improvement.

• Continuous Improvement (CI):continuous incremental improvements in manufacturing and other processes.

• The Basic Principles of KaizenThe principles of Kaizen that must be understand are:1. People are the most important asset. Teamwork

provides results and gives everyone a feeling of accomplishment. A dozen heads are better than one.

2. Everyone must be open to change and improvements. Ideas from workers, management, suppliers, and customers can lead to new, better and easier ways of doing things.

3. Gradual changes are easier to accept than complete overhauls and employees are more likely to accept gradual change. Small changes will demonstrate how a tiny improvement can provide real results.

4. Old ways of doing things may be comfortable, but not very efficient. Everyone in a company has to accept Change is Good and necessary for company survival.

5. Making excuses is unacceptable if it is We have always done it this way and don’t see why we have to change now. Keeping the old ways may result in a company not being able to survive the competition.

6. If the job is right the first time, waste will be reduced. Waste accounts for as much as 35% or higher of manufactured product. By eliminating waste, profits increase.

7. Correct process errors immediately or they become larger. Equipment breakdowns and failures are a result of letting a minor problem become a major headache.

• Kaizen’s Event Purpose• The purpose for holding a Kaizen event is

basically to identify waste in a manufacturing process and to eliminate it, thereby improving production.

• A Kaizen event is Team Oriented, as it gathers the managers, operators, and owners of a process in a specific place to analyze, and map out the existing methods of the operation.

It is also a forum for developing, discussing, and allowing changes to be made to improve the process. Usually there are four stages that a Kaizen Team undertakes.

Step One: Analyze and map the current processes of a specific area of the plant

Step Two: Identify the problems and the opportunities for improvement.

Step Three: Implement changes to the process that allow for improved workflow.

Step Four: Evaluate the changes made and follow up, with adjustments as required.

• Kaizen’s Key Personnel• The Team Leader who is respected by both

the workers and the company’s managers. The ideal leader will have some experience with Kaizen principles and events. The Team Coordinator’s role is to ensure that all of the components of the event are well planned, scheduled, implemented and reviewed. The coordinator acts as the events facilitator and guide, to help team members.

• Continuous Improvement starts with management and under their leadership works down through the organization.

• The underlying theme is that everyone is responsible and has a part to play in making improvements.

• All employees must work together to identify the steps needed to improve working practices.

• Planning meetings help teams to focus on satisfying customer needs. Visual management techniques, such as flow charts and wall charts make clear what resources are necessary and who is responsible for each part in the process.

• Any deviation from the standard value of a variable (quality and• production rate) presents a problem. It is necessary to know

what thevariable objective is (desired standard) and what the starting situation

• (present situation) is in order to propose a realistic objective. There are

• three main factors that production managers fear most: (1) poor quality, (2) an increase in production cost, and (3) an increase in lead time.

• These three factors are signs of poor production management.

Figure 1.2. Continuous change can offset the expense and time required for radical changes.

• The next key group is Upper Management whose duty is to choose the Event Coordinator and to support that person with whatever resources may be required.

• After the Event Once the event has been completed, it is the team leader’s responsibility to put the hard copy of the final presentation together and to circulate it to team members, management, and anyone else who requires a copy.

• • The follow-up to the event is also the team leader’s responsibility. He or she should

• organize a meeting where all team members and other concerned parties may review the

• results of the Kaizen and discuss further changes that can improve a future Kaizen blitz.

• • The team leader must prepare a personal report, outlining his or her experiences for the

• Kaizen including successes and failures.• • This report should be made available to any future Kaizen Team

Leaders for review• before they embark on Kaizen journey

• Lean manufacturing, sometimes called Lean Production, is a business philosophy that was

• originally developed at Toyota Motor Company, where it was called Toyota Production System

• (TPS). The objectives are to eliminate all forms of waste in production process. The Japanese

• term for waste is muda.