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Introduction to Thinking Lean

11th December 2007Saindhav Tamhane

Centre for Innovation, DTED


Seeing Improvement


HEADLINES

Recent Service orientated cases

Invoicing Process:Simplified process, gained $160,000pa (billable hours)

Insurance Policy Issuance:Reduced red tape, 80% reduction (lead-time)

Customer Database:Simplified process, 70% improvement (in accuracy)Simplified process, $80,000pa (billable hours)

Restocking after Car Sales:Reduced red tape, 70% reduction (delivery lead-time)

Order Processing:Reduced red tape, $3,000,000+pa (increased sales)

These projects cost only staff hours and re-issuance of procedures.


UK Public Sector efficiency gains

•Halving the end-to-end time for planning applications.

•Halving the time for voids in council houses.

•Cutting end-to-end processing time for high demand adaptations from disabled people from over 200 days to 12 days.

•Payroll errors reduced from 75% to 2%.

•Reducing backlog in lost and found departments by 80%.

•Reducing the time taken in report production from 77 to 6 days in the Justice system.1

Evaluation Of The Lean Approach To Business Management And Its Use In The Public SectorScottish Executive Research 2006

1 Seddon, J. (2002). "Systems Thinking and Performance Improvement in the Public Sector". Vanguard, January 2002


A Process is a series of connected actions or operations undertaken to achieve a particular outcome.

A Process Flow is the model defining the order and relationship of one process step to the next.

Process Engineering is the application of engineering techniques to construct a process model.

Basic Definitions


It is not something one does – ‘Lean’ is a philosophy

It’s focus is in creating value for the ‘customer’ whilst continuing to eliminate ‘waste’

Waste or Non Value Add is any operation that does not provide value

What is ‘Lean’?

Value Add is any operation that provides value


1. Defects2. Waiting3. Motion4. Over-Processing5. Over-Producing6. Inventory7. Transportation

The Seven Wastes


Filling Up on Tuesday

Pictures from the BBC and Fotosearch.com


It is a well established approach with proven methodology – It works !

It has developed beyond the factory into service operations

It has strong synergies with sustainable practices

Why ‘Lean’?

It has a focus on productivity improvement NOT cost cutting


Seek clarity on the

Process – creating Flow

Customer – providing value

Waste - eliminating non-value adding steps

The Approach

Focus on understanding the Process


1st Steps in Improving the Process

Understand Current Reality

Create Future Vision

Transition Current

to Future

Issues

Issues


Improving the Process

Understand Current Reality

Create Future Vision

Define Realistic Future State

Becomes New Current Reality

TIMESupport: 35%

Waste: 60%

COST

Value Adding: 45%Support: 40%

Waste: 15%

Value Adding: 5%

Source: Hines, Silvi & Bartolini, 2002

© Peter Hines 2007, Lean Enterprise Research Centre


Some Key Tools & Techniques

Value StreamMapping

WasteElimination

5S

VisualManagement

One PieceFlow

KanBan

QuickChangeover

Standard Work

ErrorProofing

Theory of Constraints

LeanLayout


Value Stream Mapping is about analysing the

process and identifying opportunities to reduce

waste – non value adding activities

Value Stream Mapping (VSM)

Circle Diagrams

Developed by

D Henderson CFI

Enter Commitment and Fill Out P.O.

Authorise Order

Fax P.O.

ProcessPayment

Book Order - Simple Flowchart

Receive Ordered Book

ProcessInvoice

Identify Book and Supplier

Post to Accounts Payable

Authorise

Standard Flowchart

Total NVA = 6.1 days

Total VA = 23 mins

ProcessPayment

Post to AccountsPayable

AuthorizeProcessInvoice

C/T=180 minsRework = 5%Operators = 4

C/T= 120 minsRework = 5%Operators = 3

Customer

35 orders per annumPer person

Lot Size = Individual Order

Book SupplierU.S.

Next Day

OrdersEnter OrderFill in P.O

C/T=6 mins

AuthorizeOrder

C/T= 3 mins

Fax P.O

C/T=120 mins

Operators = 5

P.O.Order

C/T= 4 mins

7 m

0.1 days0.5 days

3 m6 m

4 m

1.25 days0.5 days

6m3 mTotal NVA = 2.75 daysTotal VA = 13 mins

1 day

Overall Value Added Time = 39 Minutes.

Overall Non Value Added Time = 8.85 Days!

3 days 2.5 days

7 m

Current State Map

• Next Day dispatch

• 2 days delivery

Value Add Ratio = 0.8%

Value Add Ratio = 1%


• Identify Excess movement

• Clearly visualise layout

• Understand movement within a workstation

• Useful within a factory or office environment

• Most effective focused at a single workstation

Spaghetti Diagrams


Trace the movement within a process

Desk

Printer

Bookcase

Filin

gC

abin

et

Security Bin

Spaghetti Diagrams


• Probability of error in each hand-off

• Identify double handling

• Effective for offices

• Useful between hand-over processes

• Question why each step exists

Circle Diagrams

Circle Diagrams

Number of staff : 7

Touches :

Double Touches

Rebounds

Loops

Ministerial Brief eCourier

Department Information Officer : ADivision Director : B

Division PA : CArea Manager : D

Staff Member (Brief Author) : E

Department CEO : F

CEO’s PA : G

EfficiencyTouches – (Double Touches + Rebounds + Loops)

Touches

%

Legend

A B

C

D

E

F

G

HCircle Diagram

Developed by

D Henderson CFI

Circle Diagrams

Developed by

D Henderson CFI

Brief Request

Information Officer Logs and Routes

Division Director Assigns

Responder

Brief Written

Division Review

Department Review

Brief Issued to Minister

Ministerial Brief eCourier Simple Flowchart

Revise

OK

Revise

OK

Standard Flowchart

Circle Diagrams

Number of staff : 7

Touches : 19

Double Touches : 1

Rebounds : 8

Loops : 0





Department CEO : F

CEO’s PA : G

Legend

Ministers Office

Note: In this example, the Division Director requested changes to the document, but the CEO did not.


Touches

52.6 %

A

B

C

D

E

F

G

Developed by

D Henderson CFI

Circle Diagrams

Number of staff : 7

Touches : 33

Double Touches : 3

Rebounds : 13

Loops : 0





Department CEO : F

CEO’s PA : G

Legend

Ministers Office

Note: In this example, both the Division Director and CEO requested changes to the document .


Touches

51.5 %

A

B

C

D

E

F

G

Developed by

D Henderson CFI

Circle Diagrams

Number of staff : 7

Touches : 13

Double Touches : 1

Rebounds : 3

Loops : 0





Department CEO : F

CEO’s PA : G

Legend

Ministers Office

Note: In this example, Both CEO and Division Director request changes, but normal communication channels are bypassed.


Touches

69.2 %

A

B

C

D

E

F

G

Developed by

D Henderson CFI


The essence of “The Visual Office” is “seeing not saying”

Visual Management


What order do the files go in?

How many pens do we have?

*Images courtesy of NHS Institute for Innovation and Improvement What do they cost?(where do we buy them!)

Visual Office Tools


A smarter inbox?– Up is finished/resolved– Down needs action What do I do next?

*Images of Don Tapping’s “Heijunka Wheel” courtesy of Learning and Productivity Pty. Ltd.

Visual Office Tools


Bureaucracy gone mad...

*Images courtesy of BBC News

Visual Office isn’t….


Lean Misconceptions

It’s all about the implementing the Tools !

It’s just about the understanding the Process !

But the techniques only apply to Manufacturing !

The System is out of Balance!

Inventory Profile of the Automotive Supply Chain(UK 1999 Figures , Volume Car Stock Levels)

0

10

20

30

40

50

60

70

80

90

100

Raw

Mat

eria

l

Bou

ght-o

utP

arts

In-h

ouse

bui

ltP

arts

Pre

-Ass

embl

yW

IP

Ass

embl

y W

IP

Fini

shed

Com

pone

nts

Inbo

und

Tran

sit

On-

site

Par

t(V

M)

Veh

icle

Pro

duct

ion

WIP

Load

ing

&D

espa

tch

Out

boun

dTr

ansi

t

Mar

ketp

lace

Cus

tom

er

Day

s of

Inve

ntor

y

MaxAverageMin

First Tier SupplierFirst Tier Supplier

Outbound Logistics

Outbound Logistics

Market -Place

Market -Place

VehicleManufacturer

VehicleManufacturer

Inbound LogisticsInbound Logistics

Source: M. Holweg, 2001© Peter Hines 2007, Lean Enterprise Research Centre


Process

People

Purpose

The Three P’s

100% Efficient

80%

40% Strategic Direction

Efficiency is doing things right

Concept from Ian Glenday, Repetitive Flexible Supply Ltd

100% Efficient

Align First

Then Improve

Strategic Direction

Effectiveness is doing the right things

Concept from Ian Glenday, Repetitive Flexible Supply Ltd


Summary

SEEK

Strategic alignment

Leadership commitment

Clear objectives & targets

Good (real) data

The right tools

To involve the process operators

Continual Refinement

PLAN

DO

ACT

CHECK


Primary purpose– to provide leadership through education & training in lean thinking and

the correct application of lean tools and techniques– Assist organisations address growth and capacity issues

What is the LEANetwork?

A collaborative venture amongst:

Lean Thinking1 day

In-house program

Lean Thinking1 day

Executiveprogram

Uni AdelaideLeadershipprograms

Fraunhoferprograms

Toolbox Series

Awarenessraising

High level

Awarenessraising

Low level

Lean Thinking10 day

Champion’sCourse

Courtesy of David Harvey DTED


http://www.unisa.edu.au/gradupdate/2007/October/main5.aspPrinciples Of Lean Thinking

Course Details

Management Development Programs

http://www.agsb.adelaide.edu.au/execed/mdp/

Lean Toolbox Serieshttp://www.centreforinnovation.org.au/calendarmonth.aspx

http://www.unisa.edu.au/gradupdate/2007/October/main5.asp

http://www.agsb.adelaide.edu.au/execed/mdp/

http://www.centreforinnovation.org.au/calendarmonth.aspx

Introduction to Thinking Lean - spb.sa.gov.auspb.sa.gov.au/sites/default/files/Introduction to...

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