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Prof Peter Hines
2009 Annual Conference
© S A Partners 1993 - 2009
Redefining the Lean Principles
Professor Peter Hines
© S A Partners 1993 - 2009Redefining the Lean Principles 3
Overview
Womack & Jones’ 5 Lean Principles Some Concerns A Redefined Principle Set: the 7Ps Conclusions
© S A Partners 1993 - 2009Redefining the Lean Principles 4
Womack & Jones’ 5 Lean Principles
“Lean Thinking can be summarized in five principles: precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let the customer pull value from the producer, and pursue perfection”
J. Womack & D. Jones, Lean Thinking, 1st Edition, Page 10
© S A Partners 1993 - 2009
Some Concerns
© S A Partners 1993 - 2009Redefining the Lean Principles 11
Questions about the Current 5 Lean Principles
What is working well? What is working less well?
What is missing? Any other comments?
Name:………………………………… Firm:…………………………Email………………………
© S A Partners 1993 - 2009Redefining the Lean Principles 12
Focus on the Patient ValueUnderstand our processes Value streamSocial & Technical Flows WasteResponsive Teams PullLearn and Spread Perfection
Many Have Customised: e.g. Flinders Medical
Flinders Principles Lean Principles
© S A Partners 1993 - 2009Redefining the Lean Principles 13
Sustainable Lean Management
Source: P. Hines, P. Found, G. Griffiths & R. Harrison, Staying Lean, 2008
© S A Partners 1993 - 2009Redefining the Lean Principles 14
Lean Thinking
“Fortunately, there is a powerful antidote to muda: lean thinking….in short, lean thinking is lean because it provides a way to do more and more with less and less – less human effort, less equipment, less time, and less space – while coming closer and closer to providing customers with exactly what they want”
J. Womack & D. Jones, Lean Thinking, 1st Edition, Page 15
© S A Partners 1993 - 2009Redefining the Lean Principles 15
Getting off on The Wrong Foot
“Muda. It’s the one word of Japanese you really must know….muda means “waste””
J. Womack & D. Jones, Lean Thinking, 1st Edition, Page 15
“Eliminate muda, mura, muri…completely”
Taiichi Ohno,http://www.toyota.co.jp/en/vision/traditions/jul_aug_04.html
http://www.toyota.co.jp/en/vision/traditions/jul_aug_04.html
© S A Partners 1993 - 2009Redefining the Lean Principles 16
Muda, Mura & Muri
Muda (Waste) Mura (Unevenness) Muri (Burden)
© S A Partners 1993 - 2009
The Redefined Principle Set
The 7Ps
© S A Partners 1993 - 2009Redefining the Lean Principles 18
The New Lean Principles: #1 Purpose
The ‘Missing’ Principle Value, Cost & Waste Creating a Balanced Purpose
© S A Partners 1993 - 200919
Value, Cost & Waste
PerceivedValue
Waste/Cost
xCreating Lean Solutions:
1. Reduce Internal Waste2. Develop Customer Value
Cost-Value Equilibrium
1
2
© S A Partners 1993 - 2009Redefining the Lean Principles 20
Creating a Purpose
Effective andsustainable
purpose
Voice of the Customer
Voice of the Owner
Voice of Society
Voice of the Employee
© S A Partners 1993 - 2009Redefining the Lean Principles 21
Understanding the Voice of the Owner
Align your Key Business ProcessesTo the Value Criteria of your Owners
Financial PerformanceVersion:Date:Name:Currency:
Notes Year -2 Year -1Current
Year Budget
Current Year
Expected£k £k £k £k
Total Revenue
Gross MarginGross Margin (%)
Overhead costProfit before Interest and Tax
Return on Sales (%)
Operating Cash Flow
Memo: Prior YearNet Trading Assets at Period End Return on Assets (%)
Memo: Prior YearInventory at period endDebtor DaysCreditor DaysInventory turn ratioAsset turn ratio
Notes 1) Use exisitng accounting definitions with consistency throughout
Group:Business:
Sheet1
Workshop Process.ppt - 1
Financial Performance
Group:Version:
Business:Date:
Name:
Currency:
NotesYear -2Year -1Current Year BudgetCurrent Year Expected
£k£k£k£k
Total Revenue
Gross Margin
Gross Margin (%)
Overhead cost
Profit before Interest and Tax
Return on Sales (%)
Operating Cash Flow
Memo:Prior Year
Net Trading Assets at Period End
Return on Assets (%)
Memo:Prior Year
Inventory at period end
Debtor Days
Creditor Days
Inventory turn ratio
Asset turn ratio
Notes1) Use exisitng accounting definitions with consistency throughout
Workshop Process.ppt - 1
© S A Partners 1993 - 2009Redefining the Lean Principles 22
Understanding the Voice of the Customer
“Value Criteria” Rank Product XX Performance VsYour Expectations Our Competitors Your best Other Supplier
Better than
Same as
Worse than
Better than
Same as
Worse than
Better than
Same as
Worse than
Responsiveness 4
Price 5
Quality of people 1
Innovation 2
Expertise in subject areas
3
Align your Key Business ProcessesTo the Value Criteria of your Customers
© S A Partners 1993 - 2009Redefining the Lean Principles 23
Understanding the Voice of the Employee
Align your Key Business ProcessesTo the Value Criteria of your Employees
© S A Partners 1993 - 2009Redefining the Lean Principles 24
Understanding the Voice of the Society
Align your Key Business ProcessesTo the Value Criteria of Society
© S A Partners 1993 - 2009Redefining the Lean Principles 25
The New Lean Principles: #2 Process
Not just Value Streams within Order Fulfilment Realising X and 2X Profit Potential
© S A Partners 1993 - 2009Redefining the Lean Principles 26
Typical Business Processes
Strategic ManagementDirectional Process
Con
tinuo
us Im
prov
emen
tEn
ablin
g pr
oces
s People ProcessEnabling process
Environmental Systems Management
Enabling Process
Innovation Process
Order Creation
Order Fulfilment
Core Processes
Core Processes
© S A Partners 1993 - 2009Redefining the Lean Principles 27
Realising X and 2X Profit Potential
ProfitPotential
£
Time
Classic Lean Capacity CreationIn Order Fulfilment
= Cost Saving
Lean EnterpriseFill Capacity
In e.g. Order Creation= Wider Margins
= Increased Turnover
X
2X
© S A Partners 1993 - 2009Redefining the Lean Principles 28
Value and Cost: Example
© S A Partners 1993-2005
© S A Partners 1993 - 2009Redefining the Lean Principles 29
The New Lean Principles: #3 People
Respect for People Communication Leadership Engagement Reward & recognition Training
© S A Partners 1993 - 2009Redefining the Lean Principles 30
Fake Lean and Real Lean: Learning from The Toyota Way
Continuous Improvement
Fake Lean
Respect for People
Real Lean
90% of problems in business are caused by management, 10% by the workman. F. W. Taylor, 1912
© S A Partners 1993 - 2009Redefining the Lean Principles 31
Top 10 Reasons for Failure
1. Lack of a clear executive vision.2. Lack of an effective communication strategy.
3. Failure to create and communicate a real sense of urgency.
4. Poor consultation with stakeholders.
5. Lack of structured methodology and project management.
6. Failure to monitor and evaluate the outcome.
7. Failure to mobilise change champions.
8. Failure to engage employees.
9. Absence of a dedicated and fully resourced implementation team.
10. Lack of sympathetic and supportive Human Resources policies.
Source: Lucey, Bateman & Hines, 2005
© S A Partners 1993 - 2009Redefining the Lean Principles 32
The New Lean Principles: #4 Pull
Product, Parts & Information Runners Repeaters, Strangers CI/DI Training & development Push to Pull lean
© S A Partners 1993 - 2009Redefining the Lean Principles 33
The CI Learning System
Continuous Improvement
Redesign process
Strategic ChoicesTargets
DeployedTargets
Organisational Learning
Feedback tostrategy
Greater rate of improvement
Faster, better change
Discontinuous Improvement
Seamlessly integrate
© S A Partners 1993 - 2009Redefining the Lean Principles 34
Ad-hoc FormalGoal
orientedManaged
Autonomy Way of Life
Achi
evem
ent
KnowingOrganisation
UnderstandingOrganisation
ThinkingOrganisation
LearningOrganisation
Lean Maturity and Organisational Learning
Single looplearning
Double looplearning
Step change in learning occurswhere the organisation can achieve higher results than previously imagined due to lack of knowledge of what was possible
Bessant & Caffyn
McGill & Slocum
Senge
PushLean
PullLean
© S A Partners 1993 - 2009Redefining the Lean Principles 35
The New Lean Principles: #5 Prevention
Quality Designing it right Quality at source Jidoka
Risk Zero Defect Thinking (ZD) using PFMEA
© S A Partners 1993 - 2009Redefining the Lean Principles 36
The Quality Pillar in the Classic Toyota Model
Clear strategic foundations
Manage by fact using appropriate toolsWorkplace organisation and visual management
Standardised and stable process
• Flow• Pull• Quick
changeover• Workload
balancing• Capacity
Planning
Delivery
• Authority to stop
• Error proofing• Root cause
solutions• Six Sigma• Zero Defects
Quality
Sustainable continuous improvementPeople and teamwork
Lean Maturity Best quality, cost, lead time, safety
© S A Partners 1993 - 2009Redefining the Lean Principles 37
The New Lean Principles: #6 Population
Looking after the Wider Population Environment Management Corporate Social Responsibility
© S A Partners 1993 - 2009Redefining the Lean Principles 38
Lean Green Framework
Waste(Muda)
Non value adding to the product or service in the
eyes of the customer
Over Production
Lost People Potential
Waiting
Transporting
Inappropriate Processing
Unnecessary Inventory
Unnecessary Motion
Defects
Waste(Muda)
Non value adding to the product or service in the
eyes of the customer
Over Production
Lost People Potential
Waiting
Transporting
Inappropriate Processing
Unnecessary Inventory
Unnecessary Motion
Defects
Lean
Green Waste(Muda)
Destruction of our environment in the eyes
of society
GreenhouseGases
Poor Health & Safety
Rubbish
Pollution
Excessive Power Usage
Excessive Water Usage
ExcessiveResource
Usage
Eutrophication
Waste(Muda)
Destruction of our environment in the eyes
of society
GreenhouseGases
Poor Health & Safety
Rubbish
Pollution
Excessive Power Usage
Excessive Water Usage
ExcessiveResource
Usage
Eutrophication
© S A Partners 1993 - 2009Redefining the Lean Principles 39
The Revised Lean Model of Excellence
Clear strategic foundations
Manage by fact using appropriate toolsWorkplace organisation and visual management
Standardised and stable process
• Flow• Pull• Takt time• Quick
changeover• Workload
balancing• ……
Delivery• Authority to
stop• Error
proofing• In-station
quality control
• Root cause solutions
• ……
Quality
Sustainable continuous improvementPeople and teamwork
High Engagement Best quality, cost, lead time, safety
• 3Rs: Reduce, Reuse, Recycle
• Stress Point Management
• CO2 budgets• Technology
solutions• ……
Environmental
© S A Partners 1993 - 2009Redefining the Lean Principles 40
The New Lean Principles: #7 Perfection
Managing towards a realistic Future State Sustaining the Change
© S A Partners 1993 - 2009Redefining the Lean Principles 41
CurrentState
PerformanceLevel
Time
IdealState
FeasibleFuture State
2) Back off to what is currently possible
TargetedFuture State
3) Back off to chosen target
ImplementationProjects
AchieveTarget 4) Establish new target
New TargetedFuture State
Managing Improvement Cycles to Future State
From mapping to management
© S A Partners 1993 - 2009Redefining the Lean Principles 42
The 5S ‘S’ Curve
Improvement
Time
80%
60%
40%
WIIFU
WIIFM
Target
© S A Partners 1993 - 2009Redefining the Lean Principles 43
Sustaining the Change
Lean Iceberg Model
Processmanagement
Technology, tools and techniques
Strategy and alignment
Leadership
Behaviour and engagement
ABOVE WATERLINE - VISIBLEUNDERWATER - ENABLING
ABOVE WATERLINE - VISIBLEUNDERWATER - ENABLING
Supply chain integration
3
21
4 5
Lean Iceberg Model
Processmanagement
Technology, tools and techniques
Strategy and alignment
Leadership
Behaviour and engagement
ABOVE WATERLINE - VISIBLEUNDERWATER - ENABLING
ABOVE WATERLINE - VISIBLEUNDERWATER - ENABLING
Supply chain integration
43
21Per
form
ance
and
Mat
urity
Engagement and Time
Roadmap 1Jan 2004
Roadmap 2July 2005
Specify Value by Offering
Specify Value by Offering
Make the Offering Flow
Make the Offering Flow
Integrate the Value Stream
At the Pull of the Customer
In Pursuit of Perfection
Specify Value by Offering
Specify Value by Offering
Make the Offering Flow
Make the Offering Flow
Integrate the Value Stream
At the Pull of the Customer
In Pursuit of Perfection
© S A Partners 1993 - 2009Redefining the Lean Principles 44
Conclusions
There is some question about the existing 5 Lean Principles
They appear to need to be contextualised The new 7Ps may be helpful I would like your help in perfecting them!!!
© S A Partners 1993 - 2009Redefining the Lean Principles 45
Further Information
For further information, please contact:
Professor Peter HinesM: +44 (0)7778 840979
Or join me at my LinkedIn Lean
Enterprise groups:
mailto:[email protected]
Prof Peter Hines� Redefining the Lean Principles���Professor Peter HinesOverviewWomack & Jones’ 5 Lean PrinciplesSome ConcernsQuestions about the Current 5 Lean Principles Many Have Customised: e.g. Flinders MedicalSustainable Lean ManagementLean ThinkingGetting off on The Wrong FootMuda, Mura & MuriThe Redefined Principle SetThe New Lean Principles: #1 Purpose Value, Cost & Waste� Creating a PurposeUnderstanding the Voice of the OwnerUnderstanding the Voice of the CustomerUnderstanding the Voice of the EmployeeUnderstanding the Voice of the SocietyThe New Lean Principles: #2 Process Typical Business ProcessesRealising X and 2X Profit PotentialValue and Cost: Example The New Lean Principles: #3 People Fake Lean and Real Lean: Learning from The Toyota WayTop 10 Reasons for Failure The New Lean Principles: #4 Pull The CI Learning SystemLean Maturity and Organisational LearningThe New Lean Principles: #5 Prevention The Quality Pillar in the Classic Toyota ModelThe New Lean Principles: #6 PopulationLean Green FrameworkThe Revised Lean Model of ExcellenceThe New Lean Principles: #7 Perfection Managing Improvement Cycles to Future StateThe 5S ‘S’ CurveSlide Number 43ConclusionsFurther Information