- Lean Concepts
- Non-Value-Added Activities
With the publication of The Machine that Changes the World Womack (1990) introduced the term “lean production” to the Western World.
The basic idea of lean is attractively simple. It is that the organization should be obsessively focused on the most effective means of producing value for their customers. An organization using lean will approach this challenge by:
- Applying 5 basic lean principles.
- Focusing on understanding waste and value in its work .
- Training staff who do and manage the work to act as improvement teams to bring about change.
- The final outcome to prepare spiral of perfection .
The 5 principles are:
- Specify what customers Value :
Value is what the customer wants and only what the customer wants. This requires a precise understanding of the specific needs of the customer. It is said that up to 95% of process activities are non – value adding. This is probably true, depending on your definition of value adding vs supporting and waste in a system
- Understand the Value Stream :
The value stream are those activities that, when done correctly and in the right order, produce the product or service that the customer values. A lean organization traces and manages all the activities in the organization that deliver value wherever they are and whichever department they are in.
Activities can be:
- in whole or part unnecessary and wasteful (and therefore, should be eliminated).
- supporting the value-adding activities (which should be reduced as far as possible).
- customer value-adding (which should be continuously improved) .
- Improve the Flow – In a lean organization work should flow steadily and without interruption from one value adding or supporting activity to the next. This is contrasted with the “batching” of work where, for instance a week’s expenses claims are collected for a manager to authorize in one go. Where it is suitable, flow significantly speeds the processing and every effort should be made to eliminate obstacles and bottlenecks that prevent flow
- Pull – The system should react to customer demand, in other words, customers pull the work through the system. In non-lean organizations work is pushed though the system at the convenience of the operators and so you produce outputs that are not required. Most services react to customer demand and so pull the work through the system
- Perfection – As the first four principles are implemented you should get to understand the system ever better and from this understanding you should generate ideas for more improvement. A lean system becomes yet leaner and faster and waste is ever easier to identify and eliminate. A perfect process delivers just the right amount of value to the customer. In a perfect process, every step is valuable-adding, capable (produces a good result every time), available (produces the desired output, not just the desired quality, every time), adequate (does not cause delay), flexible, and linked by continuous flow. If one of these factors fails some waste is produced (see below).
Womack and Jones have set out six additional principles of what they call lean consumption that that correspond closely with those of lean production:
- Solve the customer’s problem completely by ensuring that all the goods and services work, and work together
- Don’t waste the customer’s time
- Provide exactly what the customer wants
- Provide what’s wanted exactly where it’s wanted
- Provide what’s wanted where it’s wanted exactly when it’s wanted
- Continually aggregate solutions to reduce the customer’s time and hassle.
These principles recast traditional lean thinking principles to make us take a customer eyed-view of our services. It is similar to the efforts marketers have made in recent years to move away from the 4P’s of Product, Price, Promotion and Place to Concept (i.e. the benefit to the customer of the service), Cost (to the customer including hassle and lost opportunities to be elsewhere doing something else), Communication and Channel accessibility.