Lean Management: Learning Objectives

Lean
Management
An Introduction
Naeem Shahzad
PIQC Institute of Quality
Learning Objectives
• Understand the basics of Lean Manufacturing
• Understand different types of wastes
• Understand concepts of Lean tools
1
1 Fundamentals of
Lean Manufacturing
What Is Lean Management?
2
A philosophy of production that emphasizes the minimization of the amount of
all the resources used in the various activities of the enterprise. It involves
identifying and elimination non‐value adding activities in design, production,
supply chain management and dealing with customers.

APICS Dictionary
Lean producers employ teams of multi‐skilled worker at all levels of
organization and use high flexible, increasingly automated machines to produce
volumes of products in potentially enormous variety. It contains a set of
principles and practices to reduce cost through the relentless removal of waste
and through the simplification of all manufacturing and support processes.”

APICS Dictionary
3
Lean
Manufacturing
Toyota
Production
System
Toyota
Production
System
Womack
Mass
Production 1980s
Shingo
Scientific
Management
Toiichi Ohno 1950s
1908
Taylor
7
1880s
"Lean Manufacturing is "lean" because it uses less of everything when compared

to mass production‐half the manufacturing space, half the investment in tools,
half the engineering hours to develop a new product in half the time. Also, it
requires keeping far less than half the needed inventory on site, results in many
fewer defects, and produces a greater and ever growing variety of productions.”
International Motor Vehicles Program (IMVP)
4
Objectives of Lean Management?
A philosophy of production that emphasizes the minimization of

Lean
Production
the amount of all the resources used in the various activities of
the enterprise.
• Identify and eliminate non‐value adding activities in design,

production, supply chain management
• Employ teams of multi‐skilled employees
• Use flexible and automated machines
• Use JIT production and strive toward six‐sigma quality
• Consists of a set of principles and practices to reduce costs via

removal of waste and simplification of all manufacturing and
support processes
9
Objectives of Lean Management ?
Lean Supply Chain strive to achieve following;
• Eliminate waste in business value streams
• Meet Customer demand
• Increase velocity
• Reduce need for working capital
• Increase inventory turns
• Gain market share
• Increase profitability
• Develop workforce
• Produce with perfect quality
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5
Types of waste
“Any activity that does not value to the good or service in the eye of the
customer.”
A by‐product of a process or task with unique characteristics requiring special
management control.
11
Types of waste: Toyota 3M Model
Toyota’s view is that the main method of Lean is not the tools, but the reduction of
three types of waste:
• Muri
Overburden
• Mura
Unevenness
• Muda
Non‐value‐adding work
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6
Types of waste: Toyota 3M Model
• Muri
Overburden
• Mura
Unevenness
• Muda
Non‐value‐adding work
13
Types of waste: Muda
Toyota’s Taiichi Ohno
originally defined seven types
of wastes;
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7
Overproduction
Overproduction is building something before you can ship it to the next process
or someone in exchange for cash.
15
Waiting
Products waiting around in factories either as finished goods or work in

progress (WIP) another major cause of waste. WIP is commonly caused by
producing large batch sizes.
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8
Transportation
Moving work in process (WIP) from place to place in a process, even if it is only
a short distance. Or having to move materials, parts, or finished goods into or
out of storage or between processes.
17
Inventory
Many companies order over & above what is required to fulfill the order, this
may be due to quality problems along the production process or the often
mistaken belief that is saves money by ordering larger quantities.
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9
Motion
Any motion employees have to perform during the course of their work other
than adding value to the part, such as reaching for, looking for, or stacking
parts, tools, etc. Also, walking is waste.
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Overprocessing
Taking unneeded steps to process the parts. Inefficiently processing due to poor
tool and product design, causing unnecessary motion and producing defects.
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10
Defective Units
Production of defective parts or correction. Repairing of rework, scrap,
replacement production, and inspection means wasteful handling, time, and
effort.
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11
Lean Principles
Leans Principle Implications for Supply Chain Management
1. Create Value for
the Customer
Only a customer can define what

constitute value in terms of a product or
service. When a supply chain creates value
for customers, it recognizes what creates
value from customer’s perspective and
answers the question “ what will the
customer pay for?”.
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Lean Principles
2.Identify all steps
across a value
stream
A value stream encompasses all “the
processes of creating, producing and
delivering a good or service to the market.”
All of the activities that are performed to
process raw material to finished product,
from order to cash and from product
concept to product launch, are included.
Identifying steps across the entire value
stream often exposes waste.
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12
Lean Principles
3. Create Value flow
What are the actions that create value flow?
One piece or continuous, smooth flow is the
ultimate objective. When striving for
smooth flow, problems that must be dealt
with become visible.
25
Lean Principles
4. Pull products based
upon customer
demand
Pull scheduling replaces what is used and drives

actions toward a make‐to‐order environment. In
Pull, each successive step in an overall process
signals the preceding step that it needs more
material/ product to work on and triggers the
predecessor to produce the needed material/
product. In a pull environment, no one
upstream function or department should
produce a product or service until the customer
downstream asks for it.
26
13
Lean Principles
5. Strive for perfection by
continually removing
successive layers of waste
Relentless continuous improvement
removes successive layers of waste.
Continuous improvement results are
maximized when the first four lean
principles are in place.
27
2 Lean Manufacturing
Flow Mapping
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14
Manufacturing Strategies
The following strategies are used for manufacturing to delivery items to
the customer;
• Engineer‐to‐Order (ETO)
• Make‐to‐Order (MTO)
• Assemble‐to‐Order (ATO)
• Make‐to‐Stock (MTS)
29
Manufacturing Strategies
Key Metrics: Time
Delivery Lead Time
Engineer‐to‐
Design Purchase Manufacture Assemble Ship
Order
Delivery Lead Time
Make‐to‐
Inventory Manufacture Assemble Ship
Order
Delivery Lead Time
Assemble‐to‐
Manufacture Inventory Assemble Ship
Order
Delivery Lead Time
Make‐to‐
Manufacture Assemble Inventory Ship
Stock
30
15
Value Stream Mapping
Flow
31
Value Stream Mapping: Process Flow Chart
A diagram of the flow of a production or

service process through the production
system. Standardized symbols are used
to designate processing, flow directions,
branching decisions, input/output, and
other aspects of the process.
32
16
33
Value Stream Mapping is
a Lean technique used
to analyze the flow of
materials and
information currently
required to bring a
product or service to a
consumer.
34
17
35
36
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37
Exercise: Local Branch‐Loan approval
Key steps for loan approval are given below, starting from form filling till contract signing for loan.
1. Form filling: As customer requests for medium size loan, the bank representative takes about 45min (on
average) to retrieve the form and other related documents, as he also listens to other customers. After this
waiting time, customer takes 25min to fill the form and completes the other documentation requirement.
2. Documentation approval: Customer submits filled documentation; after review Bank representative
submits documentation to Branch Manager for approval. Documentation remains on the table for about
32hr before it is approved by Brach Manager who takes 5min to approve it.
3. Customer Profile Creation: Approved documents remain 1hr on Branch Manager’s table before they are
sent to IT executive in order to create customer profile. It takes about 27hr for approved documents profile
creation is started and completed in 12min.
4. Electronic Documentation: Once the customer’s electronic profile is created in the computer, (after 24hr) IT
executive takes about 4min to develop electronic documents to be sent to the head office.
5. Sending Documents: When all electronic documents are completed IT executive sends all electronic files to
head office after 2hr by just hitting the “Send to HO” (assume zero min).
Head Office: Electronic file is approved & processed by head office in 46min and sent back to the branch
office after 21 days.
6. Contract signing: Customer waits for about 110 min for formal contract singing which takes about 15min. 38
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Muhammad Naeem Shahzad

PIQC Institute of Quality
www.piqc.edu.pk
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Lean

A philosophy of production that emphasizes the minimization of the amount of

identifying and elimination non‐value adding activities in design, production,

supply chain management and dealing with customers.

Lean producers employ teams of multi‐skilled worker at all levels of

organization and use high flexible, increasingly automated machines to produce

volumes of products in potentially enormous variety. It contains a set of

and through the simplification of all manufacturing and support processes.”

"Lean Manufacturing is "lean" because it uses less of everything when compared

A philosophy of production that emphasizes the minimization of

• Identify and eliminate non‐value adding activities in design,

• Employ teams of multi‐skilled employees

• Use flexible and automated machines

• Use JIT production and strive toward six‐sigma quality

• Consists of a set of principles and practices to reduce costs via

Products waiting around in factories either as finished goods or work in

Only a customer can define what

Pull scheduling replaces what is used and drives

A diagram of the flow of a production or

Muhammad Naeem Shahzad

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