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The Skinny on the Lean Enterprise--

The Skinny on the Lean Enterprise--. Peter Ward Fisher College of Business The Ohio State University. The Skinny on the Lean Enterprise. What we have learned: Understanding lean processes and value streams “Seeing” processes fully and communicating what you see through value stream mapping

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The Skinny on the Lean Enterprise--

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  1. The Skinny on the Lean Enterprise-- Peter Ward Fisher College of Business The Ohio State University

  2. The Skinny on the Lean Enterprise What we have learned: • Understanding lean processes and value streams • “Seeing” processes fully and communicating what you see through value stream mapping • Managing lean processes • Using basic tools

  3. Sr. Mgmt. Flow Kaizen VALUE STREAM IMPROVEMENT Process Kaizen ELIMINATION OF WASTE Front Lines FOCUS

  4. The Skinny on the Lean Enterprise The skinny: • Five principles • Seven Wastes (old news for us) • A paradox

  5. Apply Five Simple Principles: • Specify value from the standpoint of end customer • Identify the value stream for each product family • Make the product flow • So the customer can pull • As you manage toward perfection

  6. Value Specify value from the standpoint of the end customer Ask how your current products and processes disappoint your customer’s value expectation: • price? • quality? • reliable delivery? • rapid response to changing needs? • ???

  7. Value Stream • Identify all of the steps currently required to move products from order to delivery • Challenge every step: Why is this necessary? Would the customer think the product is worth less if this step could be left out? • Many steps are only necessary because of the way firms are organized and previous decisions about assets and technologies

  8. Action Action Action Action Multi-plant/Multi-company Plant Action Value Stream Total Value Stream Concept Launch Order Cash Raw Material Finished Product Action Action 8

  9. Flow Line up all of the steps that truly create value so they occur in a rapid sequence Require that every step in the process be: • Capable – right every time (6 Sigma) • Available – always able to run (TPM) • Adequate – with capacity to avoid bottlenecks (right-sized tools)

  10. Pull Through lead time compression & correct value specification, let customers get exactly what’s wanted exactly when it’s wanted: • For the short term: Smooth pull loops to reduce inventory • For the near term: Make-to-order with rapid response time, using the Web • For the long term: Diagnostics and prognostics in a stable relationship to take out the surprises for consumers and producers?

  11. Managing Toward Perfection Next Future State Future State Current State Original State

  12. Managing Toward Perfection Future State Current State Original State Original State

  13. Lean Principles In Summary • Specify & enhance value from the end customer • Identify the value stream for each product family & remove wasted actions (muda) • Make the product flow • So the customer can pull • By managing toward perfection Always repeat the principles as you start,to avoid focus on isolated techniques!

  14. The Skinny on the Lean Enterprise The skinny: • Five principles • Seven Wastes (old news for us) • A paradox

  15. The paradox • Lean processes are under very tight control. • SPC, standardized work, safety, 5S, TPM, Poke Yoke, etc. • At the same time, people who work in lean processes are truly empowered to experiment. • The tension between control and empowerment is difficult to manage or even to understand.

  16. The Seeming Paradox Explained • Tightly controlled processes have much of the variation removed. • With controlled processes experimentation is more effective because there is little random error to confound results. • Therefore, learning is promoted. • We don’t lose the results of our experiments in a sea of natural variation. • Continuous improvement is nothing but a manifestation of organizational learning with the discipline to apply what has been learned every time.

  17. The Skinny on the Lean Enterprise By the way, this stuff really works. Inventory turns is a leading measure of both performance and flow.

  18. Inventory Turns Manufacturing and Automotive Automotive Manufacturing ’77 ’79 ’81 ’83 ’85 ’87 ’89 ’91 ’93 ’95 ’97 ’99 Source— US Department of Commerce, Bureau of Economic Analysis

  19. What’s Next?Bus Mgt 841 • Builds on the spring course and your summer experience. • First 5 weeks of Autumn quarter on Friday mornings • Focus is on integration with the other things MBAs learn about management. • Document what you do this summer. Keep track of your accomplishments and what they mean to your organization. (Hard and soft benefits.)

  20. Have a great summer!

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