Lean Management : Small Business Info : Lean Business Club, Inc.

GENERAL MANAGEMENT
CHECK POINT 4: LEAN MANAGEMENT

Please Select Any Topic In Check Point 4 Below And Click.

1.	What Is Lean?
2.	The Origin Of Lean
3.	The Toyota Production System
4.	Basic Lean Management Values, Principles, And Guidelines
5.	Value-Added Operational Activities
6.	Non-Value-Added Operational Activities
7.	small business example Value-Added Analysis
8.	Prepare Your Company For Lean Transformation
9.	Basic Tasks In The Lean Transformation Process
10.	Adopt Basic Lean Management Guidelines In Your Company
11.	Make Lean A Part Of Your Company's Organizational Culture
12.	Create A Lean Management Team And Develop Lean Team Managers
13.	Identify What Your Customers Want And Develop Your Best Value Proposition
14.	The Kano Model
15.	Develop And Implement Hoshin Planning In Your Company
16.	Develop And Implement Cross-Functional Operational Plans In Your Company
17.	The Value-Stream Basics
18.	Value-Stream Mapping
19.	Complete Value-Stream Mapping And Value-Added Analysis In Your Company
20.	Value-Stream Mapping And Value-Added Analysis Guidelines
21.	small business example The Value-Stream Mapping Report
22.	Implement Kaizen In Your Company
23.	Implement The Plan-Do-Check-Act (PDCA) Cycle In Your Company
24.	Implement Standardized Work In Your Company
25.	Conduct Kaizen Events And Implement Kaizen Projects In Your Company
26.	Essential Kaizen Implementation Methods
27.	Implement Just-In-Time In Your Company
28.	Implement Jidoka, Poka-Yoke, Andon, And TPM In Your Company
29.	Additional Information About Lean Management
30.	For Serious Business Owners
31.	The Latest Information Online

DO I NEED TO KNOW THIS CHECK POINT?

Management Level	Yes	Optional
Level 1: I Am An MBA Student.	V
Level 2: I Am A Professional Manager In A Company.	V
Level 3: I Plan To Start A One-Person Business.	V
Level 4: We Plan To Start A Small Business Without Employees.	V
Level 5: I/We Plan To Start A Small Business With Employees.	V
Level 6: I Am A One-Person Business Owner.	V
Level 7: I Am A Small Business Owner With Employees.	V
Level 8: We Are Small Business Owners Without Employees.	V
Level 9: We Are Small Business Owners With Employees.	V
Level 10: I Am A Management Consultant Or A CPA.	V

WELCOME TO CHECK POINT 4

TUTORIAL 1 General Management				TUTORIAL 2 Human Resources Management				TUTORIAL 3 Financial Management				TUTORIAL 4 Operations Management				TUTORIAL 5 Marketing And Sales Management
1	6	11	16	21	26	31	36	41	46	51	56	61	66	71	76	81	86	91	96
2	7	12	17	22	27	32	37	42	47	52	57	62	67	72	77	82	87	92	97
3	8	13	18	23	28	33	38	43	48	53	58	63	68	73	78	83	88	93	98
4	9	14	19	24	29	34	39	44	49	54	59	64	69	74	79	84	89	94	99
5	10	15	20	25	30	35	40	45	50	55	60	65	70	75	80	85	90	95	100

HOW CAN YOU BENEFIT FROM CHECK POINT 4?

The main purpose of this check point is to provide you and your management team with detailed information about Lean Management values, principles, methods, and guidelines and how to apply this information to maximize your company's performance.

In this check point you will learn:

• About the purpose and basic advantages of lean management.
• About the origin of lean management and the Toyota Production System.
• About basic lean management values, principles, and guidelines.
• About value-added and non-value-added operational activities and three types of waste.
• How to complete your company's lean transformation process.
• How to create a lean management team and create lean team managers.
• How to identify what you customers want and develop the best value proposition.
• How to complete value-stream mapping and value-added analysis.
• How to develop and implement hoshin planning.
• How to implement kaizen, PDCA cycle, just-in-time, jidoka... and much more.

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 4

You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.

You and your team should adhere to basic lean management guidelines on a continuous basis:

•	Treat your customers as the most important part of your business.
•	Provide your customers with the best possible value of products and services.
•	Meet your customers' requirements with a positive energy on a timely basis.
•	Provide your customers with consistent and reliable after-sales service.
•	Treat your customers, employees, suppliers, and business associates with genuine respect.
•	Identify your company's operational weaknesses, non-value-added activities, and waste.
•	Implement the process of continuous improvements on organization-wide basis.
•	Eliminate or minimize your company's non-value-added activities and waste.
•	Streamline your company's operational processes and maximize overall flow efficiency.
•	Reduce your company's operational costs in all areas of business activities.
•	Maximize the quality at the source of all operational processes and activities.
•	Ensure regular evaluation of your employees' performance and required level of knowledge.
•	Implement fair compensation of your employees based on their overall performance.
•	Motivate your partners and employees to adhere to high ethical standards of behavior.
•	Maximize safety for your customers, employees, suppliers, and business associates.
•	Provide opportunities for a continuous professional growth of partners and employees.
•	Pay attention to "how" positive results are achieved and constantly try to improve them.
•	Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. WHAT IS LEAN?

INTRODUCTION TO LEAN

You and your management team should become fully familiar with lean management concepts, methods, and guidelines if you really want to secure your long-term success in business.

What goes through your mind when somebody says: "Rolls Royce"? You probably think: It's the ultimate super-expensive luxury car. And what goes through your mind when somebody says: "This product is made in Japan". You probably think:

I expect this product to provide high value based on quality, reliability, and price. If I need this type of product, I will strongly consider spending more money and purchasing a Japanese-manufactured product instead of trying to "save" money and taking a chance.

If you realize that millions of consumers worldwide also feel very strong about the "Made in Japan" brand, you will appreciate the real power of Lean!

Lean* embodies some of the best management concepts, principles, methods, and values which are critical in developing an effective business organization and improving every aspect of its performance on a continuous basis. Lean has practical applications in all areas of operational activities and it can be used by a one-person business owner or by any type of small, medium-sized, and large business organization.

* Note:

A large part of information about Lean in this check point is based on management concepts, principles, guidelines, methods, and tools developed over a sixty-plus-year period by management experts in the Toyota Motor Corporation in Japan and contained in the Toyota Production System.

WHAT IS REALLY SO SPECIAL ABOUT LEAN?

1.	Lean Is A Universal Management Tool. Lean is a universal management tool applicable to various types of small, medium-sized, and large business organizations. Although lean was developed in a large-scale manufacturing environment in Japan, it is equally useful in every manufacturing and non-manufacturing organization anywhere in the world. Lean can be applied effectively in a service, merchandising, contracting, or project management organization of any size.
2.	Lean Is A Comprehensive Management Methodology. Lean can be applied to all operational management functions and activities within any business. This means that lean can be used very effectively in general administration, human resources, finance and accounting, operations, marketing and sales management activities.
3.	Lean Provides Practical Management Guidelines. Lean has been successfully tested by many business owners and managers who aim to maximize their organization's operational performance and profitability. Lean really works and, if you give it a chance, it will help you to turn your company around and make it more profitable in the long term.
4.	Lean Makes Good Business Sense. Lean will enable you to focus on what is really important in your business, namely: providing the best value of products and services to your customers and in return to receive their continued long-term loyalty and support. Ultimately, this will pay your bills and maximize your profits.
5.	Lean Represents A Strong And Positive Business Culture. Lean will guide you and your management team in adopting meaningful and ethical principles of business behavior which will subsequently result in increased productivity, improved profitability, and higher return on your investment. Once you will embark on the lean journey, you will never want to stop it!
6.	Lean Business Engineering Provides The Ultimate Business Management Solution. Lean fits perfectly well with another unique business management methodology introduced in this program, called Business Engineering. The Business Engineering Method is based on a comprehensive multi-disciplinary approach to business management and covers all major elements of operational business activities. Once you realize the full potential of both methodologies, you will be ready to implement Lean Business Engineering in your organization.

Note:

Since lean represents an organization-wide management methodology applicable to all operational activities and not limited only to operations management, it is presented in Tutorial 1.

THE MAIN PURPOSE OF LEAN MANAGEMENT

The main purpose of lean management is to maximize the company's performance by providing customers with a perfect value of products and services and developing a perfect value-creation process that has zero or minimal waste.

Lean Management is designed to maximize the all-around operational performance and profitability of any business organization by offering the best possible value of products and services, based on quality, reliability, and price, to its customers* while minimizing waste and using fewer resources.

Lean management is a practical management tool which will enable you and your management to transform your organization into "lean organization" and implement "lean principles and values" in the most cost-effective manner.

Lean management methods are quite different from the traditional "Western-style" business management methods which you may be using at present. However, once you decide to implement these methods, you will be surprised, how they can help your organization to become more efficient and profitable. For this reason, you should become familiar with lean management methods, adopt lean values, principles, and guidelines and get ready to transform your business organization into a Lean Organization.

* Note:

In this program the term "customer" means the ultimate consumer of products and services or a business entity that purchases products and services for resale to other customers.

MAKE YOUR CUSTOMERS HAPPY AND THEY WILL MAKE YOU HAPPY TOO!

Peter F. Drucker, one of the fathers of the Modern Management Science, stated that:

"The purpose of a business is to create a customer"

Business owners and managers in a lean organization are strong believers that:

The customer is the most important part in the business process and all efforts should be made to ensure that every customer receives maximum value, based on best possible quality, reliability, and price.

Moreover, it will be wise to remember two basic rules when dealing with customers:

• Rule No. 1: The customer is always right!
• Rule No. 2: When the customer is wrong - use Rule No. 1!

BASIC LEAN MANAGEMENT THINKING

Business owners and managers in a lean organization understand that their "ticket to business success" is to identify what their customers really want and to provide them with the best possible value to meet their specific needs. The ultimate goal of lean management is to ensure customer satisfaction on a continuous basis, which in turn will provide the foundation for a long-term "win-win" relationship between the organization and its customers.

According to Basic Lean Thinking, business owners and managers must focus on the entire operational process from start to finish, instead of focusing on specific operational activities. This includes everything, namely: general administration, human resources, finance and accounting, operations, marketing and sales.

LEAN APPLIES TO ALL OPERATIONAL
ACTIVITIES IN EVERY BUSINESS ORGANIZATION


General Management Activities	Human Resources Management Activities	Financial Management Activities	Operations Management Activities	Marketing And Sales Management Activities

A CHAIN IS ONLY AS STRONG AS ITS WEAKEST LINK

The entire business process should be viewed as a Chain Of Operational Activities in every organization and, as you know, the "chain is only as strong as its weakest link". For this reason, it is essential to evaluate each operational activity ("operational link") within the lean organization and develop a cost-effective plan to maximize all value-added operational activities ("strong links") and eliminate or minimize all non-value-added operational activities ("weak links") defined as waste. This will subsequently enable the organization to offer the best possible value of products and services to customers and to be profitable at the same time.

In a lean organization, all operational activities are classified in three categories as shown below.

CLASSIFICATION OF OPERATIONAL ACTIVITIES IN A LEAN ORGANIZATION


Value-Added Activities	Essential Non-Value-Added Activities	Unnecessary Non-Value-Added Activities
This includes all operational activities that add value to the final product or service offered to customers. All value-added operational activities are considered essential in maximizing the organization's ability to offer best possible value to customers. These activities should be evaluated and streamlined for maximum performance and results.	This includes all operational activities that don't add value to the final product or service offered to customers, but are essential in enabling the organization to meet its specific operational objectives (general administration, human resources, finance and accounting, marketing and sales). These activities should be evaluated and optimized for maximum performance and results.	This includes all operational activities that don't add value to the final product or service, offered to customers, and considered waste. These activities should be identified and eliminated or reduced for maximum performance and results.

A CONTINUOUS FLOW

In a lean organization, all operational activities in the business process must create a Continuous Flow like a water stream in a river or a conveyor belt in a factory. Moreover:

• Each operational activity in the continuous flow must add value to the product or service.
• Non-value added operational activities, considered waste, are unacceptable in a
lean organization.

All non-value-added operational activities, defective work, unnecessary documentation, excessive inventory, waiting time, delays, and overspending are considered waste and must be eliminated or minimized to ensure a smooth and continuous operational flow within the organization. This will be critical in enabling the company to provide customers with the best possible product or service value, based on quality, reliability, and price.

COST-EFFECTIVE VALUE-ADDED STREAMS

Lean management prescribes development of Cost-Effective Value-Added Streams throughout the entire operational cycle, which starts with suppliers, proceed within the organization, and end with customers. The main idea behind developing most cost-effective value-added streams is:

•	To maximize quality of products and services.
•	To minimize operational defects.
•	To minimize waste in human resources.
•	To minimize waste of materials.
•	To minimize waste of plant and equipment capacity.
•	To minimize inventory levels.
•	To minimize time to produce products and services.
•	To minimize costs to produce products and services.
•	To minimize facility space requirements.
•	To minimize capital requirements.
•	To maximize operational efficiency and productivity.
•	To maximize profitability and return on investment.

By identifying and eliminating, or minimizing, waste throughout various operational activities, the organization will require less materials, less human resources, less plant and equipment to produce better-quality products and services at reduced costs. This will subsequently reduce capital investment requirements, increase profitability, and improve return on investment.

Although lean methodology finds its origin in large-scale manufacturing environment, lean management principles and guidelines apply equally to all operational activities in small, medium-sized and large manufacturing and non-manufacturing organizations alike.

You must remember that lean is not just a series of practical management principles, methods, and guidelines, but a smart way of thinking and acting within your own business.

ADDITIONAL INFORMATION ONLINE

•	Lean Management In 90 Seconds By Four Principles.
•	Lean Manufacturing Tour By Philip Beyer, System 100.
•	Introduction To Lean Manufacturing By Value Streams.
•	Lean Summit 2008 - Jim Womak, Lean Enterprise Academy.
•	Toyota Executive On Lean Management By Virtual Assistance.

2. THE ORIGIN OF LEAN

LEAN TIMELINE

According to Lean Timeline developed by Lean Enterprise Institute, the first "lean activities" took place in the 15th century, when Venetian Arsenal introduced the floating assembly line for boats of standard design. Lean activities continued in different forms throughout the latter centuries and provided foundation for development of lean management concepts in the 20th century.

Modern lean management has its origin with Toyota Production System (TPS) and it has evolved gradually over the last sixty-plus years. This system has been widely used by Toyota and other Japanese manufacturing companies during the second half of the 20th century. The TPS also included several important Japanese management concepts and methods, such as Kaizen, Just-In-Time, Jidoka, and Total Productive Maintenance (TPM). These methods helped many Japanese companies to earn a well-deserved reputation of "high quality and reliability product manufacturers".

"MADE IN JAPAN" BRAND

Many Japanese products became very popular all over the world during the last sixty years because of their high quality and reliability, reasonable price, and high level of customer satisfaction. These products created a universal "Made in Japan" brand in the minds of millions of consumers worldwide. Best examples of this brand include such famous names as:

• Toyota, Honda, Nissan, Subaru, Mazda, and Mitsubishi.
• Sony, Panasonic, Sanyo, Toshiba, Canon, Nikon, Sharp, Hitachi and Fujitsu.

INTRODUCTION OF TERM "LEAN"

During the 1980's several U.S. experts conducted extensive studies of Japanese manufacturing methods with an objective to identify the "secret Japanese manufacturing weapons". One such study was undertaken by a group of researchers at the Massachusetts Institute of Technology (MIT) led by Dr. James P. Womak.

The term "Lean" was first introduced by John Krafcik in his 1988 article, "Triumph Of The Lean Production System", based on his master's thesis at MIT. Initially, this term applied exclusively to manufacturing processes in a large scale production environment. However, later lean concepts, methods and tools have been expanded to cover a broad range of manufacturing and non-manufacturing processes alike in companies of all sizes.

Today lean is the symbol of "how to do things right at the right price" and provide high quality products and services to customers in the most cost-efficient manner. For this reason you owe it to yourself to study lean management principles to ensure the long-term success of your business.

ADDITIONAL INFORMATION ONLINE

•	Lean History By Simplex Improvement.
•	The Roots Of Lean Sigma By TBM Consulting Group.
•	A Brief History Of Lean By Lean Enterprise Institute.
•	Introduction To Lean Manufacturing By Gemba Academy.
•	Lean Thinking History Podcast By HSS Interactive Network.

COMMONLY USED LEAN TERMINOLOGY (SOURCE: WIKIPEDIA)

Japanese Term		English Translation
Andon	行灯	Signboard.
Chaku-Chaku	着うた	Load-load.
Gemba	現場	Go to where all activities are taking place.
Genchi Genbutsu	現地現物	Go and see for yourself.
Genjitsu	実際の事実を集め	Gather the actual facts.
Hansei	反省	Self-reflection.
Heijunka	平準化	Production smoothing.
Hoshin Kanri	方針管理	Direction management.
Jidoka	自働化	Autonomation - automation with human intelligence.
Just In Time	ジャストインタイム	Just in time (JIT).
Kaikaku	改革, 革新, 根本的な変	Reform, radical change, innovation.
Kaizen	改善	Continuous improvement.
Kanban	看板, also かんばん	Sign, index card.
Manufacturing Supermarket	製造スーパーマーケ	Place where all components are available to be withdrawn by a process.
Muda	無駄, also ムダ	Waste.
Mura	斑 or ムラ	Unevenness.
Muri	無理	Overburden.
Nemawashi	根回し	Laying the groundwork, building consensus, literally: Going around the roots.
Obeya	大部屋, also 作戦指令室	Large room, war room.
Poka-Yoke	ポカヨケ	Fail-safe - to avoid (yokeru) inadvertent errors (poka).
Seiri	整理	Sort out, organize.
Seiton	整理	Straighten, tidy-up.
Seiso	清掃	Clean, shine.
Seiketsu	清潔	Sanitize, standardize.
Shitsuke	躾	Sustain, discipline.

ADDITIONAL INFORMATION ONLINE

•	What Is Lean? By Peter Herku.
•	Lean Manufacturing By John Deken.
•	L3 Demystified: Japanese Terms By Brian Wellinghof.
•	Japanese Lean Pronunciation Guide By Simplex Improvement.
•	Lean Manufacturing And Japanese Terms By EMS Consulting Group.

3. THE TOYOTA PRODUCTION SYSTEM

THE TOYOTA PRODUCTION SYSTEM

The Toyota Production System (TPS) represents the foundation of Lean Manufacturing, which evolved into Lean Management during the last seven decades and became applicable to a broad range of small, medium-sized, and large organizations. Today, lean management is equally important to manufacturing and non-manufacturing companies alike.

The Toyota Production System was developed by Kiichiro Toyoda and his team in Toyota Motor Corporation during the 20th century and its main purpose has been "the complete elimination of all waste" in pursuit of the most efficient manufacturing methods. This production control system has been developed and continuously improved since 1950’s with the main objective of "manufacturing vehicles ordered by customers in the quickest and most efficient way, in order to deliver the vehicles as quickly as possible."

The Toyota Production System is based on several well-known Japanese management methodologies, including Kaizen, Just-In-Time, Jidoka, and Total Productive Maintenance (TPM) introduced below.

MAIN PILLARS OF THE TOYOTA PRODUCTION SYSTEM


Kaizen	Just-In-Time	Jidoka (Autonomation)	Total Productive Maintenance (TPM)

KAIZEN

The word ”Kaizen” means “good change” or "improvement" in Japanese. Kaizen prescribes “continuous improvement in personal life, home life, social life, and work life”.

According to Masaaki Imai, the father of Continuous Improvement and a pioneer who introduced Kaizen Philosophy all over the world, Kaizen is the single most important concept in Japanese Management and the key to Japanese competitive success. When applied to the workplace, kaizen means continuous improvement of everything by everyone - managers and workers alike.

Kaizen may be a short word, but it represents a very deep and strong culture - a culture of continuous all-around improvement of everything and everywhere. Kaizen is one of the most commonly used words in Japan. As a concept, kaizen is totally ingrained in the minds of Japanese people who "think and breathe" kaizen without realizing it. Many successful Japanese companies adopted kaizen strategy and values as their basic approach to business management.

According to Masaaki Imai, Western business people have been asking for many years how did the Japanese companies achieve such a phenomenal success. Well, the secret is out - and its name is kaizen!

Implementation of kaizen is discussed in this check point. Kaizen is also discussed in detail in Tutorial 4.

JUST-IN-TIME (JIT) METHODOLOGY

Just-In-Time represents a “methodology for eliminating or minimizing waste in the total operational process from purchasing through distribution”.

The main purpose of Just-In-Time Methodology, or JIT Methodology, is “ making only what is needed, when it is needed, and in the amount needed!" The JIT methodology was envisioned by Kiichiro Toyoda, the president of Toyota Corporation between 1941 and 1950, and developed by Taiichi Ohno, who is considered the father of Toyota Production System, in 1950’s.

Based on JIT methodology, each process must produce only what is needed “just-in-time” by the next process in a continuous flow environment. JIT methodology prescribes manufacturing high quality products efficiently through the complete elimination of waste, inconsistencies, and unnecessary requirements in the production flow.

Although just-in-time originated in a manufacturing environment, it became widely applicable to manufacturing and non-manufacturing organizations alike including service, merchandizing (retail and wholesale), contracting, and project management companies.

Implementation of Just-In-Time is discussed in this check point. Just-In-Time is also discussed in detail in Tutorial 4.

JIDOKA

The word Jidoka is loosely translated from Japanese as "automation with a human touch".

Jidoka means that “when a problem occurs in any process, the equipment must be stopped immediately, thereby preventing defective products from being produced”. This in turn will help maximizing high level of quality and minimizing waste. According to jidoka principles, "quality must be built in during the manufacturing process!"

The basic concept of jidoka was originated by Sakichi Toyoda, the founder of Toyota Corporation, in the beginning of the 20th century. The main purpose of jidoka is to maximize visualization of problems in any manufacturing process. This will help in preventing the production of defective products and result in securing high level of product quality.

Based on jidoka guidelines, if an equipment malfunction or a defective part is discovered, the affected machine must stop automatically, and operators must cease production and correct the problem as soon as possible. Jidoka is critical in the implementation of the just-in-time methodology, whereby all manufactured parts must meet pre-determined quality standards to ensure zero defects.

Implementation of Jidoka is discussed in detail in this check point.

TOTAL PRODUCTIVE MAINTENANCE (TPM)

The prime purpose of Total Productive Maintenance (TPM) is to maximize the overall efficiency of equipment and tooling used in the product and service production processes and to minimize operational losses due to equipment and tooling failure.

Since different types of equipment and tools may be used in various manufacturing and non-manufacturing companies, TPM represents a critical function designed to enable any organization to provide the best possible value of products and services to customers at the best possible price.

The traditional TPM program was developed in Japan in 1960’s and it is based on the ”5S” Methodology, which became an integral part of Toyota Production System. The ”5 S” methodology was developed by Hiroyuki Hirano as a part of his overall approach to production systems. This methodology consists of five stages, termed in Japanese as:

1.	*Seiri - Seiri Sort* out all tools and materials and eliminate all unnecessary items in the workplace.
2.	*Seiton - Seiton Straighten* or arrange all work, tools, and materials to create an efficient work flow.
3.	*Seiso - Seiso Shine* or systematic cleaning of workspace, equipment, and tools.
4.	*Seiketsu - Seiketsu Standardize* all operational procedures and tool setups in the workplace.
5.	*Shitsuke - Shitsuke Sustain* or ensure continuous adherence to rules and procedures in the workplace.

The main objective of the "5 S" methodology is to provide basic guidelines to operators for organizing their tools and equipment in the workspace to ensure maximum efficiency and productivity in the operational facility.

The TPM program also contains several important elements, or TPM Pillars, including autonomous maintenance, planned maintenance, quality maintenance, focused maintenance, predictive maintenance, training and education, and safety procedures.

Implementation of Total Productive Maintenance is discussed in detail in this check point.

THE TPS HOUSE

Toyota developed a graphic representation of Toyota Production System and summarized all main elements of this system in a model TPS House presented below. Hopefully, this will help you to better understand the essence of the Toyota Production System and the basic concepts of lean management.

ADDITIONAL INFORMATION ONLINE

•	Toyota Production System By Prithvi Ghag.
•	The Toyota Way Philosophy By Toyota MHEurope.
•	The Toyota Way To Lean Leadership By Jeffrey Liker.
•	Driven: Sharing The Toyota Way By Toyota North America.
•	Toyota Production System Principles By Toyota Parts Center.

4. BASIC LEAN MANAGEMENT VALUES, PRINCIPLES, AND GUIDELINES

THE MAIN FOCUS OF LEAN MANAGEMENT

The main focus of Lean Management is:

To improve the overall performance and profitability of any organization by providing maximum value to customers based on best possible product and service quality, reliability, price, warranty, and after-sales service while minimizing waste.

You and your management team must follow lean management guidelines to identify, evaluate, and improve all operational activities within your organization on a continuous basis, including general administration, human resources, finance and accounting, operations, marketing and sales. This will enable your company to offer the best possible value of products or services to your customers and ensure their high level of satisfaction. Ultimately, this will provide your organization with the best long-term opportunity for a successful business performance in a highly competitive marketplace.

LEAN ENTAILS EVALUATION AND IMPROVEMENT OF ALL OPERATIONAL ACTIVITIES


Evaluate And Improve General Management Activities	Evaluate And Improve Human Resources Management Activities	Evaluate And Improve Financial Management Activities	Evaluate And Improve Operations Management Activities	Evaluate And Improve Marketing And Sales Management Activities

Lean management process is based on several Lean Management Guidelines outlined below.

BASIC LEAN MANAGEMENT VALUES AND GUIDELINES

1.	Treating Each Customer As The Most Important Part Of The Business. Adopting a philosophy that customers are always the most important part of every business process and must be treated accordingly.
2.	Providing Each Customer With The Best Possible Value. Maintaining focus on providing the best possible value of products and services and after-sales service and product support to customers on a continuous basis.
3.	*Meeting Customers’ Requirements At The “Right Time”* And “At The Right Price”.** Ensuring that customers’ requirements are met at the “right time” and the “right price” on a continuous basis.
4.	Respecting All People Involved In The Business Process. Providing maximum care, dignity, and respect to all people involved in the business process, including customers, employees, suppliers, business partners and associates on a continuous basis.
5.	Identifying Operational Weaknesses And Taking Corrective Measures. Identifying weaknesses in various operational processes within the organization and taking corrective measures in a timely manner on a continuous basis.
6.	Ensuring Continuous Operational Performance Evaluation And Improvement. Adopting a philosophy of operational performance evaluation and improvement within the organization on a continuous basis.
7.	Streamlining Operational Processes, Maximizing Efficiency, And Eliminating Or Minimizing Waste. Streamlining various operational processes, maximizing efficiency, and eliminating or minimizing waste within the organization on continuous basis.
8.	Maximizing Quality At The Source Of All Operational Processes And Activities. Ensuring highest level of quality at the source of each operational process and activity within the organization.
9.	Implementing Operational Process Improvements On Organization-Wide Basis. Ensuring that operational process improvements take place on organization-wide basis and involve all business partners, employees, and suppliers on continuous basis.
10.	Ensuring Continuous Personal Self-Evaluation And Improvement. Adopting a philosophy of regular personal self-evaluation, learning, and self-improvement on a continuous basis.
11.	Motivating All Employees To Adhere To High Ethical Standards Of Behavior. Ensuring that all employees adhere to the highest level of ethical behavior throughout all operational activities and interaction with other employees, customers, and suppliers.
12.	Compensating Employees Fairly Based On Their Performance. Providing fair reward, compensation, and acknowledgement to all employees, based on their performance within the organization.
13.	Ensuring Maximum Safety For All Customers And Employees. Ensuring highest level of safety for all customers and employees related to all operational processes and activities within the organization.
14.	Ensuring Continuous Professional Growth Of Partners And Employees. Ensuring that all business partners and employees have the opportunity to grow and improve their performance within the organization on a continuous basis.
15.	*Paying Attention To “How”* Positive Results Are Achieved.** Leading the organization toward superior performance and results while paying attention to “how” these results are achieved on a continuous basis.
16.	Cultivating Long-Term Relationships During The Business Process. Cultivating long-term mutually-beneficial relationships with customers, business partners, employees, and suppliers involved in the business process on a continuous basis.
17.	Ensuring Improvement Of All Value-Added Activities. Ensuring steady improvement of all value-added operational activities within the organization on a continuous basis.

ADDITIONAL INFORMATION ONLINE

•	Lean Principles By Agame Consulting.
•	Lean Manufacturing Principles By EMS Consulting Group.
•	The Five Principles Of Lean By Lean Consulting Works LLC.
•	The Principles Of The Lean Business System By Peter Hines.
•	The Toyota Way - 14 Management Principles By C.K. Vishwakarma.

5. VALUE-ADDED OPERATIONAL ACTIVITIES

WHAT IS VALUE?

Value is the worth placed upon products and services by customers.

In lean management, it's all about Value. Not just any value, but the best possible value which should be offered to customers on a continuous basis. This value must be based on the best possible quality and reliability of products and services delivered to customers at the best possible price and in a timely manner. Thus, the main objective of lean management is to identify what type of value is required, when the value needs to be improved, how the value should be added, and who will be involved and responsible for the value-added process within the organization.

WHAT IS PERCEIVED VALUE?

Perceived Value is the value which your customers attach to your products and services. Based on lean management principles, only your customers can attach a perceived value to your products and services. Remember that:

It’s not really what you think your product or service is worth, it’s what your customers think about the value of your product or service and how they can benefit from it.

Subsequently, only your customers will decide if they are willing to pay the price which you are asking for your products or services. Moreover, since there are various operational activities involved in providing products and services, only your customers will decide which activities will actually add value and which won’t.

VALUE-ADDED OPERATIONAL ACTIVITIES

Every operational activity within your organization either adds value to your product or service, or doesn’t. To be considered as a Value-Added Operational Activity, it has to meet the following three requirements:

1. The customer must be willing to pay for a specific operational activity.
2. A specific operational activity must transform a product or service in a positive way.
3. A specific operational activity must be done correctly the first time around.

Here are some examples of what customers are willing to pay for and what they are not willing to pay for.

WHAT ARE CUSTOMERS WILLING OR NOT WILLING TO PAY FOR?


Customers Are Willing To Pay For:	*Customers Are Not* Willing To Pay For:**
• The actual product cost. • The actual service cost. • The actual labor cost. • The actual material cost. • The actual inventory cost. • The actual plant and equipment cost. • The actual shipping cost.	• Product packaging costs. • Marketing and selling costs. • Indirect labor and supervision costs. • Administration and management costs. • Plant maintenance and repair costs. • Business accounting costs. • Employee hiring and training costs.

DO IT RIGHT THE FIRST TIME AROUND

You must remember that if any operational activity is not done correctly the first time around, it will triple your cost as explained below:

•	*The first cost* is incurred when a particular operational activity is completed the first time around.
•	*The second cost* is incurred when a particular operational activity must be re-done because it was not done correctly the first time around.
•	*The third cost* is incurred because if a particular operational activity would have been done correctly the first time around, you could have completed a new operational activity instead and receive an additional payment for it.

Ultimately, you and your management team must do all you can to maximize the value of your products and services offered to customers. The best way of achieving this important objective is to identify and eliminate or minimize non-value-added operational activities within your company.

6. NON-VALUE-ADDED OPERATIONAL ACTIVITIES

WHAT IS WASTE?

In lean management, all Non-Value-Added Operational Activities are considered as Waste and are classified as "Three M's", which are known as Muda, Mura, and Muri. It is very important that you and each member of your management team fully understand the difference between each type of waste, because it will enable you to identify, eliminate or minimize wasteful operational activities within your organization and subsequently increase your company's productivity and profitability.

THREE TYPES OF WASTE


Muda	Mura	Muri
*Muda means “waste” in Japanese.* Muda is any non-value added operational activity that consumes resources without creating real value for a customer. There are two types of muda: • *Type 1 Muda* includes any type of “non-value-added activities”, which are necessary in supporting value-added activities and should be improved, but not eliminated. This relates to essential administration, human resources, financial, operations, marketing, and sales management activities. • *Type 2 Muda* includes any type of “non-value-added activities”, which are not essential and should be identified and eliminated as soon as possible.	*Mura means “unevenness” in Japanese.* Mura is any irregular or unplanned non-value-added operational activity, which should be identified, eliminated or minimized as soon as possible. Examples of mura include product testing and inspection, redoing defected products and services, repairing returned products, incurring labor, plant and material costs for reworking previous defects, plant breakdown costs and other unscheduled working activities, unnecessary waiting for any reason within the organization or in the operational facility, conducting unproductive management meetings or unproductive meetings with employees, suppliers and customers.	*Muri means “overdoing” in Japanese.* Muri is any non-value added operational activity which causes unnecessary or unreasonable overloading of people, plant and systems within an organization and should be identified, eliminated or minimized as soon as possible. Examples of muri include issuing wrong instructions in the workplace which will cause unnecessary waste of human, material, and financial resources, poorly designed working processes, tasks, and activities which may cause product or service defects, require additional repair work, incur unnecessary costs, and produce harmful results for customers and employees.

According to lean management, there are nine basic Forms Of Waste outlined below.

NINE BASIC FORMS OF WASTE

1.	Transportation. In a manufacturing company, transportation waste is the unnecessary movement of raw materials, work-in-process and finished goods from the supplier to the company, between various departments within the company and between the company and the customers. In a service and contracting company, transportation waste is the unnecessary movement of people and documentation between the supplier and the company, between various departments within the company and between the company and the customer. Main reasons for excessive transportation include poor supply chain design in the supplier-company-customer process, poor plant layout within the facility, and poor planning and communication within the company.
2.	Inventory. Inventory waste represents a particularly serious problem in a manufacturing company. Main reasons for excessive inventory include poor understanding of customers’ needs and subsequent mismatch between customers’ demand and the company’s ability to supply products, excessive levels of inventory quantities, including raw materials, work-in-process, and finished goods, and ineffective inventory control. In service and contracting companies, the inventory waste is usually less problematic, but must always remain under tight control.
3.	Motion. Motion waste is a direct result of excessive movement of people between the company and its suppliers and customers, and between various departments within the company. Motion waste also includes unnecessary delays and waiting for raw materials, work-in-process and finished goods, tools and equipment. Main reasons for excessive motion are poor planning of operational activities, unsuitable plant layout, and weak coordination of activities with suppliers and customers.
4.	Waiting. Waiting and delays represent total waste. Main reasons for waiting and delays include poor planning of operational activities within the company, poor communication between the company and its suppliers and customers, poor communication between personnel within the company, shortage of raw materials, work-in-process, finished goods, tools, and equipment within the company, late deliveries from suppliers, and imbalance of operational activities within the company.
5.	Overproduction. Overproduction means producing more than required. This type of waste represents a particularly serious problem in manufacturing companies and it is less of a problem in service or contracting companies. Main reasons for overproduction include poor understanding of customers’ needs and subsequent mismatch between customers’ demand and the company’s excessive production output, excessive level of plant capacity utilization, and inappropriate use of employees within the operational facility.
6.	Overprocessing. Overprocessing means adding too much value to the finished product or service, or adding excessive value which can’t be used and will not be appreciated and paid by customers. Main reasons for overprocessing include poor understanding of customers’ needs and expectations, and subsequent mismatch between customers’ needs and the company’s ability to meet those needs without exceeding product or service cost parameters.
7.	Defects. Defects are errors in products and services which are rejected by customers. All defects represent waste of materials, labor, plant, and operational facilities. Every time when defects occur, the cost of each defect must be tripled. The first cost of a particular defect is the wasted initial cost of materials, labor, plant, and operational facilities. The second cost of a particular defect is the cost of materials, labor, plant, and operational facilities required to re-do the specific product or service. The third cost of a particular defect is the wasted cost of another product or service which could have been completed if the initial defect wouldn’t have happened in the first place.
8.	Underutilization Of Employees. Underutilization of employees means not using all available skills, talents, abilities, ideas, and energy of current personnel within the organization. This type of waste usually exists in organizations where business owners and managers are not able or willing to recognize that employees may possess untapped skills and desire to use these skills if given a chance. Underutilization of employees also represents a major de-motivation factor which can cause further decline in the company’s productivity and profitability.
9.	Overspending. Overspending means spending more material, financial, and human resources than is necessary to achieve specific operational objectives. Overspending represents a total waste because excessive use of the company’s resources ultimately translates into increased operating expenses, reduced profitability and lower return on investment. Main reasons for overspending include poor management, planning and controlling skills, and abilities of the company’s management team.

EXAMINE ALL OPERATIONAL ACTIVITIES AND IDENTIFY WASTE

You and your management team must examine all value-added and non-value-added operational activities and identify excessive use of material, financial, and human resources within your organization in a timely manner to ensure successful performance. You must also identify and improve all non-value added operational activities (type 1 muda) which will remain essential to your business activities, as explained next.

ESSENTIAL NON-VALUE ADDED OPERATIONAL ACTIVITIES

Type 1 Muda includes many non-value added operational activities which may be considered "waste" in a lean organization. However, since these activities are essential in supporting the daily operation of your company, based on traditional Western-style business management principles, they should be evaluated and improved as much as possible. It is critical, therefore, that you and each member of your management team become fully familiar with relevant elements of operational management, explained in detail in this program.

IDENTIFY ESSENTIAL NON-VALUE-ADDED ACTIVITIES IN EACH OPERATIONAL AREA


General Management Activities	Human Resources Management Activities	Financial Management Activities	Operations Management Activities	Marketing And Sales Management Activities

IMPROVE YOUR CROSS-FUNCTIONAL BUSINESS KNOWLEDGE

Improved cross-functional business knowledge by each member of your management team in all operational areas will become the best guarantee for minimizing all wasteful activities and maximizing your company’s productivity, profitability, and return on investment. This knowledge is at the core of the Lean Business Engineering Method presented in this program.

You and your management team must ensure timely identification of various Type 2 Muda, Mura, and Muri non-value-added operational activities and prepare a detailed plan to eliminate or minimize waste within your organization. Subsequently, this will reduce your operational costs and enable you to offer the best product or service value to your customers and ensure your company’s profitability.

ADDITIONAL INFORMATION ONLINE

•	Waste Series By Simplex Improvement.
•	Seven Wastes Presentation By Else, Inc.
•	The Seven Deadly Wastes By Gemba Academy.
•	The Seven Types Of Waste - Part 1 By Rexroth Bosh Group.
•	The Seven Types Of Waste - Part 2 By Rexroth Bosh Group.

7. SMALL BUSINESS EXAMPLE
VALUE-ADDED ANALYSIS

WHAT IS VALUE-ADDED ANALYSIS?

Does it add value or doesn’t it add value? This is the question!

According to lean management, Value-Added Analysis is a process which entails summarizing all operational activities, which relate to production of specific products and services, and determining whether each activity adds value or doesn’t add value to the final product or service.

EXAMPLE OF VALUE-ADDED ANALYSIS

Imagine that you are hungry and you have decided to visit one of your favorite fast food places for lunch. You walk into the restaurant, wait in line for a few minutes, place your order with a friendly person behind the counter, and pay your charges. Then you sit down, wait for a while, and your meal arrives on a plate – it looks fresh, warm, and very appetizing. You enjoy your meal and, upon completion, walk out from the restaurant feeling satisfied.

Now, ask yourself what has really had to happen to provide you with a positive fast-food experience, i.e. allowing you to experience value received during this event? The answer to this question will entail summarizing each operational activity involved in this process, known as a Value Stream, and determining whether it adds value to customer’s experience or doesn’t.

Value-added analysis entails examination of each operational activity from the customers’ perspective and answering three key questions outlined below.

VALUE-ADDED ANALYSIS SUMMARY

No.	Description Of The Operational Activity	1. Is the customer willing to pay for it?	2. Does it transform a product or a service in a specific way?	3. Was it done correctly the first time around?
1.	The restaurant must be open for business and have "A" grade.	Yes	No	Yes
2.	The customer must be able to invite friends for a meal.	No	No	Yes
3.	Food processing equipment must be in good working order and available for use.	No	Yes	Yes
4.	Raw materials (fresh food ingredients) must be ordered in right quantity in a timely manner and available for use.	Yes	Yes	Yes
5.	Employees must be well trained and available to provide friendly service to customers.	Yes	Yes	Yes
6.	The food menu must be printed and all prices must be clearly displayed.	No	Yes	Yes
7.	The food must be prepared exactly to a customer's order.	Yes	Yes	Yes
8.	The food must be delivered to a customer in a timely manner.	Yes	Yes	Yes
9.	The food must be tasty, warm, and ready for consumption.	Yes	Yes	Yes
10.	The customer must be able to pay for the food by credit card, check, or by cash.	No	No	Yes
	Total "Yes"	6	7	10
	Total "No"	4	3	0
	Actual Value-Added Activity Level	Total "Yes"__ = 23 = 77% Total Answers 30

In a perfect world, you would find 30 "Yes" answers to all questions in the example above, which would indicate ideal value-added activity at a 100% level. However, in this real-world situation customers may identify 7 non-value added activities, as shown above, thereby reducing the actual value-added activity level to 77%.

When you decide to complete Value-Added Analysis related to your company's activities, you may follow the above-mentioned simple example to accomplish this task. Your analysis must include all operational activities, related to your specific products or services, taking place at your facility and you will have to determine which activities add value to your products or services and which don't.

ADDITIONAL INFORMATION ONLINE

•	Value Series By Simplex Improvement.
•	Value Chain Analysis By Dennis Adams.
•	Toyota Production System By Prithvi Ghag.
•	Take The Value Stream Walk By Jim Womack.
•	Focus On Non-Value Added Activities To Reduce Costs By Mike Madden.

8. PREPARE YOUR COMPANY FOR LEAN TRANSFORMATION

SET YOUR LEAN FOCUS

Hopefully, by now you are gradually becoming a “believer” that Lean Management can really make a big difference in your business and contribute substantially to your long-term business success.

Are you ready to increase your company’s profitability and maximize the return on your investment by transforming your business into a lean organization?

If you are ready for the Lean Transformation Process, then your company’s Lean Focus and main objective should be:

To create satisfied customers, to treat them like royalty, and to provide each customer with the best possible value of products and services, based on the highest possible quality and reliability at the best possible price.

You must remember that only your customers will decide what “the best quality” and “the best price” of products or services are. Subsequently, only they will decide whether or not to do business with you. All you can do is to maximize your efforts in earning their business and continue following lean management guidelines.

Everybody within your organization, who is directly or indirectly involved in dealing with your customers, must be well trained and prepared to treat each customer like “royalty” to secure their complete and continuous satisfaction. This superior treatment of customers must apply not only during the selling process but also extend to the after-sales services to ensure long-term customer satisfaction and loyalty toward your organization.

ASK THE RIGHT QUESTIONS AND FOLLOW THE LEAN LOGIC SEQUENCE

The lean transformation process follows certain logic which is applicable to various operational activities within the organization. For this reason, you and your management team should follow and implement the Lean Logic Sequence which is described by ten questions and answers, or “The Ten How’s”, outlined below. Remember, there are no wrong answers, only wrong questions. So, if you really want to succeed, you should always ask the right questions at the right time.

Note that:

• Each Question (Q) represents your specific business objective.
• Each Answer (A) provides a specific lean management guideline for your business.

THE LEAN LOGIC SEQUENCE: TEN QUESTIONS (Q.) AND ANSWERS (A.)

Q. 1: How can we maximize the profitability of our business?

A. 1: By achieving the best possible operational and financial results through our business activities.

Q. 2: How can we achieve the best possible operational and financial results through our business activities?

A. 2: By providing our customers with the utmost respect on a continuous basis and the best possible value of products and services in a timely manner.

Q. 3: How can we provide our customers with utmost respect on a continuous basis?

A. 3: By introducing lean culture within our organization and implementing effective lean training of our employees.

Q. 4: How can we introduce lean culture within our organization and implement effective lean training of our employees?

A. 4: By evaluating our current values and organizational culture, employee performance and training methods, and implementing lean management and employee training guidelines.

Q. 5: How can we provide our customers with the best possible value of products
and services?

A. 5: By offering our customers the best possible quality of products and
services at the best possible prices and after-sales service.

Q. 6: How can we offer our customers the best possible quality of products and
services at the best possible prices and after-sales service?

A. 6: By developing and implementing operational plans (hoshin planning), streamlining all operational activities, maximizing operational efficiency through improved value-added activities and eliminating or minimizing non-value added activities and waste within our organization.

Q. 7: How can we implement our operational plans, streamline our operational activities, maximize our operational efficiency, and minimize waste?

A. 7: By evaluating and improving all current operational activities related to each product or service category within our organization through value-stream mapping (VSM).

Q. 8: How can we evaluate and improve current operational activities within our organization through value-stream mapping (VSM)?

A. 8:

By identifying and summarizing all value-added and non-value-added operational activities, conducting value-stream analysis and developing improved value-stream maps, conducting kaizen events, and implementing improved flow processes based on just-in-time, jidoka, and total preventive maintenance guidelines within our organization.

Q. 9: How can we provide the best possible value of products and services to our customers in a timely manner?

A. 9: By implementing improved flow processes based on kaizen, just-in-time, jidoka and total preventive maintenance guidelines within our organization.

Q. 10: How can we ensure short- and long-term improvement of our company's operational performance and financial results?

A. 10: By adhering to all lean management methods and guidelines within our organization on
a continuous basis as described above.

LEAN TRANSFORMATION IS A NEVER-ENDING JOURNEY

Lean transformation is not a sprint. It is a marathon!

You and each member of your management team must realize that Lean Transformation is not a specific destination, but a never-ending long-term journey. You must begin this journey at a starting point, which is represented by your company’s current situation, and be prepared to continue your journey into the future on a step-by-step basis. The key to your company’s lean transformation success will be:

The total commitment to lean management principles, methods, and guidelines by you and each member of your management team.

Through your lean journey you will discover several important management methods, called Lean Management Methods, outlined below.

BASIC LEAN MANAGEMENT METHODS


Kaizen	Just-In-Time	Jidoka (Autonomation)	Total Productive Maintenance (TPM)

Each lean management method is discussed in detail in this check point.

ADDITIONAL INFORMATION ONLINE

•	Lean Transformation Plan By Jacob Isaac-Lowry.
•	Lean Transformation Summit 2008 - Jim Womak, LEI.
•	Lean Transformation Summit 2008 - Daniel T. Jones, LEI.
•	Lean Transformation Summit 2008 - Takashi Tanaka, LEI.
•	Lean Transformation Summit 2009 - Daniel T. Jones, LEI.

9. BASIC TASKS IN THE LEAN TRANSFORMATION PROCESS

FAMILIARIZE WITH THE LEAN TRANSFORMATION PROCESS

You and each member of your management team should become familiar with the Lean Transformation Process designed to transform your company from its' current state into a new and improved lean state. The main purpose of this process is to enable you and your management team to take a step-by-step approach toward meeting your specific business objectives.

Lean transformation process entails completing several important steps outlined below.

BASIC STEPS IN THE LEAN TRANSFORMATION PROCESS

1. Adopt Basic Lean Management Guidelines In Your Company.

2. Make Lean A Part Of Your Company's Organizational Culture.

3. Create A Lean Management Team And Develop Lean Team Managers.

4. Identify What Your Customers Want And Develop Your Best Value Proposition.


Needs	Wants	Delighters

5. Develop And Implement Hoshin Planning In Your Company.


Hoshin Strategic Planning		Hoshin Operational Planning

6. Develop And Implement Cross-Functional Operational Plans In Your Company.


Lean General Management Plan	Lean Human Resources Management Plan	Lean Financial Management Plan	Lean Operations Management Plan	Lean Marketing And Sales Management Plan

7. Complete Value-Stream Mapping And Value-Added Analysis In Your Company.


Level 1: Current State	Level 2: Ideal State	Level 3: Future Improved State

8. Implement The Improved Value Stream In Your Company.


Kaizen	Just-In-Time	Jidoka (Autonomation)	Total Productive Maintenance (TPM)

9. Repeat The Lean Transformation Process As Required.

ADDITIONAL INFORMATION ONLINE

•	Lean Change Management By Jason Little.
•	Lean Change Management By Mohamed El-Sayed.
•	A Lean Approach To Change Management By A.T. Kearny, Inc.
•	Lean Change Management By Kyle Toppazzini And Lee Consulting.
•	Lean's U.S Origins: The Seed Of Change Is Planted By John Bernard.

10. ADOPT BASIC LEAN MANAGEMENT GUIDELINES IN YOUR COMPANY

BASIC LEAN MANAGEMENT GUIDELINES

Lean transformation process requires that you and each member of your management team study and adopt Basic Lean Management Guidelines outlined below.

TASK 1: ADOPT BASIC LEAN MANAGEMENT GUIDELINES IN YOUR COMPANY

1.	Be Open-Minded, Self-Critical, And Prepared For A Change. Be completely open-minded and self-critical regarding your personal behavior and your company’s business activities and prepared for a change to improve your business performance.
2.	Identify Operational Inefficiencies And Waste. Identify and evaluate operational inefficiencies and wasteful processes and activities related to your company’s products and services.
3.	Prepare A Plan Of Action To Minimize Inefficiencies And Waste. Develop a plan of action to improve operational processes and activities related to your company’s products and services.
4.	Improve Operational Processes And Activities. Implement your plan of action to improve operational processes and minimize wasteful activities related to your company’s products and services on a continuous basis.
5.	Ensure Employee Participation. Motivate every employee to maximize personal performance and participate in improving operational processes and activities within your organization.
6.	Ensure That Your Customers Are Treated Like Royalty. Motivate every employee to treat each customer as the most important person within your organization.
7.	Offer Your Customers The Best Possible Value. Ensure that all customers receive best possible products and services at best possible prices and after-sales service from your organization.
8.	Ensure That Your Employees Are Treated With Genuine Respect. Ensure that every employee within your organization is treated with genuine dignity, care, and respect.
9.	Ensure Maximum Safety Of Your Customers And Employees. Ensure that maximum safety is provided to all your customers and employees within your organization.
10.	Develop And Implement Hoshin Strategic And Operational Planning. Develop and implement hoshin strategic and operational planning designed to maximize your organization’s performance, productivity, profitability and return on investment.
11.	Implement Kaizen Guidelines. Implement kaizen guidelines to relevant operational activities within your organization designed to improve performance of all employees and quality of all products and services for your customers.
12.	Implement Just-In-Time Guidelines. Implement just-in-time guidelines to relevant operational activities within your organization to ensure the best possible value of products and services for your customers.
13.	Implement Jidoka (Autonomation) Guidelines. Implement jidoka (autonomation) guidelines to relevant operational activities within your organization.
14.	Implement Total Productive Maintenance (TPM) Guidelines. Implement total productive maintenance (TPM) guidelines to relevant operational activities within your organization.
15.	Plan And Implement Value-Added Activities. Plan and implement value-added activities designed to ensure the best possible value of products and services for your customers.
16.	*Plan And Implement A Continuous Flow Based On A “Pull”* Sequence.** Develop a continuous flow of processes and activities within your organization based on a “pull” operational sequence.
17.	Plan And Implement Standardized Operational Processes And Activities. Simplify and standardize all operational processes and activities related to products and services within your organization.
18.	Plan And Implement Highest Level Of Quality At The Source. Ensure highest possible quality at the source of all operational processes and activities related to products and services within your organization.
19.	Plan And Implement Effective Cross-Functional Communication. Ensure clear, continuous, and cross-functional communication between all employees within your organization.
20.	Promote Individual Growth And Knowledge Improvement. Ensure individual growth and knowledge improvement by all employees within your organization on a continuous basis.
21.	Challenge And Motivate All Employees. Challenge and motivate all employees to continue effective implementation of all lean management guidelines within your organization.
22.	Create A Blame-Free Working Environment. Motivate all employees to think “outside-the-box” and express their creativity in improving various operational processes and activities without being afraid that they may be blamed for any potential negative consequences.
23.	Never Rest On Your Laurels. Ensure that employees in your organization never settle for what has been achieved so far, and understand that lean process and continuous improvement are not a destination, but a journey designed to make your company more successful by doing the “right things” for your customers and employees.

ADDITIONAL INFORMATION ONLINE

•	Lean Principles By Peter Hines, Cardiff University.
•	The Toyota Way Philosophy By Toyota MHEurope.
•	Driven: Sharing The Toyota Way By Toyota North America.
•	Toyota Production System Principles By Toyota Parts Center.
•	Book Review: The Toyota Way 14 Management Principles By Jeffrey Liker.

11. MAKE LEAN A PART OF YOUR COMPANY'S ORGANIZATIONAL CULTURE

TASK 2: MAKE LEAN A PART OF YOUR COMPANY'S ORGANIZATIONAL CULTURE

Lean Transformation Process entails:

1. Evaluating your company’s current Organizational Culture.
2. Examining the basic values which guide you and your management team.
3. Improving the organizational culture according to lean management guidelines.

Every organization is unique in many different ways and your company is not an exception. For this reason, it is critical that you and your management team “take stock” of the organizational culture which currently exist in your company. This process entails answering questions which relate to your personal core values and your company’s basic principles and priorities.

DECIDE WHAT IS REALLY IMPORTANT TO YOU

Is This Most Important To You?

Or, Is This Most important To You?

•	To make as much money for our company as possible in the shortest period of time.

•

•

•

•

•

To provide our customers with the best possible value of products and services in a profitable manner.
To ensure our customers' satisfaction while maintaining long-term profitable performance.
To ensure our customers' and employees' safety while maintaining long-term profitable performance.
To maintain strong reputation in the marketplace while maintaining long-term profitable performance.
To maintain high moral code in relation to customers, suppliers, and employees, while maintaining long-term profitable performance.

EVALUATE THE LEVEL OF YOUR MANAGERIAL ETHICS

You and your management team should also evaluate the level of Managerial Ethics which currently exists in your organization. Some business owners erroneously believe that short-term profits are the most important part of their business and everything else fails in comparison. They are often willing to cut corners to achieve their goals, employing questionable business ethics, and placing their personal interests above everything else. These business owners fail to realize that decency and honesty are actually the best long-term business policies.

On the other hand, there are many successful business owners, who conduct their business based on high moral code level. These business owners adhere to management principles and core values, based on decency and genuine caring for customers and employees, even if at times it may not be so profitable in the short term.

You and your management team are strongly advised to adopt Lean Values and make them an integral part of your organization.

Organizational Culture and Managerial Ethics are discussed in detail in Tutorial 1.

ADDITIONAL INFORMATION ONLINE

•	Lean Culture Introduction By Ankit Patel.
•	Changing The Culture By OK MFG Alliance.
•	Toyota Culture By Mark Evans, Toyota Manufacturing UK.
•	What Is Lean And How Important Is Culture Change? By Leading Edge Group.
•	Implementing TPS: A Cultural Transition By Jim Hauss, Raymond Corporation.

12. CREATE A LEAN MANAGEMENT TEAM AND DEVELOP LEAN TEAM MANAGERS

TASK 3: CREATE A LEAN MANAGEMENT TEAM AND DEVELOP LEAN TEAM MANAGERS

Lean transformation process requires a creation of an efficient Lean Management Team, or Lean Team, within your organization. In fact, the success or failure in transforming your business into a lean organization depends primarily upon your ability to create an efficient and cohesive lean team of managers and employees who will work together toward achieving common lean objectives.

The ultimate success of your lean team will depend substantially upon the characteristics, values, and experience of the Lean Team Manager. For this reason it is critical to ensure that each lean team manager within your organization possesses specific characteristics, which will enable your company to achieve desired results in the most cost-efficient manner. Some of these characteristics are summarized below.

CHARACTERISTICS OF A LEAN TEAM MANAGER

1.	A Thorough Understanding Of Lean Management Values, Principles, And Guidelines. A lean team manager must be prepared to learn and understand a broad range of lean management values, principles, methods, guidelines, and tools.
2.	Total Commitment To Implement Lean Management Principles And Guidelines. A lean team manager must be totally committed to the implementation of lean management principles and guidelines within the organization on an individual and team-level basis.
3.	Strong Analytical Ability To Evaluate Current Situation Within The Organization. A lean team manager must possess a strong analytical ability to evaluate current situation and quickly identify specific problems and inefficiencies related to various operational processes and activities within the organization.
4.	Total Commitment To A Continuous Improvement Of Processes And Activities. A lean team manager must be totally committed to a continuous improvement of operational processes and activities, based on kaizen principles and guidelines, within the organization.
5.	Strong Commitment To Maximize Quality Throughout The Organization. A lean team manager must be totally committed to maximize quality of products and services through improved quality of all operational processes and activities within the organization.
6.	Total Commitment To Identify And Eliminate Wasteful Activities. A lean team manager must be totally committed to identify, eliminate or minimize wasteful processes and activities within the organization through continuous value-added analysis.
7.	Strong Ability To Demonstrate Flexibility, Innovation, And Adaptability. A lean team manager must demonstrate and promote flexibility, innovation and adaptability to all members of the lean management team throughout the entire lean transformation process.
8.	Strong Ability To Develop Cost-Effective Solutions On Organization-Wide Basis. A lean team manager must provide sound and practical approach to resolving existing operational problems and developing new cost-effective solutions within the organization.
9.	Total Commitment To Deliver Maximum Value To Customers. A lean team manager must be totally committed to provide maximum value to customers through best possible quality and prices of products and services and best possible after-sales service.
10.	Strong Commitment To Hire High Quality Employees. A lean team manager must be able to identify and hire suitable employees who will be willing and able to follow lean management principles and guidelines on a continuous basis.
11.	Total Commitment To Effective Lean Management Training Of Employees. A lean team manager must be totally committed to provide effective individual and team training to all employees in various areas of lean management to secure cost-effective operational results within the organization.
12.	Strong Ability To Provide Clear Purpose And Direction To Each Team Member. A lean team manager must possess effective leadership skills and provide clear purpose and guidance to each team member to secure most effective results within the organization.
13.	Strong Ability To Respect, Reward, And Compensate Employees. A lean team manager must be able to demonstrate strong respect and be prepared to reward and fairly compensate employees according to their performance and contribution toward meeting the company’s objectives.
14.	Total Commitment To All-Around Safety Within The Organization. A lean team manager must be totally committed to ensure all-around safety concerning all customers and employees and related to all operational processes and activities throughout the organization on a continuous basis.
15.	Strong Ability To Communicate Effectively On A Cross-Functional Basis. A lean team manager must be able to communicate clearly and effectively on a cross-functional basis with all team members to secure effective implementation of lean management solutions within the organization.
16.	Continuous Focus On Improved Processes, Activities, And Results. A lean team manager must be able to focus on improving all operational processes, activities and specific operational results achieved by the organization on a continuous basis.
17.	Strong Ability To Be Open-Minded And Self-Critical. A lean team manager must be open-minded during the process of evaluating current situation, planning and implementing new operational solutions, and self-critical in evaluating accomplished results within the organization.
18.	Strong Ability To Build Long-Term Relationships With Suppliers And Customers. A lean team manager must be able to develop mutually beneficial long-term relationships with suppliers and customers on individual basis to secure the most productive organizational performance.
19.	Never Be Satisfied With Accomplished Results. A lean team manager must “never rest on his/her laurels” and be always focused and highly motivated to make further improvements related to all operational processes and activities within the organization.
20.	Strong Ability To Create A Blame-Free Working Environment. A lean team manager must be able to develop and cultivate a “blame-free” environment and identify specific operational problems without trying to assign blame to a particular employee, thereby motivating employees to think “outside-the-box” and develop new solutions without any reservations.
21.	Total Commitment To High Moral Values. A lean team manager must be totally committed to implementing and maintaining high ethical standards by all employees throughout various operational processes and activities within the organization on a continuous basis.
22.	*Total Commitment To “Politics-Free”* Working Environment.** A lean team manager must be totally committed to identify and eliminate any trace of “destructive political behavior” and “inter-office manipulations” and ensure a healthy and “politics-free” working environment within the organization.

You may also want to read The Lean Manager authored by Michael Balle and Freddy Balle and published by the Lean Enterprise Institute.

ADDITIONAL INFORMATION ONLINE

•	The Lean Manager By Michael Balle Institute Lean France.
•	Lean Summit 2012 - Michael Balle Institute Lean France, LEI.
•	Take The Value-Stream Walk By James P. Womak, Industry Week TV.
•	Lean Journey, Lean Summit 2012 Dan Jones, Lean Enterprise Academy.
•	Managing To Learn By John Shook, Senior Advisor Lean Enterprise Institute.

13. IDENTIFY WHAT YOUR CUSTOMERS WANT AND DEVELOP YOUR BEST VALUE PROPOSITION

TASK 4: IDENTIFY WHAT YOUR CUSTOMERS WANT
AND DEVELOP YOUR BEST VALUE PROPOSITION

If you ask a typical business owner: “What is your most important business goal?”, you will probably get this answer: “To make as much money as I can as quickly as possible!”. This may be interpreted as: “It is all about me, my business, my profits, and my return on investment!”

The truth is that it’s not just about you! It’s really about your opportunity to identify your customers’ specific needs and provide them with timely and cost-effective solutions and as a result to be rewarded in a profitable way. The bottom line:

This is about creating a win-win situation between your customers and you!

There is nothing wrong in “making money”! In fact, you do need money to survive in business. However, the problem is that some unscrupulous business owners try to “make quick profits” by cutting corners and using ethically-questionable practices to achieve their goals. One of the main objectives of the entire Lean Business 2100 Management Program is to show you how you can “make money in an honest way” and adoption of lean management principles and guidelines will be critical in achieving this goal. Remember that:

At the end of the day you are answerable to only one person – you see this person in the mirror every day!

For this reason, re-assure yourself, that only through solid values, based on honesty, genuine care, and respect for others, you will achieve your personal and business objectives and remain successful in the long term!

CRITICAL PRINCIPLE OF LEAN MANAGEMENT

You and each member of your management team should always remember one of the most critical principles of lean management:

Treat your customers like royalty and earn their loyalty!

You are strongly advised to embrace this principle and start treating all your customers like “royalty”. You and your management team must be prepared to do whatever you can to identify and satisfy your customers’ specific needs in a timely manner and your success will follow.

You must also make sure that everybody in your organization adopts this principle as soon as possible. This will enhance your company’s ability to provide your customers with the Best Possible Value of products and services on a continuous basis. As a result, you will be rewarded by an increased level of customers’ appreciation and long-term loyalty toward your organization. Ultimately, your company will be rewarded with an increased level of sales, profitability and return on investment.

Your customers are people, just like you, who have needs and wants and would like to solve their specific problems by using reliable products or services at reasonable prices. You must be able to identify your customers’ problems well in advance and view these problems as your opportunity to satisfy their needs, while achieving your business objectives. Once you adopt this critical business principle, you will improve your chances of developing a long-term mutually beneficial relationship with your customers and this could become the cornerstone of your business success in the future.

IT'S ALL ABOUT VALUE

Many business owners erroneously assume that price is one of the most critical factors why customers decide to buy specific products and services. The truth, however, is that:

It is not about the price, it’s all about the value offered to customers!

Just ask anybody who purchased a Japanese-made product and was prepared to pay more instead of paying less and taking chances. For this reason, you and your management team must understand what really is Value related to your products or services and how your customers perceive this value. You must also remember that:

• “You really get what you pay for!”
• “If it is too good to be true, it probably is!”

WHAT DOES VALUE REALLY MEAN?

You should always keep in mind that many savvy customers today, just like you, usually know what is in their best interests when making purchasing decisions. Moreover, you must remember that your customers alone will decide what “value” really means to them and all you can do is to maximize your efforts in offering your customers the best possible value on a continuous basis.

Value is a relative concept and it may mean many different things to different customers. For example, it may include the following:

• Ability to meet the customer’s specific needs.
• Price and available discounts.
• Quality and reliability.
• Timing, availability, and location.
• Warranty and after-sales service.
• Functionality and integration with other products and services.
• Reputation of the product or service provider.

When dealing with customers, it is critical that you and your management team understand what is really important to your customers and how they make their buying decisions. Depending upon the nature of your business, you may be dealing with customers in a Consumer Market or in an Organizational Market. Each market has its’ own unique requirements and specific factors which must be taken into consideration.

CLASSIFICATION OF THE BUYERS' MARKETS


The Consumer Market	The Organizational Market
This market consists of all individuals and households that purchase products and services for personal use.	This market consists of all individuals and organizations that purchase products and services for a broad range of organizational or commercial purposes.

Buyers Markets are discussed in detail in Tutorial 5.

WHAT DO CUSTOMERS WANT TO KNOW BEFORE THEY DECIDE TO BUY?

Some of the typical questions, which customers may ask during a Purchasing Decision-Making Process include:

• Do we really need this product or service?
• How will this product or service solve our specific problem?
• How suitable is this product or service for our specific needs?
• How reliable is this product or service?
• How reliable is the product manufacturer or service provider?
• How much does this product or service cost?
• Can we really afford this product or service?
• Can we afford not to have this product or service?
• Is financing available for this product or service?
• Are any discounts available regarding this product or service?
• How does the price compare with similar products or services from other providers?
• What is the return policy related to this product or refund for this service?
• What is the warranty available for this product or service?
• What kind of after-sales service can be expected from this provider?

Buying Behavior is discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

•	Customer Value Proposition By John Butler.
•	What Is A Value Proposition? By Steve Rankel & Product 180.
•	How To Create A Unique Value Proposition By Olga I. Mizrahi.
•	The Truly Unique Value Proposition By Strategic Resource Group.
•	Customer Proposition By Deva Rangarajan, Vlerick Business School.

14. THE KANO MODEL

WHAT IS THE KANO MODEL?

Do customers really know what they want?

The answer to this question is “usually, yes”, although sometimes customers aren’t completely sure what to expect until they are provided with various optional solutions regarding specific products and services.

In the 1980’s, a Japanese professor Noriaki Kano developed a Customer Satisfaction model known as the Kano Model, which provides a visual way to understand what customers really want and what is their reaction in various purchasing situations. The Kano model provides a graphic representation of customer satisfaction and classifies product and service attributes, based on how they are perceived by customers and their effect on customer satisfaction. The Kano model is useful in:

• Identifying specific customer needs.
• Determining product and service functional requirements.
• Identifying strengths and weaknesses of existing products and services.
• Developing new products and services.
• Analyzing competitive products and services in the marketplace.

Based on the Kano model, there are three levels of customer satisfaction as described below.

Source: Wikimedia Commons, File: Kano Model, 2007.

THREE LEVELS OF CUSTOMERS' SATISFACTION

1.	Needs - Based On Threshold Attributes. Needs represent the minimum requirements that customers may have regarding a specific product or service. Needs must be fulfilled by producers under any circumstances. If needs are not fulfilled, the customer will be absolutely dissatisfied and will reject a product or service. However, if the needs are completely fulfilled, the customer’s satisfaction will be on a neutral level, because this is the minimum of what the customer will accept. For example, the customer expects a new car to have completely functional breaks and to be in an excellent working order.
2.	Wants - Based On Performance Attributes. Wants represent flexible requirements that customers may have regarding a specific product or service. Customers expect their wants to be fulfilled by producers and their level of satisfaction will vary accordingly. This means that when customers’ wants are met to the minimum, they will express low level of satisfaction. On the contrary, when customers’ wants are met to the maximum, they will express a very high level of satisfaction. The price that customers will be willing to pay is directly related to the producer’s ability to meet their wants. For example, customers will be willing to pay more for a car which provides better fuel performance efficiency and comes with a better service warranty.
3.	Delighters - Based On Excitement Attributes. Delighters represent unexpected benefits regarding a specific product or service that customers may receive. Since customers are not aware of these types of benefits, they will not be dissatisfied if they will not receive them. However, if customers will receive these benefits, they will be pleasantly surprised and delighted and their level of satisfaction will grow exponentially. For example, customers will be delighted to have a spoiler and additional 60,000 miles maintenance service added as a “bonus” to their car purchase free of charge.

DEVELOP YOUR BEST VALUE PROPOSITION BASED ON THE KANO MODEL

You should develop your company’s Value Proposition based on the Kano model by identifying and summarizing your customers’ specific requirements for products or services. You should also evaluate your company’s current performance in meeting your customers’ requirements and ask the following questions:

• Are we doing enough in meeting our customers’ requirements based on Kano
   model?
• What else can we do to improve our performance in meeting our customers’
   requirements?
• What should we change in our operational activities to maximize our customers’
   level of satisfaction?

Your answers to the above questions will guide you in making important adjustments to specific operational processes within your organization. This will ultimately enable you to develop the best possible value proposition regarding your products or services to your customers and increase their level of satisfaction. Some of the important factors which directly relate to your company’s value proposition and to your customers’ level of satisfaction are summarized below.

EVALUATE YOUR CUSTOMERS' EXPECTED LEVEL OF
SATISFACTION BASED ON KEY VALUE PROPOSITION FACTORS

No.	Value Proposition Factor	Expected Level Of Customers' Satisfaction
No.	Value Proposition Factor	Very Poor	Poor	Fair	Good	Very Good
1.	Functionality. How does functionality of the product or service meet our customers’ needs?
2.	Performance. How effective is the product or service performance in meeting our customers’ needs?
3.	Reliability. How reliable is the product or service performance in meeting our customers’ needs?
4.	Suitability. How suitable is the product or service in meeting our customers’ needs?
5.	Shape And Size. How does the product physical shape or size meet our customers’ needs?
6.	Maintainability. How do the product or service maintenance requirements meet our customers’ needs?
7.	Integration. How will the product or service integrate with our customers’ current situation?
8.	Safety. How does the product or service safety meet our customers’ needs?
9.	Price And Discounts. How does the product or service selling price and discounts meet our customers’ needs?
10.	Purchasing Conditions. How does the installment payment and refund policy regarding product or service meet our customers’ needs?
11.	After-Sales Service. How does the after-sales service policy regarding product or service meet our customers’ needs?
12.	Warranty. How does the product or service warranty meet our customers’ needs?
13.	Free Benefits And Incentives. How do additional benefits and incentives related to the product or service meet our customers’ needs?

Buying Behavior is discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

•	Kano Model By Deepak Talab.
•	Kano Analysis By Kamran Kiyani.
•	Kano Analysis By 2020 Delivery Academy.
•	Two-Dimensional Quality By Anand Karandikar.
•	Engineering Design - The Kano Diagram By Steve Shooter.

15. DEVELOP AND IMPLEMENT HOSHIN PLANNING IN YOUR COMPANY

TASK 5: DEVELOP AND IMPLEMENT HOSHIN PLANNING IN YOUR COMPANY

Hoshin Kanri, or simply, Hoshin, means “direction setting” in Japanese.

Hoshin provides a practical lean methodology for developing and implementing strategic (long-term) and operational (short-term) plans in any small, medium-sized, or large lean organization and involves employees on all levels. Hoshin planning was popularized by Kaoru Ishikawa, a well-known management expert and author of Ishikawa Diagram. Later, hoshin planning was re-developed by another well-known management expert Yoji Akao. Hoshin represents the lean foundation for strategic and operational management planning and it follows the PDCA Cycle and process improvement principles.

According to lean management guidelines, you and your management team must focus your attention on the following essential elements during the Hoshin Planning outlined below.

ESSENTIAL ELEMENTS OF HOSHIN PLANNING

1.	Providing your customers with the best possible value of products and services.
2.	Improving all value-added operational processes and activities on a continuous basis.
3.	Eliminating or minimizing all non-value-added operational activities or waste.
4.	Integrating all value-added operational activities into an efficient value stream.
5.	Utilizing human, financial, operational, and marketing resources in the most efficient way.
6.	Providing maximum respect and safety to your customers and employees.
7.	Ensuring profitable performance and sound return on shareholders’ investment.

The main Advantages Of Hoshin Planning are summarized next.

MAIN ADVANTAGES OF HOSHIN PLANNING

1.	Focusing on shared objectives.
2.	Communicating shared objectives to all managers.
3.	Involving all managers in the planning process to achieve shared objectives.
4.	Holding participants accountable for achieving their part of the plan.

The hoshin planning should be completed on two levels as outlined below.

IMPLEMENT HOSHIN PLANNING ON TWO LEVELS


Hoshin Strategic Planning	Hoshin Operational Planning
This entails developing long-term strategic plans for your company for one- to five-year period. Strategic plans will address the following questions: • What to do? • Why to do it? • How much will it cost? • Where will the money come from?	This entails developing short-term operational plans for a period up to one year. Operational plans will address the following questions: • How to do it? • When to do? • Who will do it? • How to measure results?

The Planning Process, Strategic Planning, and Operational Planning are discussed in detail in Tutorial 1.

The Hoshin Planning Process entails seven steps outlined below.

THE HOSHIN PLANNING PROCESS IN YOUR COMPANY

Step 1. Identify Main Problems And Challenges Facing Your Company.

Identify main problems and challenges facing your company which, upon resolution, will enable you to provide the best possible value of products and services to your customers in a profitable manner.

Step 2. Develop Your Company’s Comprehensive And Measurable Objectives.

Develop comprehensive and measurable business objectives (hoshin objectives) which will address your company’s main problems and challenges specified in Step 1.

Step 3. Develop Your Company’s Overall Vision And Specific Goals.

Develop your company’s overall vision and specific goals based on the comprehensive and measurable objectives outlined in Step 2.

Step 4. Develop Supporting Strategies For Achieving Your Company’s Specific Goals.

Develop supporting strategies, based on lean guidelines, for achieving your company’s specific goals outlined in Step 3.

Step 5. Determine Operational Methods And Objectives For Each Supporting Strategy.

Determine operational methods and objectives (target values), based on lean guidelines, for implementing your company’s supporting strategies outlined in Step 4.

Step 6. Implement Performance Measures For Each Operational Method.

Implement performance measures, based on lean guidelines, for each operational method and objectives (target values), outlined in Step 5.

Step 7. Evaluate Current Operational Performance And Measure The Results.

Evaluate current operational performance and measure the results, based on lean guidelines, to ensure that your company is achieving its operational objectives outlined in Step 5 and repeat the process as necessary.

THE HOSHIN PLANNING AND IMPLEMENTATION PROCESS

The Hoshin Planning And Implementation Process entails completing and reviewing management information related to your company’s planning activities. This information can be summarized in different types of reports, known as Hoshin Review Tables, or simply Tables, and includes details of planned activities, actual results, and performance variances.

Once you and your management team identify and summarize your company’s specific problems and challenges (Step 1), you will be ready to develop your company’s comprehensive and measurable Hoshin Objectives for each quarter (Q) (Step 2), as presented in a Hoshin Gantt Chart example below. Each hoshin objective should:

1. Require basic change in the business process within the organization.
2. Involve the entire organization.
3. Bring the organization to the next level of performance.

HOSHIN GANTT CHART EXAMPLE

Upon summarizing hoshin objectives (Step 2), you and your management team should outline your company's overall vision and goals (Step 3), proceed with developing supporting strategies (Step 4) and determine planned results or target values (Step 5), as presented in a Hoshin Annual Plan Table example below.

HOSHIN ANNUAL PLAN TABLE EXAMPLE

Upon summarizing your supporting strategies for each hoshin objective, you and your management team should discuss various options related to the hoshin planning and implementation process and assign specific personnel to implement the most suitable options (Step 6). At the final stage of this process you should evaluate the performance results (Step 7) and identify reasons for failing to achieve some of the objectives by using the Hoshin Review Tables, presented below.

THE HOSHIN ANNUAL REVIEW TABLE

Note:

The above information about hoshin planning and implementation is presented in a simplified format to provide the basic knowledge only. You may find additional detailed information online.

ADDITIONAL INFORMATION ONLINE

•	Hoshin Kanri By Mike Hoseus.
•	Hoshin Planning Presentation By Light Consulting.
•	Learn How To Apply Hoshin Kanri To Your Business By Gemba Academy.
•	Why Use Hoshi Planning? By Wes Waldo, Breakthrough Management Group.
•	Hoshi Kanri - Strategic Business Improvement By David Hutchins, DHI LTD.

16. DEVELOP AND IMPLEMENT CROSS-FUNCTIONAL OPERATIONAL PLANS IN YOUR COMPANY

TASK 6: DEVELOP AND IMPLEMENT
CROSS-FUNCTIONAL OPERATIONAL PLANS IN YOUR COMPANY

To maximize the effectiveness of hoshin strategic and operational planning and implementation process, you and your management team should develop Cross-Functional Hoshin Operational Plans for each area of your company’s activities for at least one year as presented below.

This process requires development of a Cross-Functional Team within your organization to ensure that every member of your management team is “on the same page” in terms of what your organization needs to accomplish and when it should be done. The cross-functional planning within your company is also in line with the basic principles of the Lean Business Engineering Method and Lean Management Guidelines discussed in detail in this program.

DEVELOP HOSHIN OPERATIONAL PLANS IN FIVE OPERATIONAL AREAS


Lean General Management Plan	Lean Human Resources Management Plan	Lean Financial Management Plan	Lean Operations Management Plan	Lean Marketing And Sales Management Plan

Hoshin Operational Plans may include several tasks (hoshin objectives) outlined below. You and your management team will need to decide which tasks may be relevant to your company, based on your specific needs to maximize the value of your products and services to your customers and increase profitability.

LEAN GENERAL MANAGEMENT PLANNING

• Preparation Of A Plan Of Management.

This plan is based on a consolidated plan of action in accordance with the specific company needs.

• Development Of An Organizational Chart.

This chart is prepared in accordance with the specific nature and needs of the company.

• Development Of A Management Structure.

This structure is reviewed and modified in accordance with the results of situational analysis and needs of the company.

LEAN HUMAN RESOURCES MANAGEMENT PLANNING

• Preparation Of Job Descriptions And Job Specifications.

Existing job descriptions and job specifications are reviewed and modified in accordance with the company's specific needs.

• Employee Planning And Forecasting.

Employee requirements are identified and summarized in accordance with the company's specific needs.

• Preparation Of Employee Recruitment Plans.

New employees are recruited and hired in accordance with the employee planning requirements.

• Employee Training And Management Development.

Appropriate training and development plans are prepared for employees in accordance with the company's specific needs.

• Preparation Of The Employee Compensation Budget.

The total cost of basic compensation, employee benefits, and the company's contributions is summarized in accordance with the employee planning requirements.

• Employee Appraisal Planning.

The performance of every employee is appraised on a pre-planned basis in accordance with the company's specific needs.

LEAN FINANCIAL MANAGEMENT PLANNING

• Development Of An Effective Computerized Bookkeeping System.

The existing system is reviewed and modified in accordance with the specific company's needs.

• Preparation Of An Operating Budget.

This budget represents a numerical plan which summarizes estimated operating results for the forthcoming fiscal period. It includes a sales (or revenue) budget, production (or cost of sales) budget, operating expenses budget, and budgeted income statement.

• Preparation Of A Financial Budget.

This budget provides a description of future financial conditions and includes capital expenditure budget, cash budget, and budgeted balance sheet.

• Development Of New Internal Control Procedures.

The existing procedures relating to cash management and control, credit control, and control of purchases and disbursements are reviewed in accordance with the specific company's needs.

• Planning Of Inventory Levels.

The current level of inventories is identified, and future adjustments are planned in accordance with operating budget requirements.

• Development Of New Cost Recovery Rates.

Current cost recovery rates are reviewed and adjusted in accordance with operating budget requirements.

• Development Of New Management Accounting Reports.

The current set of reports is reviewed and redesigned in accordance with the specific company's needs.

• Development Of A New Integrated Financial Management System.

Current financial management systems are evaluated, and new integrated financial management system is developed in accordance with the specific company's needs.

LEAN OPERATIONS MANAGEMENT PLANNING

• Facility Design And Development.

The current facility is reviewed and reorganized in accordance with lean operational guidelines and the specific company's needs.

• Development Of A New Product Or Service Range.

The current product or service range is examined and new products or services are developed in accordance with the overall marketing plan requirements.

• Development Of New Manufacturing Or Operational Processes.

The current manufacturing or operational processes are evaluated, and new ones are developed in accordance with lean operational guidelines and the specific company's needs.

• Development Of An Operations Management Plan.

This plan includes evaluation and selection of new equipment, examination and redesign of plant layout, and preparation of equipment maintenance and replacement schedules in accordance with lean operational guidelines.

• Development Of New Cost Estimating Methods.

Current cost estimating methods are evaluated and re-adjusted in accordance with the specific company's needs.

• Preparation Of Production Or Operations Plans.

These plans include annual forecasts of production or operations output (aggregate plans), and short-term master production schedules in accordance with lean operational guidelines.

• Operational Capacity Requirements Planning.

This entails planning of operational capacity needed to fulfill master production schedule requirements in accordance with lean operational guidelines.

• Shop Floor Planning.

This entails preparation of drawings, tools, operational and manpower capacity needed to fulfill specific production scheduling requirements in each shop in accordance with lean operational guidelines.

• Materials Purchasing Planning And Supply Chain Management (SCM).

This entails preparation of a detailed list of optional suppliers, materials, prices, and delivery dates in accordance with lean operational guidelines.

• Quality Control Planning And Total Quality Management (TQM).

This entails examination of current quality control methods and development of new methods in accordance with lean operational guidelines and the specific company's needs.

• Material Dispatch Planning.

This entails examination of the current methods of material dispatch and development of new methods in accordance with lean operational guidelines and the specific company's needs.

LEAN MARKETING AND SALES MANAGEMENT PLANNING

• Development Of A New Marketing Information System (MIS).

The current marketing information system is reviewed and modified in accordance with strategic marketing requirements.

• Market Segmentation, Targeting, Positioning, Measurement, And Forecasting.

This entails identification of new market segments, targeting suitable markets, positioning the company in these markets, measuring the market potential, and forecasting the level of future sales.

• Development Of New Marketing Mix Strategies.

The current strategies relating to product, price, promotion, and distribution are reviewed and adjusted in accordance with the strategic marketing requirements.

• Preparation Of A Marketing Plan.

This plan includes a new product or service plan and a revised annual marketing plan. Both plans are developed in accordance with the company's strategic marketing requirements.

• Preparation Of A Sales Plan.

This plan includes a detailed sales or revenue budget which is developed in accordance with the company's sales forecasts. This plan also includes marketing and selling costs budgets developed in accordance with the company's marketing planning requirements.

• Development Of A Sales Organization.

The current sales organization is examined and re-designed in accordance with the company's sales planning requirements.

• Preparation Of Sales Force Recruitment Plans.

New sales people are recruited and hired in accordance with the company's sales planning requirements.

• Sales Force Training And Development.

Appropriate training and development plans for sales people are prepared in accordance with the company's specific needs.

• Preparation Of Sales Force Compensation Plans.

The current level of basic compensation, incentives, and employee benefits for sales people is reviewed and adjusted in accordance with the company's employee compensation program.

• Sales Force Appraisal Planning.

The performance of every sales person is appraised on a pre-planned basis in accordance with the company's employee appraisal program.

Operational Planning is discussed in detail in Tutorial 1.

ADDITIONAL INFORMATION ONLINE

•	Cross-Functional Process Teams By Henry Shaffer, Insite One.
•	Cross-Functional Teams By Anat Lechner, NYU School Of Business.
•	Best Practice In Creating Cross-Functional Teams By Donna Howes.
•	Cross-Functional Teams By Stanford Advanced Project Management.
•	How To Manage Cross-Functional Teams? By Total Quality Consulting.

17. THE VALUE-STREAM BASICS

WHAT IS VALUE-STREAM?

A Value Stream is a sequence of operational activities within an organization, designed to provide best possible products and services to customers in the most cost-effective way.

You will find that some operational activities will add value to your products or services, while other activities will not add value. According to lean management guidelines, you must develop an efficient operational flow within your organization, called a Value Stream, designed to satisfy your customers’ needs by providing them with maximum value, based on quality, reliability and price, in the most cost-efficient manner and minimum waste.

Each value stream must be:

• Examined from the customer’s perspective.
• Evaluated in terms of value-added and non-value-added operational activities.
• Viewed from the end of the operational process, as seen by the customer, and each preceding
activity is examined in sequence as shown below.

Upon summarizing your customers’ specific product or service requirements and developing your best value proposition, you will be ready to evaluate and improve the operational value stream within your organization.

A VALUE STREAM MUST BE EXAMINED FROM YOUR CUSTOMER'S PERSPECTIVE

1. Examine The Final Stage Of The Value Stream.
Final Operational Activities Related To Products And Services.

2. Examine All Interim Stages Of The Value Stream.
Interim Operational Activities Related To Products And Services.


Materials	Labor	Plant And Equipment	Information

3. Examine The Initial Stage Of The Value Stream.
Initial Operational Activities Related To Products And Services.

COMPREHENSIVE VALUE-STREAM ANALYSIS

The prime purpose of lean management is to enable you to improve your business operations which are under your control. However, since your business doesn't function in isolation, your operational efficiency may also depend upon the efficiency of your suppliers and customers. So, here is the question:

How do your suppliers and customers affect your value stream?

WHO MAY AFFECT YOUR VALUE STREAM?


Your Suppliers	Your Company	Your Customers

To find out, you must complete a Comprehensive Value-Stream Analysis, which will include relevant operational activities that occur at your suppliers' and customers' facilities and may directly affect your operational performance and results.

SUPPLIERS AND CUSTOMERS MAY AFFECT YOUR VALUE STREAM

1. Identify Your Suppliers' Operational Activities, Which May Directly Affect Your Operational Performance.

2. Summarize All Operational Activities Within Your Organization.

3. Identify Your Customers' Operational Activities, Which May Directly Affect Your Operational Performance.

A comprehensive value-stream analysis will provide you with the best opportunity to identify what is really going on within your company, to evaluate your current operational strengths (value-added activities) and weaknesses (non-value-added activities), and to maximize your company's performance efficiency. Ultimately, this will enable your company to offer the best possible value of products and services to your customers, transform your company into a lean organization, and improve your company's profitability.

18. VALUE-STREAM MAPPING

WHAT IS VALUE-STREAM MAPPING?

In lean management, a Value-Stream Mapping (VSM) is an effective management tool which provides a visual representation of all operational activities, related to the production of specific products and services and summarizes relevant information, documentation, and time requirements. This process entails completing an Operational Flow Diagram which summarizes each step in the operational process starting with your suppliers and ending with your customers.

Source: Wikimedia Commons, File: Value Stream Map Parts, 2013.

ADVANTAGES OF A VALUE-STREAM MAP

1.	Provides A Detailed Summary Of The Entire Operational Process. The VSM provides a detailed visual summary of the entire operational process from the customer’s perspective.
2.	Provides A Single View Of All Operational Activities. The VSM provides a single view of all operational activities related to a selected product or service category.
3.	Facilitates A Detailed Value-Stream Analysis. The VSM enables a detailed evaluation of the value stream related to a selected product or service category.
4.	Provides Timing And Sequencing Of All Operational Activities. The VSM provides time requirement and sequencing of all operational activities related to a selected product or service category.
5.	Helps To Identify Value-Added And Non-Value Added Operational Activities. The VSM enables identification of all value-added and non-value added operational activities related to a selected product or service category.
6.	Helps To Identify Wasteful Operational Activities. The VSM enables identification of all wasteful operational activities which should be minimized or eliminated.
7.	Helps To Measure Time Used During All Operational Activities. The VSM enables determination of the amount of time used for all value-added and non-value added operational activities.
8.	Provides An Effective Visual Platform For Operational Decision-Making. The VSM provides a common-language visual platform for various members of the management team to make constructive operational decisions.
9.	Helps To Improve Operational Performance. The VSM facilities the development of a plan of action designed to maximize the value of products and services offered to customers and increase their level of satisfaction.
10.	Helps To Improve Relationship With Vendors And Customers. The VSM provides information describing the influence of vendors and customers on the value stream and helps to streamline their relationship with the company.
11.	Helps To Maximize Profitability. The VSM facilities the development of a plan of action designed to maximize the company’s profitability by maximizing the value of its products and services and minimizing waste.

You and your management team will need to complete the value-stream mapping for your selected product or service category and summarize all elements of your operational activities on three levels outlined below.

THREE LEVELS IN VALUE-STREAM MAPPING (VSM)


Level 1: Current State	Level 2: Ideal State	Level 3: Future Improved State
Current state illustrates your company's situation at present and it provides the point of reference for VSM. Current state is represented by a value-stream map related to your specific products or services. This map summarizes all relevant value-added and non-value added operational activities performed at present.	Ideal state illustrates your company's hypothetical perfect situation in the future with zero waste. Ideal state is represented by a value-stream map related to your specific products or services, which summarizes only value-added operational activities that should be performed in the future. The ideal-state value stream map provides the benchmark for developing the future improved state value-stream map.	Future improved state illustrates your company's situation in the future with reduced level of waste. Future improved state is represented by a value- stream map related to your specific products or services. This map summarizes all improved value-added and essential non-value added operational activities which should be performed in the future.

The value stream mapping process entails the use of specific Value-Stream Mapping Icons presented below.

VALUE-STREAM MAPPING ICONS ONLINE

•	Value Stream Mapping Symbols From Ambor.
•	Value Stream Mapping Symbols From Doc Stoc.
•	Value Stream Mapping Symbols From Know Ware.
•	Value Stream Mapping Symbols From e-Draw Soft.
•	Value Stream Mapping Symbols From Strategos Inc.

19. COMPLETE VALUE-STREAM MAPPING AND VALUE-ADDED ANALYSIS IN YOUR COMPANY

TASK 7: COMPLETE VALUE-STREAM MAPPING AND VALUE-ADDED ANALYSIS


Value-Stream Mapping (VSM)	Value-Added Analysis
This entails completing a flow diagram which summarizes all operational activities in your organization starting with your suppliers and ending with your customers. VSM also entails summarizing time and other information which may be relevant to a specific operational activity.	This entails detailed examination of each operational activity and identifying which one adds value to your products or services and which doesn't add value and for this reason is considered a waste. You will need to evaluate each wasteful activity and decide whether it should be eliminated or minimized to ensure your company's successful performance in the future.

STEPS IN VALUE-STREAM MAPPING (VSM) AND VALUE-ADDED ANALYSIS

1. Complete Your Company's Current-State Value-Stream Map.

This step entails drawing a current-state value-stream map describing all operational activities in your company. This step also entails summarizing actual time, specific information and documentation which is required to complete each operational activity.

2. Complete Your Company's Current State Value-Added Analysis.

This step entails a detailed examination of each operational activity in your company's current-state value-stream map and determining whether it adds value to your selected product or service category, or doesn't add value and is subsequently considered a waste.

3. Complete Your Company's Ideal-State Value-Stream Map.

This step entails drawing an ideal-state value-stream map describing only value-added operational activities which would exist in your company in ideal situation with zero waste. This step also entails summarizing ideal time and specific information or documentation which will be required to complete each value-added operational activity.

4. Complete Your Company's Future-Improved-State Value-Stream Map.

This step entails drawing a future-state value-stream map describing improved operational activities in your company in the future with a minimized level of waste. This step also entails summarizing time and information or documentation which will be required to complete each improved operational activity in the future.

5. Repeat The Above Process.

Repeat the above steps as often as necessary to meet your company's specific operational requirements. The main purpose of this step is to ensure continuous improvement of all operational activities in your company based on "kaizen events" which are discussed in this check point.

VALUE-STREAM MAPPING QUESTIONS

Your company’s Value Stream Mapping Process begins with selecting a specific product or service category and developing a detailed operational flow diagram summarizing all relevant current operational activities. Some of the questions which relate to the Current-State Value Stream Mapping are summarized below:

• What is the sequence of operational activities related to the selected product or service?
• What is the actual operational activity required to complete a specific task?
• What is the time required to complete a specific operational activity?
• What is the waiting time involved regarding a specific operational activity?
• What information is required to complete a specific operational activity?
• Is there any inventory required to complete a specific operational activity?
• How many employees are involved in completing a specific operational activity?
• What are plant or equipment requirements for a specific operational activity?
• What is the change-over time when changing products or services categories?
• What is a waiting time, caused by suppliers or customers, related to operational activities?
• What is the transportation time related to moving products within the facility or to customers?

20. VALUE-STREAM MAPPING AND VALUE-ADDED ANALYSIS GUIDELINES

HOW MANY VALUE-STREAMS DO YOU HAVE IN YOUR COMPANY?

Depending upon the nature and the size of your company, you may have only one Value-Stream for your entire operation, or you may have several value streams – one for each product or service category.

In case of multiple value streams within your organization, you and your management team should select one product or service category which represents the most urgent need for improving the value stream efficiency and begin a comprehensive value-stream mapping process. Subsequently, this will enable you to identify all value-added and non-value-added activities in the selected value stream and prepare you for the next stage in improving your operations.

Each member of your management team must become familiar with the Basic Value-Stream Mapping Elements outlined below.

VALUE-STREAM MAPPING (VSM) ELEMENTS

1.	Operational Activities. This includes all value-added (VA) and non-value-added (NVA) operational activities related to production of the selected product or service category.
2.	Inventory Requirements. This includes any type of raw materials, work-in-process, and finished goods inventory which may be required to complete specific operational activity related to the selected product or service category.
3.	Information And Documentation Requirements. This includes all information, documentation, and instructions which may be required to complete specific operational activity related to the selected product or service category.
4.	Lead Time Or Cycle Time. Lead time, or cycle time, is the total time (in minutes) required to complete one unit of product or service flowing through a value stream from start to finish. This includes work preparation time, waiting time, document preparation time, inventory-related time, tooling time, material movement time, assembly time, packaging time, delivery time and any additional time related to a specific product or service. The total lead time must be sub-divided into value-added lead time and non-value-added lead time.
5.	Takt Time. Takt means “beat” or “pace” in German. In lean, takt time is the pace of production based on the rate of customer requirements. Takt time is determined by dividing the available production time (in minutes( by the number of product or service units required by a specific customer during the same period. Takt time is used as a benchmark for synchronizing the lead time with the customer-driven demand for products or services.
6.	The Box Score. The box score is a summary of most important operational metrics related to a specific VSM process. This includes total lead time, value-added lead time, non-value-added lead time, takt time, inventory-related metrics, production rate metrics, and any additional relevant information.

Each member of your management team, involved in VSM, must become familiar with the basic Value-Stream Mapping and Value-Added Analysis Guidelines summarized below.

DETAILED VALUE-STREAM MAPPING AND VALUE-ADDED ANALYSIS GUIDELINES

1.	Select A Product Or Service Category. In case of multiple value streams, identify a product or service category which represents the most urgent need for improving the value stream efficiency within your company and select this category for comprehensive value-stream mapping.
2.	List All Operational Activities. List all current operational activities, from start to finish, related to the selected product or service category. This must include all relevant personnel requirements, average waiting time and delays which are incurred during the current operational process.
3.	Create A Current-State Value Stream Map. Create an operational flow diagram, with one box for each current operational activity, from start to finish, related to the selected product or service category. This diagram represents the basis for your company’s current-state value stream map.
4.	Allocate Personnel Requirements To Each Operational Activity. Allocate personnel, required to complete the selected product or service category, to each operational activity in your company's current-state value stream map. Also include personnel supervision requirements details.
5.	Allocate Inventory Requirements To Each Operational Activity. Allocate inventory, including raw materials, work-in-process, and finished goods, required to complete the selected product or service category, to each operational activity in your company's current-state value stream map. Also include all material movement and transportation requirements details.
6.	Allocate Documentation Requirements To Each Operational Activity. Allocate documentation and instructions, required to complete the selected product and service category, to each operational activity in your company’s current-state value stream map.
7.	Determine The Average Time Requirement For Each Operational Activity. Determine the average time, required to complete each operational activity in your company’s current-state value stream map, including average waiting time and delays, and add that time to the appropriate box.
8.	Determine The Cycle Time. Determine the cycle time, required to complete one unit of the selected product or service category in your company’s current-state value stream map by adding the time in each box. This time must also include average waiting time and delays throughout the current operational process from start to finish.
9.	Identify All Value-Added Operational Activities. Identify all operational activities, which add value to the selected product or service category in your company’s current-state value stream map.
10.	Identify All Non-Value-Added Operational Activities. Identify all operational activities, which don’t add value to the selected product or service category in your company’s current-state value stream map. Non-value-added operational activities include: product or service inspection, testing, rework, plant and tool set-up, inventory storage and buffering, product movement between operations, plant maintenance, quality control and inspection, tool control, supervision, training, and any additional activity that doesn’t improve the form, function or fit of the product or service, based on the first pass through the process.
11.	Create An Ideal-State Value Stream Map. Identify and move all boxes representing non-value-added operational activities to the right of the value-added operational activities in your company’s current-state value stream map. Some of these boxes will represent operational activities which are essential in the current operation process and can’t be eliminated (type 1 muda), while other boxes will represent activities which can be eliminated (type 2 muda, mura, and muri).
12.	Determine The Value-Added Cycle Time. Determine the value-added cycle time by adding the time of all value-added operational activities in your company’s current-state value stream map.
13.	Determine The Non-Value-Added Cycle Time. Determine the non-value-added cycle time by adding the time of all non-value added operational activities in your company’s current-state value stream map.
14.	Determine The Total Cycle Time. Determine the total cycle time by adding the value-added cycle time and non-value-added cycle time in your company’s current-state value stream map.
15.	Determine The Total Cycle Time Contributors. Determine the individual percentages of the value-added cycle time and non-value-added cycle time against the total cycle time in your company’s current-state value stream map.
16.	Determine The Takt Time. Determine the takt time by dividing the total net daily operating time by the total daily customer demand in units of product or service. Since takt time is a production pace driven by customers’ demand for a specific product or service, you can use this factor as a benchmark for determining your total cycle time to maximize your operational efficiency.
17.	Complete The Current State Box Score. Enter all details related to your company’s current-state value stream map, including the value-added cycle time, non-value-added cycle time, total cycle time, total cycle time contributors, and takt time.
18.	Create A Future-Improved-State Value Stream Map. Re-examine all operational activities in the current operational process flow and develop improved operational process flow by maximizing value-added operational activities and minimizing non-value-added operational activities in your company’s current-state value stream map. This will represent the basis for your company’s future-improved-state value stream map.
19.	Determine The Improved Value-Added Cycle Time. Determine the improved value-added cycle time by adding the time of all value-added steps in your company’s future-improved-state value stream map.
20.	Determine The Improved Non-Value-Added Cycle Time. Determine the improved non-value-added cycle time by adding the time of all non-value-added steps in your company’s future-improved-state value stream map.
21.	Determine The Total Improved Cycle Time. Determine the total improved cycle time by adding the improved value-added cycle time and improved non-value-added cycle time in your company’s future-improved-state value stream map.
22.	Determine The Total Improved Cycle Time Contributors. Determine the individual percentages of the improved value-added cycle time and improved non-value-added cycle time against the total improved cycle time.
23.	Repeat The Above Process As Necessary Repeat the above process as necessary to ensure operational process improvements on a continuous basis.

ADDITIONAL INFORMATION ONLINE

•	Value Stream Mapping By Simplex Improvements.
•	Value Stream Mapping Process By Anand Subramanian.
•	Current State Value State Mapping By Educate Virtually.
•	Value Stream Mapping Basics By MIT Open Course Ware.
•	Value Stream Mapping By Karen Martin, The Karen Martin Group.

21. SMALL BUSINESS EXAMPLE
THE VALUE-STREAM MAPPING REPORT

FOLLOW VALUE-STREAM MAPPING AND VALUE-ADDED ANALYSIS GUIDELINES

You and your management team must follow the basic Value-Stream Mapping and Value-Added Analysis Guidelines outlined above and complete a Value-Stream Mapping Summary Report, based on your company’s specific operational requirements.

A simplified example of a value-stream mapping report for a restaurant is presented below. Each line in this report represents a box in the value-stream map and it is evaluated from the customers’ perspective as a value-added (VA) or non-value-added (NVA) operational activity.

VALUE-STREAM MAPPING SUMMARY REPORT

Operational Activity Including Waiting Time And Delays		Time (Minutes)
		Current State		Ideal State	Future- Improved State
		VA	NVA	VA	VA	NVA
1.	Restaurant manager opens the restaurant in the morning.		10	0		10
2.	Restaurant manager checks the inventory of food ingredients available in the storage.		40	0		30
3.	Restaurant manager prepares a list of food ingredients which must be ordered from vendors.		60	0		40
4.	Restaurant manager places purchase orders with vendors for required food ingredients.		60	0		60
5.	Food ingredients are delivered to the restaurant from various vendors. Includes waiting time.		200	0		120
6.	Food ingredients are unpacked, checked, sorted out, and stored.		200	0		120
7.	Selected food ingredients are placed for storage in the fridge.		150	0		80
8.	Required food ingredients are de-frosted or taken out from the storage room. Includes waiting time.		200	0		120
9.	Kitchen equipment is tested to ensure good performance.		150	0		100
10.	Kitchen equipment is cleaned and prepared for food processing.		250	0		150
11.	Selected food ingredients are prepared to meet customers’ requirements.	90		60	85
12.	A customer waits in line and places a meal order with the restaurant employee.	20		15	15
13.	The meal is prepared in the kitchen according to the customer’s order.	20		15	15
14.	The meal and drink are packaged for delivery to the customer.	5		5	5
15.	The meal and drink are delivered to the customer in the restaurant.	5		5	5
16.	The customer receives the ordered meal and drink and pays for it.	5		5	5
	VALUE-STREAM BOX SCORE
	Total Value-Added (VA) Time (Minutes)	145	---	105	130	----
	Total Non-Value Added (NVA) Time (Minutes)	---	1,250	----	----	830
	Total Cycle Time (VA+NVA) (Minutes)	1,395	105	960
	Total VA Time Contribution (%)	10.4	----	13.5
	Total NVA Time Contribution (%)	89.6	----	86.5
	Takt Time (Minutes)	800		800

22. IMPLEMENT KAIZEN IN YOUR COMPANY

TASK 8: IMPLEMENT IMPROVED VALUE STREAM IN YOUR COMPANY

Upon completion of the value-stream mapping and value-added analysis, you and your management team will be ready to begin the actual improvement of the current value stream of operational activities within your organization. According to lean management, the Value-Stream Improvement Process entails implementation of several methods and procedures, such as Kaizen, Just-In-Time, Jidoka, and Total Productive Maintenance (TPM) explained below.

MAIN ELEMENTS OF VALUE STREAM IMPROVEMENT


Kaizen	Just-In-Time	Jidoka (Autonomation)	Total Productive Maintenance (TPM)

IMPLEMENT KAIZEN IN YOUR COMPANY

Kaizen represents a philosophy of continuous incremental improvement in all areas of operational activities in every business organization.

Kaizen applies to general administration, human resources, finance and accounting, operations, marketing and sales, and it involves everybody in the organization. According to Masaaki Imai, kaizen represents one of the basic building blocks for transforming any traditional business organization into a lean organization. Kaizen is effective in small, medium-sized and large manufacturing and non-manufacturing companies providing products and services to customers. For this reason kaizen will also apply to your company.

Moreover, kaizen applies to everybody in the organization, whether it is a one-person business, or it is a company with hundreds of employees. Obviously, everybody’s role in the organization is different and each management level has specific “kaizen responsibilities”:

•	The CEO is responsible for developing the company's culture, values, vision, and strategic plan, based on kaizen guidelines.
•	Managers are responsible for developing and implementing the company's operational plans designed to meet the company's objectives, in line with kaizen guidelines.
•	All non-management employees are responsible to achieve their individual working objectives in accordance with operational plans and kaizen guidelines.

Kaizen should be implemented on two levels within your organization as described below.

IMPLEMENT KAIZEN ON TWO LEVELS WITHIN YOUR COMPANY


Level 1: Kaizen Maintenance		Level 2: Kaizen Improvement
This entails developing specific policies and rules designed to maintain current operational procedures and meet current work standards within your organization.		This entails introducing improvements to current operational procedures and work standards, designed to maximize the value-added activities and minimize waste within your organization.

The basic Kaizen Implementation Guidelines within your company are outlined below.

BASIC GUIDELINES FOR KAIZEN IMPLEMENTATION

1.	Adopt The Principle Of Continuous Improvement Everywhere. All employees are encouraged to adopt the principle of continuous improvement of everything and everywhere within the organization. Nobody should “rest on their laurels” and instead everybody should be open-minded toward finding better solutions in all areas of operational activities.
2.	Ensure Customer Satisfaction. All employees are encouraged to provide maximum effort in ensuring high level of customers’ satisfaction on a continuous basis. Employees’ performance and positive contribution in meeting and exceeding customers’ expectations should be monitored and rewarded accordingly by management.
3.	Respect All Employees. All employees must be treated with utmost dignity and respect irrespective of their position within the organization. Business owners and managers should not dwell on blaming employees for past mistakes and instead should provide them with better training and instructions.
4.	Engage All Employees. All employees are encouraged to get involved in the search for a better way of performing their job in the organization. Employees’ positive contribution to improve operational activities and reduce waste should be monitored and rewarded accordingly by management. Teamwork should also be encouraged in the workplace, whenever appropriate.
5.	Improve All Operational Processes And Activities. All employees should look for additional ways of improving everything related to their work, including operational processes, procedures, methods, materials, tools, equipment, and communication.
6.	Maximize Value-Added Operational Activities. Each current value-added operational activity should be identified and evaluated. The management team must develop a plan to maximize all value-added operational activities within the organization, based on the company’s future-state value stream map.
7.	Ensure Built-In Quality And Zero Defects. All operational activities must have a built-in quality control at each working stage to ensure that defective work-in-process is not carried forward and instead is stopped immediately after the defect is identified. This will enable management to ensure the highest level of product and service quality with zero defects.
8.	Minimize Non-Value-Added Operational Activities. Each current non-value-added operational activity (type 1 muda) should be identified and evaluated. The management team must develop a plan to minimize all non-value-added operational activities within the organization, based on the company’s future-state value stream map.
9.	Eliminate Waste. All current wasteful operational activities (type 2 muda, mura, and muri) should be identified and eliminated, if possible, or minimized. This includes waste related to transportation, inventory, motion, waiting, overproduction, overprocessing, defects, underutilization of employees, and overspending. Every employee should be involved in identifying waste and rewarded accordingly.
10.	Implement Plan-Do-Check-Act (PDCA) Cycle. Managers are encouraged to apply the Plan-Do-Check-Act (PDCA) cycle guidelines to specific operational activities related to various products and services. The four stages in the PDCA cycle provide the basis for effective planning, implementation and performance control of all related operational activities within the organization.
11.	Implement Standardized Work. Managers are encouraged to develop and implement standardized work parameters and guidelines for various operational activities within the organization. This will be used as a benchmark for evaluating actual operational performance in various departments and comparing actual results with planned results specified in the standardized work parameters.
12.	Implement Kaizen Workshops. Selected employees are encouraged to participate in kaizen workshops designed to identify problems and inefficiencies related to specific operational activities within the organization and develop a set of cost-effective solutions to maximize the company’s performance.

At this stage, you and your management team should be ready to proceed with implementing kaizen procedures within your organization. The first and probably one of the most important methods in the kaizen implementation process is the Plan-Do-Check-Act (PDCA) Cycle discussed next.

ADDITIONAL INFORMATION ONLINE

•	Definition Of Kaizen By Masaaki Imai, Kaizen Institute.
•	Kaizen Overview By Ron Pereira And Gemba Academy.
•	Kaizen Keys For Continuous Improvement By Joe Boyle.
•	Ten Commandments Of Continuous Improvement By Gemba Academy.
•	Kaizen Improvement Process By Process Predictability Management, Inc.

23. IMPLEMENT THE PLAN-DO-CHECK-ACT (PDCA) CYCLE IN YOUR COMPANY

THE PLAN-DO-CHECK-ACT (PDCA) CYCLE

The Plan-Do-Check-Act (PDCA Or PDSA) Cycle, represents an essential practical method for implementing kaizen guidelines in every business organization.

The PDCA Cycle is applicable to all operational activities within every organization, including general administration, human resources, finance and accounting, operations, marketing and sales. It was developed in the US by Walter A. Shewhart in 1930’s, introduced in Japan by W. Edwards Deming in 1950’s, and for this reason it is also known as the Deming Cycle.

The PDCA cycle consists of four basic steps described below.

Source: Wikimedia Commons, File: PDCA Cycle, 2008.

IMPLEMENT KAIZEN THROUGH PLAN-DO-CHECK-ACT (PDCA) CYCLE

1.	Plan. Define objectives (expected results) for improving a selected value stream, operational process or activity within your organization and prepare a detailed step-by-step plan for implementing this task.
2.	Do. Implement the step-by-step plan for improving the selected value stream, operational process or activity defined in Step 1 and evaluate actual results (measured results).
3.	Check Or Study. Compare the measured results specified in Step 2 with your expected results defined in Step 1 and summarize the difference. If the difference between measured and expected results in negligible and meets your expectations, you can proceed with Step 4. If the difference between measured and expected results is unacceptable to you, repeat Step 2 until measured results are acceptable.
4.	Act Or Adjust. Once you are satisfied that measured results specified in Step 2 are in line with expected results specified in Step 3, complete the implementation of the step-by-step plan for improving the selected value stream, operational process or activity defined in Step 1.

CRITICAL IMPORTANCE OF THE PLAN-DO-CHECK-ACT (PDCA) CYCLE

You and each member of your management team must understand the logic behind the PDCA Cycle to ensure effective operational performance, sound management control, and continuous improvement within your organization.

The PDCA cycle has unlimited applications in various operational activities throughout the organization and it is widely used during kaizen workshops discussed below. The PDCA cycle will enable you and your management team to plan, implement, check, and adjust any operational process or activity and improve operational efficiency.

The key element in the PDCA cycle is that each operational activity must be pre-planned first and the planned result (expected result) will be used as a benchmark for comparison with the actual result (measured result). Upon comparing actual results with planned results, you will be able to determine the performance variance and this, in turn, will provide you with a clear indication whether or not you achieved your specific objective. Subsequently, PDCA cycle will enable you to adjust and improve all operational activities within your organization in the most efficient manner.

The PDCA cycle logic is applicable to several key management methods within any organization. Some of these methods are outlined next.

PLAN-DO-CHECK-ACT (PDCA) CYCLE APPLICATIONS IN BUSINESS

1.	Management By Objectives (MBO). The MBO process represents a key management method widely used in traditional business organizations. This method entails establishing planned operational objectives (expected results), completing actual operational activities and measuring results (measured results), identifying the variance between both results, and taking corrective action.
2.	Feedback Management Control. Feedback management control represents one of the key methods of control in any traditional business organization. This method entails establishing planned operational objectives (expected results), completing actual operational activities and measuring results (measured results), identifying the variance between both results, and exercising management control, and taking corrective action. Remember: If you can’t measure it, you can’t control it.
3.	Management Accounting. Management accounting represents a key financial management method designed to ensure sound financial planning and control in any business organization. This method entails preparing annual income and expense budget and cash flow projection (expected results). Subsequently actual income and expense values (measured results) will be compared with the budget values to determine the variance between both results, exercising management control, and taking corrective action.
4.	Standardized Work Standardized work represents a key management method designed to ensure effective planning, implementation, control, and improvement of various operational activities in a lean organization. This method entails establishing work standards (expected results), completing actual operational activities and measuring results (measured results), identifying the variance between both results, and taking corrective action. This method is discussed next.

The PDCA Cycle is discussed in detail in Tutorial 4.

ADDITIONAL INFORMATION ONLINE

•	PDCA Cycle By Teera Sakol.
•	Plan-Do-Check-Act Cycle By Rich Schuttler.
•	Plan-Do-Check-Act By Solutions 2 Work Stress.
•	Plan-Do-Check-Act Cycle Explained By Gerold Keefer.
•	PDCA - Plan-Do-Check-Act Cycle By EMS Consulting Group.

24. IMPLEMENT STANDARDIZED WORK IN YOUR COMPANY

STANDARDIZED WORK

Standardized Work represents a critical management tool for every lean organization.

Standardized Work, also known as Standard Work or Standard Operation, provides a summary of working procedures and instructions related to various operational tasks and activities which can be documented, measured and repeated in any organization. Standardized work may apply to a broad range of operational activities, such as general administration, human resources, finance and accounting, operations, marketing and sales.

Standardized work can be viewed as a “things to do checklist” for any type of operational process or task in the organization and it contains detailed instructions for performing specific operational activities. The main purpose of standardized work is to establish a “work standard” which can be used as a benchmark for evaluating and subsequently improving Actual Work Performance.

The deviation of actual work performance results from standardized work requirements, called Performance Variance, can be used as a tool to measure work performance efficiency and enable management to develop and implement appropriate improvements in the workplace. Standardized work summary must include all essential details related to a specific operational process or task and remain flexible to accommodate future improvements, which may later become the “new work standard”. Subsequently, this will provide continuity in improving various operational processes within the organization.

Development of Standardized Work Parameters provides several important advantages outlined below.

STANDARDIZED WORK ADVANTAGES

1.	Helps To Ensure High Level Of Product And Service Quality. This process helps the company to maintain high level of product and service quality and consistency in accordance with customer requirements.
2.	Provides Employees With Clear Operational Guidelines. This process provides employees with clear operational guidelines related to what they are supposed to do at work and how they are supposed to do it.
3.	Helps To Identify And Minimize Operational Waste. This process enables management to identify any wasteful activities and minimize non-value-added operational waste (type 2 muda, mura, and muri).
4.	Helps To Improve Operational Processes And Value Stream Efficiency. This process enables management to improve operational processes and maximize the value stream efficiency throughout the organization.
5.	Helps To Measure Employees’ Work Performance. This process enables management to measure employees’ work performance efficiency at and increase productivity and profitability within the organization.
6.	Helps To Determine Corrective Action When Necessary. This process enables management to determine corrective action, which may be necessary to improve efficiency, and identify additional employee training requirements.
7.	Helps To Minimize Costs And Maximize Customer Satisfaction. This process enables management to minimize operational costs, offer best possible product and service value, and subsequently maximize customers’ satisfaction.

Basic guidelines for establishing standardized work parameters are outlined below.

GUIDELINES FOR ESTABLISHING STANDARDIZED WORK PARAMETERS

1.	Standardize Working Activities To Maximize Employee Efficiency. Select an operational process, task or activity and define specific work that needs to be performed to ensure acceptable level of employee effectiveness. If the selected operation involves the use of equipment and tooling, the prime consideration should be given to the person and equipment should be secondary.
2.	Standardize All Repetitive Operational Tasks And Related Activities. Identify and standardize all repetitive operational process, tasks, or activities within your company. This will simplify your company’s future-state value-stream map, maximize operational savings in labor, materials, and equipment costs, reduce the cycle time (actual operating time), reduce product or service costs, and maximize efficiency and productivity.
3.	Ensure That Equipment And Tools Are In Good Working Conditions. Identify all equipment and tools used in various operational activities within your company and prepare a status report outlining their current condition. Develop a plan of action designed to ensure that equipment and tools are maintained in good working conditions to meet your customers’ future requirements in the most cost-effective manner.
4.	Develop Standardized Work Progress Reporting System. Identify and examine all relevant work progress reports related to your current operational activities and develop a standardized work progress reporting system for your future state value stream. Provide full training to employees to ensure efficient use of the new reporting system and make sure that this system is easily accessible.
5.	Review The Standardization Process On A Regular Basis. Review the standardization process related to various operational activities within your organization on a regular basis. Identify any possible inefficiency in selected operational activities and continue to introduce and document new improvements through kaizen events or workshops. Note: Kaizen events are discussed below.

Upon summarizing the details of standardized work, you and your management team will be ready to implement standardized work within your company. This process entails six steps as outlined next.

IMPLEMENT STANDARDIZED WORK IN YOUR COMPANY

Step 1: Check Equipment And Tools.

Identify equipment and tools which may be required for the implementation of standardized work and ensure that they are in acceptable working condition to meet specific operational requirements. Depending upon the nature of the company's activities, “equipment and tools“ may also include software programs, information systems, or anything else which may be instrumental in completing a specific operational process, task or activity.

Step 2: Check Cycle Time Versus Takt Time.

Identify the actual cycle time (actual operating time required to complete a unit of work), compare it with the takt time (the pace of production based on the rate of customer requirements), and determine the variance. Usually the actual cycle time is higher than takt time and it should be shortened to reduce the variance between both cycles in line with customer demand. Cycle time reduction can be achieved by analyzing current value stream, identifying opportunities for restructuring, streaming and implementing improved operational activities.

Step 3: Check Work-In-Process (WIP).

If applicable to the nature of standardized work, identify the range and level of work-in-process (WIP) inventory, considered as waste (muda), used in the current operational process. Determine acceptable minimum WIP range and level without causing shortages or bottlenecks in the operational process.

Step 4: Summarize Standardized Working Instructions.

Upon completion of Steps 1 - 3, summarize details of all requirements related to operational processes, tasks and activities, including equipment and tools, cycle time, takt time, work-in process inventory, into a suitable format and develop standardized work instructions. These instructions can be presented in a form of detailed instruction sheet or an operational manual, which summarize all pertinent information.

Step 5: Monitor Work Performance, Measure Results, And Measure Variance.

Monitor actual work performance related to various operational activities within your company on a continuous basis, compare actual performance results with expected results, based on standardized work parameters, and determine the deviation (variance) from the standardized work. Evaluate each work performance variance and determine the real reason behind it. Use the “5 Why” method, discussed below, for work performance variance analysis. Summarize all your findings and prepare work performance variance report. Make sure that appropriate manager and employee involved in the actual work are fully aware of specific performance variances and are ready to take corrective action.

Step 6: Adjust Work Performance Whenever Required.

Use work performance variance reports for making necessary operational adjustments and process improvement as often as possible. Actual process improvement requirements and solutions should be determined through kaizen events, discussed below. All managers and employees involved in the actual work should participate in these kaizen events and provide maximum input to improve relevant operational activities.

The next stage in improving operational performance within your organization entails conducting Kaizen Workshops which are discussed next.

ADDITIONAL INFORMATION ONLINE

•	Standard Work Series By Simplex Improvement.
•	Standardization By Ron Pereira, Gemba Academy.
•	Standard Work In Lean Services By Michael Balle.
•	Operational Excellence - Lean Standardized Work By Frank G. Adler.
•	Why Use Standard Work In Your Lean Journey? By Shawna Gilleland.

25. CONDUCT KAIZEN EVENTS AND IMPLEMENT KAIZEN PROJECTS IN YOUR COMPANY

A KAIZEN EVENT

According to Kaizen Methodology, all operational processes within your organization must be identified, evaluated, and gradually improved to maximize your business performance.

Upon completion of the current-state value-stream mapping and establishing standardized work parameters, you and your management team will be ready to begin improving operational activities within your organization. This process entails identifying specific operational problems, or customer complaints, which you may experience at present and selecting suitable work improvement projects designed to eliminate these problems through Kaizen Events, also known as Kaizen Workshops or Kaizen Blitz.

A typical kaizen event may run a day or several days, depending upon the scope and complexity of the kaizen project. This event should be planned well in advance and include all relevant managers and employees involved in the operational process or activities targeted for improvement. Although kaizen events require interruption of current operational activities and will cause some loss in production, they are usually well justified as a result of future operational improvements and savings.

ADDITIONAL INFORMATION ONLINE

•	Kaizen Tools For A Kaizen Event By Systems 2 Win.
•	Kaizen And Kaizen Events By EMS Consulting Group.
•	Why Have Kaizen Events? By Joe Dager And Michael Balle.
•	Kaizen Blitz Versus Traditional Approach By Consulting With Impact.
•	Hosting A Kaizen Event By Sam Ellsworth, Arsenal Management Solutions.

KAIZEN AND GEMBA

According to Masaaki Imai, each manager must do Gemba, which in Japanese means "go to where all activities are taking place". It is critical therefore that you and each member of your management team spend some time in different departments and evaluate various operational activities in each department. You will find that some of these activities add value to your products or services, while other activities don't. Your job will be to identify all non-value-added activities, considered waste, and develop a kaizen project designed to eliminate or minimize waste in that department.

Gemba is closely related to 3 Gen Principles used in a lean organization which are presented below:

• Genchi - Go to the shop floor and observe the action (similar to gemba).
• Genbutsu or Gembutsu - Observe the actual product or service.
• Genjitsu - Gather the actual facts.

ADDITIONAL INFORMATION ONLINE

•	Gemba Walks By Connstep.
•	Gemba Glossary By Gemba Academy.
•	Morning Improvement Walk By Fast Cap.
•	What Is Gemba? By Jim Womak, Lean Sensei International.
•	Lean Gemba Walks By Jim Womack, Lean Enterprise Institute.

DEVELOP A KAIZEN PROJECT

You must also take your customers' specific requirements into account when developing a new Kaizen Project. There are three types of kaizen projects which could help you to improve the operational performance within your organization as outlined below.

THREE TYPES OF KAIZEN PROJECTS


Management Projects	Group Projects	Individual Projects
Management projects entail selecting management activities, which represent a current problem within your organization and need to be improved.	Group projects entail selecting team activities, which represent a current problem within a specific department and need to be improved.	Individual projects entail selecting an individual activity, which represents a current problem related to a specific work station or an employee within the organization and need to be improved.

Kaizen Project Implementation is based on a PDCA cycle and entails four stages outlined below.

FOUR STAGES IN KAIZEN PROJECT IMPLEMENTATION

Stage 1: Plan.

Evaluate all operational results obtained during Stage 2 and summarize all related findings. If you are satisfied with the achieved results (measured results), you may proceed to Stage 4 with a full-scale operational process or activities improvement within your company or in the selected department. If you are not satisfied with results obtained during Stage 2, (because of excessive variance between expected and measured results) you must identify specific reasons and rectify them before proceeding to Stage 4.

Stage 2: Do.

Implement all planned steps, outlined in Stage 1 above, on a limited scale and on a trial basis. Engage all employees involved in the above process and make sure that your customers are not affected during the trial period.

Stage 3: Check.

Stage 4: Act.

Implement all planned steps outlined in Stage 1 above, or include updated corrections developed in Stage 3, monitor the entire operational process or activities and summarize all actual results (measured results). Hopefully, the performance variance will be on acceptable level, i.e. actual results will be in line with planned results (expected results) and this will signify that your company is on the right track.

A3 REPORT FOR KAIZEN PROJECTS

A3 Report represents a simple and practical tool frequently used by managers prior to conducting a kaizen projects. This report should be limited to one page and it contains information which relates to the selected problem in the organization. The A3 Report can be easily modified to meet specific operational requirements and one example of this report illustrated below.

Several essential Kaizen Implementation Methods designed to improve your company's operational performance are discussed next.

26. ESSENTIAL KAIZEN IMPLEMENTATION METHODS

ESSENTIAL KAIZEN IMPLEMENTATION METHODS


*The "5 S"* Method**	*The "5 Why's"* Method**	Kaikaku

A popular Kaizen Project Implementation Method, frequently used in eliminating waste and organizing the workplace, is "5 S" or 5 S Plus One". This method was developed by Hiroyuki Hirano as a part of his overall approach to production systems and it is particularly useful if kaizen project is conducted in a specific workplace for the first time. This method consists of five or six steps outlined below.

THE "5 S" METHOD (OR "5 S PLUS ONE")

1.	Sort Out (Seiri). The first step entails classifying all items in the workplace into "3 R" categories: • Retain - retain all items that are essential for effective functioning in the workplace. • Return - return all items that are not essential and belong to somebody else. • Rid - remove all items that are not required for effective functioning in the workplace.
2.	*Systemize (Seiton).* The second step entails arranging all work, tools, and materials in a specific order to create an efficient working system and operational flow in the workplace.
3.	*Scrub (Seiso).* The third step entails systematic "spring cleaning" of the workplace, equipment and tools to ensure clean working environment.
4.	Standardize (Seiketsu). The fourth step entails standardizing all operational procedures, tooling and equipment setup and maintenance requirements in the workplace.
5.	Sustain (Shitsuke). The fifth step entails ensuring continuous adherence to rules and procedures in the workplace.
6.	Safety (The 6th S). The sixth step entails evaluating the working area in terms of potential hazards and creating a safe environment for everybody involved in the workplace.

Kaizen Project Implementation entails not only selecting operational activities which present specific problems that must be resolved, but also getting to the root of these problems. The "5 Why's" Method described below is widely used in this process.

ADDITIONAL INFORMATION ONLINE

•	5 S Set In Order By ISI World.
•	5 S Methodology By Lean MCO.
•	5 S Overview By Gemba Academy.
•	5 S Factory Makeover Preview By 5S Supply.
•	5 S Video Case Study By The Bilas Group LLC.

GET TO THE ROOT OF ANY PROBLEM WITH THE "5 WHY'S" METHOD

The "5 Why's" Method represents one of the most powerful, practical, and simple problem-solving techniques designed to get to the root of any problem in the shortest period of time. This method was developed by Sakichi Toyoda, described as the King of Japanese inventors, and it represents an important element of the Toyota Production System.

The "5 Why's" method is at the center of Root Cause Analysis and it is frequently used during a kaizen project implementation. This method will enable you and your management team to get to the root of your specific operational problems and determine an effective plan of action designed to eliminate these problems as quickly as possible. This method entails asking "Why?" at least five times, or more, depending upon a specific problem, by using reversed sequence. Here is a simple example of how this method works.

EXAMPLE OF THE "5 WHY'S" METHOD

1.	Why did our checks bounce last week? Because we were short of money in our checking account in the bank.
2.	Why were we short of money in our checking account in the bank? Because some of our clients did not pay their bills.
3.	Why some our clients did not pay their last bills? Because they were not happy with our service provided last month.
4.	Why some clients were not happy with our service provided last month? Because we used the wrong material during the service for our clients?
5.	Why did we use the wrong material during the service for our clients? Because our training manager did not provide correct training to our employees.

As you can see from this simple example, the lack of proper training of employees in the operations department created a problem with the checking account and caused a major embarrassment to the company's management as a result of bounced checks to suppliers. The subsequent solution to this problem will be to plan and implement a kaizen project designed to develop an improved training program for employees. This, in turn, will ensure the use of correct materials, improve the service value offered to customers, ensure higher level of customer satisfaction, motivate customers to pay their bills on time, and prevent any additional shortages in the company's checking account.

ADDITIONAL INFORMATION ONLINE

•	5 Why Presentation By ELSE, Inc.
•	Using The 5 Why Worksheet By Velaction Videos.
•	5 Why Root Cause Analysis By Six Sigma Money Belt.
•	5 Why Root Cause Analysis Problem Solving Tool By Velaction Videos.
•	Introduction To Root Cause Analysis By Denise Robitaille, Paton Professional.

IMPLEMENT MAJOR IMPROVEMENTS
WITH SUPERSIZED KAIZEN PROJECT OR KAIKAKU

Sometimes you may identify a very serious problem within your organization which may require a drastic change or complete overhaul in the existing operational process. In other instances, there may be a need to develop a brand new operational process for launching a new product or service line. In all these cases a simple kaizen project may not be enough and you will need to implement a super-sized kaizen project, called Kaikaku.

Kaikaku or "Breakthrough Kaizen", "Radical Kaizen" or "System Kaizen" means "reform", "major change", or "innovation" in Japanese. This method is effective when traditional kaizen, used for small and incremental changes and improvements, may not be sufficient. Kaikaku is used when significant or complete changes may be required in operational processes or activities. Similar to kaizen, this method also uses the PDCA cycle and it can be applied to all operational activities within any organization.

Kaikaku requires more preparation and planning time in comparison with a traditional Kaizen project. This method may often involve a purchase of expensive capital equipment or hiring additional personnel to meet new operational objectives. However, the main focus of kaikaku will remain the same - to maximize the value of products and services offered to customers, to maximize value-added operational activities, to eliminate or minimize non-value added operational activities, and to maximize the company's efficiency, productivity and profitability.

You and your management team should follow The Ten Commandments Of Kaikaku developed by Hiroyuki Hirano if you really want to introduce significant improvements and changes within your organization.

ADDITIONAL INFORMATION ONLINE

•	Perfection Series By Simplex Improvement.
•	Lean Through Equipment Kaikaku By John Dee.
•	Kaizen Or Kaikaku By Arne Ahlander, Aqqurite AB.
•	Kaizen Versus Kaikaku By Jeffrey K. Liker, G. Trachilis.
•	Kaikaku: Manufacturing Re-Imagined By Munro Associates.

Kaizen is discussed in detail in Tutorial 4.

27. IMPLEMENT JUST-IN-TIME IN YOUR COMPANY

IMPLEMENT JUST-IN-TIME IN YOUR COMPANY

Just-In-Time represents a methodology for eliminating or minimizing waste throughout all stages in any operational value stream.

Just-In-Time Methodology is another critical building block for transforming any traditional business organization into a lean organization. This methodology is applicable to small, medium-sized, and large manufacturing, service, merchandising, contracting and project management companies providing products and services to customers. You may also find just-in-time useful in improving your company's operational performance and profitability.

The main purpose of JIT methodology is "to produce only what is needed, when it is needed, and in the amount needed!". JIT methodology was envisioned by Kiichiro Toyoda, the president of Toyota Corporation between 1941 and 1950 and developed by Taiichi Ohno in 1950's. JIT methodology and it is integral part of the Toyota Production System (TPS).

BASIC JUST-IN-TIME GUIDELINES

1.	Complete Value-Added Analysis. All operational activities in the company's current-state value stream should be identified, evaluated from the customers' perspective, and categorized as value-added activities and non-value-added activities, or waste (type-1 muda, type-2 muda, mura, and muri).
2.	Eliminate Or Minimize Waste Throughout The Entire Operational Process. All non-value-added activities (type-1 muda) are important in maintaining current operational process and should be improved to ensure cost-effective performance in the future. All non-value-added activities (type-2 muda, mura, and muri) should be eliminated or minimized throughout the entire operational process as soon as possible.
3.	Balance And Synchronize All Operational Activities. All value-added operational activities in the company's current-state value stream should be evaluated and improved, if possible, to create a more balanced value stream in the future and to synchronize the operational cycle time with the customer-driven takt time. Sometimes it may be necessary to replace current operational activities with more effective activities, or combine several operational activities into one activity.
4.	Develop And Implement An Operational Pull System. The sequence and scheduling of all value-added operational activities in the company's value stream should be evaluated and planned from the customer perspective to create a pull-through operation driven by customer demand.
5.	Standardize Work And Reduce Work Variations. Develop standardized work procedures and parameters for value-added operational activities in the company's value stream. Reduce work variation in the operational facility to maximize the value stream efficiency. Coordinate product and service range optimization with product and service developers, designers, and programmers.
6.	Develop And Implement A Continuous Operational Flow. Plan and develop a continuous operational flow, maximize value-added activities and minimize non-value activities in the company's value stream. The improved value stream should be designed to maximize the value of products and services to customers.
7.	Develop And Implement Just-In-Time Plant Layout. Plan and develop a just-in-time plant layout, based on self-sustained work stations, or work cells, including L-shaped and U-shaped work station configurations, multi-machine arrangements in each work station and flexible machine requirements and capabilities. Maximize the use of automated conveyor lines and material handling equipment.
8.	Reduce Operational Machine Setup Time. Examine set-up activities and instructions related to equipment and tooling in the operational facility and develop a detailed plan for set-up time reduction. All time savings should be applied to level-loading of manufacturing operations to ensure a smooth and balanced operational value stream.
9.	Develop And Implement Just-In-Time Purchasing. Develop and implement just-in-time purchasing based on smaller number of vendors. Ensure improved communication with selected vendors on a continuous basis. Selected vendors should be prepared to supply their products and services in smaller quantities on as needed basis, driven by customer demand.
10.	Develop And Implement Just-In-Time Quality Control. Develop and implement just-in-time quality control in accordance with a zero defect policy in the operational facility. All operators should be cross-trained not only to operate various machines or equipment, but also to maintain steady quality control of products and services.
11.	Develop And Implement Just-In-Time Preventive Maintenance. Develop and implement just-in-time preventive maintenance based on total productive maintenance (TPM). Machine or equipment operators should be actively involved in this process on a continuous basis. This process also entails corrective maintenance, preventive maintenance, breakdown maintenance and record-keeping and is discussed below.
12.	Ensure Strong Employee Participation And Team Work. Identify the current level of employee participation and team work in various operational activities within the organization. Develop and implement a plan designed to maximize employee participation and teamwork to enable the company to provide the best possible value of products and services to customers on a continuous basis.

ADDITIONAL INFORMATION ONLINE

•	Toyota Just-In-Time System At The Factory.
•	Just-In-Time Manufacturing By Laura Saffold.
•	Just-In-Time And Lean Operations By Joan Maines.
•	Just-In-Time Systems By Welingkar's Distance Learning Division.
•	Just-In-Time - Lean Manufacturing Basic Concepts By Enrique Mora.

PULL SYSTEM IN A JUST-IN-TIME ENVIRONMENT

Just-in-time methodology prescribes development of operational value-added activities in a company's value stream in accordance with the customer-driven requirements. The actual sequence of operational activities in the just-in-time environment, called a Pull System, begins with specific purchase orders, or "pulls", initiated by customers. This system uses a Kanban which represents a special "pull signal" designed to ensure effective functioning of the operational process.

Once the customers' purchase order for a specific product or service is placed, the company's goal is to satisfy this order as quickly as possible by adhering to a Pull System Sequence outlined below.

JIT PULL SYSTEM SEQUENCE

1.	When a product order is received (the first pull signal), a production instruction (the second pull signal), must be issued to the product assembly department to complete one product assembly for delivery to the customer as soon as possible.
2.	The assembly line must be stocked with required number of all needed parts so that any type of ordered product can be assembled as quickly as possible.
3.	The assembly line must immediately send a request (the third pull signal) to the storage facility to replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process).
4.	A request (the fourth pull signal) must be sent to the parts-producing process to stock small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.

ADDITIONAL INFORMATION ONLINE

•	Pull Series By Simplex Improvement.
•	Kanban And Pull System By EMS Consulting Group.
•	Push-Pull System Supply Chain Strategy By Ian Johnson.
•	Pull System And Kanban Demonstrated By Educate Virtually.
•	Kanban And JIT Two Bin System By Hurst Green Plastics Limited.

KANBAN IN A JUST-IN-TIME ENVIRONMENT

Kanban means "signboard" or "card" in Japanese.

Kanban is a center-part of the just-in-time production scheduling and control system which represents an important part of every lean organization. Kanban contains specific information related to a particular part or product and it is used as a visual signal to "pull" manufacturing operations. Kanban was developed by Taiichi Ohno in 1950's and it became an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Intro To Kanban By Axosoft.
•	Kanban Overview By Gemba Academy.
•	Kanban Pull System By Mestek Corporation.
•	Kanban Supermarket System By Mestek, Inc.
•	The Kanban System by John Lupo, Grandma's Bakery.

TAKT TIME IN JUST-IN-TIME ENVIRONMENT

Takt Time means "pace" or "beat" or "Taktzeit" in German.

Takt Time sets the production pace in the manufacturing process based on customer demand. Takt time is calculated by dividing the available production time (in minutes) by the number of product or service units required by a specific customer during the same period. Takt time is used as a benchmark for synchronizing the lead time or cycle time with the customer-driven demand for products or services.

ADDITIONAL INFORMATION ONLINE

•	Takt Time Series By Simplex Improvement.
•	How To Calculate Takt Time By Lean Sigma Source.
•	Takt Time Versus Cycle Time By Jeff Heycheck, Velaction.
•	Takt Time Explained In Two Minutes By Kaizen Consultants.
•	Takt Time By Chinar Agawal, Nikita Bogadia, And Vinit Walinjkar.

CYCLE TIME IN JUST-IN-TIME ENVIRONMENT

Cycle Time or "lead time" is the total time required to complete one job, task, or one unit of product or service flowing through a value stream from start to finish in a lean manufacturing organization.

Cycle Time includes work preparation time, waiting time, document preparation time, inventory-related time, tooling time, material movement time, assembly time, packaging time, delivery time and any additional time related to a specific product or service.

ADDITIONAL INFORMATION ONLINE

•	Cycle Time Video By Rimrock Corporation.
•	Cycle Time Series By Simplex Improvement.
•	Cycle Time And Process Time By Systems 2 Win.
•	When To Cut Cycle Time Or Lead Time By RTD Knowledge.
•	Cycle Time, Normal Time And Standard Allowance By P. Khemchandani.

CELLULAR MANUFACTURING IN JUST-IN-TIME ENVIRONMENT

Cellular Manufacturing is an essential element of the just-in-time methodology which is based on the principles of group technology for manufacturing processes.

Manufacturing Cells are used extensively in just-in-time manufacturing environment and provide higher level of product quality, efficiency, and productivity. Cellular manufacturing is an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Cells Series By Simplex Improvement.
•	Cellular Layout Presentation By ELSE, Inc.
•	Cellular Manufacturing Layout By AYA 140906.
•	Lean Manufacturing Cell By Ivan D. Hernandez.
•	Manufacturing Cell Design And Lean Principles By Sreejesh SP.

JIT INVENTORY MANAGEMENT

Just-In-Time Inventory Management is focused on minimizing the level of inventory and keeping only what is needed when it is required and in the quantity required by a customer.

JIT Inventory Management prescribes carrying minimal amount of inventory, which may include direct and indirect materials used in the process of producing products and services for customers. JIT inventory management system was developed by Taiichi Ohno and it is integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Inventory Series By Simplex Improvement.
•	Latest Trends In Operations Management By Shashank.
•	Sherwin Williams Lean Inventory System By Bob Stefanov.
•	Idea Inventory Management By Henry Kemp, Idea Consumer Products.
•	Inventory Management Best Practices By MDM And Manhattan Associates.

JIT SUPPLY CHAIN AND LOGISTICS

Just-In-Time Supply Chain And Logistics entail development and management of vendor selection, transportation network, warehousing, material handling, inventory, order fulfillment, procurement, and customer service.

The main purpose of JIT Supply Chain And Logistic Systems is to maximize customer satisfaction, minimize waste, and increase operational efficiency and profitability of the organization. JIT supply chain and logistic systems are an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	JIT Supply Chain By Ian Johnson.
•	RFID-Enabled JIT Logistics Management System For SHIP By Nan Cao.
•	Logistics, Distribution And Supply Chain Management By Patrick Dixon.
•	JIT, Logistics Systems And Supply Chain Management By Victor Holman.
•	Manufacturing On-Demand - The Shift To JIT Supply Chain By Thomas Frey.

Just-In-Time is discussed in detail in Tutorial 4.

28. IMPLEMENT JIDOKA, POKA-YOKE, ANDON, AND TPM IN YOUR COMPANY

IMPLEMENT JIDOKA IN YOUR COMPANY

Jidoka (Autonomation), or "automation with human touch", is a methodology aimed at enabling machine operators and machines to detect work defects during operating processes and stop the machines immediately.

In broader terms, Jidoka means that every employee should "build quality at the source", i.e. during a specific operational process related to any product or service in any company. Jidoka guidelines are applicable to any service, merchandising, contracting, and project management company of any size.

Based on jidoka guidelines, every employee is responsible for the quality of his* work at any stage during the operational work cycle. If the employee identifies a specific problem, he must stop the machine or operational process and attempt to fix the problem by himself. If the employee can't fix the problem, he must ask a supervisor for assistance. Jidoka is critical in every business organization, since it sets a "zero-defect" standard, and ensures the best possible value of products and services offered to customers.

In a manufacturing environment, the main purpose of jidoka is to enable machines to work with more autonomy from operators, to identify the root causes of specific operational problems, and to prevent machines in producing defected parts or products. This, in turn, provides operators with additional time and enables them to work simultaneously with several machines, thereby helping to increase the productivity level, while ensuring higher level of product quality.

Jidoka means that a machine must safely stop when the normal processing is completed. It also means that, in case of quality or equipment problem during the operational process, the machine must detect the problem on its own and stop, thereby preventing defective products from being produced. As a result, only products that meet quality standards will be passed on to the following processes on the production line.

* Note: Applies to both genders, "he or she", throughout the program.

BASIC JIDOKA GUIDELINES

1.	Implement Automatic Stops. Implement automatic stops for various machines or equipment, as necessary, in case when a specific operation has been completed or a quality problem has been detected. This will prevent a defective operation to continue, reduce defects, minimize waste, and improve product and service quality for customers.
2.	Implement Andon. Implement andon, or an electronic visual display board, at any suitable stage in the operational process. This is designed to provide employees with important warning signs or specific information during the operational process and to increase their efficiency and overall productivity.
3.	Ensure Separation Between Machine And Machine Operator. Introduce automation in various operational processes, as necessary, to maximize operational efficiency, to enable employees to operate several machines simultaneously, and to ensure high level of operational safety within the organization.
4.	Implement Multi-Process Machine Handling. Implement multi-process machine handling by creating self-sustained work stations, or work cells, including L-shaped and U-shaped work station configurations, multi-machine arrangements in each work station and flexible machine requirements and capabilities.
5.	*Implement The "5 Why's"* Method.** Implement the "5 Why's" method as a part of the jidoka process. This simple and practical method is very helpful in evaluating a specific operational problem and identifying real reasons behind it.
6.	Implement Source Inspection. Implement source inspection of work in progress throughout the operational process, based on the policy of zero-defects and quality at the source. Every employee, involved in a specific operational activity, must check the outcome of his work based on standardized work requirements to ensure highest possible quality of products and services. If a specific defect is identified, the operation must stop until the defect is corrected.
7.	Implement Progressive Inspection. Implement progressive inspection throughout the entire operational process to ensure that all defects have been identified in a timely manner. This type of inspection is critical to ensure the best possible value of products and services offered to customers, to minimize waste, to maximize employee efficiency and the company's productivity and profitability.
8.	Implement Poka-Yoke Or Error-Proofing. Implement poka-yoke, or error-proofing procedures, in the operational processes within your organization. Poka-yoke represents any method or device designed to assist the operator in preventing a mistake during a specific operational process.
9.	Implement Built-In Quality Control. Implement built-in quality control throughout your operational processes, based on zero-defect policy. This will enable your organization to offer the best possible value of products and services to customers, increase your employees' productivity and your company's profitability.

ADDITIONAL INFORMATION ONLINE

•	Jidoka Series By Simplex Improvement.
•	Autonomation And Jidoka By Tom Huckabee.
•	Ninbennoaru Jidoka By Anand Subramaniam.
•	Autonomation (Jidoka) By Mimox International.
•	Automation With A Human Touch By BIN Industrial Training.

IMPLEMENT POKA-YOKE IN YOUR COMPANY

"Poka-Yoke" means "mistake-proofing" in Japanese.

Poka-Yoke represents any device or procedure designed to assist the operator in preventing a mistake during a specific operational process. This method provides a useful method of ensuring a zero-defect operational process. Poka-yoke was introduced by Shigeo Shingo and became an integral part of Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Poka-Yoke By Ananth S. Iyengar, MITE.
•	What Is Poka-Yoke? By B2B White Board.
•	Poka-Yoke In Industry By Keltech Engineering.
•	Understanding Poka-Yoke And Chaku-Chaku By TLC.
•	Poka-Yoke - Lean Warehousing Management Tools By Brad Fye, Leancor.

IMPLEMENT ANDON IN YOUR COMPANY

"Andon" means a "problem display board" in Japanese.

Andon represents an important method of providing electronic visual display or a warning sign to operators, when a specific problem may arise during an operational process. A simple example of andon is a dashboard in a car, which displays various types of information to a driver, including red light in case of low gas in the tank, or flicking light in case of a maintenance problem

In the manufacturing environment, machines are usually designed to stop automatically when processing is completed or when a problem arises. In this case, andon may be used to inform operators about the machine stoppage and enable them to continue performing work on other machines, or identify causes of a specific problem and prevent its recurrence. This enables each operator to be in charge of several machines, resulting in higher productivity, while continuous improvements lead to greater processing capacity. Andon represents an essential element of jidoka quality control and it is an integral part of Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Andon By Xelagl.
•	MR Display By Allen Peng.
•	Lean Manufacturing Andon By Alzatex.
•	Andon Standard System By Industrial Andons.
•	Lean Manufacturing Andon Display, By Electronics Displays.

IMPLEMENT TOTAL PRODUCTIVE MAINTENANCE (TPM) IN YOUR COMPANY

Total Productive Maintenance (TPM) is a methodology designed to maximize productivity in operational processes while ensuring full maintenance of equipment and tooling.

Total Productive Maintenance represents another critical building block for transforming any traditional business organization into a lean organization. TPM guidelines are applicable to manufacturing, service, merchandising, contracting, and project management companies of any size.

You may also find TPM useful in improving your company's operational performance and profitability.

TOTAL PRODUCTIVE MAINTENANCE (TPM) GUIDELINES

1.	Implement Autonomous Maintenance. Autonomous maintenance means that machine operators must be responsible to provide routine maintenance of their own machines and tools.
2.	Implement Planned Maintenance. Planned maintenance means that dedicated maintenance personnel must be responsible to plan and implement all maintenance activities related to machinery, equipment, and tools in the company, based on specific operating guidelines.
3.	Ensure Separation Between Machine and Machine Operator. Introduce automation in various operational processes, as necessary, to maximize operational efficiency, to enable employees to operate several machines simultaneously, and to ensure high level of operational safety within the organization.

Equipment Maintenance And Replacement is discussed in details in Tutorial 4.

ADDITIONAL INFORMATION ONLINE

•	TPM Presentation By Elseinc.
•	This Is TPM By Crazy Human 7.
•	Four Principles Of TPM By Four Principles.
•	The TPM Guide By Lean Manufacturing Coaching.
•	Total Productive Maintenance By Bruce Hamilton And John Kravontka.

29. ADDITIONAL INFORMATION ABOUT LEAN MANAGEMENT

HANSEI - SELF-REFLECTION

Hansei means “self-reflection” in Japanese.

Hansei is one of the most important words uniquely attributed to Japanese culture. Hansei is focused on being honest and self-critical, identifying what went wrong, acknowledging personal mistakes, taking responsibility, and making commitment to improve the situation. Hansei also prescribes modest behavior and humility when success has been achieved. Hansei Culture represents an integral part of the Toyota Production System (TPS).

You and your management team should adopt hansei culture to maximize your company’s operational performance and results.

ADDITIONAL INFORMATION ONLINE

•	Hansei By Jill Knapp.
•	Hansei By Lean Sensei.
•	Introspection By Bipolar Advantage.
•	Hansei: The Art Of Reflection By Matthew May.
•	Calgary Life Coach - Self-Reflection By Russ Small.

HEJUNKA - PRODUCTION LEVELING

Heijunka means production leveling, or production smoothing in Japanese.

The main purpose of Hejunka is to minimize negative effects of production flow fluctuation in a manufacturing organization. Hejunka represents an important lean method for reducing waste (muda) and increasing the production flow efficiency during the manufacturing process. Heijunka is an integral part of the Toyota Production System (TPS).

You and your management team should implement hejunka in your operations to maximize your companys performance and results.

ADDITIONAL INFORMATION ONLINE

•	Heijunka Series By Simplex Improvement.
•	Lean Supply Chain Part 2 - Heijunka By Brian Maskell.
•	Technical Lean Tools - Heijunka By Jacob Isaac-Lowry.
•	Heijunka - Leveling Volume And Mix Of Work By EMS Consulting Group.
•	Heijunka For Lean Healthcare: Leveling Work By EMS Consulting Group.

ISHIKAWA DIAGRAM

Ishikawa Diagram is also called a “fishbone diagram” or “cause-and-effect diagram”.

Ishikawa Diagram is used in analyzing and summarizing root causes of various problems related to specific categories of activities within an organization. These categories may include: people, methods, machines, materials, measurements, and environment. Ishikawa diagram was created by Kaoru Ishikawa in 1968 and it is used in problem-solving processes in lean organizations. Refer to example in Tutorial 4.

ADDITIONAL INFORMATION ONLINE

•	Cause And Effect Diagram By Jeff Hajek, Velaction.
•	5 Why - Root Cause Analysis By Six Sigma Money Belt.
•	Cause And Effect Analysis By David Hutchins International.
•	Root Cause Analysis, Fishbone, Problem Identification By Click OK.
•	Ishikawa Diagram In Excel To Perform Root Cause Analysis By QI Macros.

LEAN ACCOUNTING (LEAN FINANCIAL MANAGEMENT)

Lean Accounting or Lean Financial Management represents a comprehensive lean financial management methodology designed to support business practices in a lean enterprise.

Lean Accounting includes several elements including lean performance measurements, value stream accounting, and decision-making process in lean accounting, accounting simplification, transaction elimination, and target costing.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Brian Maskell, BMA, Inc.

•	Lean Accounting Overview By Brian Maskell, BMA, Inc.
•	Lean Accounting Part 2 - Value Stream Accounting By Brian Maskell, BMA, Inc.
•	Lean Accounting Part 3 – Decision Making By Brian Maskell, BMA, Inc.
•	Lean Accounting Part 4 – Accounting Simplification By Brian Maskell, BMA, Inc.
•	Lean Accounting Part 5 – Target Costing By Brian Maskell, BMA, Inc.

LEAN ANALYTICS

Lean Analytics is designed to enable entrepreneurs to evaluate critical parameters of their business performance during a business startup process and determine what really works and what doesn’t work.

A new book Lean Analytics, authored by Ben Yoskovitz and Alistair Croll, describes how to measure progress through lean startup process by “building, measuring and learning” during the business startup process to maximize chances for a successful performance. You can obtain a Free Book online.

ADDITIONAL INFORMATION ONLINE

•	Lean Analytics Intro By Alistair Croll.
•	Lean Analytics Webcast By Alistair Croll.
•	Lean Analytics Webcast By Ben Yoskovitz.
•	Lean Analytics For Startups Webcast By Alistair Croll.
•	Making Sense of the Numbers (Lean Analytics) By Ben Yoskovitz.

LEAN CONSTRUCTION

Lean Construction is a “way to design production systems to minimize waste of materials, time, and effort in order to generate the maximum possible amount of value."

Lean Construction Methodology is used by architects, designers, builders, engineers, contractors, and suppliers. The term "lean construction" was introduced by the International Group For Lean Construction in its first meeting in 1993.

ADDITIONAL INFORMATION ONLINE

•	Lean Construction Saves Money By Glenn Ballard.
•	Lean Construction - Weekly Work Plan By Jason Maze.
•	Lean Construction - Pull Planning By Lean Jason Maze.
•	Lean Construction - A Case Study By Dave Rahe, Pepper Construction.
•	Application Of Lean In Construction Industry By Criterion Lean Construction.

LEAN HUMAN RESOURCES MANAGEMENT

Lean Human Resources (HR) Management is applicable to a broad range of business organizations irrespective of their size.

Lean Human Resources (HR) Management incorporates specific lean management principles, methods, and guidelines designed to maximize the HR contribution to providing customers with the best possible value of products and services while eliminating or minimizing waste and non-value added activities. This process entails development of efficient employee recruitment and hiring procedures, screening and testing applicants, employee orientation, training, development, motivation, compensation and performance appraisal.

ADDITIONAL INFORMATION ONLINE

•	Lean Recruiting By Luis Carter.
•	Lean HR By Dwayne Lay And Jim Stroud.
•	Lean HR - Granite State HR Conference 2012.
•	Effective Use Of Six Sigma In HR By Michaela Leo.
•	Applying Lean Thinking In HR By Liza Provenzano, Canadian Tile Corporation.

LEAN EDUCATION

Lean Education represents an important process of educating business owners, managers, consultants and students in various areas of lean management.

Lean Education includes basic lean management principles, methods and guidelines, introduction to key point indicators (KPIs), lean metrics, the mapping process, value-added and non-value-added activities, various types of waste, lean tools, standardized work, kaizen, just-in-time, jidoka and other lean management elements.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jacob Isaac-Lowry:

•	The Role Of Lean Management By Jacob Isaac-Lowry.
•	Fundamentals Of Lean Management By Jacob Isaac-Lowry.
•	Measurement Section - MiFlow Mapping By Jacob Isaac-Lowry.
•	Measurement Section - Key Point Indicators By Jacob Isaac-Lowry.
•	Measurement Section - Rates Of Defects And Yield By Jacob Isaac-Lowry.

LEAN INTEGRATION

Lean Integration entails creating the best possible value for customers while using fewer resources by integrating various processes and data in a lean organization.

Lean Integration is a management system which focuses on the customer, engaging in continuous improvement, empowering the team, adopting an organization-wide approach, planning for change, automating processes, ensuring built-in quality. Lean integration was first introduced by John Schmidt in 2009.

ADDITIONAL INFORMATION ONLINE

•	Lean Lab Design By Smart Consulting Group.
•	Chain Of Custody, Lean Integration By Ventana Medical Systems, Inc.
•	Automotive Part Production On A Fully Integrated Lean Machining Cell.
•	Lean Problem-Solving - Problem Solving Integration By Jacob Isaac-Lowry.
•	The Integration Of Advanced Technology With Lean Production By Comer Ind.

LEAN IMPROVEMENT AND PERFECTION

Lean Improvement And Perfection represents the ultimate destination process in every lean organization.

The Lean Improvement And Perfection Process is based on kaizen guidelines, which prescribe gradual and continuous improvements in every area of operational activities within the organization. Lean improvement and perfection process may also include Kaikaku or “radical change” to meet the organization’s long-term strategic requirements.

ADDITIONAL INFORMATION ONLINE

•	Perfection Series By Simplex Improvement.
•	Morning Improvement Walk By Paul Akers, Fast Cap.
•	Two Second Lean Improvement By Paul Akers, Fast Cap.
•	Pursuit Of Perfection - The Fifth Principle Of Lean By Brian Maskell.
•	Seeking Perfection In Marketing And Sales By Joe Wager, Lean Marketing Lab.

LEAN MANUFACTURING (LEAN OPERATIONS MANAGEMENT)

Lean Manufacturing, or Lean Operations Management, prevails in lean manufacturing organizations.

Lean Manufacturing is a comprehensive lean operations management methodology designed to enable a manufacturing organization to provide customers with the best possible value of products and services while eliminating or minimizing waste and non-value-added activities. Lean manufacturing has its origin with Toyota Production System (TPS) and it has evolved gradually over the last sixty years.

ADDITIONAL INFORMATION ONLINE

•	Lean Manufacturing By Lead Manu Tools.
•	Introduction To Lean Manufacturing By SME.
•	Lean Manufacturing Tour By Philip Beyer, System 100.
•	Introduction To Lean Manufacturing By Gemba Academy.
•	What Is Lean Manufacturing? By Guide Very Good Channel.

LEAN MARKETING AND SALES MANAGEMENT

Lean Marketing And Sales Management entails applying lean guidelines to marketing and sales management function.

Lean Marketing And Sales Management is based on specific lean management principles, methods, and guidelines designed to maximize the value of products and services offered to customers while eliminating or minimizing waste and non-value-added activities. This process entails development of an efficient marketing and sales value stream, continuous process improvement and employee training, and pro-active marketing and sales management planning and control.

ADDITIONAL INFORMATION ONLINE

•	Lean Sales And Marketing By Bill Waddell.
•	Hansei In Lean Sales And Marketing By Marketing Lab.
•	Why Lean In Sales And Marketing? By Lean Marketing Lab.
•	Applying Lean Principles To Sales And Marketing By Dave Brock.
•	Seeking Perfection In Lean Sales And Marketing By Lean Marketing Lab.

LEAN METRICS

Lean Metrics include a broad range of standard performance parameters related to various operational activities in a lean organization.

Lean Key Performance Metrics (KPMs) provide critical information about operational performance and enable business owners and managers to evaluate performance results and effectively plan ahead. Lean metrics relate to operational, financial, marketing, sales, and employee performance activities.

ADDITIONAL INFORMATION ONLINE

•	Managing With Metrics By Jeff Hajek, Velaction.
•	Performance Measurement By Eagle Hill Consulting.
•	Key Performance Metrics By Rich Allen Action Coach.
•	Five Categories Of Performance Measures By Victor Holman.
•	What Metrics Are Most Important? By Michael Cyger And Gary Cone.

LEAN OFFICE

Lean Office is an office which is organized according to lean management guidelines and principles.

The prime purpose of a Lean Office is to maximize the quality and efficiency of work produced in the office, while minimizing all wasteful activities. Lean office plays an important role in ensuring overall operational efficiency in a lean organization.

ADDITIONAL INFORMATION ONLINE

•	Lean Office By Fast Cap.
•	Lean Office By Michael Scott, Dunder Mifflin Paper.
•	How To Implement Lean In An Office By Yvonne Gallien.
•	5 S Office High Speed By McKay Womack Family Channel.
•	Lean Office Applying Lean To Business Processes By EMS Consulting Group.

LEAN PROCESS IMPROVEMENT

Lean Process Improvement is a key methodology in every lean organization.

Lean Process Improvement represents a comprehensive management methodology focused on maximizing the product and service value for customers, improving all operational processes, increasing value-added activities, ensuring high level of product, service, and process quality, minimizing waste, reducing lead times and total costs, and respecting all employees. Lean process improvement relates to all operational activities and is implemented on an organization-wide basis.

ADDITIONAL INFORMATION ONLINE

•	Lean Practitioner - Improve Process Flow By Chris Turner.
•	Welcome To The Process Excellence Revolution By Pex Network.
•	Four Principles Lean Management In 90 Seconds By Four Principles.
•	Transforming Your Business Through Lean Process By Don Wetekam.
•	Traditional Improvement Versus Kaizen Blitz By Consulting With Impact Ltd.

LEAN PRODUCT DEVELOPMENT

Lean Product Development is another key methodology in every lean organization.

Lean Product Development is a practical method aimed at delivering products (and services) to the market in the most cost- and time-effective manner through waste elimination in planning, resource management, and interdisciplinary communication. Lean product development consists of three key elements: minimizing waste during the product development process, improving the product development process, and visualizing the product development process.

ADDITIONAL INFORMATION ONLINE

•	Lean New Product Development Principles - Part 1 By Accuer, Inc.
•	Lean New Product Development Principles - Part 2 By Accuer, Inc.
•	Lean Product Development By Dan Martell, Lean Startup Circle LA.
•	Lean Product And Process Development By Allen Ward, Lean Frontiers.
•	Lean Product Development By Ronald Mascitelli, Technology Perspectives.

LEAN PROJECT MANAGEMENT

Lean Project Management entails applying lean guidelines to project management companies.

Lean Project Management is based on specific lean management principles, methods, and guidelines designed to maximize the value of the project results offered to customers while eliminating or minimizing waste and non-value-added activities. This process entails development of an efficient project flow value stream, continuous process improvement and employee training, and pro-active project management planning and control.

ADDITIONAL INFORMATION ONLINE

•	Lean Critical Project Management By Larry Leach.
•	Critical Chain Project Management - Part 1 By Rob Richards.
•	Critical Chain Project Management - Part 2 By Rob Richards.
•	Intro To Agile Scrum In Under 10 Minutes By Hamid Shojaee.
•	Top 10 Terms Project Managers Use By Jennifer Witt, Project Manager.

LEAN PROBLEM-SOLVING

Lean Problem-Solving is a process of applying lean guidelines to resolve operational challenges in a business environment.

Lean Problem Solving is a method of identifying specific problems and developing most effective solutions in a lean organization in accordance with lean management principles. This method entails setting realistic limits for the team, identifying specific problems, prioritizing these problems, checking and adjusting solutions, making the process visible and continuing with the process on a continuous basis.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jacob Isaac-Lowry

•	Introduction To Lean Thinking By Jacob Isaac-Lowry.
•	Understanding The Premise Of Lean By Jacob Isaac-Lowry.
•	Why Problem-Solving Matters? By Jacob Isaac-Lowry.
•	Problem-Solving Case Study By Jacob Isaac-Lowry.
•	Problem-Solving Integration By Jacob Isaac-Lowry.

LEAN QUALITY MANAGEMENT AND CONTROL

Lean Quality Management And Control is an integral part of every lean organization.

Quality is built into each step of the process in a lean organization. “Quality control consists of developing, designing, producing, marketing, and servicing products and services with optimum cost-effectiveness and usefulness, which customers will purchase with satisfaction” according to Kaoru Ishikawa. Dr. Ishikawa popularized Total Quality Control (TQC) in Japan which became an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	The ISO 9001 Family - Global Management Standards By ISO.
•	Lean Management - Quality Circles By John Bernard, Mass Ingenuity.
•	The 5 Deadly Diseases By William Edwards Deming, Deming Institute.
•	Total Quality Management By Kenneth M. Ragsdell, Missouri University.
•	Learn What The 7 Quality Control Tools Are In 8 Minutes By Gemba Academy.

LEAN RETAIL MANAGEMENT

Lean Retail Management entails applying lean guidelines in a retail business environment.

Retail Lean Management is based on specific lean management principles, methods, and guidelines designed to maximize the value offered to customers while eliminating or minimizing waste and non-value-added activities. This process entails development of efficient retail procedures, continuous process improvement, employee training, and pro-active retail management planning and control.

ADDITIONAL INFORMATION ONLINE

•	Store In A Box - Cisco Lean Retail Approach By Cisco.
•	Cisco Remote Expert Smart Solution For Retail By Cisco.
•	Lean On Me - Store Manager Support By Mindfield Group.
•	Retail Store Management Lessons - Insights On Mind Set By NUL.
•	Retail Store Management Lessons - Staffing Plan Insights By NUL.

LEAN SIMULATION AND LEAN GAMES

Lean Simulations And Lean Games represent important lean training methods.

Lean Simulation And Games are interactive training methods which introduce lean concepts, principles, and guidelines to students and employees in a classroom environment. Lean simulation includes lean games designed to provide an opportunity to learn about lean methods and practices in a fun way, select specific lean metrics, and determine how these metrics may relate to various operational activities within a lean organization.

ADDITIONAL INFORMATION ONLINE

•	One Piece Flow Game By ELSE Inc.
•	Lean Simulation Series By Simplex Improvement.
•	Lean Games - Plug Game By Lean Games Films 1.
•	Paper Airplane - Lean Simulation By TXM Lean Video Channel.
•	Lean Manufacturing (TPS) One Piece Flow Simulation By Ron Pereira.

LEAN SIX SIGMA

Lean Six Sigma is a management strategy for problem-solving and process improvement which is based on two methodologies: lean management and Six Sigma.

The main purpose of Lean Six Sigma is elimination or reduction of waste (muda) and meeting the strict Six Sigma quality standards for products and services. Lean Six Sigma was popularized by Michael L. George, author of numerous Lean Six Sigma books, including What Is Lean Six Sigma?

ADDITIONAL INFORMATION ONLINE

•	The Roots Of Lean Sigma By LeanVideodotNet.
•	What Is Lean Six Sigma By EMS Consulting Group.
•	Lean Six Sigma - An Overview Webinar By Mark Edgeworth.
•	What Is Lean Six Sigma? By Jay Arthur, SixSigmaMoneyBelt.
•	Introduction To Lean Six Sigma By Earl Murman And Team, MIT.

LEAN STARTUP

Lean Startup is a business startup strategy based on lean management guidelines for entrepreneurs and business owners.

The main purpose of Lean Startup Strategy is to enable entrepreneurs and small business owners is to apply lean management principles, methods, and guidelines during a business startup process. Lean startup strategy was introduced by Eric Ries in his book titled The Lean Startup in 2011.

ADDITIONAL INFORMATION ONLINE

•	Eric Ries Discusses The Lean Startup.
•	Lean Startup Methodology By Eric Ries.
•	The Lean Startup Video By Joone Studios.
•	Authors © Google - Eric Ries, The Lean Startup.
•	Author Ries On Entrepreneurs, The Lean Startup.

LEAN WAREHOUSING AND STORAGE

Lean Warehousing And Storage entails applying lean guidelines in warehousing business environment.

Lean Warehousing And Storage includes application of relevant lean management principles, methods, and guidelines in a warehouse or storage facility. The prime purpose of this process is to minimize waste and non-value-added operational activities, to streamline the operational flow, to maximize the utilization of human resources, plant and equipment, and to improve the operational efficiency within the facility.

ADDITIONAL INFORMATION ONLINE

•	Lean Warehousing Webinar With Manny Cantone, Lean Quest.
•	5S Board - Lean Warehousing By Brad Frye, Lean Logistic Center.
•	Poka Yoke - Lean Warehousing By Brad Frye, Lean Logistic Center.
•	Standup Board - Lean Warehousing By Brad Frye, Lean Logistic Center.
•	Hanel Lean Lift - Vertical Storage For Warehouses By Headland Machinery.

QUALITY CIRCLE

A Quality Circle is a group of volunteer employees from the same work center who meet on a scheduled basis to discuss job-related issues and problems.

A Quality Circle is usually led by a supervisor or by an experienced production worker and includes no more than 10 to 12 employees. Quality circle meetings are usually held once a week outside regular working hours. Kaoru Ishikawa is credited for introducing quality circles in Japan in 1962. Quality circle became an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Brainstorming Done Right By Ed Muzio.
•	Quality Circles Defined By B2B White Board.
•	"Q+" A Documentary On Quality Circle By Vikram Chandolia.
•	Skills For Quality Improvement 2 Brainstorming By David Hutchins, DHI.
•	Manufacturing Quality At Honda - Circle Meetings By Honda Corporation.

QUALITY FUNCTION DEPLOYMENT (QFD)

Quality Function Deployment (QFD) is a method designed to transform specific customer requirements into defined product or service characteristics.

According to Yoji Akao , who introduced Quality Function Deployment in Japan in 1966, “the main purpose of this method is to transform user demands into design quality, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process.”

ADDITIONAL INFORMATION ONLINE

•	Quality Function Deployment By Educate Virtually.
•	Quality Function Deployment Matrix By Scott Miller, UHM College.
•	Quality Function Deployment Using Triptych By George W. Chollar.
•	Quality Function Deployment Tutorial By Free Lean Six Sigma Training.
•	Quality Function Deployment And House Of Quality By Michael Short, MIT.

VISUAL CONTROL

Visual Control is an effective method for providing visual information to employees in a lean organization instead of providing written information or instructions.

Visual Control is implemented by using different types of visual signals, such as kanban card, heijunka box, andon, or electronic visual display, and a visual management board. The prime purpose of the visual control is to maximize process efficiency and minimize waste. Visual control is an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Lean Visual Control By Paul Akers.
•	Visual Management Dashboard By Jed Shields, PMI.
•	Visual Management Board By Allison Myers, A Lean Journey Blog.
•	Visual Controls And Images in Work Instructions By Velaction Videos.
•	Using Defect Tagging As A Visual Control By Greg Folts, Marshall Institute, Inc.

VISUAL WORKPLACE

Visual Workplace is an effective method of communication in a lean organization.

Visual Workplace uses various types of visual control methods to improve communication and motivation of employees, to maximize operational efficiency, and to minimize wasteful activities in a lean organization. Visual workplace is developed in accordance with the organization’s specific needs and subsequently specific visual control tools are used. Visual workplace is an integral part of the Toyota Production System (TPS).

ADDITIONAL INFORMATION ONLINE

•	Lean Manufacturing Visual Factory By Alzatex Learning Center.
•	Visual Workplace Sign Shop By Visual Workplace, Inc.
•	Visual Controls - 5S - Kaizen By Visual Workplace, Inc.
•	5S And Lean Visual Workplace - 2012 By Accuform Signs.
•	Lean Manufacturing Visual Factory By Alzatex Learning Center.

LEAN MANAGEMENT SOFTWARE

1.	SoftwareAG Software AG, founded in Germany in 1969, represents an organization-wide provider of lean management tools for integrating business processes and data. The Software AG’s ARIS program provides value-stream mapping capabilities and process strategy, design, integration and control, SOA-based integration and data management, efficient management of big data, and process-driven SAP implementation.
2.	Systems2Win Systems2Win provides over 150 Word and Excel templates for lean management and kaizen continuous improvement. Includes continuous process improvement tools, on line training for continuous improvement, lean systems for continuous improvement, lean process improvement, 5S workplace organization, value stream mapping software
3.	igrafx iGrafx provides process management solutions and business process analysis tools designed to enable business owners and managers to improve business optimization process and achieve operational excellence. iGrafx offers organization-wide solutions around a single platform for process knowledge and analysis.

USEFUL LINKS

•	ASQ
•	Wise Geek
•	Kaizen Institute
•	Business Dictionary
•	JMA Consultants, Inc.
•	Lean Enterprise Institute
•	Lean Manufacturing Glossary
•	The Northwest Lean Networks

30. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

31. THE LATEST INFORMATION ONLINE

WOULD YOU LIKE TO LEARN MORE?

Would you like to learn how to improve your personal business management knowledge and maximize your business performance through Lean Business Club?

When you are ready:

1.	Learn about the Membership Benefits, join Lean Business Club, and never feel lonely at the top again.
2.	Complete the Membership Form, or the Student Membership Form, and receive your *free first-year membership*.
3.	*Save up to 75% off the regular subscription rate* for complete access to the Lean Business 2100 Management Program online.

If you are U.S. Veteran, your membership in Lean Business Club and complete access to the Lean Business 2100 Management Program online will be available to you free of charge for an unlimited period.

LESSON FOR TODAY:
Best Advice In Business: Don't Get Mean. Get Lean!