Lean Management

Introduction
Module - 1
2
Program Objectives
To present
Lean Management philosophy
Lean Thinking as a proven strategy for managing plants
and factories.
Underlying principles
Various Lean tools and practices
To Learn in detail the tool of Value Stream Mapping
3
Ultimate Goal of an
Organization
Making Profits
Survival
Growth
4
Rate of Improvement Matters
5
Rate of Improvement Matters
6
Profits = Revenue - Cost
Ultimate Goal of an
Organization
7
Low Cost
High Quality
Availability
Profit
Repeat Business
Growth
Cash !!
Cash !!
$ $$ $
Value !!
Value !!
Who wants what.
CUSTOMER CUSTOMER CUSTOMER CUSTOMER CUSTOMER CUSTOMER CUSTOMER CUSTOMER YOUR COMPANY YOUR COMPANY YOUR COMPANY YOUR COMPANY YOUR COMPANY YOUR COMPANY YOUR COMPANY YOUR COMPANY
8
Revenue depends on ability to provide a Revenue depends on ability to provide a Revenue depends on ability to provide a Revenue depends on ability to provide a
Customer preferable product Customer preferable product Customer preferable product Customer preferable product
Ultimate Goal of an
Organization
9
Preferable
Quality
Preferable
Quality
Ability to
customize
Ability to
customize
Availability
Availability
Preferable
Price
Preferable
Price
Preferable
Product
Preferable
Product
Ultimate Goal of an
Organization
10
The challenge is to make
what the customer wants,
when the customer wants it,
at a price the customer is willing to pay.
Organizational Challenge
11
CRAFT MANUFACTURING - Late 1800s
Car built by workers who walked around the car
Built by craftsmen with pride
Components hand-crafted, hand-fitted
Excellent quality
Very expensive
Few produced
Organizational Challenge
12
Starting about 1910, Ford and his right-hand-
man, Charles E. Sorensen, fashioned the
first comprehensive Manufacturing Strategy.
They took all the elements of a manufacturing
system-- people, machines, tooling, and
products-- and arranged them in a continuous
system for manufacturing the Model T
automobile.
Organizational Challenge
13
Ford is considered by many to be the first
practitioner of Just In Time and Lean
Manufacturing.
Organizational Challenge
14
Assembly line - Henry Ford
Low skilled labor, simplistic jobs, no pride in
work
Interchangeable parts
Affordably priced for the average family
Millions produced - identical
Organizational Challenge
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Customer Expectation
Much better quality
More customized variants
Just-in-time delivery
Shorter lead times
And freedom to order in small quantities
..At Lower & Lower Prices
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Time
Customer Expects
Industry
100%
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Customers expect 100%
Quality
Time
Customer Expects
Industry
100%
Q
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Customers expect 100%
Quality
Customer Expects
Industry
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Time
Customer Expects
Industry
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Time
Industry
Customer Expects
Time
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Industry
Customer Expects
Time
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Time
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Time
Enterprise
Customer Expectations
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Industry Trends
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DONT WAIT...
NOW NOW NOW NOWIS THE TIME
Cost
Selling Price
Profit
Loss
Time
How to survive?
Cost Vs. Selling Price
18
How to Survive?
During 1970s, Japanese were redefining the
manufacturing paradigms.
Began to incorporate quality
into cost focused strategy
Discovered the power of FLOW
Use of TIME as a new competitive dimension
Toyota Production System was born
19
What if Flow is not proper?
Traffic jam
Trains/ flight not on time
Blood pressure
Heart attack
Flood/ draught
High Inventory
High lead time
Increased cost
What else
20
Taiichi Ohno
All we are doing is looking at the time line from the
moment the customer gives us an order to the point when
we collect the cash.
Customer Customer Customer Customer
Order Order Order Order
Waste
Product Product Product Product
Shipment Shipment Shipment Shipment
Long Long Long Long T TT T
And we are reducing
that time line by
removing the non-value
added wastes.
Taiichi Ohno, 1988
21
Toyota Management
Cells or flexible assembly lines
Broader jobs, highly skilled workers, proud of product
Low lead time
Excellent quality mandatory
Costs being decreased through process improvement.
Global markets and competition
22
Lean Management
During 1980s Americans realized that the
things are not the same anymore.
Japanese were not only making better
cars, they were also doing it cheaply.
Toyota was making cars in America at
25% less cost.
Severely denting American market share.
23
Lean Management Philosophy
An outcome of study of Toyota Production Systems, by a
team of researchers in USA, led by James Womack &
Daniel Jones.
Their books detailing how Toyota has emerged, as the
worlds most efficient automaker popularized Lean
Manufacturing as a new manufacturing philosophy.
The first book was published in 1990 as
The Machine That Changed the World
24
Lean Management
Popularized by another book in 1996.
Lean Thinking - Banish Waste
and Create Wealth
in Your Corporation.
25
Jim Womacks Comments
We also know that lean thinking is spreading
across the world.
This summer, when Dan Jones, Jose Ferro, and
I visited India for the first Lean Summits, we
were amazed to find some of the leanest
operating practices we have ever encountered
outside of Toyota City.
26
In Order to Survive
We have to make our Organizations Lean
by understanding the Lean philosophy
and promoting Lean Thinking
throughout the organization .
27
Lean
As defined by Webster Dictionary :- Adj
1. Containing little or no fat
28
The term lean is used because lean
manufacturing uses less
Labor in the factory
Manufacturing space
Capital investment
Materials
Time between the customer order and the product
shipment
Definition of Lean
Term lean coined by
John Krafcik,
one of the research members
on Jim Womacks MIT team
for the 5 year study.
29
The purpose of Lean Management is to make your
company strong and fast.
Strong = High performance, repeatable performance
Fast = Easily adapts to fluctuations in market conditions
Reduced operating costs and improved customer
satisfaction are natural by-products of being Lean
Lean Management: Purpose
30
Lean Management:
Philosophy
A management philosophy that demands shorter
lead times to deliver high quality, low cost products
through improved flow in the value stream.
Design (concept to customer)
Supply (order to delivery)
Build (raw material to finished Product)
31
New Business
Sustainable Profits
Decreased
Cost
= == =
Improved
Flow
Decreased
Cost
= == =
Lean Management
32
Lean Management: System
An integrated system to ensure
Value for the customer
Improvement in flow in
Product development,
process engineering,
operations management &
corporate governance processes
Respect for people
33
WORKER
Respect for
human dignity
CUSTOMER
Highest
satisfaction
of needs
Machine
1
Machine
2
Machine
3
Machine
4
PROCESS
Total elimination of
muda or waste
The Three Objectives