Lean management is a systematic approach aimed at maximizing value and reducing waste. It was originally developed by Toyota but has since been adopted by many service industries. The document discusses how Wipro and RBS implemented lean management principles. Both companies standardized processes, identified types of waste, and engaged employees. As a result, they achieved cost reductions of 20-30%, lead time reductions, and improved customer satisfaction and productivity.
2. Introduction
WHAT IS LEAN MANAGEMENT ?
Def: Lean Management is a systematic approach aimed at maximizing the
value added by activities by reducing waste and delays
• Lean concept developed by ‘Toyota’ is arguably the most important
innovation in operations
• Most of the manufacturing companies adopted ‘lean management’
principles and became profitable
• Most in the business world believed that ‘lean management’ principles
were confined only to manufacturing industry , but the trend changed
after 2000
• Most of the service companies adopted ‘lean management’ principles and
were highly successful
3. What does Lean Management say
• Standardize the process
• Process should be simple , straight forward and should not be ambiguous
• Continuous improvement
• Define the path clearly and explicitly
Concepts
• Value Added Time – Directly satisfies the customer, improves the product
being produced.
• Non-value Added Time – Include activities like
communication, setup, preparation etc.
• Process – A series of activities necessary to achieve desired outcome
• Value Stream – A series of activities that occur as we work ourselves
through a process
4. Types of Waste(Muda) in IT
Waste Element Examples Business Outcome
Defects Unauthorized system and Poor customer
application changes. service, increased costs
Substandard project
execution
Overproduction Unnecessary delivery of Business and IT
low-value applications and misalignment, Increased
services. maintenance
Waiting Slow application response Lost revenue, poor
times. customer service, reduced
productivity
Non-value Added Reporting technology Miscommunication
Processing metrics to business
managers
Transportation On-site visits to resolve Higher capital and
hardware and software operational expenses.
issues.
5. Types of Waste(Muda) in IT Contd.
Waste Element Examples Business Outcome
Motion (Excess) Fire-fighting repeat Lost productivity
problems within the IT
infrastructure and
applications
Inventory (Excess) Server sprawl, Increased costs: data
underutilized hardware. center, energy; lost
Benched application productivity
development teams.
Employee Knowledge Failing to capture Talent leakage, low job
(Unused) ideas/innovation. satisfaction, increased
Employees spend time on support and maintenance
repetitive or mundane costs
tasks.
6. Lean Management at Wipro
Why go in for Lean Management????
• Company was not able to compete on the basis of low labor costs
• Difficult to compete with other IT Firms on superior quality.
• Could not meet customer expectations.
7. How Wipro Implemented Lean
Management
• Wipro started ‘lean journey ‘ in 2004
• Wipro taught employees to ask ‘5 why’s’ to find the root cause for
wastes and eliminate wastes, which can reduce inefficiency
• This technique was implemented in a project which was falling
behind the schedule.(Out of 10 projects identified)
8. Implementation In the Project
- Wipro identified that most of employees were solving same
problems over and over
- Wipro identified that no standards existed
- Skilled people were asked to create standards and train the same to
other members
- Rotation of people into different function was carried out to ensure
employees acquired necessary skills
- Certain wastes like ‘cluttering of unnecessary mails’, ‘unnecessary
meetings’, ‘wastage of time due to unavailability of required
resource – printer example’ were identified and fixed
9. Lean Management at an
Organizational Level
• Specify the work
-Specify the process/chain in which the work should be carried out
-Identify the repeatable parts of the process and codify them
• Specify how workers should communicate
-Define who should be communicating, how often, and what
Wipro developed a tool similar to spread sheet, which helped in
communicating within and/or outside the project.
-Create a shared understanding
Wipro created a structured communication framework to have an
effective communication with clients
10. Continued ……..
• Address problems quickly
-If a problem arises, ideally the person who created it should fix it
People closest to the problem might know better about the problem rather
than an outsider
• Problems should be solved where they occur
Identify the location/step where the problem has occurred and fix at the same
position. Wipro employs web tools to capture the location where the problem
has occurred for further analysis
• Engage your managers
-Project managers and other midlevel leaders must motivate their teams
-Senior leaders must be long term champions
Implementing ‘lean’ process was looked from a long term perspective
11. Effect of Implementation in Wipro
• As of 2010, almost 36% of total Projects are using Lean techniques.
• Each project saves at minimum 20% cost on an average
• Reduction in lead time for projects previously requiring 180 days to
100 days
• Achieves cost reduction for both clients and Wipro
• Defect rate reduced from 18% to 8%
12. Lean Management At RBS
Why go in for Lean Management???
• High cost of operating activities.
• Large number of errors pertaining to loan distribution.
(Pursuit for Lean Management originated after the 2008 economic
crisis)
• Slow cycle time
• Due to slow processes, efficiency was less.
13. How RBS Implemented Lean Systems
• Creating work cells and relationship cells to eliminate wastes
• Rotation of people among different cells so that people get chance
to create expertise in 2 or more fields
• Each work cell was entrusted with a particular responsibility, thus
scope of work was specified
• Team lead was appointed to each work cell – coordination within
teams and inter – functional work groups
• Created a mechanism to track dependencies between two cross
functional teams – Used IT for this – which reduced further delays
and wastage(of time and money).
15. Effect Of Lean Management
Implementation in RBS
• A productivity improvement figure was initially set at 12%. Actual
improvement figures are close to 30%
• Units that employed Lean Management saw improvements in customer
satisfaction to the tune of 20%
• Up to 25% improvement in employee engagement
16. References
• ‘Lean Knowledge Work’ – Harvard Business Review
• ‘Lean Management – New Frontiers For Finance
Institutions’ – McKinsey & Company
• ‘Bringing Lean Principles To Service Industry’ –
Wharton School of Business
Editor's Notes
Imp Points1.Developed By Toyota2.Adopted extensively by Manufacturing Companies3.Gradual movement to the services sphere post 2000
Eliminate Waste: Here waste refers to overproduction, waiting, transporting( excessive transportation can cause deterioration in quality), unnecessary inventory and defects( rework and scrap both incur huge costs to the company).fiDefining of path: Provide a checklist of steps to be achieved before final goal.
5 whys:Follows a top-down approach to find the root cause of the problem.It also used the Ishikawa diagram (aided in framing the 5 why’s)
Cycle Time: Time required for a service to be performed. Consider case of applying for a loan. If inter-departmental coordination is poor persons seeking loans would have to make numerous visits to bank due to loss of customer information somewhere in the chain. If, however, the organisation is well structured cycle time can reduce considerably. Also for those Large Institutional clients redundant steps can be avoided thereby facilitating less cycle time.
Waste in reference to time. Work cells are to established in areas that involve standard, assembly line processes with limited specialized knowledge. Work cells are co-located cross functional teams that cover a process from start to finish. It consists of a member from each department that plays a part in a particular value chain.2. Scope of a Work Cell is basically the scope of the value stream.3. Last Point: Consider an Electronics company seeking a loan. One work cell will be responsible for loan processing while another team elsewhere would be responsible to study the and its business. Coordination between these two work cells can be enhanced with the aid of I.T
Lean Management is all about people and wastesHigh level of coordination is required to implement lean managementAzimPremji was willing to spend to spend billions for