An Introduction to the Lean Business Model
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First introduced in the automotive manufacturing industry, “Lean” is a systematic method for the elimination of wastes/the set of “tools” that assist in the identification and steady elimination of waste. Today, the continuous improvements delivered when applying a Lean approach can benefit organisations across all sectors . This presentation provides an introduction to understanding the concept in the manufacturing context and tools available to make your processes flow smoothly, efficiently and profitably.
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An Introduction to the Lean Business Model
- 1. www.principalityconsulting.com www.principalityconsulting.com An Introduction to the Lean Business Model
- 2. www.principalityconsulting.com Overview • Lean Model • What is Lean? • Lean Business Journey, Timing & Themes – Standardisation & Reducing Variation – Identifying & Eliminating Waste – Inventory Management – Stuck in First Gear
- 3. Health and Safety Environment Ethics and Compliance Employee engagement- Reward& Recognition Employee engagement- Talent Development Employee engagement- Communication Disaster Planning Business Planning Key Account Management New Product Introduction Customer Service Sales and Operations Planning Lean Tools Lean Tools Training Lean Improvement Product Quality Research and Development Technology Transfer IT Infrastructure Branding Act Plan DoCheck The Lean Business and Operational Excellence Order Fulfilment Lean Business
- 4. What is lean? A quick reminder…
- 5. Lean and Flow aren’t new Any colour as long as it’s black! Manufacturing at Highland Park in 1913
- 6. When did it all become so complex? We want variety!
- 7. Variety means... •Colour changes •Body and shape changes Which, in turn, means... • Increased skill requirement • More parts and part numbers
- 8. Which, in turn, means… •Process islands •More complex scheduling Which, in turn, means…
- 9. Spaghetti World! Assembly Components Piece Parts Process Material Information
- 10. What is Lean Thinking? Inputs Your Process Outputs
- 11. 1st Step - ID your Value Streams and create flow with what resources you have Inputs Your Process Outputs MRP, Shared Resource, unbalanced shifts and long C/O times Value Stream 1 Value Stream 3 Value Stream 2 Value Stream 4
- 12. 2nd Step eliminate the “knots and remaining tangles” by dedicating resources to value streams - commit yourself to single piece flow! Input s Your Process Outputs Value Stream 1 Value Stream 2 Value Stream 3 Value Stream 4
- 13. Lean Business Model •Focussed on maximising profitability and generating cash •Links seamlessly with OE deployment and Sales and operations planning •Supports a plant-specific roadmap •Drives local involvement and competition •Combines all current best practice
- 14. Lean Business Journey Time Performance Standardisation of new system and methods Understand the waste in the current system Reduce variation Previous performance Month on month performance improvement
- 15. Lean Business Journey – 5 Phases Time Consistency Continuous Improvement Habitual Behaviour Performance Gaining Control Getting Ready
- 17. Lean Business Journey - Timing Time Consistency Continuous Improvement Habitual Behaviour Performance Gaining Control Getting Ready 12 – 18 Months 18– 24 Months 24 – 36 Months3 – 12 Months0 – 3 Months
- 18. Lean Business - Themes
- 22. Guaranteeing Output is a Manufacturing Plant’s Number 1 Priority QUALITYQUALITYPPEOPLEEOPLE PPARTSARTS PPLANTLANT COSTCOSTPPROCESSROCESS HOWINPUT OUTPUT DELIVERYDELIVERY QUALITYQUALITYPPEOPLEEOPLE PPARTSARTS PPLANTLANT COSTCOSTPPROCESSROCESS HOWINPUT OUTPUT DELIVERYDELIVERY Leaders add value by successfully controlling the inputs – the 4 P’s If the inputs are right the output is guaranteed
- 23. Why is there so much firefighting in a typical day? QUALITYQUALITYPPEOPLEEOPLE PPARTSARTS PPLANTLANT COSTCOSTPPROCESSROCESS HOWINPUT OUTPUT DELIVERYDELIVERY QUALITYQUALITYPPEOPLEEOPLE PPARTSARTS PPLANTLANT COSTCOSTPPROCESSROCESS HOWINPUT OUTPUT DELIVERYDELIVERY If the inputs aren’t standardised then there could be: 10 People variables x 10 Parts variables x 10 Plant variables x 10 Process variables 10 x 10 x 10 x 10 How can you manage 10,000 possible outcomes? ?
- 24. Standards: Effect on Variation and Quality 10x10x10x10 = 10,000 Possible Outcomes 5x5x5x5 = 625 Possible Outcomes Current: • Variation • Errors •Little control • Reactive Future • Control • Improved quality • Predictability • Prevention
- 25. From control into continuous improvement • The systems, people, equipment, product and all need to go from control to habitual improvement • Areas from clutter to clean • Engineering from breakdown panic to predictive calm • Process from fickle to dependable • Product from changeable to consistent • Shift management from reactive to proactive • Continuous improvement from special effort to daily habit 10,000 Outcomes 5,000 Outcomes 1,000 Outcomes 250 Outcomes Control Consistency Continuous Improvement Chaos 10,000 Outcomes 5,000 Outcomes 1,000 Outcomes 250 Outcomes Control Consistency Continuous Improvement ChaosGaining Control Consistency Continuous Improvement Habitual Behaviour
- 26. The Golden Triangle Creating Standards for Operational Excellence Standard Work Standard description of a task or process, which if followed consistently, ensures the same output Standard Management Standard process to ensure standards are being met Visual Management Make problems visible and bring them to the attention of the user. Status within 10 seconds.
- 27. The Golden Triangle Basis for daily error avoidance and control Standard Work Visual ManagementStandard Management 5SReject Control Daily Maintenance
- 29. In Manufacturing there are 7 Traditional Types of NVA or Waste •Waste of T ransport •Waste of I nventory •Waste of M ovement •Waste of W aiting •Waste of O verprocessing •Waste of O verproduction •Waste of D efects and Rework
- 30. 4 weeks HOURS 1000 2000 AVERAGE INVENTORY INVENTORY High Inventory Manufacturing
- 31. HOURS 1000 1.5 weeks INVENTORY Low Inventory Manufacturing Has a positive impact on; • Quality and scrap • Engineering change introduction • Margin • Overtime & resources at month-end • Capital investment • Due date performance • Improved forecast reliability • Leadtime- • Leadtime is proportional to inventory
- 35. Lean Business Journey - Timing Time Consistency Continuous Improvement Habitual Behaviour Performance Gaining Control Getting Ready 12 – 18 Months 18– 24 Months 24 – 36 Months3 – 12 Months0 – 3 Months
- 36. Stuck in first gear and can’t get traction! “Lean production has dramatically lifted the competitiveness of many manufacturing companies and the value they deliver to customers. Despite these triumphs, many firms I visit are stuck in first gear on their initial lean efforts. They are trying to create flow but can’t somehow get traction. An overlooked and recurring pitfall that I’m seeing more often is a lack of “basic stability” in operations.” Art Smalley Lean Enterprise Institute
- 37. A poor business will get stuck in first gear… Time Consistency Continuous Improvement Habitual Behaviour Performance Gaining Control Getting Ready Stuck in first gear
- 39. www.principalityconsulting.com Journey Summary • Get Ready - To understand the current state and implement actions to get started • Gain Control – To reduce surprises and firefighting in order to focus on future improvement strategy • Consistency - To deliver some quick wins, align by value streams, develop the improvement infrastructure and up-skill middle management • Continuous Improvement - To engage the majority in focused improvement, achieve a revolutionary change, extend the scope to the supply chain and develop a growth strategy • Habitual Behaviour - To feedback all the positive improvement experience into the re-design of equipment, systems and suppliers