Lean is a methodology for process improvement that focuses on eliminating waste and aligning production with customer value. It emphasizes the distinction between value creation and waste, utilizing tools like value stream mapping, Kaizen, and Just-In-Time (JIT) to enhance operational efficiency. The approach is applicable across sectors, highlighting the role of standardization, quality control, and performance improvement to achieve competitive advantages.

1. Lean is a process-improvement methodology that focuses on
removing nonvalue-added activity and aligning production with
customer requirements.
Lean aims to eliminate waste in order to focus on creating the
most value possible for customers.
What is Lean?

2. All about Value
• Value is what the customer are willing to pay for.
• Value is difficult to quantify because it is directly related to customer
perception, context and purpose.
• Value can be tangible in some cases eg. Manufacturing,
entertainment and in some service like hotels, lease a car etc.
• Value can be intangible in some cases eg. value of an insurance
contract is a risk mitigation, value of a health check is a diagnostic.
• From a business perspective, this means that activities of companies
create value only when the customer is willing to pay for them.

3. Not every euro creates value
• Not all the resources are used to produce the value some resources.
• One may be surprised to learn that on average only 10, 20% cost
create value, while 80, 90% of cost usually create waste.
• This is where Lean methodology comes into play, lean shows the
difference between value creation and waste creation.

4. Key concepts of lean
• Kaizen
• Gemba
• Jidoka
• Value stream mapping
• Six sigma
• JIT

5. Lean principles enable winning strategies
• IKEA is a great example of the lean concept of design-to-cost. They
design their products to make optimal usage of the volume of
transport boxes.
• Apple is an an example of linear approach in terms of portfolio
rationalization. Steve Jobs understood that over offering can create a
lot of confusion for customers and a huge quantity of waste in
operations.
• When he came back to his own company after several years, he killed
70% of products in order to offer a clearer product range to
customers and to focus efforts on a few initiatives within the
company

6. Lean principles enable winning strategies
• Ryanair is a good example of optimized low end service. The low cost
of flight company has cut off all complex processes adding little value,
such as the flight connections and baggage takeover. They have also
increased the flexibility of the operations by useing a single type of
aircraft that all pilots and all technicians can handle.
• McDonald's serves billions of exactly the same burger around the
world. The global standard is so well-known that The Economist even
published the Big Mac index to analyze the purchase power parity of
currencies.
• This proves winning strategies that are based on a lean approach.

7. How a lean model creates competitive advantage
• Probably one of the most important decisions operations managers
have to make is about which activities should be performed internally
and which ones should be outsourced.
• When you go to the restaurant, you outsource making dinner.
• Outsourcing a broken process can decrease labor cost in the very
short term but it will also decrease dramatically customer satisfaction
and increase hidden costs.
• Amazon is an emblematic example since the company insource most
operations, even transportation, because their level of efficiency
allows them to reach the highest level of quality at the lowest cost by
themselves.

8. Lean manufacturing system
• Most of the companies think that to implement lean means just the
application of lean tools.
• In addition to tools, lean addresses four areas. Business
requirements, operations improvement, performance governance,
and people engagement.
• Firstly Business requirements, there needs to be a clear strategy
developed and deployed to the whole organization.
• Just an example, whenever you visit a factory one should ask people.
do you know the strategy? Do you know the objectives? And what is
your contribution? Whenever you hear a really good answer to that,
you know that the company exactly knows what the business
requirements are and how to deploy to the whole organization.

9. performance governance & operations improvement.
• The company needs to develop clear standards and processes on how
to steer performance. This means to have a clear KPI structure in
place.
• Key Performance Indicators, Combined with a cascading media
structure from top management down to each employee.
• In total a defined structure consists of five elements. P-Q-C-D-S-M, it's
P for productivity, Q for quality, C for costs, D for delivery, and S for
safety.
• The company needs to decide which lean tools should be part of the
toolbox and applied systematically.

10. Operations improvement (continued) & people engagement
• could be tools like Kanban, TPM, SMED, and so on. The important
thing is here, not to choose too many of them.
• Sometimes companies have a massive toolbox and even unnecessary
tools, so the important thing is to figure out which of the tools are
important.
• A better proven approach is learn, do, and teach.

11. Value stream mapping
• Value stream mapping is one of the key tools of the beginning of a
lean implementation. It is used to create transparency across the
whole value stream, and it helps to identify pain points or waste
along the way.
• Value stream mapping includes all process steps required to make a
product, it's the material flow and the information flow.
• Based on the value stream design, the improvement targets for the
next 12 to 18 months are defined, and deployed, to the whole
organization.

12. Value stream mapping (Continued)
• you map the current state of the process involved to make the
product, from the beginning to the end. And the important thing is
here that you highlight all the pinpoints.
• For example, people are struggling with or the whole value stream is
not aligned, problems are not aligned. So one need to highlight those
pain points and based on that, think also what the improvements are.
• Third, future state of this process, this future state includes all
improvements and adjustments of the process.
• So future goals needs to be, on one hand, really challenging, but also
realistic, that it can be achieved within a defined timeframe of
typically about 12 to 18 months.

13. Value stream mapping (Continued)
• Last, one need to design an implementation plan listing all activities
needed to achieve the future process.
• So the implementation plan should assign clear responsibilities to
stakeholders, and for sure it includes deadlines, and doing meetings
to track the progress systematically.
• The process can continuously be improved. So that means companies
don't do it just once, but after period of times, for example, one year.
They should run the exercise again and look for other opportunities
for improvement.

14. Optimize the work-flow (JIT)
• Just in time synchronizes production with customer demands.
• That means that products should be supplied to the right place, the
right quality, and for sure quantity, at the right time.
• The limitation of just in time is a combination of three key elements,
its pull, its flow, and its takt.
• Pull means that customer demand triggers production to be pulled
through the system. Material is replenished based on consumption
only, there is no production in advance, and stock is limited.
• This reduces dramatically inventory & reduction of lead time as well.
• Pull can be implemented by applying the Kanban principle.

15. Optimize the work-flow (JIT-Kanban)
• A Kanban is a signal telling the supplier, or the supply process, to
produce and deliver a defined quality of products.
• Originally, the Kanban was a label containing information on a
production batch.
• There is one easy example for a Kanban, it's called two-bin system, or
a two-bin Kanban.
• For example- two bins, at the beginning, both of them are full. Now I
take something away, so it means I have an empty one and a full one.
And the empty bin is a signal for the replenishment product to start
to produce and replenish the product.
• That's the easiest form of a Kanban.

16. Optimize the work-flow (JIT-Flow)
• Flow focuses on smoothing workload and workstation and in
between, so the goal is to have an equal workload at each station.
• Sometimes if you walk to different companies and you see people
working, some of the workers, they work harder than the others in
production, Which is not good.
• Ideally, between all those operators or stations, there are no buffers
of inventory in between. So that means that the small size of batches
is crucial to minimize buffers.

17. Optimize the work-flow (JIT-Takt)
• Flow requires all processes and logistics to be linked, Which means that all
work processes need to be harmonized. Takt means to harmonize the
system speed, and to synchronize it with customer demand.
• Workstation A, we have one employee, he needs 2 minutes to do his job.
Workstation B, there's another employee, who needs 4 minutes to his job.
And you have workstation C, so there are two people, and they need
together just one minute to do their job.
• Workstation B, that's the bottleneck, so that means finally that's the reason
why your customers have to wait.
• So whenever you see a lot of inventory in front of a process compared to
the others, it's a typical sign for a bottleneck. Debottlenecking is very
critical to the whole just in time approach.
• To conclude, just in time avoids inventories, and ensures that customers
are delivered with reliability by applying pull, flow, and takt.

18. Standardize process (5S)
• 5S stands for five Japanese words that start with a letter S and mean
Good Housekeeping.
• The key benefits of 5S are: a higher efficiency, a higher quality, and
safety. So in total is much less searching and less transportation.
• Sort is the needed from the not needed. Remove everything which is
not needed to perform the work. The important thing is, check also
what is required and has been missing so far, because that's
important as well for your workplace.
• Set is a place for everything. So that means you need to organize tools
and your equipment exactly how you need it.
• Shine is Clean for daily work, clean your whole work area and the
workplace itself.

19. Standardize process (5S)
• The fourth one, and this is a really important one in the whole
process: It's standardize, develop standards as base for sustainability.
• Fifth is Sustain, means improvement over time. Ensure that
everybody follows a standard. It's the key thing that there are no
deviations.
• 5S delivers tangible results. We have seen many cases where labor
productivity improved by about 10 percent, delivery by 15 percent,
and quality by 20 percent.
• Safety incidents could be reduced down to zero. And last, but not
least, employee morale increased significantly as well.

20. Standardization
• In manufacturing, it is one of the most important tools to drive
productivity. Standard work is an approach which identifies the most
reliable and efficient methods and standardize it.
• A key tool to entrust standardization is vision management. Vision
management means that current level of performance are visualized
on boards on the shop floor and that there is a clear review process in
place involving different levels of management.
• The idea is to see current performance at a glance. In case of
deviations, action should be triggered immediately. Based on vision
management, the continuous improvement process can be tracked
systematically.

21. Standardization (PDCA)
• Recommended structure for such boards is: PDCA. The first one is.
Plan. Plan means to have a clear link to company strategy to the
objectives, but also for the relevant work area.
• Do is to have a detailed action plan in place on how to deploy the
objective and strategy of the company. That means having a clear
product management in place to keep the overview.
• C is a checkpoint. Typically a set of all relevant KPI's and very often
those KPI's follow the PQCDSM structure. It's pro-activity, quality,
cost, delivery, safety, and last but not least, morale.
• The next is the act part. In the act part you find all the defined actions
and the root causes just in case there are any deviations, and this is
important.

22. Standardization
• What is the part of the PDCA where companies struggle? Well you
know, it's A. Many are great in planning but struggle when it comes to
sustain the performance and to define the right measures
immediately. So that's the challenge.

23. Improve machine performance (OEE)
• In addition to the optimization of workplaces and processes we need
to think about how to improve machines? The optimization of
machines means how to increase the availability or up time of the
machines.
• The most important key performance indicator to evaluate the
performance of a machine is the OEE. The Overall Equipment
Effectiveness.
• It is very often used to understand sources for performance losses
and how to eliminate them with selected link tools. The OE is equal to
availability rate multiplied by performance rate multiplied by quality
rate, which is also equal to the value added time divided by schedule
time.

24. Improve machine performance (OEE)
• Based on an OEE analysis, typical losses can be identified and
eliminated. For example, minor stops, breakdowns, idling time,
changeovers, and so on. Typically, an OEE of about 85% stands for an
excellent machine performance.
• Two key tools that they use to solve problems and improve the overall
equipment effectiveness. SDEM and TPM
• The first one, Single Minute Exchange of Dies called SMED. It aims to
minimize the changeover time and to increase available production
time. A shorter changeover time leads to a shorter planned
downtime, in total an increase of machine availability.
• You can compare the approach like a well organized pit stop in
formula one. The whole team follows clear standards when work is
optimized and parallelized.

25. Improve machine performance (OEE-SDEM)
• First, you need to observe the process and capture all process steps
from the beginning to the end. Then you distinguish between external
task that can be done with the machinery running, and internal task
that require shut down of the machine.
• The optimization of the process flows the ECRS logic. E means
eliminate, eliminate useless process gaps. C means combine, run
steps in parallel. R means rearrange, make internal steps into external
ones and S simplify. Simplify the verb by using tools or modified
equipment.
• That in total is very useful in companies with diversified products that
require frequent machine resetting.

26. Improve machine performance (OEE-TPM)
• TPM is the key improvement driver for many benchmark in
companies like Toyota, Fuji, Unilever and Procter & Gamble.
• TPM aims to eliminate losses in machines but also people and
resources. So quality of TPM is autonomous maintenance.
• Autonomous maintenance is a systematic approach to prevent
failures by utilizing the maintenance capabilities of the equipment
operator.
• The first thing you need is a clear autonomous maintenance standard,
showing what to do and how to do. The second thing is need a clear
economist's maintenance schedule showing when to do it. And the
third thing is is a systematic tracking of found and fixed abnormalities,
which reflect finally the continuous affirmative maintenance work of
the team.

27. Quality control
• Every quality issue is linked to cost that's why another important
focus in the area of lean is quality. lean aims for zero defects which
means high quality for all products. Defects are prevented before they
occur.
• The aim of zero defects is to continuously improve processes to
prevent the same mistakes from happening twice, and it is a basic
rule.
• This requires, finding the root causes of failures to sustainability
correct them. There two keying tools Poka Yoke and Six Sigma.

28. Quality control (Poka Yoke)
• Poka Yoke prevents human mistakes or makes errors immediately
visible.
• It makes it impossible to use a product in a wrong way or avoid to
transfer the product to the next production steps. One example for
Poka Yoke is a shape of a SIM card. It's impossible for the user to
place it wrongly into the phone.
• The USB port is another good example, since it makes it impossible
for the users to plug a cable in the wrong direction.
• Poka Yoke can also prevent operators from making mistakes in the
assembling process or in starting the machine. It reduces the amount
of waste to use a tool to one.

29. Quality control (Six Sigma)
• Six Sigma comes from statistics and is used for statistical process
control. Based on Six Sigma, the capability of a process can be
evaluated.
• Six Sigma comes from statistics, and is used, for example, for
statistical process control. Based on Six Sigma, the capability of a
process can be evaluated.
• For examples, phone screens that are too long to fit to the phone
casing or that are too short to stay in place. In both cases it would be
costly to repair these faults. The purpose of Six Sigma method is
therefore to reduce Six Sigma so that the difference between the
average plus the sigma and the average minus the sigma falls within
the specifications.
• Six Sigma process level means just 3.14 defects per million
opportunities.

30. Quality control (Six Sigma Cont.)
• These tools and approaches aim to increase quality. However,
maximum quality is not always efficient and creates cost. In addition,
it could be not appreciated by the customer.
• Sometimes the customer is not even able to see the difference any
more. That's why lean tries to get rid of both, under quality but over
quality.
• A useful tool to structure quota expectation is a CTQ diagram means
critical-to-quality. It builds up top down like a logic tree.
• First, make a list of customer needs. Second, associate and
expectation to each customer need and third, list the requirements to
fulfill the expectations.
• In conclusion, this approach is a way to reach the right level of quality.

31. The four key differences between Lean in manufacturing and in services
• First, waste and value creation are quiet visible in the manufacturing,
but almost invisible in services.
• In manufacturing, bottlenecks and idle times are easy to notice
because they have a visual consequence. For example a pile of parts,
all operators waiting. In service though, they are difficult to notice,
since value creation and waste are mainly driven by data flow, and
often hidden in PCs or servers.
• Often, the only clue about the existence of a bottleneck is when
employees complain about the workload. That's why it will be
essential to leverage the value stream mapping in services, in order to
visualize bottlenecks and idle times.

32. Key differences between Lean in manufacturing and in services (cont.)
• Second, manufacturing processes generally do not imply interaction
with customers. While service processes imply frequent interaction
with customers.
• For example, if you take a phone manufacturer, customers don't get
to tell the factory workers how they would like their phone assembled
or packaged. On the contrary, if we take a bank, customers will need
many meetings and phone calls with their banking agent to get the
credit.
• The third main difference between manufacturing and service is the
variety of the human capital.
• In manufacturing, human capital variety can range from specialized to
generalist operators, or from teams to their team leaders or
supervisors.

33. Key differences between Lean in manufacturing and in services (cont.)
• But in service, human capital is much more diverse, and mixes
activities of all types. Clerical, administrative, commercial,
engineering, up to CO level. So it will be obviously more challenging
to apply concepts like standardization in the context of services.
• The fourth difference is that the manufacturing relies mostly on
machines. Whereas, the service rely mostly on IT systems.
• The equivalent of a manufacturing working station is often an IT tool
in services. With the same challenges on economy and optimization
of activities.
• As a consequence, if you want to apply the lean approach in services,
we recommend the following. Make sure that you dedicate enough
time to expose waste by using the values stream mapping, work load
the balance sheets, and works.

34. How Lean delivers impact in services
• Lean has two main goals: lead time reduction and process time
reduction.
• Lead time reduction is about reducing the customer phasing end to
end cycle time. usually when the customer makes a request, to the
end when the customer received this service including all the steps
and departments involved.
• For example, we managed to reduce the time needed to deliver a
credit card from three weeks to 15 minutes or the development time
of a new software applications from 12 to six months.
• Note that the lead time reduction has a tremendous impact on
customer satisfaction but not necessarily on cost reduction.

35. How Lean delivers impact in services
• The second goal is process time reduction. Process time is the total
time spent by employees to produce a good or a service. If you
decrease process time, you improve productivity but not necessarily
lead time.
• Process time reduction is about reducing waste. Another important
part of waste is obvious such as reworks and over processing.
• Generally speaking productivity means either to do more with the
same resources or to do the same with fewer resources.
• So part of the productivity should be used to sustain growth while the
other part should be used to generate margin by reducing cost.
• It is important to understand that the productivity deployed to
sustain growth generates higher profit margin increase than
productivity deployed in cost reduction.

36. Don't fix symptoms, fix root causes
• Observing people is the only way you capture some important details
that people don't tell you in interviews or workshops, called Gemba.
• It is very often, an accountant matching purchase orders with invoices
for an industrial goods company that issues purchase orders.
• It happens because sometimes a pricelist change but the buyers do
not update the system. So the invoice reflects the new price and the
purchase order reflects the old price.
• If it is lower than the threshold, it is good because we can fix it. But if
it is higher than the threshold it is more complicated, because the
buyer has to change the purchase order itself.

37. Don't fix symptoms, fix root causes
• The mismatch is just a symptom and not the problem itself. So fixing
the symptom by forcing the system to match is a temporary fix that
does not prevent the problem to happen again.
• So, Don't fix symptoms. Not only it's useless, but it can even be
harmful because it will hide waste instead of exposing it.