This document discusses the principles of lean manufacturing and value-added activities. It defines value-added activities as those that transform a product and that a customer is willing to pay for. The document outlines the goals of lean manufacturing as improving quality, reducing time and costs, and eliminating waste. It also discusses key lean concepts like continuous flow, pull-based production, and continuous improvement.

1. • Value added
• An activity is value added if and only if three
conditions are met
1. The customer must be willing to pay for the
activity
2. The activity must change the product, making it
closer to the end product that the customer
wants and will pay
3. The activity must be done right the first time.

2. • A value added activity is one that either
(1) directly adds value to the final product or
(2) directly satisfies the customer

3. • Just-in-Time rests on two pillars:
• • Value Adding Manufacturing/ lean manufacturing
• • Kaizen/continious improvement
• Value Adding Manufacturing (VAM): a management philosophy of
continual improvement, through the identification and the
progressive elimination of all wastes (MUDA in Japanese) in
manufacturing related activities, i.e. non-value adding activities. A
value adding activity is:
• • An activity that transforms the product (transformation,
processing)
• • An activity or a feature of the product that the client is willing to
pay for
• The technical definition of Lean manufacturing is “A systematic
approach to identifying and eliminating waste (non-value-added
activities) through continuous improvement by flowing the product
at the pull of the customer in pursuit of perfection.”

4. • Non-value-added activities are activities that
do NOT change the form, fit, or function of the
part and activities the customer does not
want to pay for.
• Value-added activities are activities that
change the form, fit, or function of the part
and the customer is willing to pay for them.

5. • LEAN Manufacturing is applicable to companies ranging
from the small job shop to large manufacturing enterprises.
It teaches a systematic approach to eliminating wastes and
creating flow throughout the enterprise
• Lean manufacturing or lean production, which is often
known simply as "Lean", is a production practice that
considers the expenditure of resources for any goal other
than the creation of value for the end customer to be
wasteful, and thus a target for elimination. Working from
the perspective of the customer who consumes a product
or service, "value" is defined as any action or process that a
customer would be willing to pay for. Basically, lean is
centered around creating more value with less work.

6. • The four goals of Lean manufacturing systems are to:
• Improve quality: To stay competitive in today’s
marketplace, a company must understand its
customers' wants and needs and design processes to
meet their expectations and requirements.
• Reduce time: Reducing the time it takes to finish an
activity from start to finish is one of the most effective
ways to eliminate waste and lower costs.
• Reduce total costs: To minimize cost, a company must
produce only to customer demand. Overproduction
increases a company’s inventory costs because of
storage needs.

7. • Eliminate waste: Waste is any activity that consumes time,
resources, or space but does not add any value to the product or
service. There are seven types of waste:
•
• 1). Overproduction (occurs when production should have stopped)
• 2). Waiting (periods of inactivity)
• 3). Transport (unnecessary movement of materials)
• 4). Extra Processing (rework and reprocessing)
• 5). Inventory (excess inventory not directly required for current
orders)
• 6). Motion (extra steps taken by employees because of inefficient
layout)
• 7). Defects (do not conform to specifications or expectations)

8. • Steps to achieve lean systems
• The following steps should be implemented to create the ideal lean manufacturing
system:
•
• 1. Design a simple manufacturing system
• 2. Recognize that there is always room for improvement
• 3. Continuously improve the lean manufacturing system design
•
• Design a simple manufacturing system
• A fundamental principle of lean manufacturing is demand-based flow
manufacturing. In this type of production setting, inventory is only pulled through
each production center when it is needed to meet a customer’s order. The benefits
of this goal include:
• Decreased cycle time
• Less inventory
• Increased productivity
• Increased capital equipment utilization

9. • There is always room for improvement
• The core of lean is founded on the concept of continuous product and
process improvement and the elimination of non-value added activities.
“The value adding activities are simply only those things the customer is
willing to pay for, everything else is waste, and should be eliminated,
simplified, reduced, or integrated”. Improving the flow of material through
new ideal system layouts at the customer's required rate would reduce
waste in material movement and inventory.
•
• Continuously improve
• A continuous improvement mindset is essential to reach a company's
goals. The term "continuous improvement" means incremental
improvement of products, processes, or services over time, with the goal
of reducing waste to improve workplace functionality, customer service, or
product performance.

10. • but is not restricted solely to manufacturing activities and instead
can be easily applied to the whole organisation’s administrative
functions as well as to the service sector too. Lean can be and often
is extended beyond the organisation’s boundary to encompass the
supply chain.
• The Five Simple Principles for Lean Manufacturing
• 1. Identify and understand what creates value for the customer
•
• By accepting that only a fraction of the total time and effort
expended in the organisation actually adds value for the customer;
understanding what the customer wants is the first step towards
identifying all the non-value added activities or waste within the
organisation.

11. • 2. Identify, understand and map all the process
steps required to fulfil the customer
•
• By documenting the entire set of activities across
all parts of the organisation involved in delivering
products or services to the customer allows for
an understanding how value is delivered to the
customer in the current state makes it possible to
identify the wasteful activities that can then be
targeted for elimination.

12. • 3. Make the value-added actions within processes flow
•
• Flow is about creating value for the customer with the minimum number
of process steps with the minimum number of delays between those
process steps and the minimum number diversions along the way. The
value stream is used to identify wasteful activities to be eliminated; flow
concerns the rethinking or reorganisation of the remaining activities to
further eliminate waste.
• 4. Only make what the customer wants or Pull
•
• If one objective for creating flow within processes is to minimize their
throughput time. A clear second is to ensure that processes are only
initiated when customer demand requires it. Essentially, this may mean
only making products or delivering services at the point the customer
demands; just-in-time. As such as many process steps in the value stream
should be triggered when there is a firm customer requirement.

13. • 5. Pursue Perfection through Continuous Improvement
•
• Creating flow and pull begins with often radical changes to
individual process steps, but the gains delivered by Lean
principles really become significant as they are applied with
increasing scrutiny. As this happens more and more layers
of waste become visible and the cycle continues towards a
theoretical end point of perfection; where every asset and
every action adds value for the customer. Through
continuous improvement the organisation should strive for
incremental improvements in the value stream every single
day. Go here for more information on Continuous
Improvement

14. • In applying the five principles of Lean your organization will
encourage a culture of continuous improvement; it will
become “the way things are done” instead of “that’s the
way we've always done it”. You will be ensuring that every
asset and activity are driving towards the overall
organisational strategy through constant review of
processes and the targeted elimination of waste to ensure
that they constantly and consistently deliver value to the
customer.
• But what does that mean?
• Lean allows the organisation to maintain high levels of
customer service whilst being able to grow and flex with a
changing environment and it does this through
implementing sustainable change.

15. • Consider the following definitions for each of the key
words:
•
• Value: that which the customer is willing to pay for. For
instance, in manufacturing this will typically be the
processes that convert raw materials into products;
while in administrative functions it may concern the
unnecessary paperwork.
•
• Value Stream: the sequence of processes that deliver
value to the customer. The complete value stream
flows through the complete supply chain.

16. •
• Flow: movement between value adding processes
without delay or interruption.
•
• Pull: activating a process when the customer wants to
receive, not when the supplier wants to provide.
• What are the Benefits of Lean?
•
• Lean essentially aims to compress time required to
deliver value to the customer.
•

17. • Typically, if you quarter lead-times, you will double
productivity and reduce costs by 20%.
•
• This is known as the ¼:2:20 rule. Typical results are as
follows:
• Halving of lead-times; doubling of stock turnover
• 30% to 50% reduction in floor space requirements
• 20% to 40% increase in Overall Equipment
Effectiveness (OEE)
• 20% to 25% labour productivity gains
• Reduction in administration and co-ordination roles

18. • Kaizen: Kai (to change); Zen (for the better). A
Kaizen is an approach consisting of creating a
multi-task group
• of persons (including workers) to improve an
existing process by small, quick and inexpensive
changes,
• without major investment. Since the workers
are involved, they are not bent on returning to
the production floor
• with the intention of proving that the consultant
or management is wrong.

19. Continuous Improvement
 Represents continual improvement of
all processes
 Involves all operations and work
centers including suppliers and
customers
People, Equipment, Materials,
Procedures

20. • Continuous Improvement
• Definition
• Continuous -- 1 : marked by uninterrupted
extension in space, time, or sequence
• Improvement -- 1 : the act or process of Improving
 a : the state of being improved; especially
:enhanced value or excellence
b : an instance of such improvement : something
that enhances value or excellence

21. • Continuous improvement is a management
philosophy based on employees’ suggestions. It
was developed in the United States at the end of
the nineteenth century.
• Nevertheless, some of the most important
improvements took place when this idea or
philosophy arrived in Japan.
• Japan was already using tools such as quality
circles, so when Japanese managers combined
these two ideas, kaizen was born.

22. • Continuous Improvement is often referred to
by the Japanese word ‘Kaizen’
• Kaizen is the Japanese term for an
organizations commitment to continuous
improvement.
• Continuous Improvement (CI):continuous
incremental improvements in manufacturing
and other processes.

23. • The Basic Principles of Kaizen
The principles of Kaizen that must be understand
are:
1. People are the most important asset. Teamwork
provides results and gives everyone a feeling of
accomplishment. A dozen heads are better than
one.
2. Everyone must be open to change and
improvements. Ideas from workers,
management, suppliers, and customers can lead
to new, better and easier ways of doing things.

24. 3. Gradual changes are easier to accept than
complete overhauls and employees are more
likely to accept gradual change. Small changes
will demonstrate how a tiny improvement can
provide real results.
4. Old ways of doing things may be comfortable,
but not very efficient. Everyone in a company
has to accept Change is Good and necessary
for company survival.

25. 5. Making excuses is unacceptable if it is We
have always done it this way and don’t see
why we have to change now. Keeping the old
ways may result in a company not being able
to survive the competition.

26. 6. If the job is right the first time, waste will be
reduced. Waste accounts for as much as 35%
or higher of manufactured product. By
eliminating waste, profits increase.
7. Correct process errors immediately or they
become larger. Equipment breakdowns and
failures are a result of letting a minor problem
become a major headache.

27. • Kaizen’s Event Purpose
• The purpose for holding a Kaizen event is
basically to identify waste in a manufacturing
process and to eliminate it, thereby improving
production.
• A Kaizen event is Team Oriented, as it gathers
the managers, operators, and owners of a
process in a specific place to analyze, and map
out the existing methods of the operation.

28. It is also a forum for developing, discussing, and allowing
changes to be made to improve the process. Usually
there are four stages that a Kaizen Team undertakes.
 Step One: Analyze and map the current processes of a
specific area of the plant
 Step Two: Identify the problems and the
opportunities for improvement.
 Step Three: Implement changes to the process that
allow for improved workflow.
 Step Four: Evaluate the changes made and follow up,
with adjustments as required.

29. • Kaizen’s Key Personnel
• The Team Leader who is respected by both
the workers and the company’s managers.
The ideal leader will have some experience
with Kaizen principles and events. The Team
Coordinator’s role is to ensure that all of the
components of the event are well planned,
scheduled, implemented and reviewed. The
coordinator acts as the events facilitator and
guide, to help team members.

30. • Continuous Improvement starts with management and
under their leadership works down through the
organization.
• The underlying theme is that everyone is responsible
and has a part to play in making improvements.
• All employees must work together to identify the steps
needed to improve working practices.
• Planning meetings help teams to focus on satisfying
customer needs. Visual management techniques, such
as flow charts and wall charts make clear what
resources are necessary and who is responsible for
each part in the process.

31. • Any deviation from the standard value of a variable
(quality and
• production rate) presents a problem. It is necessary to
know what thevariable objective is (desired standard)
and what the starting situation
• (present situation) is in order to propose a realistic
objective. There are
• three main factors that production managers fear
most: (1) poor quality, (2) an increase in production
cost, and (3) an increase in lead time.
• These three factors are signs of poor production
management.

32. Figure 1.2. Continuous change can offset the expense and time required for radical changes .

33. • The next key group is Upper Management whose
duty is to choose the Event Coordinator and to
support that person with whatever resources
may be required.
• After the Event Once the event has been
completed, it is the team leader’s responsibility
to put the hard copy of the final presentation
together and to circulate it to team members,
management, and anyone else who requires a
copy.

34. • • The follow-up to the event is also the team leader’s
responsibility. He or she should
• organize a meeting where all team members and other
concerned parties may review the
• results of the Kaizen and discuss further changes that can
improve a future Kaizen blitz.
• • The team leader must prepare a personal report,
outlining his or her experiences for the
• Kaizen including successes and failures.
• • This report should be made available to any future Kaizen
Team Leaders for review
• before they embark on Kaizen journey

35. • Lean manufacturing, sometimes called Lean
Production, is a business philosophy that was
• originally developed at Toyota Motor
Company, where it was called Toyota
Production System
• (TPS). The objectives are to eliminate all forms
of waste in production process. The Japanese
• term for waste is muda.