This document provides an overview of lean thinking principles for process improvement. It discusses the four main concepts: customer focus, value stream, continuous flow, and perfection. Customer focus means understanding value from the customer's perspective. Value stream means identifying activities that do not add value. Continuous flow is moving products through without waiting. Perfection is continuously improving until processes meet customer needs with no delays or errors. The document uses examples and exercises to illustrate key lean concepts like identifying waste, applying the five S's, and conducting a value stream analysis. The overall goal is to teach participants how to analyze and enhance operations using lean thinking techniques.

1. 1
Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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Lean Thinking
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“Hidden Waste in Your Processes” (Part 1) +
“Successfully Implementing Operational Enhancements” (Part 2)
Chris Piccin
2
Day One
3
Introductions
▪ Tell us your name and company
▪ What’s your biggest operations issue?
▪ What are you hoping to get out of this class?
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2. 4
Day One Topics
The Four Big Ideas of Lean
Customer Focus
Value Stream
Value Add Analysis
By the end of this session you will:
• know the four principle concepts for Lean thinking
• understand how to build a Customer Journey map that
describes Moments of Truth and Customer Critical to
Quality Dimensions
• be able to identify different types of waste and non-
value add activities in a value stream
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Why Lean?
“We missed another deadline.”
“Too many complaints.”
“The work keeps piling in, we’re all working overtime, we can’t keep up.”
“This was our best year ever and we can’t afford to hire more people.”
“I’m always waiting for something before I can do my job.”
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6

3. 7
What is Lean Thinking?
Four Big Ideas:
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1 Customer Focus Understand value from your customer’s perspective.
2 Value Stream Concentrate on the path through your processes. Find
and reduce activities that do not add value (waste).
3 Continuous Flow Move products or transactions through the process as
fast as value can be added, no waiting.
4 Perfection Keep improving until processes produce exactly what
the customer wants, when they need it - no delays,
errors or wasted effort.
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1. Customer Focus
Deliver value from the
customer’s perspective
• Design Features and Customer
Benefits
• Moments of Truth and ServQual
• Customer Journey Maps
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9
Customer Focus:
Design Features Deliver Customer Benefits
What Apple Built
(Another) MP3 Player
What Apple Sold
Put 1000 Songs in Your Pocket
KEY FEATURES
• 5 GB hard drive
• 10 hour rechargeable battery
• Scroll wheel
• iTunes software and catalogue
CUSTOMER BENEFITS
• Availability – All my songs, right now
• Simplicity – No instructions required
• Cool
Portable Music
Circa 2000
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4. 10
Customer Focus:
Moments of Truth and ServQual
1Carlzon, Jan: Moments of Truth, 1987
2Zeithaml, Parasuraman & Berry, "Delivering Quality Service; Balancing Customer Perceptions and Expectations," Free Press, 1990.
Process Gaps
1. Does the provider understand what the
customer expects?
2. Has the provider specified features required
to meet customer expectations?
3. Does the finished product or service meet
specifications?
4. Are all customer communications consistent
with the specifications?
Moment of Truth1 An interaction where customers form a positive or negative opinion based on experience.
ServQual2 Defining the gaps between Customer Expectation and Customer Experience.
Customer (Critical to Quality) Dimensions
Reliability Availability, dependability and
accuracy
Assurance Trust, confidence, safety and ease
of use
Tangibles Physical appearance
Empathy Caring, individualized experience
Responsiveness Prompt help or service
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11
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Segment: Work-from-home Wilsons
The Wilsons are a two income family of four. Their Internet Service Provider (ISP)
supplies the digital oxygen for their daily lives. Mrs. Wilson owns a small business and
has a dedicated workstaBon with a mulBline VOIP phone in the home. Mr. Wilson
frequently accesses corporate email and applicaBons via his laptop.
Thinking This can’t happen. I have
work to do tonight.
Updates must be in team’s
inboxes first thing in the am
Resolved: That wasn’t bad!
Transferred: Waste of Bme.
Are they going to show up?
Will they fix it tonight?
Best case: Wow!
Worst case: I want a new ISP
Feeling Concern Angst Relief or FrustraBon Doubt Pleasant Surprise or Betrayal
Moments of Truth
Very SaBsfied
SaBsfied
Neither
DissaBsfied
Very DissaBsfied
Phases of Journey Discovery No?fica?on Diagnos?c Schedule Service Call
Descrip?on Mrs. Wilson cannot log on
aSer dinner. She reboots, no
luck. She waits 10 minutes
and tries again.
Mrs. Wilson calls ISP 800
number. She navigates IVR
screens seeking service
support.
Mrs. Wilson encounters IVR
prompts instrucBng her to
check her equipment before
speaking to a service rep.
Mrs. Wilson gets transferred
to a representaBve who
schedules a service call and
tries to miBgate issues.
Service Crew arrives at the
Wilsons home. They inspect
lines and equipment, repair
or replace as necessary.
Cri?cal to Quality
Dimension
Reliability – 24/7/365
Internet access
Assurance – ease and speed
to find appropriate support
Accuracy - percent of issues
resolved by automaBon
Empathy – alt soluBons
Responsive – acceptable Bme
Tangibles – competence of
service team
Problem logging on
Assume internet problem
Contact ISP
Internet Service Interrup?on
7:00 pm Tuesday Night
IVR trouble shooBng
Problem resolved
Transfer to Service Rep
Service scheduled
On-Bme arrival
Late arrival
Problem resolved quickly
Delayed
resoluBon
Customer Focus: Customer Journey Example
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Simulation Round 1:
Setting the Scene
• Your products are made from domestically sourced, 100%
sustainable hardwood veneers of the highest quality.
• Your customers work in small spaces and cannot store large
quantities of materials. They often purchase less than full
sheets and depend on fast deliveries.
• Your costs are out of control and, worse, delivery performance is
faltering. Your customers are complaining. LOUDLY.
• Your bank is concerned and raised the possibility of reducing
your credit line. Your jobs: convince the bank that the operation
can be run effectively and efficiently.
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You work for a specialty plywood supplier that caters to artists and
makers in the New York metro area.

5. 13
Simulation Round 1:
The Rules
• Follow your job descriptions to the letter – do not adapt the process you
have been instructed to perform
• Follow your reporting lines. You may only talk to your Supervisor or your
Subordinates
• By all means ask questions for clarification, but you may not always get an
answer. Sound familiar?
• No computers may be used during the simulation.
• You may find yourself confused or frustrated with the process. This is
normal.
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14
Value Stream
2. Value Stream
Find and reduce activities that
do not add value
• Eight Wastes
• Five S
• Value Added Analysis
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Customer Journey
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Value Stream Schematic:
Commercial Loans
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Origination
“up to the proposal”
Collections
Deal Structure
“proposal to booking”
Loan Servicing
“booking to termination”
Cash
Application
Customer
ServiceLegalUnderwriting
Business
Development
Value Stream – End to End
“Close the deal fast!” “Minimize risk” “Fix problems” “Get the cash on the books”

6. 16
Value Stream:
The Eight Wastes
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D
O
W
N
T
I
M
E
Customer
Focus
Value
Stream
Continuous
Flow
Perfection
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55
Example: Extreme Transportation Reduction
This structure is a storage
facility for new cars. It's an
inside view of one of the 20-
story car towers at Autostadt,
Volkswagen's facility in
Wolfsburg, Germany
Transportation Reduction
for Auto Manufacturing
This structure is a 20-story storage facility for
new Volkswagen cars in Wolfsburg, Germany
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Transportation Reduction Example:
Enrollment Packages
69
Example: Use of work cells and Kanban
Production of Benefit Kits
BindBind
AssembleAssemble
ShipShip
Store & PickStore & Pick
PrintPrint
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70
NewProcess:ContinuousFlowthroughworkcells
PickBindAssembleShipPrint
PickAssembleBindShip
70
NewProcess:ContinuousFlowthroughworkcells
PickBindAssembleShipPrint
PickAssembleBindShip
70
NewProcess:ContinuousFlowthroughworkcells
PickBindAssembleShipPrint
PickAssembleBindShip
Print

7. 19
Sort Set in Order Shine Standardize Sustain
Keep only the
necessary items
Arrange items for
efficient workflow
Clean the work
area
Document and
conduct checks.
Maintain and
review standards
Motion Reduction up Close and Personal
Work Area: Five S
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20
Five S in Action
Sort?
Set in Order?
Shine?
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21
No
Value Added
Value Added Analysis:
Three Questions
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Task
Customer
Requirement?
Right First
Time?
Business
Requirement?
Real
Value Added
Business
Value Added
No
No
NoYes Yes
Yes
Defects Motion
Talent
Inspection
Review & Approval
Waiting / Inventory
Tasks to reduce or eliminate. They exist because the
process is inadequately designed or functioning poorly.

8. 22
Real Value Add Analysis:
Computer Rack Manufacturing Example
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Steel Coil Inventory
Stamp Steel
Construct Cabinet
Buffer Stock
Paint Cabinet
Inspect and Rework
Buffer Inventory
Final Assembly
Test and Rework
Inspect and Rework
Buffer Inventory
96.0
0.3
8.0
0.2
0.1
3.0
0.5
0.2
5.0
3.0
0.2
Cycle-time: 116.5 hours
Steel Coil Inventory
Stamp Steel
Construct Cabinet
Buffer Stock
Paint Cabinet
Inspect and Rework
Buffer Inventory
Final Assembly
Test and Rework
Inspect and Rework
Buffer Inventory
0.3
0.2
0.5
3.0
Real Value Add: 4.0 hours
Steel Coil Inventory
Stamp Steel
Construct Cabinet
Buffer Stock
Paint Cabinet
Buffer Inventory
Final Assembly
Test and Rework
4.0
0.3
0.2
0.5
0.5
1.0
2.5
0.1
Real Value Add: 3.5
Cycle-time: 9.1
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Real Value Analysis Exercise
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• Using the criteria you learned, analyze each process step and
identify add value and which do not
• Be prepared to justify your choices
• Remember to think about the process from the Customer’s
perspective
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Simulation Round 2:
Improving the Value Stream
• Owner is responsible for final decisions
• Changes must be reversible
• No changes that involve customers
• No elimination of staff
• Facilitator has final approval
• Implement changes and train if necessary
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Objective: identify and implement two changes to improve the process.