Operations & Management
Everyone wants to eliminate waste, but how much Lean is enough?
June 10, 2009 by Vladimir Kajdan
Management strategies have continued to develop since Frederick Taylor (1856 – 1915) first published The Principles of Scientific Management in 1911. Prior to this, management as a discipline did not exist.
Total Quality Management (TQM), the second generation of management strategy was developed by Armand Feigenbaum (1951). He emphasized the hierarchy of quality:
• Quality of Return – for shareholders.
• Quality of Products/Services – for customers.
• Quality of Life – for employees.
Six Sigma is the third generation of management strategy, and it requires:
• Benchmark best practices – you can sell only what the customer needs.
• Reduce variations in process – which in turn reduces the number of defects from this process.
• Eliminate waste – implement Lean Philosophy.
Is that it? Is our manufacturing strategy perfect enough? Not really. It is never enough. We have Lean Six Sigma that represents just the newest modification of the latest management strategy.
Every company owner, CEO and manager wants to make their business process as lean as possible by eliminating waste. However, they would not be able to answer the questions:
How much “lean” would they want? What degree of leanness is actually achievable?
WHAT CONSTITUTES LEAN PHILOSOPHY?
We can find many definitions of lean principles with various shades. All of them emphasize minimization of the amount of all the resources (including time) used in the various activities of the enterprise. Some definitions will sound like slogans or advertisements: “Create Value and Eliminate Waste!” “Be a Lean Enterprise by replacing your outdated mass-production system with a lean system!” “Improve Quality, Eliminate Waste, Reduce Delays and Total Cost!” I found about 100 definitions of what lean principle is. The shortest of them is: “Do more for less!”
Eventually, the principle is very simple and formed probably centuries ago when people just started gaining profit from a business: earn higher profit for less investment! Make your business more efficient! How? The answer is simple: through increasing the leanness of your business process. Lean producers employ teams of multi-skilled workers at all levels of the organization, and use highly flexible, increasingly automated machines to produce large volumes of products with potentially enormous variety. The lean philosophy sets out principles and practices to reduce cost through the persistent removal of waste and through the simplification of all manufacturing and support processes.
WHAT IS THE MEASUREMENT OF THE LEANNESS OF A BUSINESS PROCESS?
Despite the fact that waste is well defined, the real business process will always have some portion of theoretical waste. Any company can asymptotically move themselves to the lean dream; however, there will always be room for improvements. As more attempts in this direction are made the more valuable become the questions: Maybe my business is already lean enough? How lean should it be? How much should it be improved? Eventually, the question arises: What is the measurement of the leanness of a business process?
The most accessible and simple measurement for the leanness of a business process is percentage of time that is spent for value-adding activities in relation to the total time used for the business.
The leanness of the business process depends on how well it is designed, or how lean its Standard Operating Procedures (SOP) are. Calculate the Leanness as ratio of Lean Work Time (LWT) to Best Work Time (BWT). Do not mix it with Performance, which should be calculated as a ratio of Best Work Time to Average Work Time (AWT).
The dynamics of Performance and Leanness within the project implementation stage show results are not immediate. To improve performance, workers need time to recognize the effects of performance improvement on their bonuses (and as a result, the first few months show just marginal improvement). Leanness goes even lower in the first month because workers have to learn and accommodate the new (improved) procedures. (BWT rises in the first month.) ASQ is a great resource to understand additional business improvement processes and philosophies.
Vladimir Kajdan, Ph.D, is an ASQ Certified Six Sigma Black Belt & Quality Engineer. He is director of business excellence for Starline Architectural Windows Ltd. You can reach him at firstname.lastname@example.org.