Lean Thinking in Business Process Optimization
In the early 1980s,Toyota developed a process which they called “Lean manufacturing” as a systematic way to eliminate waste at all levels when they were producing cars. Over time, lean manufacturing spread not only to other car companies and their suppliers, but to many different manufacturing industries (notably, steel production, electricity generation, oil, chemicals and plastics production, etc.). Eventually it went beyond manufacturing into all kinds of organizations which produced goods of some sort (such as fast moving consumer goods (FMCG) and distribution or transport companies). By the early 1990s it was therefore called “lean enterprise” or “lean production” and ultimately became known generically as “lean thinking.” At this point it started to also become frequently used in hospitals, and even banks and insurance companies, where their “back-office” processes and call-centers needed lean-thinking to make them more efficient and effective (mainly seeking to cut out administrative waste).
To clearly define our terms here, “lean thinking” is a practice which considers the expenditure of assets and resources for any goal other than the creation of value for the end customer to be wasteful. These wasteful practices or business processes (which are not yet optimized) are therefore a clear target for elimination. Hence, at the most essential level, “lean” is centered on preserving value with less work.
At an overall practical approach level, lean thinking suggests six clear “principles” to review whether or not we are lean enough. Lets look briefly at all six of these with the first being complexity.
1. Review Process Complexity
The lean complexity principle suggests that we should look for any process which is overly complex or confusing and seek to simplify things as much as we can. Getting rid of this waste or “excess process baggage” is what streamlines operations and leads to greater customer satisfaction. Examples of complexity or processes which can cause confusion are:
- Varying quality standards every time a process runs,
- A high level of very small work steps or tasks (and individual people to do each of them),
- Involvement of many different departments in a single process,
- Numerous supporting processes,
- Input from multiple suppliers who contribute material, parts or services.
2. Review Waste of Manpower
After reviewing process complexity, the next Lean principle is “does the process lead to waste of manpower or human resources?” Causes of manpower waste are many and various but include:
- Poor people/machine/work-station interface,
- Inconsistent work methods,
- Unfavorable workstation, office or cell layout,
- Doing unnecessary/unneeded operations (like unnecessary checking),
- Poor workplace organization and housekeeping,
- Redundant inspections/approvals.
3. Review Overproduction Waste
Overproduction is the waste of producing too much of anything, too soon (or well before it is required) or too fast (thereby building inventory that can’t be readily shifted). Once again, there are a myriad of causes of overproduction including:
- Just-in-case logic,
- Misuse of automation,
- Long process setup,
- Poor scheduling,
- Unbalanced workload,
- Badly designed Reward systems,
- Unreliable shipment by suppliers.
4. Review Wasted Space
Using more space than is required such as storing inventory, on a just-in-case basis for example, is a clear waste of space. The causes of wasted space are things like:
- Poor layout (cramped, inaccessible, etc.),
- Too much inventory, especially work in process,
- Poor workplace organization,
- Excess equipment,
- Oversized equipment,
- General clutter.
5. Review Wasted Energy
Energy waste in Lean relates specifically to “gearing up” within an organization to meet high demand but never needing to use the equipment or people to meet these predicted peaks. This happens a lot in manufacturing organizations or utilities for example (which often have lots of under capacity and redundant equipment) but also in offices (where there may be lots of dedicated printers for example, or empty desks, where people work more often from home or travel extensively. Some examples of energy waste are:
- Using more energy (people and machines) than is required to build the product to market demand,
- Any motion that in unnecessary (moving goods around, filling in extra unneeded boxes on forms),
- Oversized or poorly maintained equipment,
- Idle equipment,
- Poor workplace organization,
- Any errors which have to be corrected or any re-work in general.
6. Review Wasted Time
Last but not least in the Lean principles is wasting time. Lean thinking suggests that any activity which consumes time without adding value for the customer should be minimized or ideally, eliminated. Causes of wasted time are many and various but in the main relate to a lack of scrutiny on how long each major or minor process takes. Any activity that consumes time without adding value, especially the waste of waiting (equipment downtime, waiting for materials, setup, etc.) is a candidate for review. Examples of wasted time are:
- Any unnecessary waiting (for material, parts or people to do their job),
- Poor machine maintenance,
- Production or Process line imbalances,
- Poor machine or asset setup discipline,
- Poor communication between processes.
The complete elimination of waste, as opposed to just reducing it, is obviously a vital way to increase competitiveness of any organization. However, to achieve this, we need a systematic approach and a set of “tools” which everyone can readily understand. Lean thinking provides this approach and tools and if we use these six review principles, most enterprises can achieve much greater efficiency and/or effectiveness than they might imagine.