AFSO21 Reading list -- Lean Thinking Published April 4, 2007 RAF MILDENHALL, England -- Lean Thinking, Dan Jones and Jim Womack Overview: The authors provided a comprehensive review of the principles that guide lean thinking as well as step-by-step instructions on how to develop an action plan for managing lean initiatives in both service and manufacturing firms. Personal Evaluation: The book was well organized, defining the terms and principles associated with lean thinking followed by specific examples of how lean concepts were utilized to breathe new life into several manufacturing organizations. Highlights: Lean Thinking provides a way to specify value, line-up value-creating actions in the best sequence, and perform activities more effectively by eliminating waste. Lean Thinking is summarized by 5 principles: 1. Value: Must be defined by the customer and created by the producer. To precisely define value, we must identify a specific product with specific capabilities offered at specific prices to specific customers. 2. Value Stream: All actions required to bring a specific product from concept to production launch. 3. Flow: The ways to line up all of the essential steps in the value stream needed to get the job done with as little waste as possible. 4. Pull: Making only what the customer actually tells you they need and allowing them to pull that product away from you after it is completed. 5. Perfection: The complete elimination of muda (Japanese word for waste) by applying Kaizen (Japanese word for continuous approach to process improvement). Pg 31 - 32: Defining value: Why is it so hard to define value? Partly because most producers want to make what they are already making and partly because many customers only know how to ask for some variant of what they are already getting. Another reason firms find it hard to define value is because value creation often flows through many firms and each firm defines value in a different way to suit its own needs. Rather than identifying the end product received by the customer, the firms define value according to their link within the supply chain. Pg 164: Interesting note: In the late 1980, defense contractors for the U.S. Air Force utilized cross functional teams to resolve cross functional conflicts. They realized that organizations were unified systems composed of interrelated units. Implementing change in one unit would have effects on the partner units and thus the organization as a whole. This suggests that managers can no longer function within the traditional organizational chart, but must integrate their department with the goals and strategy of the whole organization. Value steams and flow must be a combined effort rather than compartmentalized strategies. Case Studies: Pratt and Whitney (P&W), Pg 151 -188. P&W initiated the "American System" which involved producing interchangeable parts in order to eliminate the need to fit new parts to existing products. This was the first step in P&W's attempt to eliminate waste, but as technologies changed and P&W progressed in age, size, and complexity, kaizen became essential to their survival. New methods of lean thinking have been a constantly pursued in order to meet ever changing consumer needs. Porsche, Pg 189 - 218. Porsche focused on superior craftsmanship and paid little attention to the production process. As a result, muda hindered the production rate and inflated the prices. After consulting Japanese experts, Porsche's leaders took steps to delayer the management hierarchy and a lean system was implemented in the engine assembly shop to reduce inventory and time required to find parts. Showa, Pg 219 - 246. Toyota lean initiatives were applied to a small coal boiler-building business. The initiative required that the company move to small-lot production and produce only what was requested by the next production step in order to reduce inventory. In one week, it was possible to eliminate half the plant space, 95 percent of the in-process inventory, half of the human effort, and 95 percent of the throughput time needed to make the final product. Pg 247: Getting started: "The most difficult step (to implementing a lean plan) is to overcome the inertia associated with current operations. You'll need a change agent, a core of lean knowledge, some type of crisis to serve as a lever for change, a map of your value streams, and a determination to quickly implement value-creating activities to produce rapid results." Pg 256: "(Creating a lean organization) means creating a mindset in which temporary failure in pursuit of the right goal is acceptable, but no amount of improvement in performance is ever enough." Expect to take one step back before taking two steps forward. Pg 264: Process Management Board concept: Make everything transparent: It is vital to create a "scoreboard" which shows everyone involved in a value stream exactly what's happening in real time. A simple process status board is ideal for displaying improvement trajectory. Pg 276: The Lean Enterprise defined - Objectives of the lean enterprise are to: - Correctly specify value for the customer. - Avoid the normal tendency for each firm along the stream to define value differently to favor its own role in providing it. - Identify all actions required to bring a product from concept to launch, from order to delivery, and from raw material into the customer's hands, and on through its useful life. - Remove any actions which do not create value and make those actions which do create value proceed in continuous flow as pulled by the customer. - Finally, analyze the results and start the evaluation process over again.