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What is & How to Create a LEAN Environment, The 7 Kinds of Waste, and intro to KAIZEN

lean environment
Lean manufacturing and creating a LEAN culture has always created a lot of discussions in the supply chain and manufacturing world as a way to create an efficient company who is able to achieve high customer demand all while controlling organizational costs. In my first focus in my LEAN series I focused on creating a lean initiatives program by over-viewing what is lean and continued further on explaining what is 5S. In today's LEAN post, I will focus on how to create a lean environment and culture by knowing and eliminating the 7 wastes, as well as an introduction to continuous improvement often called KAIZEN.

What is a LEAN environment?

What should we attempt to become LEAN in our business? Overall, we want to BANISH WASTE AND CREATE WEALTH. We have to SHED FAT AND BUILD MUSCLE as a team. lean environment eliminate wasteWhy should we become LEAN and create a LEAN environment? We buy lean meat to eliminate the fat which may cause a problem in the future. We become lean to be faster, feel better and improve the quality of our lives. In business, we become lean to exceed our customer’s expectations by increasing through-put to our customers, streamlining our supply chain operation, decreasing lead times, being more flexible, and improving the quality of our goods and services. Profitability should increase as well because your cost of goods sold should be reduced as an overall goal. After all, you are in business to serve your customers and increase profitability. Is this a LEAN environment a new concept? No. The roots of lean thinking go back to the manufacturing innovations of Henry Ford in the early 20th century. But lean manufacturing really got its start after World War II at Toyota Motor Company, which developed the Toyota Production System (TPS). TPS’ goal is elimination of all waste. There are seven (7) basic kinds of waste
  1. Overproduction: manufacturing items before they are required
  2. Waiting: leaving goods in work-in-process before they are needed for the next process
  3. Transporting: excessive movement and handling to get goods from one process to the next
  4. Inappropriate processing: using equipment that is more sophisticated and expensive than actually needed
  5. Unnecessary inventory: holding goods that are not flowing through any process
  6. Unnecessary or excess motion: allowing bending, stretching, walking, etc. that is not strictly needed to do the job and can  jeopardize workers’ health and safety
  7. Defects: allowing quality deficiencies that result in rework or scrap.

What about the office?

  1. Clean up all office clutter
  2. Move file cabinets around to improve office efficiency
  3. Use 5S to sort pens, pencils, paper, staples, scissors and any office tools
  4. Are desks in the right position for office processing?
  5. Clean paper piles off desks, put them in your desk drawers for future follow-up on the dated you will use them
  6. Maintain and sustain these changes to the office and use continuous improvement to increase efficiencies
  7. Make sure there are no underused employees and level the office load
  8. Examples of lean in the office? Self-billing invoicing, automatic invoicing, and back-to-back purchase orders
These wastes in the production area, warehouse or office, contribute to excess inventory, fail to add value to the customer, and limit supply chain capacity, quality and velocity. Where should you focus to implement a LEAN environment? We do it for ourselves and our customers.
  • As a previous article stated, start with 5S as the foundation to your LEAN implementation. Get things cleaned, sorted, organized and sustained, before initiating a formal lean program across-the-board. Suggest that your extended supply chain partners do the same, if they haven’t already: your suppliers, logistics providers, transportation companies and any warehouses. Setting Key Performance Indicators (KPIs) with your supply chain partners is the way to go, as you monitor your overall improvement to exceed your customer’s expectations.
  • A great LEAN motto to guide your LEAN implementation is: There is always a better way to do anything. Blast! Create! Refine! Find it, it is there.  A cross-functional team is the best place to start, as ideas from the various team member areas will help find the right way to LEAN initiatives for your company.
  • Education and training is the right way to start, using internal or external training. Re-certification in LEAN principles yearly, and staying abreast of the LEAN state-of-the-art, is a must. Your employees will go through a learning curve/paradigm shift with the new LEAN environment and culture. Change will come slowly, but the investment in time is worth it. Leaders must be developed for all key areas to maintain any LEAN implementations.
  • A keen focus on product value is critical. Every step in every process must add value for the customer. If it doesn’t add value, you eliminate it. The goal is not the lowest cost product, but a product value. Quality should never be sacrificed. It is the value to the consumer, or your ultimate consumer, that is important. If you focus on value added activities, the non-value added activities can be eliminated increasing throughput to your customers.
  • Continuous Improvement or Kaizen should be utilized daily. You should attempt to standardize your products wherever possible. Your goal is perfection, of course, but that is not readily attainable. To shoot for perfection is a good thing. Start with elimination of process variance in all aspects of the company using tools like: Total Quality Management (TQM), Six Sigma, LEAN Six Sigma (LSS), Kaizen, Kaizen Blitz, Kanban and International Standards Organization (ISO 9000).
  • Use Voice of the Customer (VOC) techniques and customer needs to drive your LEAN activities. Have your customers answer questionnaires about your company weaknesses and strengths. Evaluate the customer comments about your weaknesses, prioritize them, using Pareto’s 80/20 Principle, and implement improvements based on your customer’s input. Let your customers know that their comments/input are valuable to you and you are implementing systems and procedures to improve and eliminate any weaknesses. This will help retain your customers.

An Introduction to KAIZEN to Create a LEAN Environment

lean environment kaizenLet’s start with defining daily Continuous Improvement or KAIZEN: Keep our theme in mind: There is always a better way to do anything. When you come in every morning and do your routine work, look for ways to improve anything you do. Look at your work differently. Take the blinders off and try something new that might help productivity, efficiency, improved product flow or throughput. Ask, “Why are you doing this?” Is it because you always have, then rethink what you are doing. Are you measuring what you can, but not what matters? Are you persisting on what doesn’t work? It is critical to understand the importance of flexibility in a process, because customers demand it. KAIZEN and continuous improvement or somewhat interchangeable.  Kaizen means small steps of continuous improvement. Continuous improvement should be monitored and implemented daily. It is the continuous search for imperfections by all employees. They both take daily discipline. All employees must embrace it. So there is a learning curve, but once adopted there is no turning back. It can mean as much as a 10% increase in productivity and quality. Management will look to employees for daily ideas on how to improve their jobs to increase throughput and velocity to the customer. Teamwork and achievement are created by implementing Kaizen. The use of cross-functional teams to look at areas, audit them for 5S or KAIZEN is critical. Cross-functional teams look at things differently due to their diverse backgrounds and come up with some great ideas...

What tools can be used for Kaizen to Create a Lean Environment?

  • Value Stream Mapping (VSM): Similar to a flow chart, this tool maps the current and future state of the process separating value-added from non-value-added activities.
  • Root cause analysis: This set of problem solving tools aims to identify the root causes of problems or events. Take Inventory Records Accuracy: if the on hand balance in the warehouse does not match the on-hand balance on the computer or ERP system, you have to find out why: Is it a location error? Counting error? Bill of material error? Wrong part number? ….before you change these two (2) numbers to match, find the root cause and resolve it by reviewing the transaction detail in the Warehouse Management System (WMS).  Once resolved write a Standard Operating Procedure (S.O.P.) to eliminate it.

The Five Whys5 Whys Examples

Problem Statement: Customers are unhappy because they are being shipped products that don’t meet their specifications (this is a violation of the LEAN philosophy). 
  1. Why are customers being shipped bad products?
    • Because manufacturing built the products to a specification that is different from what the customer and the sales person agreed to.
  2. Why did manufacturing build the products to a different specification than that of sales?
    • Because the sales person expedites work on the shop floor by calling the head of manufacturing directly to begin work. An error happened when the specifications were being communicated or written down.
  3. Why does the sales person call the head of manufacturing directly to start work instead of following the procedure established in the company?
    • Because the “start work” form requires the sales director’s approval before work can begin and slows the manufacturing process (or stops it when the director is out of the office).
  4. Why does the form contain an approval for the sales director?
    • Because the sales director needs to be continually updated on sales for discussions with the CEO.
In this case only four Whys were required to find out that a non-value added signature authority is helping to cause a process break down. In the next LEAN series articles, three (3) and four (4) we will discuss: KANBAN pull systems and LEAN Six Sigma. AUDIENCE PARTICIPATION TIME: What are other wastes YOU/your staff can eliminate from your business in order to create a LEAN environment? How about meetings? Poor or verbal communication? OTHERS? You know other wastes: think about them! Let us know your thoughts.
Chuck Intrieri
Mr. Chuck Intrieri is a highly experienced and credentialed Supply Chain Management professional and is a recognized thought leader and innovator, primarily in the areas of Supply Chain Optimization, LEAN initiatives, Operations, Manufacturing, Third Party Logistics (3PL) International Purchasing/Importing, Inventory Management and Logistics, Strategic Sourcing, and Procurement Operations.
Chuck Intrieri
Chuck Intrieri
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